Though the dust has settled just a bit in the fight over who should pay how much for the eRate, the battle is by no means over. Rep. Bliley, R-Va., threatened as much with his reaction to the decision by the Federal Communications Commission (FCC): “There is a right way and a wrong way to implement [the eRate]. The FCC has chosen the wrong way. If the courts strike down this illegal program, schools may be left holding the bag.”
But a plan being suggested by Sen. Conrad Burns, R-Mont., may provide a solution. Burns wants to redirect an existing 3 percent excise tax on telephone service to fund the eRate.
The telephone tax was instituted in 1914, when telephone service was considered a luxury, to help finance World War I. It was kept in place to combat the budget deficit. The tax generated $4.5 billion for the federal treasury last yearmore than double the cost of the eRate.
Burns, the communications subcommittee chair, first proposed his solution on June 3, and it has spurred quite a bit of interest on Capitol Hill. As Burns said in his opening remarks at the Communications subcommittee hearing June 10, “World War I should be paid for by now, and phones are certainly no longer a luxury item.”
Burns wants to cut the excise tax in half and use the remaining half to fund the eRate and the rural health care program. His proposal would fund the eRate at its current demand without collecting the money from telcosand with a savings to consumers.
“World War I should be paid for by now, and phones are certainly no longer a luxury item.”
All five FCC commissioners expressed interest in Burns’ plan during the June 10 hearing, though Kennard and FCC Commissioner Susan Ness said they did not want to put the eRate on hold while Congress considers the new plan.
“I would hope that we would be able to continue with our program, pending a solution such as that,” Ness said.
Meanwhile, House Telecommunications subcommittee chairman Billy Tauzin, R-La., is planning to introduce similar legislation. Like Burns’ idea, Tauzin’s proposal would cut the telephone tax in half to fund the eRatebut it would transfer oversight of the program from the FCC to the Department of Education. The money would be sent as block grants to the states for them to administer.
Tauzin faces opposition from his Republican colleagues in the House, who some observers say want to keep fueling criticism of the eRatewhich Republicans call the “Gore tax”to gain seats in an election year. Tauzin is likely to argue that eliminating the program altogether would be unwise and would exacerbate the image of Republicans as being anti-education.
“Our interests are simply this,” an aid to Tauzin told the White House Bulletin. “The cat’s already out of the bag as far as the program goes. It’s in place, and the question is, are we going to allow it to grow unchecked, or are we going to place some kind of institutional controls on the size and the scope of the program?”
Aside from Republican leaders, feedback from other members of the House on Tauzin’s idea has been “extraordinarily positive,” the aid said. “There are a number of rank and file who are lining up behind us. And I think if we introduce the legislation, we’ll get 50 co-sponsors almost immediately.”