Taxes
Bill Would Make Net Tax Ban Permanent
     Senate Commerce Committee Chairman John McCain, R-AZ, appealing to the public's anti-tax sentiment, introduced legislation that would make a three-year moratorium on Internet taxes permanent. In addition to the moratorium, the unnumbered legislation would clarify that sales and use taxes on e-commerce transactions are prohibited and would forward a sense of the Senate to have the United States Trade Representative encourage the World Trade Organization to make the Internet a tax-free zone worldwide. Reaction was mixed to the announcement. The National Governors' Association Economic Development and Commerce Group opposes a McCain's move, said director Tim Masanz, while a congressionally-appointed commission is in the midst of studying the issue. "It's too early to make the decision until the commission acts," he said. Masanz also worried that a provision in the bill that would prohibit sales and use taxes on electronic commerce transactions could thwart localities' taxing authority.

Taxes
Clinton Tax Veto Hurts Industry R&D Hope
     President Clinton delivered on his long-promised veto of a major tax-cut bill, deflating the high-tech industry's hopes for a multi-year extension of the research and development tax credit. In remarks prior to his veto, Clinton said the $792 billion tax-cut bill backed by congressional Republicans was "too big, too bloated, places too great a burden on America's economy." Still, the Clinton Administration has supported some of the provisions included in the tax cut bill, such as the research and development tax credit. The vetoed bill, H.R. 2488, included a five-year extension of the tax credit, a high-tech industry priority.

Export
WH May Make More Export Changes
     Commerce Secretary William Daley said the Clinton Administration could announce another change to its computer export controls as soon as January, even though some of the changes announced in July have yet to go into effect. At the same time, Daley urged Congress to move as quickly as possible on its review of some of the most recent changes the administration announced loosening computer export controls. Congress has six months to review some changes to controls on computer exports to about 50 "Tier Three" countries, such as India, China, Russia and Israel.

Export
Group Pushes WH For More Export Relief
     While praising the White House for providing major encryption export relief, a presidentially appointed committee that provides the government with advice on export issues urged President Clinton to go even further in relaxing its encryption controls. The President's Export Council, which includes both industry and government members, plan to send a letter to the president arguing for the need for the Clinton Administration to provide even more export relief to ensure the widespread use and availability of encryption for enhancing the security of electronic commerce transactions. The high-tech industry appeared generally pleased with the administration's move.

Intellectual Property
Ashcroft: Export Controls Equal To Property Theft?
     Controls on the export of strong encryption products deprive software makers the full value of their intellectual property and individuals should be compensated for this "property" that the government is taking from them, Sen. John Ashcroft, R-MO, argued in a speech that defended total decontrol of cryptography. Speaking to the conservative Heritage Foundation, Ashcroft raised a new argument from Constitution's Fifth Amendment, which declares that no person has be deprived of property "without due process of law; nor shall private property be taken for public use, without just compensation." But extending that argument to the intellectual property sphere may raise a new set of issues. Meanwhile, the administration said it has not changed its policy with respect to the export of source code. The recent court case, Bernstein v. U.S. Department of State, successfully raised First Amendment objections to the government's policy on source code.

Export
Senate Banking Reauthorizes Export Act
     After months of negotiations and draft changes, the Senate Banking Committee approved legislation to reauthorize the law governing the nation's export control process. The bill, approved on a 19-0 vote, would reauthorize the Export Administration Act, which expired in 1994. The legislation, which could go to the Senate floor in October, attempts to overhaul the current export control system by ensuring that mass market and commodity items are not burdened with unnecessary export restrictions, and aims to put more focus on exports that present a serious national security threat. It addresses an industry goal by including a provision that would decontrol an item once it has been determined to be a mass-market product or is subject to foreign availability.

Crime
Cybercrime Sees Congressional Crack-down
     Congress is trying to make sure that state and local police forces are not cut out of tackling cybercrime, and two separate bipartisan groups of lawmakers have this week circulated "Dear Colleague" letters encouraging local law enforcement to take a higher profile in guarding against computer hacking and on-line child exploitation. With Rep. Matt Salmon, R-AZ, signing on to a companion version of the Computer Crime Enforcement Act (S. 1314 and H.R. 2816) sponsored by Sen. Patrick Leahy, D-VT, the legislators circulated a letter attempting drum up support for the measure, which would authorize $25 million to state police agencies to fight hackers. The money would be disbursed through Department of Justice grants that could be spend on education, training, or enforcement programs.

On The Hill
IT Plan Snubbed In Senate Approps
     The Senate Appropriations Committee has expressed concern about the Clinton Administration's new information technology research initiative, declining to provide any money for the project in its spending bill that funds the National Science Foundation, the lead agency on the White House proposal. Despite its criticism of the administration's "Information Technology for the 21st Century" proposal, the committee did provide an increase of $100 million for ongoing computer and information science and engineering activities at NSF in the panel's fiscal year 2000 veterans affairs, housing and independent agencies spending bill, S. 1596, which it approved.

Campaigns
Bush Pushes R&D Funding
     Texas Governor and Republican presidential candidate George W. Bush declared he would boost the defense research and development budget by $20 billion over five years to ensure the U.S. continues to lead on military technology. "The transformation of our military will require a new and greater emphasis on research and development. So I will also commit an additional $20 billion to defense R&D between the time I take office and 2006," Bush said in a speech at The Citadel.

Y2K
Y2K Glitches Expected Locally, Globally
     While no major national meltdown is expected to coincide with the 2000 date change, local glitches and global uncertainties could create some problems, the Senate's top Y2K watchers — Sens. Robert Bennett, R-UT, and Christopher Dodd, D-CT — declared 100 days from the deadline. "Y2K problems will not be spread across the nation, they will occur across the street," Bennett said. "If you stockpile information, you will develop your own contingency plans and you won't panic." In the Senate Special Committee on the Year 2000 Technology Problem's final assessment, the health care industry still poses the greatest risk for Y2K problems in the United States.

Telecom
FCC Over The Hill, Former AG Says
     The Federal Communications Commission has outlived its usefulness, and its remaining enforcement duties should be turned over to the Justice Department, GTE Vice President and General Counsel William Barr told technology consultants and Northern Virginia law students. Barr, who served as attorney general under President Bush, said the Justice Department is better suited to deal with the growing consolidation of the telecommunications industry through antitrust regulations. He said the FCC is spinning its wheels on trying to force the Baby Bells to open their local telephone markets, rather than looking forward and addressing the potential growing monopolies in Internet services.

Antitrust
Microsoft Squashed Competition, DOJ Argues
     The Department of Justice's antitrust trial against Microsoft wrapped up this week. Sometime before Thanksgiving, Judge Thomas Penfield Jackson is expected to issue his findings of fact in the case, with a verdict expected to follow shortly after. Microsoft exploited a durable monopoly in operating software to successfully crush Netscape, its only viable competitor in the market for Web browser software, attorneys for Justice Department and 19 state attorneys general said in their final arguments of the landmark antitrust case against the country's most valuable business. Microsoft countered by saying that consumers have not been hurt by its practices.

Antitrust
Microsoft Attorney Says Foreign Windows Users Overcharged
     David Boies, the government's lead attorney on the Microsoft suit, told British newspaper The Observer that non-American Windows customers have been overcharged and may be eligible for compensation, drawing criticism from a bipartisan group of Congress members including Senate Majority Leader Trent Lott, R-MS. Lott and 10 other members plan on sending a letter to Attorney General Janet Reno requesting she look into whether Boies' comments were "inconsistent" with Justice rules prohibiting Justice officials to make predictions about rulings.

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