Congressional budget experts seeking a few billion dollars to close the year's budget gap viewed a seemingly easy solution: Why not resell licenses for the electromagnetic spectrum now held by bankrupt companies that owe the government? That would bring in $2 billion or more. But House Majority Leader Dick Armey stood in the way.
Nearly a week before other "pay-fors" to cover new spending were found, the spectrum solution was a goner. "Mr. Armey will never let us do good public policy," said a Senate staffer Nov. 12. But Armey was hardly alone. Senior Republicans and Democrats joined hands to prevent taxpayers from getting what they are owed.
The spectrum fight epitomizes back-room budget politics in the final days of a congressional session, when great issues get less attention than special-interest provisions worth vast sums. The expensive lobbying firms usually insert costly sections, but this time, they excluded a money-saving provision in the omnibus spending bill, while generous doses of disinformation were dispensed.
Portions of the electromagnetic spectrum in the mid-90's were designated the "C Block" and reserved and auctioned for smaller companies. Makeshift, undercapitalized companies offered huge bids in hopes of attracting investors and thus went bankrupt.
NextWave Telecom of San Diego, which in 1996 bid $4.7 billion for "C Block" spectrum licenses, filed for bankruptcy after paying only $500 million. Sen. Pete Domenici, the Senate Budget Committee chairman, proposed that the licenses be reclaimed and resold. The net anticipated revenue gain was as high as $3.5 billion.
But federal bankruptcy court reduced the liability of the bankrupt companies -- for NextWave, from $2.5 billion to about $550 million. NextWave then could sell its license for a tidy profit, if Domenici could be kept from reclaiming the licenses.
To that end, principals of the shadow companies are on Capitol Hill to importune lawmakers; they also have hired professional lobbyists. NextWave hired the high-profile, Republican-oriented Timmons Co. and the fabulously well-connected Tom Korologos, a former Senate and White House aide. Bay Harbor Management, a New York investment bank, hired the top-drawer GOP lobbying team of former Republican National chairman Haley Barbour and Bush White House Deputy Chief of Staff Ed Rogers.
Circulated in Republican circles on Capitol Hill the last two weeks were three pages of talking points, apparently filled with misinformation. This document attributes the plan to reclaim the licenses to the Clinton administration, when in fact, it is Domenici's idea. It contends the plan envisions a rigged bid for the established telecommunications firm Nextel when, in fact, Domenici's plan would offer competitive bidding.
The talking points claim Nextel's Craig McCaw contributed $50,000 in soft money to the Democratic National Committee and is a major booster of Vice President Al Gore for president. In fact, Federal Election Commission (FEC) records show no such contributions but reveal McCaw as middle-level contributor to mostly Republican candidates, including Texas Gov. George W. Bush.
Oddly, FEC records show firms represented by Republican lobbyists engaged in the Democratic soft-money game. NextWave, on Oct. 28, 1998, contributed $30,000 to the Democratic Congressional Campaign Committee. Bay Harbor Management, on May 31, 1999, contributed $25,000 to the Democratic National Committee. Neither reported a dime in contributions to the Republicans.
House Republican committee chairmen and Democratic ranking members support the bankrupt companies. But the majority leader has led the way in protecting General Wireless Inc. of Dallas, whose $1 billion debt has been reduced to a mere $60 million by the bankruptcy court.
"I am still waiting for somebody to tell me who General Wireless is," Armey was quoted as saying by Bureau of National Affairs' Daily Report for Executives Nov. 11. Actually, General Wireless has been reorganized as Metro PCS. "There is a presumption," said Armey, "that, oh gee, I look down the list affected -- there's one in Texas -- that must be his interest. Well, you know it's never been my interest." In fact, an aide said Metro PCS caught Armey's attention because it was from Dallas. Whatever his motivation, Armey kept the licenses from being reclaimed. The issue will be revisited in the next congressional session with the performance likely to be no more edifying.
(C)1999, Creators Syndicate Inc.