Technology: Will Washington Lend an Ear?

Tech companies are looking to the Obama Administration for tax, education, immigration, and energy policies that will give them an edge
Andy Martin

What Business Wants

Joe the Plumber isn't the only American archetype who's angry at the folks in Washington. Listen to what Craig the Tech Exec has to say: "The government is thumbing its nose at us," grouses Craig R. Barrett, chairman of chip giant Intel (INTC). "We're killing engineering and innovation."

Many leaders in the tech industry share Barrett's concerns about America's competitiveness. Their major complaints about Washington are: underfunding of basic scientific research, high corporate taxes, and immigration policies that send much-in-demand foreign-born science students packing when they graduate from American universities. They want improvements in education that will produce a more tech-savvy workforce, and they reject heavy-handed government regulation. "People want more regulation for the big banks, but in the early-stage startup environment, the more laissez-faire we can be, the better," says Ron Conway, managing partner of Angel Investors, which bankrolls startups.

Back before the economy began to crack, Congress passed a bill that addressed many concerns the tech lobby had. Among other things, the America Competes Act would have doubled money for basic research in the physical sciences and improved support for math teachers. But the bill wasn't funded. These days there's even less interest in funding anything that isn't in a state of utter crisis.

Still, tech leaders hope they can make some progress with the new President and Congress. IBM (IBM) Chief Executive Samuel J. Palmisano says government and businesses need to plan together and invest in technologies that will create a "smarter" planet. He envisions using high-powered computers and data analysis techniques to improve understanding of everything from climate change to financial systems so better decisions can be made—and made quickly. "This moment presents a rare opportunity to change how the world works," Palmisano says.

The Council on Competitiveness, a major lobbying arm for businesses on innovation issues, didn't wait for election results before making an appeal to the new President. On Oct. 8 the council proposed an �ber-energy strategy that includes a $200 billion fund for investing in alternative energy technologies and infrastructure, such as a so-called smart electrical grid. The program would be financed in part by a new savings bond program. On Nov. 12 the council plans to call for a new package of federal programs aimed at improving education and boosting research funding for new technologies, including alternative energy. Among its proposals is one aimed at rerouting Labor Dept. funds into new training programs more attuned to the technical jobs of the future.

What Business Will Get

Barack Obama isn't likely to lower corporate taxes as much as executives want, but he is aligned with the objective of overhauling the infrastructure for innovation. For starters, he has pledged to appoint the nation's first chief technology officer to ensure that government agencies have better technology and more progressive policies.

On the R&D front, he has promised to double federal funding for basic research over 10 years and to set aside money for the most outstanding young researchers in the country. He says he'll make the R&D tax credit, which now requires regular reauthorization, permanent so companies can make multiyear commitments to funding research efforts.

Most of his education proposals focus on the early years, but he also wants to make math and science education a national priority by recruiting and boosting incentives for talented math and science teachers, and increasing financial aid for college science and math students.

Obama favors an increase in H-1B visas for high-skill workers as a stopgap until there's a comprehensive new policy on immigration. As part of that, he favors granting more permanent visas to scientists from overseas. Long-term, he believes the U.S. should produce its own scientists and engineers.

Tax policy could be an area of conflict. Obama isn't offering the kind of tax relief tech executives want. "We've analyzed the impact [of Obama's plan] on our effective tax rate—it will increase by a pretty healthy percentage," says David DeWalt, CEO and president of security software provider McAfee (MFE). "The only way to overcome that is through growth or cost-cutting, and, in a downturn, it's hard to do it with growth. So it either means cutting jobs or relocating jobs overseas, just to meet the [earnings per share] the market is expecting."

Given the current budget squeeze, neither Obama nor businesses are likely to get all the resources they want. But business leaders believe that with some creativity they'll be able to get some of what they need. "Initiatives that call for a lot of new federal spending will be challenged," says Deborah L. Wince-Smith, president of the Council on Competitiveness. "We have to link what we're pushing for to the problems that are urgent so we can get the country behind it."

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