By Mark Chastain
If Georgians want to see precisely how little sense most of the activities covered by the federal stimulus bill make, look no farther than the North Georgia mountains. Vice President Joe Biden was recently in Dawsonville to announce that he had decided to spend some taxpayer dollars on a project to “stimulate” our economy.
In fact, the announcement was that the federal government would launch a new telephone company in North Georgia. Unlike the existing phone companies in the state, this new phone company would be paid for with $33.5 million in taxpayer funds.
In this case, the federal government is going into “competition” with a private company that already provides jobs for more than 1,400 Georgians and paid tens of millions in state and local taxes last year. This federally funded company is competing in an area that does not even meet the minimum threshold for being “underserved” by existing telecommunications providers. As anyone who lives or travels in North Georgia will tell you, the region is anything but a languishing series of coal mining and textile towns where good phone service is impossible to come by.
In fact, 90 percent of the areas the Obama administration has labeled as underserved already are served by broadband, and the majority of those areas are served competitively by more than one private carrier.
The resulting organization is what is often referred to as a “Government Sponsored Enterprise;” basically, the technical term for “semi-private” company supported with tax dollars and competing with private companies that pay taxes. The most famous government sponsored enterprise in U.S. history is Fannie Mae, the government-funded home loan bank that bears a large share of the blame for feeding the subprime lending that almost destroyed our economy last year. One might think the federal government had learned something from that experience, but this grant shows that is not likely.
In this case, it is quite likely the government is doing something worse than simply wasting $33.5 million duplicating services. It is far from certain that the “Obama Telephone Company” in North Georgia will be able to continue operating into the future. In fact, in the highly competitive telecommunications space, it is a virtual certainty that if room had existed to support an additional phone company in the North Georgia mountains, private investors would have started one. The fact that this company can only function with massive subsidies from the federal government (i.e., taxpayers) should raise serious questions about its ability to remain operational over the long term (and make any homeowner or business owner think twice about ordering a here today, gone tomorrow service).
Consider the impact of spending those $33 million on something actually worthwhile. Last year, according to the Tax Foundation, the average Georgian had to work until April 12th before they earned a dollar for themselves. Before that, they were working simply to pay what they owed the government. Instead of their taxpayer dollars being used by the federal government to set up a company providing redundant service in competition against private companies, Georgians could have kept these funds for themselves and invested them to start businesses or used them to pay the bills. Or, if the dollars were needed for essential services, the same amount could have paid the salaries of more than 1,000 police officers or teachers.
Mark Chastain, Chairman of the Gilmer County Commission and a small business owner in North Georgia since 1995, holds a degree from in civil engineering technology. He wrote this commentary for the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (February 12, 2010). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.
By Mark Chastain
If Georgians want to see precisely how little sense most of the activities covered by the federal stimulus bill make, look no farther than the North Georgia mountains. Vice President Joe Biden was recently in Dawsonville to announce that he had decided to spend some taxpayer dollars on a project to “stimulate” our economy.
In fact, the announcement was that the federal government would launch a new telephone company in North Georgia. Unlike the existing phone companies in the state, this new phone company would be paid for with $33.5 million in taxpayer funds.
In this case, the federal government is going into “competition” with a private company that already provides jobs for more than 1,400 Georgians and paid tens of millions in state and local taxes last year. This federally funded company is competing in an area that does not even meet the minimum threshold for being “underserved” by existing telecommunications providers. As anyone who lives or travels in North Georgia will tell you, the region is anything but a languishing series of coal mining and textile towns where good phone service is impossible to come by.
In fact, 90 percent of the areas the Obama administration has labeled as underserved already are served by broadband, and the majority of those areas are served competitively by more than one private carrier.
The resulting organization is what is often referred to as a “Government Sponsored Enterprise;” basically, the technical term for “semi-private” company supported with tax dollars and competing with private companies that pay taxes. The most famous government sponsored enterprise in U.S. history is Fannie Mae, the government-funded home loan bank that bears a large share of the blame for feeding the subprime lending that almost destroyed our economy last year. One might think the federal government had learned something from that experience, but this grant shows that is not likely.
In this case, it is quite likely the government is doing something worse than simply wasting $33.5 million duplicating services. It is far from certain that the “Obama Telephone Company” in North Georgia will be able to continue operating into the future. In fact, in the highly competitive telecommunications space, it is a virtual certainty that if room had existed to support an additional phone company in the North Georgia mountains, private investors would have started one. The fact that this company can only function with massive subsidies from the federal government (i.e., taxpayers) should raise serious questions about its ability to remain operational over the long term (and make any homeowner or business owner think twice about ordering a here today, gone tomorrow service).
Consider the impact of spending those $33 million on something actually worthwhile. Last year, according to the Tax Foundation, the average Georgian had to work until April 12th before they earned a dollar for themselves. Before that, they were working simply to pay what they owed the government. Instead of their taxpayer dollars being used by the federal government to set up a company providing redundant service in competition against private companies, Georgians could have kept these funds for themselves and invested them to start businesses or used them to pay the bills. Or, if the dollars were needed for essential services, the same amount could have paid the salaries of more than 1,000 police officers or teachers.
Mark Chastain, Chairman of the Gilmer County Commission and a small business owner in North Georgia since 1995, holds a degree from in civil engineering technology. He wrote this commentary for the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (February 12, 2010). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.
