Special Report -- The 21st Century Economy -- Keeping Growth Strong
A CRASH COURSE FOR CONGRESS
Lawmakers plunge into high-tech issues and shatter some old political alliances
They make unlikely dance partners indeed. Arrayed on one side of Washington's legislative ballroom are the brainy and impatient yet insular entrepreneurs of America's high-technology corridors. Eyeing them nervously are the congenitally cautious, technologically challenged, legalese-spouting politicians who call the tunes on Capitol Hill.
Slowly, awkwardly, and with much squashing of toes, Silicon Valley techies and Washington pols are learning to do the box step. Their uneasy embrace is born of necessity. The defining issues of the Industrial Age--the rise of trusts, the battle to end child labor and codify workers' rights, the regulatory protections spawned by the consumer movement--have faded. In their place: a new set of challenges that reflect the Information Age. Crotchety lawmakers who still think that automated floor voting is an electronic marvel are being forced to grapple with issues such as Microsoft Corp.'s market dominance, data encryption, V-chips, online privacy, and Internet taxes.
Add to the mix debate over trade expansion, immigration, and research funding, and "this is not your grandfather's economy anymore," says Republican pollster Kellyanne Fitzpatrick. "Members of Congress are being asked to make decisions on issues that have not been on their radar screen politically." The new calculus will grow more complex as the nation moves further into the 21st century, when new developments in biotechnology, telecommunications, and finance will begin to demand government scrutiny.
For old-school pols such as Senate Judiciary Committee Chairman Orrin G. Hatch (R-Utah) or House Commerce Committee Chairman Thomas J. Bliley Jr. (R-Va.), there's no easy guidebook to this new world. Conversely, it's hardly surprising, given the rapidly shifting currents, that many technology executives feel the political waters in Washington are especially hard to negotiate."OLD VS. NEW." For one thing, traditional partisan and ideological labels don't always apply so neatly anymore. There is, for instance, no consensus Democratic position on encryption. And Republicans are all over the lot on whether to increase the number of visas available to foreign high-tech workers, a key industry priority. On many issues, indeed, liberals and conservatives are working hand in hand--on both sides of the debate. "Left and right, as they've been defined, are now dead," says Jeffrey A. Eisenach, president of the Progress & Freedom Foundation, a conservative think tank. Adds White House aide Paul E. Begala: "Turn-of-the-century politics will be marked by a debate of old vs. new, not left vs. right."
Ultimately, neither party is a comfortable home for libertarian-leaning entrepreneurs. Despite Vice-President Al Gore's nonstop courtship of Silicon Valley, tech execs and their highly mobile, educated workers are turned off by the Democratic Party's historical tendency to tax and regulate. But they're also troubled by the Republicans' moral agenda, which seeks to tightly police social behavior.
Certainly, that hasn't stopped both parties from making frequent forays to Silicon Valley. "Clinton and Gore hit the ground running faster, but the Republicans have caught up," says Daniel S. Scheinmann, general counsel for Cisco Systems Inc. When it comes to reeling in the techies, "there will be raging competition for at least the next decade between the parties," predicts T. Wade Randlett, Democratic adviser to Technology Network, a bipartisan high-tech political action committee. "The fundamental ethos of Silicon Valley is that it's pro-free-market, pro-enterprise, pro-social-tolerance. Whichever party does the best job of embracing that centrist message will win."UP-AND-COMERS. As they absorb that lesson, politicians also are learning that being perceived as "pro-business" no longer means what it once did. In the old manufacturing economy, labor-management tussles often defined Corporate America's view of friendly or unfriendly politicians. Now, management is consumed by a wide range of international issues, an outgrowth of the increasingly global marketplace. And in today's less unionized workplace, top priorities are quality child care, health benefits, and portable pensions. "In the 1950s, blue-collar workers argued over the Taft-Hartley Act [the 1947 law that banned secondary boycotts]. Today, mothers in high-tech companies argue about day care," says Senator Robert G. Torricelli (D-N.J.).
The emergence of a new order has created a constellation of up-and-coming political stars. While Gore has practically made himself a fixture in Silicon Valley and on Massachusetts' Route 128, other Democrats are working closely with the high-tech community. Among the standouts: moderate California Representatives Calvin M. Dooley, Ellen O. Tauscher, and Anna G. Eshoo. GOP techno-stars include Michigan Senator Spencer Abraham and Representatives Christopher Cox and Tom Campbell of California, Robert W. Goodlatte of Virginia, W. J. ("Billy") Tauzin of Louisiana, and Rick White of Washington.
