It didn't take very long for the new economy to inspire an old-fashioned scramble for influence in Washington.
Once famously aloof from politics, high-tech companies are now swarming over Capitol Hill. They may not understand the rules of Washington's courting rituals as well as some older industries, but they are learning fast. In the first nine months of 1999, computer and Internet companies coughed up $3.8 million in contributions to congressional candidates and the major political parties, according to the Center for Responsive Politics. That's double their contributions at this point in the 1998 election. Likewise, the center found that high-tech companies spent nearly $39 million on lobbying last year, up 56% just from 1997.
Inevitably, this frenzy of industry maneuvering is narrowing the terms of discussion about the emergence of the information-based "new economy." With the high-technology industries themselves largely setting the agenda, Congress is spending much of its time refereeing arguments between the competing economic interests--such as the struggle between cable and satellite companies over broadcasting local programming.
What's been missing are broader principles defining the public's interest in this brave new world. That's why it was a welcome step when the Progressive Policy Institute, a centrist Democratic think tank, recently took a first cut at formulating some. After months of consultations, a 50-member task force that included political leaders like Senate Minority Leader Tom Daschle (D-S.D.) and industry heavyweights from companies such as Gateway and Sun Microsystems produced 10 "rules of the road" for shaping public policy toward the new economy.
The list ranged from expanding the Internet to using technology to streamline government, but at its heart were two ideas: encouraging innovation and expanding opportunity. Encouraging innovation (through policies such as increased federal support for scientific research) makes sense because, more than ever, "innovation has become the linchpin of growth," notes Robert D. Atkinson, director of the PPI's project on the new economy. Expanding opportunity (through investments in training and education) is critical because, left unchecked, the new economy will widen the gap between those with and without skills. Close behind these two principles came a third: promoting competition, which is the most reliable way to spur innovation and expand choices for consumers.
The hard part is balancing these principles when they conflict with each other or with other worthwhile goals. Even so, they can provide a compass for resolving disputes where powerful interests are now stalemated. Take the issue of whether Internet purchases should be free from local sales taxes, a debate that pits the dot.com world against the dot.gov folks in the nation's statehouses. Temporarily freeing Internet sales from taxes makes sense as a way to nurture online commerce, but a permanent ban would provide Internet merchants an unfair competitive advantage over bricks-and-mortar stores and also deny states sales taxes that they use to fund needed services.
These principles offer an even better guide toward resolving the dispute over immigration and the technology industry. High-tech companies say they need to import more highly skilled immigrants to fill thousands of critical jobs for which they can't find qualified domestic applicants. Labor unions say the immigrants will take jobs from Americans. In 1998, Congress sided with the techies, approving a temporary increase in the quota for highly skilled immigrants (under the so-called H-1B program) from 65,000 to 115,000 a year. But with the demand for skilled workers soaring, even that is proving inadequate, and next year's limit is likely to be reached as early as next March.
The industry is rallying behind a bill by Sen. Phil Gramm (R-Texas) to temporarily raise the ceiling to 200,000 workers. With thousands more computer industry jobs now unfilled (anywhere from 200,000 to 350,000) some increase makes sense. But not without more steps to expand opportunity at home by training more American workers and students to eventually fill those jobs.
The model approach was set in the 1998 compromise. When Congress increased the immigration level, it charged the sponsoring company $500 for each new visa--using the proceeds to fund college scholarships for low-income students studying math and science, and new industry-led programs to retrain older workers. One way out of the impasse next year may be to raise the visa fee to $1,000 or, arguably, more. That could generate $200 million or more for new training and education efforts targeted at technology jobs.