Response to several questions about proceeds from certain auctions that have been held or will be held by the Federal Communications Commission (FCC). Those auctions allow commercial firms to acquire the right to use certain portions of the electromagnetic spectrum for communications.
To briefly summarize some of the major points mentioned below:
The FCC is planning to hold a two-sided auction—known as an incentive auction—that will provide an opportunity for television broadcasters to voluntarily sell their spectrum rights and for wireless firms to buy licenses to use those frequencies.
Because the FCC has not conducted such an auction before, it is difficult to predict what the net proceeds of the auction will be. The Congressional Budget Office estimates that the net proceeds will probably be between $10 billion and $40 billion, with an expected value of $25 billion, the middle of that range.
Under current law, CBO expects that most of those receipts will be deposited in the general fund of the Treasury and will be applied to deficit reduction.
CBO expects that most of the receipts will be recorded in the budget about a year after the start of the auction.
To the extent that the actual proceeds differ from CBO’s estimate, future budget deficits will be larger or smaller than CBO currently projects, and those differences will be incorporated into the agency’s baseline projections.
Allocating the proceeds of the incentive auction to a particular fund in the Treasury would not change the amount of projected receipts and would have no effect on the budget unless agencies were authorized to spend any money credited to that fund. Legislation that provided new authority to spend the proceeds would increase the deficit.
