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Tech Policy In The 109th Congress
by Winter Casey
The 109th Congress that ended a little more than a week ago had both high points and disappointments for the technology industry.
Industry was thankful for the eleventh-hour extension of the research and development tax credit. However, techies were disappointed that the credit was not made permanent and that tech-related issues ranging from competitiveness and telecommunications law to patent reform and privacy protection saw no substantive action.
As industry groups craft their agendas for the newly Democratic-controlled 110th Congress that begins in January, many of the same issues can expect renewed focus, so a closer look at what the 109th Congress did and did not accomplish could be useful. Here is that recap:
Taxes
Many in the technology sector-- including the Business Software Alliance, National Association of Manufacturers, Semiconductor Industry Association, and Software Finance and Tax Executives Council -- were thrilled by the two-year extension of the R&D tax credit. That was the high point of the 109th Congress on the tax front, however.
The Association for Competitive Technology, Computing Technology Industry Association and Information Technology Association of America, said they would like to see the tax credit made more accessible for small businesses. In the 110th Congress, industry will continue to push for the credit to be made permanent or, at the least, extended once more.
Michael Wendy of CompTIA also said his group wanted tax credits for information technology training, as well as tax deductions for health information technology purchases by small providers. The bill on IT training, H.R. 4325, never moved, nor did the measure to grant a health IT tax break, H.R. 4641.
Efforts this year to make permanent a ban on state and local taxes on Internet access also failed to culminate. Two Senate panels added language on that issue to unrelated bills, but those measures did not move beyond committee. A temporary Internet tax moratorium was started in 1998, and it is set to expire next October. Sens. John Sununu, R-N.H., and Ron Wyden, D-Ore., are expected to address the matter in 2007.
ITAA chief Phil Bond said techies also are concerned about a possible attempt in the 110th Congress to move up the effective date of a tax-withholding requirement of 3 percent for any government contractors, such as those providing IT services.
Telecom
The two-year quest for sweeping telecommunications reform died in the Senate, in large part because of the battle over network neutrality regulations to prevent the owners of high-speed Internet networks from treating content providers differently.
The House passed its telecom bill, H.R. 5252, after defeating attempts to include stronger net neutrality language, but Senate Commerce Committee Chairman Ted Stevens, R-Alaska, never mustered the votes to ensure floor passage of his version.
One significant piece of telecom legislation did receive action, however. The 109th Congress cleared a bill, H.R. 4709, that targets Internet-based brokers who fraudulently obtain customers' telephone records.
The practice, known as "pretexting," first came under fire after the author of a Web log obtained the records of a prominent politician to prove a point. The legislation received another boost when the computer maker Hewlett-Packard acknowledged obtaining the records of board members, employees and journalists in an attempt to expose corporate leaks.
Privacy
On the privacy front more broadly, some techies expressed disappointed that little progress was made in 2007.
Concerns about data security heightened in the spring after the Veterans Affairs reported the theft of a computer laptop with the personal data of millions of soldiers and veterans. More missing and stolen laptops by government agencies, universities and businesses were reported throughout the year. Late this year, Congress cleared a bill, S. 3421, to address the concerns at VA.
But lawmakers did not reach agreement on broader data-security legislation that would apply to industry. Microsoft said it plans to continue to work with members in the new Congress and hopes to see some movement. ITAA's Bond said he expects the issue "will get more attention with the Democratic majority," which could be positive but must be done carefully.
ITAA said it is seeking legislation on the subject that would achieve a "balance between strong protections versus overly burdensome" rules.
Competitiveness
The broad term "competitiveness" has emerged as a hot point of discussion both in the United States and in other parts of the world. Still, the 109th Congress produced little on this agenda.
In the United States, the agenda includes ideas such as increasing the availability of H-1B visas for highly skilled foreign workers, improving mathematics and science education, and increasing funding for basic scientific research.
Although the Senate this summer passed a bill, S. 2611, that included changes to the systems for allocating H-1B visas and employment-based green cards, the legislation never made it into law.
"Without an increase in the number of H1-B visa and green cards issued each year, our nation loses the opportunity to benefit from the contributions of highly educated and skilled workers from around the world," Jack Krumholtz, the managing director of federal government affairs at Microsoft, said in a statement, adding that industry hopes the next Congress will act quickly.
CompTIA also favored reauthorization of the so-called Workforce Investment Act with a more modern focus on the role information technology plays in today's workforce, and a greater focus on training and certification with federal funds available under the law. Both the House and Senate passed bills, H.R. 27 and S. 1021, but no agreement was reached.
Techies said the next Congress needs to turn the favorable rhetoric about maintaining America's competitiveness into the actual passage of legislation.
The Rest Of The Unfinished Agenda
The 109th Congress proved to be a disappointment on other fronts, too. Patent reform was a hot subject throughout the two-year congressional cycle, with various hearings on the subject, but no legislation made it into law.
The inaction has left industry looking toward the 110th Congress. "We think it's positive sign that they're showing signs of doing something meaningful on patent reform," the computer manufacturer Dell said. The goals of patent reform advocates include fostering the efficiency of the Patent and Trademark Office and improving patent quality.
ACT, Dell, ITAA, the Information Technology Industry Council, ITAA and the Information Technology and Innovation Foundation also were among the groups that had hoped for enactment of legislation to drive the adoption of health information technology. The Bush administration took some actions independently to foster health IT, but House and Senate lawmakers never reached agreement on their competing bills.
All of the problems with e-voting machines this year also failed to spur action on a bill, H.R. 550, to mandate paper receipts of electronic votes for auditing purposes.
CompTIA voiced disappointment that a bill calling for market mechanisms and tax credits to encourage e-recycling did not become law. Wendy expects an e-waste law could get through under the Democratic-controlled Congress in 2007.
And despite congressional attention to the alleged role of U.S. technology companies in abiding by censorship policies in other countries, legislation to address that issue, H.R. 4780, never made it out of subcommittee.
Homeland Security
The 109th Congress also struggled to pass the annual appropriations bills, a fact that was abundantly evident this year. Rather than pass the separate bills for fiscal 2007, the Republican-controlled Congress pushed through a short-term spending measure that will fund the government into early next year, when Democrats are in control.
One of the few annual bills they did pass, however, covered the Homeland Security Department, and that legislation, H.R. 5441, includes funding for several tech-related efforts.
The new law includes money to begin converting the US-VISIT system for tracking foreign visitors into a system that can collect 10 fingerprints instead of two. The system screens foreigners for criminal or terrorist connections using their biographical and biometric data.
The spending statute also includes funding to integrate technology, personnel and infrastructure at U.S. borders. Another bill, H.R. 6061, authorizes the Homeland Security Department to build a virtual fence along part of the southern U.S. border.
Other security-related actions in the 109th Congress:
-- Pushed back the deadline for issuing new passport cards until June 2009 so the department can develop radio-frequency identification technology for the cards;
-- Will require Homeland Security to test cargo-scanning technology at three foreign ports;
-- Reorganized the Federal Emergency Management Agency in response to Hurricane Katrina in 2005, including provisions for emergency communications;
-- And will require states to modernize their driver's licenses and ID systems according to new federal standards by a 2008 deadline.
Chris Strohm contributed to the security section of this story.
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