Democratic Stimulus Bill Includes $650 Million for TV Converter Coupons

Last week, the House Democrats unveiled their version of the $825 billion economic stimulus package.

The proposed bill provides billions of dollars for roads, schools, global warming research, information technology upgrades, food stamps, and unemployment insurance. However, it also allocates more than half a billion dollars for digital-to analog converter box coupons. From the report accompanying the bill (pdf):

Recovery funding: $650 million

Funding provides for additional implementation and administration of the digital-to-analog converter box coupon program, including additional coupons to meet new projected demands and consumer support, outreach and administration.

That’s a lot of money for coupons. To put that figure in perspective, that’s more than last year’s entire budget for the Occupational Health and Safety Administration (OSHA).

Analog television broadcasts are set to cease Feb. 17, when TV stations drop their analog simulcasts as part of the Congressionally mandated switchover to digital television. The change won’t affect digital televisions or analog sets hooked up to cable or satellite. However, consumers with analog TVs and “bunny ears” will need to buy a digital-to-analog converter box in order to continue receiving free programing.

Even before the stimulus, American households could apply for up to two $40 coupons for the purchase of converter boxes through a program administered by the U.S. Department of Commerce. The units typically sell for about $40-$70 each. As of May 2008, 10 million households had already requested coupons, according to the U.S. Census Bureau. The deadline to apply for a coupon is March 31.

In one sense, the converter box subsidy is a laudably progressive program. By law, all TVs sold in the United States since 2005 must have digital tuners. So, the only people who will benefit from the coupons are those who have older TVs, no cable, and the inclination to apply for their coupons instead of replacing their sets. By far the greatest beneficiaries will be poorer and older Americans, who are less likely to have digital television or cable.

On the other hand, the government has already spent $1.34 billion on the converter box program, according a story in the Washington Post last week. The government has struggled to get coupons out to applicants. The Post reports that 1.7 million people who requested coupons have yet to receive them, and are unlikely to get one before the Feb. 17 transition date.

My question is this: What are they going to spend $650 million additional stimulus dollars on, if there are fewer than two million people on the waiting list, and less than three months left to apply for the coupons?

Only 13 million households in the United States relied exclusively on analog TV without cable, according to a Nielsen study published in early 2008. There may be even fewer today. If 10 million have already applied and all but 1.7 million of those applicants have already gotten their coupons, that means there are fewer than 5 million American households at risk of losing their free TV reception next month. The converter coupons have been available for over a year. So it’s probably fair to assume that a good chunk of the eligible non-applicants are never going to apply, perhaps because they’ve already upgraded their TVs, or because they just aren’t interested. But even if every one of those nearly 5 million households applied for the maximum of two $40 coupons — an unlikely scenario — the coupon program would have a total price tag of less than $400 million. The numbers don’t add up.

Spending an additional $650 million dollars to extend the lives of old televisions seems like a misallocation of resources, relative to other potential targets for stimulus spending. Besides, in terms of “bang for the buck,” isn’t it counterproductive to spend stimulus money on something that will discourage consumers from buying televisions and, you know, stimulating the economy?