All of these lawmakers, who talk regularly with high-tech execs, have proved to be quick studies at information technologies, and they're backed up by staffers who know even more. Their mostly moderate alliances, such as the New Democrat Coalition and the Republican Main Street Partnership, are becoming their parties' technology-savvy interpreters of trends in emerging industries. "These issues are arcane to members, so we play the role of educators," says Dooley, co-chair of the New Democrat Coalition.CONSENSUS. The centrists are trying to build a consensus on two defining issues of the new generation. They're pushing an environmental agenda, for example, that eschews direct government edicts in exchange for results-oriented action by corporations. And they're focusing on business-government partnerships to provide students with computers and other tech tools so they can train for the jobs of the future. Moderates also want to work with business to help displaced workers retrain to compete in the rapidly shifting job markets. "We have to be conscious of folks who don't think they're going to make it and ensure that companies have incentives to help them retrain," says Tauscher, a former Wall Street stock trader and investment banker.
On many other emerging issues, ad hoc coalitions uniting the left and the right are more common. Cox, a leading House conservative, is working with liberal Democratic Senator Ron Wyden of Oregon to pass a moratorium on new taxes on Internet access and commerce. Their opponents at times have included most of the nation's Republican governors, who see E-commerce as a huge pool of tax revenue and fear losses in their state sales-tax bases. Meanwhile, pressure to make Internet service available to rural communities is uniting such strange bedfellows as conservative Alaska Senator Ted Stevens and liberal Democratic Representative John D. Dingell of Michigan.
Another odd alliance is shaping up in the debate over encryption. The Clinton Administration, backed by law enforcement, wants to ban the export of sophisticated code-scrambling software unless the government is provided with ways to break the codes. The proposal has strong backing from conservative Republicans, including Representative Mike G. Oxley (R-Ohio), a former FBI agent, and law-and-order Democrats such as Senator Dianne Feinstein (D-Calif.). The unlikely coalition opposed to the ban includes the software industry, the liberal American Civil Liberties Union, and antigovernment social conservatives led by Eagle Forum President Phyllis Schlafly. "It's an era where you have floating majorities," says Democratic Leadership Council President Al From. "You can't depend on a coalition of big blocs sticking together on issues no matter what."
The new era coalitions, and their allies in business, don't always get what they want. High-tech execs have been vexed, for example, to see support for free trade weakening in both parties. Many Democrats worry that globalization is costing America jobs and depressing wages, and similar protectionist sentiment is bubbling up on the populist flanks of the Republican Party. Likewise, the normally tech-friendly Clinton Administration is resisting Silicon Valley's pleas to lift the cap on visas for foreign high-tech workers. The reason: pressure from unions in an election year.GOLDEN EGGS. Asia is a critical market for technology-based industries. But U.S. exporters are waging an uphill battle to persuade House Republicans to approve an additional $18 billion for the tapped-out International Monetary Fund. Business views the fund transfusion as critical to the revival of Asia's swooning economies. Yet in the current climate, "there's absolutely no political value in defending internationalism," frets former Maine Governor John R. McKernan Jr., head of the Republican Main Street Partnership.
Lawmakers and the White House are wrestling, as well, with how--if at all--to regulate the new industries that have driven much of the nation's recent economic growth. On one hand, more than 150 pieces of Internet-related legislation have been introduced in Congress in the current term, up from 24 a year ago. Yet although Microsoft Corp. and Intel Corp. are enmeshed in legal battles with antitrust enforcers, technology titans mostly have eluded the congressional impulse to regulate.
One reason: Neither party wants to be responsible for killing the goose that is laying the economy's golden eggs. And the Information Age is evolving so rapidly that lawmakers aren't sure how to be either timely or relevant. "It's too hot for them to handle," says Jerry J. Jasinowski, president of the National Association of Manufacturers. "Government understanding of economic and technological developments substantially lags behind what is actually going on in the market."
Corporate officials want the government to stay out of their product- development and merger plans. But the American public is ambivalent. While 54% say the success of new industries grows out of their "relative unrestricted state," according to a poll by Fitzpatrick, a majority say high tech requires at least some regulation. "Folks recognize that there should be some sort of oversight at the federal level," says Fitzpatrick. "The no-regulation stance is not going to play."SHIFTING ALLIANCES. Even high tech's biggest boosters concede that as technology, trade, and immigration issues flood into Congress for consideration, more federal oversight is inevitable. "So far, the friends of technology have been winning the battle," says Representative Cox. "But as time wears on, the Internet will attract its share of good and bad legislative proposals."
To prepare for that day, tech companies are hiring Washington lobbyists, forming industry coalitions, and making more frequent forays to plead their case in congressional hearing rooms. Their abiding hope: that Capitol Hill politicians at least will look and listen before leaping to impose some structure on the great, formless techno-beast. Intelligent, effective oversight will require considered judgment--and, no less, some understanding of the arcane aspects of chip design, genetic engineering, and Internet domains.
As the nation edges into the next century, the government's task will become even more complex. Political alignments will continue to shift, blurring further the familiar, more predictable landscape. All major economic transformations are wrenching experiences that bring their share of social and political dislocation. In the Information Age, too, hidebound Washington will struggle to cope with the upheaval.By Richard S. Dunham and Amy Borrus in WashingtonReturn to top