Budget Memo on the Act

Title Memorandum from Wilfred R. Rommel to Douglass Cater

Creator Wilfred H. Rommel

Date February 7, 1965

Source Memorandum, Wilfred R. Rommel to Douglass Cater, 2/7/67, EX ED 5, WHCF, Box 24, LBJ Library.



Subject: Tentative comments on some key points in the Carnegie ETV proposals

We have made quick checks as to the feasibility of three key recommendations of the Carnegie ETV proposals. Pending a more fully considered review of the details, our tentative conclusions are as follows:

1. Establishment of a Corporation—The proposal: Establish a federally chartered, nonprofit, nongovernmental corporation to receive and disburse government and private funds for extension and improvement of public television.

It is possible and suitable to establish a federally chartered corporation to perform ETV support functions as suggested by the Carnegie study. However, modifications might be considered to clarify the relationship with the Federal Government. If the Corporation is to be fully independent, as proposed by the Commission, it may be preferable not to have a board appointed by the President with Senate confirmation. On the other hand, it may be desirable to bring the Corporation closer to the Government so that there can be a certain amount of Executive and Congressional oversight. Various gradations are possible here.

2. Financing—The proposal: Establish a manufacturer’s excise tax on television sets beginning at 2% and rising to 5% producing revenues to be spent through the Corporation beginning at $40 million and rising to a level of $100 million annually.

The excise tax is opposed by Treasury as discriminating to a particular industry, regressive and not related to benefit. But there are other possibilities for funding that would be independent, to varying degrees, from annual appropriation procedures as sought by the Commission: for example, (1) sale of obligations with Federal guarantees for repayment of both interest and principle; (2) an automatic (“permanent”) appropriation for each year that would be reviewed by the Congress only at the time of initial authorizations; or (3) establishment of a trust fund with revenue appropriated annually from the general fund according to some formula (based on such measurable indices as sales of commercial advertising of TV; total number of sets owned, etc.). Again, various gradations of Federal review can be provided.

3. HEW grants for basic operation—The proposal: Authorize HEW grants to support basic operations of all stations beginning at a cost of $6 million in 1968 and rising eventually to $57 million (exclusive of support for facilities).

Budgeting and accounting in educational TV stations is fairly well standardized so that it is possible to segregate out “technical” services from “programming.” Thus, the Administration could, if it wished, propose an HEW grant for station support that could be justified as virtually free from “control” of program.

As agreed in the meeting in your office, this preliminary assessment is limited to feasibility. At this point, our comments are not addressed to the desirability of the Carnegie proposals or to questions of budgetary priorities.

Wilfred H. Rommel
Assistant Director for Legislative References