High-tech not doing well in Washington

[We asked Bill Archey, chief executive of the American Electronics Association, to tell us how well high-tech interests are being represented in Washington. The AeA is the nation's largest trade group representing the electronics and information technology industry. Bill knows Washington inside-out, and his reports in some senses are depressing. It is shocking to hear his stories of how little our members of Conress know about technology. We'll be hearing more from him going forward.]

Congress may have adjourned its latest session, but there’s still so much pending business, especially appropriations bills, that Congress will return after the election for a lame duck session beginning on November 13.

It is fair to say that the high-tech industry is not doing well

Our most important priorities were deferred until the lame duck session or until at least when the 110th Congress begins, perhaps under new leadership. The demise (or perhaps deferred demise) of the high-tech agenda also demonstrates how dysfunctional Congress has become.

The high-tech industry had two very important priorities. The first was the competitiveness initiative which called for (1) an increase in basic R&D funding, (2) a new initiative to increase the number of kids taking math and science and an emphasis on producing more qualified teachers in these subject matters, and (3) visa reform—which doesn’t just increase the quota of H-1B visas but also reforms the process for obtaining those visas along with a reform of the green card program.

The second major priority was to make permanent, or at least to extend for a lengthy period of time, the R&D tax credit. This credit expired on December 31, 2005. Many AeA member companies are losing important tax advantages of the tax credit or, at best, are unable to plan certain R&D expenditures pending the result of the extension of the R&D credit.

Addressing the problem of American competitiveness has been a priority of AeA since February 2005 when we issued our paper entitled “Losing the Competitive Advantage” The challenge has been to get members of Congress to acknowledge that we have a problem.

Over time, Congress came to realize that despite America’s technological prowess we had some problems. The President’s “American Competitiveness Initiative” in his State of the Union address in January helped. But nothing has happened — despite the fact that the Democrats issued its innovation agenda (a rather comprehensive response to the problems of competitiveness) and despite the Republic Summit, a full day program on competitiveness held by the House Science Committee.

Despite true bipartisan agreement, the lack of any decisive legislation was in part because of that agreement: The issue lacked the “partisan juice,” or benefit to either party and especially to the Republicans, for use as a wedge issue against the other party In fact, the House Republican leadership failed to support its own members on the House Science Committee who came up with some very thoughtful legislative proposals to address competitiveness.

The R&D tax credit died also because of politics. The R&D tax credit was part of a tax extenders bill which was not controversial and indeed had overwhelming bipartisan support. But the R&D credit was included in a “Trifecta” bill which included an increase in the minimum wage and the virtual elimination of the estate tax. So if you wanted to extend the R&D tax credit, which it seemed everyone in Congress wanted to do, you also had to vote for an increase in the minimum wage and the end of the estate tax, which everyone did not want to do. What will happen in the lame duck session on the R&D tax credit is very much up in the air.

Not only is the high-tech agenda tied up in the virulent partisanship in Washington, it is also suffering now and will in the future from the fact that most members of the Congress do not understand high-tech, either the technology or the issues. But that’s for another time.

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