Clinton Budget Proposal Includes Big Increases for Agencies Which Regulate or Subsidize High-Tech

(February 8, 2000) The Clinton Administration released its budget proposal for Fiscal Year 2001 on Monday, February 7. This budget proposes that agencies which regulate or subsidize computer and Internet activities receive big increases.

The amount budgeted for salaries and expenses for various agencies would rise significantly:

• Antitrust Division of the Department of Justice -- 28.2%.
• Federal Trade Commission -- 51.5%.
• Federal Communications Commission -- 12.9%.
• NTIA -- 85%.

The number of full time employees in each of these agencies would also increase, except at the FCC, where it would remain constant.

The proposed budget would also greatly increase spending on high tech research and development and grant programs:

• It includes huge increases in funding for NTIA programs relating to the "digital divide".
• It also includes a 12% increase in the NIST budget.

The table below sets out data on salaries and expenses and the number of full time employees at the Antitrust Division of the Department of Commerce, the Federal Trade Commission, and the Federal Communications Commission for the current fiscal year, and the Clinton administration proposal for fiscal year 2001.

The Department of Justice's Antitrust Division is responsible for enforcement of federal antitrust laws. Under the leadership of Assistant Attorney General Joel Klein it has taken an increasingly interventionist role in regulating businesses.

Its most public cases involve Microsoft. However, it also plays a major role in reviewing mergers of companies involved in telecommunications, computer and Internet operations.

The proposed budget describes its role as follows: "The Antitrust Division administers and enforces antitrust and related statutes. This program primarily involves the investigation of suspected violations of the antitrust laws, the conduct of civil and criminal proceedings in the Federal courts, and the maintenance of competitive conditions."

While the proposed budget for the Antitrust Division includes a 28.8% increase in funding for salaries and expenses, this same budget document does not project any significant increase in the Division's caseload. It states that there were 410 "cases and investigations" at beginning of FY 1999. It estimates that at the end of FY 2000, there will be 412 pending cases and investigations. It estimates that at the end of FY 2000, there will be 413 pending cases and investigations.

The caseload is not increasing. The average amount of money that the Antitrust Division wants to spend on each case is increasing.

The Federal Trade Commission is also taking an increasingly interventionist role in enforcing its antitrust statutory authority, as evidenced by its recent action against Intel. It seeks a 51% increase in funding for salaries and expenses.

However, in addition to enforcing competition laws, the FTC also enforces consumer protection laws. It has been devoting more and more of its resources to policing fraud on the Internet. Also, all of the bills pending in the Congress that would institute federal regulation of online privacy would give the FTC enforcement authority.

The Federal Communications Commission is the federal agency which tightly regulated telecommunications companies, until passage of the Telecommunications Act of 1996 ushered in deregulation. Ironically, while the FCC's statutory mandate is to deregulate, it seeks a 12.9% increase in funding.

Moreover, some significant new operations of the FCC, such as the e-rate program, are run by non-profit corporations which are controlled by the FCC. These operations do not appear in the just released budget proposal.

The proposed budget also would greatly expand funding for research and development and subsidizing Internet access and computer ownership.

The Fiscal Year 2001 budget proposal includes a huge increase in funding for the National Telecommunications and Information Administration (NTIA), to be spent largely on programs related to the "digital divide".

The budget proposal reflects the NTIA's new commitment to closing the gap between those groups which have higher rates of access to information technologies, and those which have lower rates of access. Studies performed by the NTIA have shown that higher percentages of Asians and whites have Internet access than hispanics and blacks. These studies have also shown gaps based on income level, and on urban/rural classification.

The NTIA has heretofore been the office within the Department of Commerce which allocates spectrum, and which speaks for the administration on telecommunications matters, especially before the FCC and the Congress. The FY 2001 budget proposal would begin the transformation of the NTIA into a universal Internet service agency.

The budget proposes creating a new $50 Million grant program titled the Home Internet Access Program. Its purpose is to provide low income people with connections, training, and support.

The budget would also increase the level of funding for Technology Opportunity Program (formerly called TIIAP) grants from $15.5 Million to $45.1 Million. This program provides grants to state and local governments, non profits, and tribal entities for the purpose of extending information technologies.

Congress reduced the level of funding for TIIAP grants from FY 1999 to FY 2000. Many Members of Congress are openly hostile to the program.

The proposed budget includes a modest increase in salaries and expenses at the Patent and Trademark Office (from $755,000,000 to $783,843,000).