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CNN Highlights Government's Digital 'Snafu'

Chances are you’ve seen the PSAs telling you how to prepare for the end of analog television broadcasting on Feb. 17. If you still own an analog TV, the ads tell you, you must purchase a converter box and attaching it to your existing set.

But it seems an “oversight” resulted in empty pockets for the government program designed to subsidize that cost by supplying converter box coupons for American households.

That’s right. According to CNN’s “American Morning” co-host John Roberts Jan. 7, “A government program designed to help people switch to digital television is out of money this morning. More than a billion dollars had been set aside to help people buy converter boxes that would let old TVs – the ones with antennas or even those old rabbit ears – to pick up new digital signals.”

 Roberts asked CNN’s personal finance editor Gerri Willis how the program went broke. Willis said, “it looks like a good old-fashioned government snafu.”

“A mistake, an error,” Willis said. “... the [Commerce] department didn’t ask for the money until Dec. 24 when Congress was on break so they didn’t get the cash.” According to her report, the program was supposed to provide coupons for the 70 million “needed” boxes to make the digital switch. 45 million have already been requested, but the remaining 25 million people will have to join the waiting list on www.DTV2009.gov.

Willis’ report didn’t mention the previous government incompetence on the issue that led to the fiasco.

Cato Institute explained the root of the problem – “the misguided giveaway of $10-$100 billion worth of free spectrum to the broadcast industry” – in a 2004 TechKnowledge article. The subsidization of converter boxes is just the end result of government interference in the markets.

In 2005, James Gattuso at The Heritage Foundation criticized the taxpayer subsidy for digital converters, saying “subsidies are the wrong thing to do. There is no federal entitlement to analog television, nor should there be one. Viewers have been on notice of the transition for nearly a decade, and there is no reason for those who have prepared for it to subsidize those who have not.”

Gattuso also criticized the cost – between $1-2 billion – which exceeded GAO estimates because the plan will provide the set-top boxes to everyone, instead of only those with financial need. Most outrageous of all, “even households with cable and satellite subscriptions would be eligible,” according to his report.

Willis agreed with the subsidies in her report, claiming that if the government is going to make $20 billion from the digital conversion they should be able “to pay for our converter boxes.”