Harry Reid’s Plan to Save America From Default Using Wireless Spectrum

With a vote on a debt reduction plan favored by Speaker of the House John Boehner apparently in doubt, the attention of lawmakers grappling to meet an Aug. 2 deadline to avoid a default on the national debt has turned to Senate Majority Leader Harry Reid.

Reid’s plan, which is expected to come to the Senate floor for a vote today, would raise $24.5 billion over 10 years, of which $13.1 billion would be available for deficit reduction, according to the nonpartisan Congressional Budget Office.

So how does $13 billion help solve a $14.3 trillion problem? It helps fills some of the gaps by making the bill more palatable to lawmakers on both sides of the aisle. As one wireless industry lobbyist put it, spectrum auctions are in large part seen as politically neutral territory because they’re not tax increases that Republicans would oppose, and they’re not spending cuts, which so irritate Democrats.

The Reid plan is a variation of one put forth by Sen. Jay Rockefeller, the West Virginia Democrat and chairman of the Commerce Committee which oversees wireless spectrum issues. Rockefeller’s plan would have raised $6.5 billion. Both plans essentially call for setting aside a big block of wireless spectrum, known as the D Block, for public safety. It would give the FCC authority to auction off TV spectrum currently held by TV broadcasters, and pay for financial incentives to entice them to voluntarily give that spectrum up. Broadcasters are generally not inclined to give it up, however.

There’s also a spending component to the plan. The D Block spectrum set aside for public safety agencies would be used to create a national wireless broadband network that emergency officials could use during an emergency. This is an idea that’s been rolling around Washington since the 9/11 terrorist attacks.

Rockefeller’s plan calls for $12 billion to begin construction of the network, plus a few billion for research and development into additional uses for the network. Reid’s bill drops the R&D funding and cuts the construction funds to $7 billion. It’s not enough to build the network, but more of a down payment, meaning there’s a good chance that lawmakers will have to find some money to finish the job in a few years.

Reid’s bill would also direct the Federal Communications Commission auction of airwaves — currently held by government agencies like the U.S. Department of Defense — that aren’t being actively used. In addition, it would encourage TV broadcasters to voluntarily give up some of their unused spectrum for auction by offering them part of the proceeds.

What would all that spectrum be used for? The expectation is that wireless carriers like Verizon Wireless and AT&T would bid on it in order to expand their wireless broadband networks, and thus give smartphone users more bandwidth to slake their apparently insatiable digital thirst.

Just because spectrum auction revenue is neither a tax increase nor a spending cut doesn’t mean there’s no opposition. Sen. John McCain, the Arizona Republican and 2008 GOP presidential nominee, blasted the plan and called it a “cop-out” from the Senate floor. Meanwhile, Rep. Anna Eshoo, a California Democrat, told Politico earlier this week that the debt bill is the wrong place to debate wireless spectrum.

It wouldn’t be the first time that wireless spectrum has figured in the budget-balancing and deficit-reduction process. Revenue generated from spectrum auctions helped then-President Bill Clinton balance the budget in 1993 and 1997, and President George W. Bush used them to help reduce the federal budget deficit in 2005.

(Image from Harry Reid’s campaign site.)