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Competitiveness Can't Compete With Politics

A White House initiative to bolster the high-tech industry gets waylaid by legislative maneuvering.

September 18, 2006|Jim Puzzanghera | Times Staff Writer

WASHINGTON — To Silicon Valley engineers, the physics of politics is a strange science in which the momentum of a plan to make high-tech companies more competitive is halted by seemingly unrelated debates over the estate tax and illegal immigration.

President Bush unveiled the so-called American Competitiveness Initiative during his State of the Union address in January. Since then, though, the ambitious plan with bipartisan support has been stalled by election-year politics.

The initiative is a top priority for high-tech executives alarmed by the bumper crops of engineers and scientists produced in China and India. After pressing since 2004 for legislation to help the United States maintain its technological dominance, the tech industry thought everything was aligned for action this year.

"These CEOs aren't Washington guys, and in their minds, when everybody agrees that something's necessary ... they just can't see why action is so difficult," said Bruce Mehlman, executive director of the Technology CEO Council, a public policy association of nine top high-tech chief executives.

The experience has provided another lesson in Silicon Valley's political education: how the crosscurrents of a high-stakes election can derail even broadly popular legislation.

The 10-year, $136-billion plan would combine increased federal science and education spending with tax breaks for research and easier access to highly skilled foreigners. Leading lawmakers from both sides of the aisle who had already made or were drafting similar proposals enthusiastically vowed their support.

But little of the multifaceted initiative has been approved. And two key components are on their deathbeds.

A proposal to increase the number of specialized visas for technically trained foreign workers has been held up by the partisan stalemate over illegal immigration. Legislation to extend and expand an expired tax credit for research and development costs was derailed this summer, when Republican leaders included it in a contentious plan to cut the estate tax.

"We're sorry that some of the important provisions got tied up in much more controversial issues," said White House science advisor John H. Marburger III. "We can't just give up after a year. The stakes are sufficiently high to view this as a multiyear campaign."

Tech executives thought the whole package would be wrapped up in months, not years, and warned that the United States risked falling behind in the global economy unless Congress acted quickly.

"We appreciate the broad bipartisan, bicameral commitment ... but we believe the time for words has passed," the CEO Council -- which includes Mark Hurd of Hewlett-Packard Co. and Paul Otellini of Intel Corp. -- wrote to congressional leaders last week. "It's time to act."

There's little time left, though, as lawmakers rush to hit the campaign trail. Supporters have reconciled themselves to starting over next year.

Lobbyists said the initiative was hindered because its varied components required approval from several congressional committees, a tall task in a shortened election-year session.

"It was a multifaceted approach that had so many pieces it was hard to manage, and it was hard to put one person in charge of managing it," said Ralph Hellmann, senior vice president for government relations at the Information Technology Industry Council.

Although Bush has given at least seven speeches on the competitiveness initiative since unveiling it Jan. 31, "it just didn't get the highest-level oomph" behind the scenes at the White House and in Congress, Hellmann said.

Some victories may be coming soon.

The House has passed two 2007 spending bills that included research funding called for in Bush's initiative, including a $439-million boost for the National Science Foundation. The Senate is trying to finish work on its version of the bills, which also fully pay for Bush's initiative, and they are expected to be approved by the end of the year.

"We're on the path to get the money, and that's what counts," said House Science Committee Chairman Sherwood L. Boehlert (R-N.Y.). "We've got more to do, but thus far, it's going well."

That funding, however, is focused on long-term basic research at universities. The two main priorities for the high-tech industry were an increase in the annual number of H-1B visas for highly skilled workers from abroad and a permanent extension and expansion of the R&D tax credit.

Complaining that there aren't enough top-level U.S. engineers and computer scientists, the tech industry often looks abroad to fill technical jobs. Those workers must first obtain special six-year H-1B visas. At the peak of the dot-com boom, Congress temporarily increased the annual number of those visas to a high of 195,000.

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