business

The High Tech Lobby: Everything's Going Its Way

As Silicon Valley writes fat checks, the pols pay heed

High-tech executives had lots to celebrate on July 4. Just days before fireworks lit up the skies, the White House and Hill Republicans agreed on legislation limiting corporate liability for Year 2000 software glitches. A day later, President Clinton granted another long-sought wish, announcing his support for lifting curbs on computer exports to China and other other politically sensitive nations. "A great week," says Intel Corp. lobbyist Michael C. Maibach, savoring the double-barreled victory.

Actually, "great year" may be more like it. With the New Economy sizzling and with techies opening their checkbooks like never before to political campaigns, Silicon Valley lobbyists are chalking up major victories. And why not? As Techland might argue, who's responsible for this economic boom, anyway? "This strong technology sector has spurred the renewal of industries across America," Microsoft Corp. CEO William H. Gates III recently noted in testimony before Congress.

Technology leaders don't yet set the broad business agenda in Washington, but they are certainly raising their profile. For the 2000 races, computer-industry execs and their companies may funnel close to $18 million to candidates and parties, double their donations for the '98 congressional elections, according to analyst Holly Bailey at the nonpartisan Center for Responsive Politics (CRP). That's peanuts compared with the $52 million that securities firms poured into political coffers in '98. But techies are relative newcomers to the electoral game, and both political parties "covet being in the passenger seat with Silicon Valley," says Bailey.

GEEK DREAMS. The big winners so far are the Presidential front-runners: Vice-President Al Gore and Texas Governor George W. Bush. Of the $1.7 million that Bush collected on a recent swing through Northern California, for instance, $850,000 came from Silicon Valley. Gore counts among his major endorsers: Novell Inc. CEO Eric Schmidt and Netscape Communications Corp. founder Marc Andreessen.

With the money flowing, high-tech lobbyists are spinning Geek Dreams about how they might be repaid. One top priority is making permanent the tax credit for high-tech research and development, which is now renewed annually and costs the Treasury more than $1 billion a year. Support is building in Congress for a five-year extension. What's more, there's bipartisan backing for legislation to speed the growth of E-commerce by setting a national standard for authenticating the electronic equivalent of written signatures.

Techies face a tougher fight to ease export curbs on data encryption--the technology used to keep computerized information secret. Software execs insist that this software is becoming more widely produced: 805 foreign encryption products are on the market today, up from 264 in 1993, according to a survey by the Cyberspace Policy Institute at George Washington University. So, execs argue, the U.S. curbs aren't stopping cyber-criminals and terrorists from laying their hands on software capable of cloaking information with an unbreakable code. All that the restrictions do, opponents say, is allow foreign competitors to make inroads into a lucrative, U.S.-dominated software niche.

The FBI and the National Security Agency (NSA) want the Administration to defend tight controls. And, until now, the White House has held the line. But it may be forced to compromise if the House and Senate succeed in passing legislation.

In fact, the effort to lift the encryption export ban is gaining support in Congress. In the House, 260 members are co-sponsoring a bill, introduced by Representative Bob Goodlatte (R-Va.), that would relax restrictions. In the Senate, two influential members who once opposed lifting controls--John McCain (R-Ariz.) and Bob Kerrey (D-Neb.)--are backing compromises more favorable to the industry. "Legislation on this issue is thinkable for the first time in 10 years," says Stewart A. Baker, a former NSA general counsel who now represents high-tech clients. But whether the encryption battle is won or lost this year, the investment that Silicon Valley is making in Washington is likely to produce tech-friendly policy for years to come.

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