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The Tech Agenda Under Democratic Rule
by Heather Greenfield
It has been a year since Democrats won control of Congress in an election and began debating their agenda and priorities.
Aside from concern about trade issues, the technology industry for the most part welcomed the new Congress. They knew most Democrats supported an innovation agenda and a continuation of the moratorium on taxes to access the Internet. But they were mostly hoping the new Congress would signal a new era of cooperation so that their issues, which tend to have bipartisan support, could get to the floor and be passed.
At this time last year, now-House Speaker Nancy Pelosi, D-Calif., and President Bush had been touting measures to make the United States more globally competitive for more than a year. Their ideas included doubling the funding for many federal research programs, boosting mathematics and science education funding, authorizing more H-1B visas for skilled foreigners, and renewing the research and development tax credit.
Many of those ideas faced obstacles under Republican congressional rule in 2006. Basic research funding increases were enacted only as part of a stopgap spending bill for fiscal 2007. A comprehensive immigration measure that included more H-1B visas and green cards was too controversial to get a vote. Math and science education measures also got stuck amid controversy in a broader bill. And the R&D credit was finally renewed retroactively -- after failing as part of a bill with language to also cut the estate tax and boost the minimum wage.
A year later, the technology industry is praising the 110th Congress for moving the innovation agenda closer to passage. But with just weeks to go in the legislative calendar this year, two of the four competitiveness initiatives remain undone -- visas and the R&D credit. And the two items that were enacted -- basic research, and math and science education -- remain unfunded.
High Points: Innovation, Taxes And Trade
In August, President Bush signed a bill, H.R. 2272, that authorizes funding for math and science education programs, scholarships and graduate fellowships. It also seeks to double funding for the government's basic research.
At a news conference last week to commemorate Democrats' electoral success in 2006, Pelosi praised Congress' work over the past year. "We are striving to restore the American dream, to make our economy stronger and fairer," she said. "We passed the [America] Competes Act, our commitment to competitiveness, to keep America number one."
Bill Archey, CEO of the tech group AeA, said among the biggest high-tech lobbying issues now is getting full funding for the competitiveness programs Congress and Bush authorized. "We're fairly optimistic that's going to happen," Archey said.
Ed Black, president of the Computer and Communications Industry Association agreed. "This Congress is much more amendable to the value of science and technology to the economy," he said. "That's a plus."
Congress also is earning praise because of last month's agreement to extend the Internet tax moratorium seven years -- more than double the number of years under previous effort. "We were among those arguing for it to be permanent, but we'll take seven years," said Joe Tasker, an Information Technology Association of America lobbyist. "Having a seven-year moratorium is important. ... This should be a good thing to spur innovation."
He also is "encouraged" by the House's passage of patent legislation, though pharmaceutical companies and some tech companies oppose it, depending on their business model. The Senate has not yet debate patent overhaul.
Last week's House vote for a Peru free-trade agreement is another high point for techies. "Tariff elimination will fuel demand for our members' products in Peru, where broadband and wireless market segments are growing at double digit rates," Telecommunications Industry Association President Grant Seiffert said. Tasker added that the vote "creates momentum [for trade] and keeps the momentum going." Tech companies are eager for that momentum to spur deals with Colombia, Panama and South Korea.
Bohannon said cyber-crime legislation that would close prosecution loopholes is another highlight of this session of Congress. The Senate Judiciary Committee has approved a bill, S. 2168, and the House is expected to act on the issue later this year.
Low Points: R&D, H-1Bs And Net Neutrality
There have been some disappointments, however. "We obviously felt this was going to be a good Congress because of what Pelosi said," said Ralph Hellman, a lobbyist for the Information Technology Industry Council. "But it's been a tough year; nothing is getting through."
Josh Ackil, a lobbyist for ITI, added: "The problem is some of our issues are being held up in larger issues. We're tired of hearing, 'We're with you, but we can't do anything.'"
Most techies are optimistic about enactment of another bill to extend the R&D credit. On Friday, the House endorsed a one-year extension as part of a broader tax measure, H.R. 3996. It also proposes changes to the alternative minimum, which seeks to ensure that even wealthier Americans pay some taxes regardless of their write-offs.
Ackil said ITI prefers an R&D expansion and ideally an extension for two years, but he said strict pay-as-you-go rules in the House that require revenue offsets for new federal expenses make it a challenge to get any tax code changes. The R&D tax credit is estimated to cost $6 billion.
The biggest frustration for techies in the 110th Congress, though, has been the failure to authorize more H-1B visas and green cards.
Ackil said the tech industry was the first to back comprehensive immigration changes. Once a comprehensive bill was considered too comprehensive to move, techies were hoping to be first in line for a short-term fix to boost visas for highly skilled workers. "We've been completely left out," Ackil said.
Another area of disappointment for some is the lack of a law to mandate equal treatment of high-speed Internet content. Without such a network neutrality law, backers say, broadband providers could charge preferred customers more for faster service.
"It would seem a Democratic Congress should be oriented to be the defenders of the Internet consumer," Black said. He pointed to recent controversies over big companies like Comcast and Verizon Communications allegedly blocking or censoring content. "If they're able to do this much damage when they're trying not to, imagine what they'll do if they feel free," Black said.
What To Expect Over The Next Year
So what do tech industry officials want to see happen before the 110th Congress ends a year from now? Tasker said that having the whole innovation agenda is at the top of the list for most.
There are varying opinions about what is realistic in the remaining few weeks this year. Most tech observers put competitiveness, a Senate vote on Peru, the R&D tax credit and cyber-crime legislation on the short list and some remain optimistic about visas. Bohannon added patent overhaul to the list, while others expect that to happen early next year.
"Next year our expectations diminish quite a bit," Archey said. He said that is not because of who controls Congress but because of the realities of trying to achieve legislative accomplishments in a presidential election year. By April, Archey said, attention will be focused on politics.
But some observers remain optimistic. "A lot of people are saying not much will get done because of the elections, but I think our issues are above that fray," Ackil said.
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