The WasteWatcher: The Staff Blog of Citizens Against Government Waste

ARC Gets Earmark Boost

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Those pork-barrel spenders are at it again.  This time, they increased the President’s fiscal year (FY) 2014 budget request for the Appalachian Regional Commission (ARC) by 23 percent, from $64.6 million to $80 million, in H.R. 3547, the Consolidated Appropriations Act, which was signed into law on January 17, 2014. 

The bill report stated that $10 million of the $15 million is to be spent on “high-speed broadband deployment in distressed counties within the Central Appalachian region that have been most negatively impacted by the downturn in the coal industry.”  Of course, the Obama administration’s policies are the proximate cause of the coal industry’s problems.

Aside from qualifying as a pork-barrel expenditure under CAGW’s criteria, the $10 million is a complete waste of money since there are already at least three federal agencies providing assistance to bring broadband technology to underserved and unserved areas of the country:  the Federal Communications Commission (FCC), the National Information and Telecommunications Administration, and the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA).  Does the government really need to fund broadband deployment in another agency? 

The three broadband programs are both fraught with problems and have intersecting goals and efforts.  The RUS has positioned itself as an incentive lender, rather than a lender of last resort.  As part of its program, the RUS analyses all sources of revenue an applicant receives, including any grant funding from the FCC’s Universal Service Fund (USF).  When the FCC announced it would be reorganizing the USF into the Connect America Fund, RUS suggested that the reorganization could have adverse consequences affecting the qualification of applicants for its loan program. 

In March 2013, the USDA Office of Inspector General’s audit of the American Recovery and Reinvestment Act of 2009 (stimulus) Broadband Initiatives Program (BIP) found that “RUS funded BIP projects that sometimes overlapped preexisting RUS-subsidized providers and approved 10 projects, totaling over $91 million, even though the proposed projects would not be completed within the 3-year timeframe RUS established and published.”  The IG “also found that the agency could have implemented the program so that it would have focused more exclusively on rural residents who do not already have access to broadband.”

The states that would benefit the most from the $10 million in ARC broadband funding include Kentucky (36 counties); North Carolina (3 counties); Ohio (7 counties); South Carolina (1 county); Tennessee (16 counties); and West Virginia (8 counties).  The remaining $5 million was for other non-specified purposes.

The ARC is a result of President Lyndon Johnson’s 1964 War on Poverty.  Like many federal programs, the ARC was conceived as a temporary investment program, but ended up surviving for decades.  While funding levels for the ARC have decreased from a high of $250 million in FY 1995 to $80 million in FY 2014, the money is still directed to a regional commission that has spent 50 years of duplicating efforts made by other agencies and has never been proven to directly reduce poverty.  While there has been a 21 percent decrease in the number of counties listed as economically distressed by the ARC since 2002, when there were 118 counties on the list, the number of distressed counties has remained constant at 93 since 2011.    

Both Congress and the administration have claimed that deploying broadband service to rural areas of the country has been a high priority.  In November 2001, the ARC released a report entitled “Information Age Appalachia: A Rural Digital Divide Program,” detailing the need for the ARC and its partners to take “proactive steps” to address the lack of access to modern telecommunications services.  Among the proposed program activities were providing access to infrastructure; education, training, and workforce development; e-commerce readiness; and tech sector employment.  The commission would act as a “catalyst” to leverage other federal, state and private sector resources and to attract additional support.  Essentially, the ARC would provide information on how to get government grants and loans, all of which is readily available on the other agencies’ websites and offices.

Among the areas meeting the description of eligible locations, is southeastern Ohio which is part of the Appalachian foothills.  Wayne National Forest dominates the landscape and smaller tributaries like the Hocking and Muskingum Rivers flow down to the Ohio River through coal country.  Typical travel in the area is either on a four-lane newly constructed state highway, or on a two-lane roadway taking a circuitous route to get from point A to point B.  Bringing fixed broadband to this rural region of the country is difficult regardless of the amount of funding provided.

The stimulus allocated $7.2 billion towards broadband investments through the Department of Commerce and the USDA.  In 2010, USDA awarded $100 million to four satellite companies to provide high-speed Internet service to hard-to-reach rural areas like those served by the ARC.  As part of the stipulations for the USDA grants, companies were required to provide free installation, no upfront charges to the customer, and reduced subscription costs for the first year.  The funds for this one-time program could be used for construction or capital improvements in order to provide broadband service; leasing costs for facilities required to provide broadband service; and pre-application expenses.  Using a combination of grants from this program and others, Scott County Telephone Cooperative in southwestern Virginia was able to bring broadband access to unserved rural communities along the Virginia/Tennessee border.

The most recent FCC report on broadband deployment, released on August 21, 2012, indicated that 95 percent of all Americans have access to fixed broadband, while mobile broadband is becoming increasingly available across the country.  The FCC has yet to update that report.  Given continued private-sector investments, the government’s data is stagnant, yet Congress continues on its spendthrift path by providing funding beyond the President’s request to an agency that merely acts as a “catalyst” to find other funding for broadband projects.  

An underlying reason for the consistent failure to improve government efficiency and eliminate waste, fraud, and abuse is Congress’s tendency to create or expand funding to a program to solve a problem.  Rather than spending the time to examine an issue in depth, including whether or not an existing program can address the subject matter, members are usually more likely to move forward with a new program.  While “waste” can be subjective, everyone should agree that taxpayer dollars should not be mismanaged.  Unfortunately, there are very few systems or incentives in place to prevent misspending by Congress and the executive branch.

Spending taxpayer dollars to fund a program to talk to communities about other government programs is wasteful in the extreme, particularly since government data is not current enough to determine the needs of the communities it is supposed to help.  The broadband program at the ARC duplicates efforts by other federal agencies while creating an additional unnecessary and wasteful layer to the bureaucracy.  It is difficult to find out who requested the additional funding for the ARC, but it is not hard to call it what it is:  an expensive and unnecessary earmark.    

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