How to Raise Revenue without Raising Taxes

By Joel D. Joseph

One way to raise a trillion dollars in federal revenue without raising taxes is to auction off television and radio station licenses instead of giving them away. Since 1994 the Federal Communications Commission (FCC) has conducted auctions of licenses for segments of the broadcast spectrum. Most of these auctions were for cellphone frequencies and other wireless devices. None were for television or radio station signals. The FCC already has an auction system in place that can be used to auction off the big stuff: radio and television licenses.

FCC auctions are open to any eligible company or individual who submits an application and upfront payment, and is found to be a qualified bidder by the Commission. The FCC has conducted 87 radio spectrum auctions that raised over $60 billion for the US Treasury. FCC auctions are conducted electronically and are accessible over the Internet.

There are more than 14,000 radio stations in the US and a similar number of television stations. Radio and television licenses are given away for free, as they have been since the 1930s. Each station’s license is worth from less than $1 million to more than $100 million. The total value of these licenses is probably worth $1 trillion or more.

Each license is now granted for an eight-year period, renewable, at no charge. Why should we give away these valuable licenses? If we were to auction off Channel 4 in Los Angeles, or New York (and hundreds of other cities) these licenses would sell for hundreds of millions, if not billions of dollars, for an eight-year period.

I am not proposing that we take away broadcast licenses, only that we auction them off as they expire. This would phase in the auction system over an eight-year period, and increase government revenues dramatically. This would cause a significant dent in our oversize federal deficit.

The Radio Act of 1927 established the principle that the radio spectrum belongs to the public, and that licensees (television and radio stations) have no property rights in them. Although the broadcast spectrum is licensed to companies and individuals, the license does not involve ownership or rights but the privilege of using that portion of the spectrum for a specific period of time.

During the 2012 election cycle, billions of campaign dollars went directly to television and radio stations. About one billion dollars was spent on media buys from radio and television stations for the presidential campaigns alone. This has given radio and television stations a virtual license to print money.

Radio and television stations will object, of course. They get something for nothing. Or as former presidential candidate Mitt Romney said, they got gifts, just like those on food stamps. But television and radio station owners are among the richest of America’s citizens, who certainly represent the upper 1% of society. Rupert Murdoch is one such beneficiary, as are CBS, ABC and NBC, all owners of multiple radio and television stations.

Until recently General Electric owned NBC. And we should not forget that General Electric, despite earning billions of dollars, has not paid federal income tax in many years.

If Congress is searching for easy money, radio and television stations should be in their target zone. Congress has the power, by amending the Radio Act of 1927 and the Federal Communications Act, to start auctioning off radio and television licenses to the highest bidders.

Congress should exempt PBS stations, college and community owned stations. A segment of the broadcast spectrum should be reserved for these public interest broadcasters.

Current station owners would still own their broadcast facilities, so each would have a leg up in the competition to buy a segment of the broadcast spectrum.

Radio and television stations are the old media. They still make lots of money, but they are old media. New media, like Google and Apple, are likely to be bidders for television and radio licenses because they are in need of new markets.

If we are going to stop corporate welfare, radio and television licenses are a good first step to level the playing field. Next on my list of corporate welfare to attack are the oil depletion allowance and farm subsidies. All of these are sacred cows, but we can no longer afford to preserve sacred cows when we are drowning in a sea of debt.

Joel Joseph is chairman of the Made in the USA Foundation, a non-profit organization dedicated to promoting American-made products. Email joeldjoseph@gmail.com.

From The Progressive Populist, January 1-15, 2013