U.S. Senate Republican Policy Committee - Larry E. Craig, Chairman - Jade West, Staff Director
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August 7, 2001

Senate Democrats' Feckless, Tech-less Agenda

With great fanfare on April 5, 2001, Congressional Democrats unveiled an "E-strategy for Economic Growth," a plan to "spur innovation, productivity, economic growth, and job creation." Unfortunately, the majority party in the Senate has failed to implement its own proposal. With only 21 days remaining on the Senate Calendar after the August recess, it is troubling that few technology issues have been brought to the floor of the Senate for a vote, or even up for consideration. This neglect is especially troubling considering the current economic slowdown, particularly in the technology sectors. It is also in sharp contrast to the Republican-led 106th Congress that considered more technology issues, and passed more laws affecting technology, than any previous Congress.

Education Reform

Without serious educational improvement to make the United States workforce more capable in math and science, the nation's competitiveness and, consequently, its high tech industries are at risk. In spite of the passage of bipartisan education reform by both chambers of Congress, the legislation has not made it to the President for his signature because of Democrat maneuvers to delay the Conference Committee. At the White House on July 5, President Bush stated: "there's nothing more important than getting the education bill to my desk . . . All you've got to do is ask the governors and superintendents and local officials . . . because they've got plans to make for the public schoolchildren of America."

The education bill (S.1) passed the Senate on June 14 (Roll Call Vote No. 192), but Senator Daschle waited until July 10 - nearly an entire month - before assigning Senate conferees to work out the major differences between the House and Senate versions of the bill. Moreover, the Majority Leader admitted stonewalling the education conference as a ploy to further increase federal education spending. This despite the fact the bill reported by the Senate Health Labor Education and Pensions (HELP) Committee represented a 57-percent increase over FY01 spending. Floor Amendments to the bill then fully doubled its seven-year price tag - from $205 billion to well more than $400 billion. Senator Daschle stated, "I told the President . . . it was not our desire to complete this work [on the education bill] until we have some understanding about the degree of resources that will be made available for the issues that we're confronting here." As a result of the Democrat Leader's stalling tactics, new educational standards and opportunities will not be in place in time for the start of the school year in September. This is a major loss for America's school children, postponing the date that U.S. students will be ready to help maintain the country's technological edge and to meet the challenges of the 21st century workplace.

The Business Coalition for Excellence in Education (BCEE), a group of leading high tech companies and business organizations, contends that America must sharpen its resolve in education in order for the technology industry to maintain its lead. In a statement regarding the elementary and secondary education reform bill, the BCEE urged the Senate "to move expeditiously in passing education reform before school is back." The BCEE also stated: "America can't wait for education reform; too much is at stake for our children and our future."

Trade Promotion Authority

If the United States is to maintain its world leadership in scientific accomplishment and technological proficiencies, U.S. entrepreneurs must have the ability to compete in the global marketplace. Trade Promotion Authority (TPA), also known as "fast track," was first conferred in the Trade Act of 1974 to give both the President and our trading partners the assurance that a trade agreement requiring changes in U.S. law would receive an up-or-down vote, without amendment, within a time certain when brought before Congress. President Bush asked the Congress to support TPA in his February 27 State of the Union Address and in his 2001 legislative agenda for international trade unveiled on May 10. Congress has approved fast-track authority for each President between 1974 and 1993. Granting such authority helps U.S. businesses gain access to new foreign markets, rather than risk unfairly losing out to other countries that already are engaged.

Senate Democrats have neglected this priority of the technology community. Finance Committee Chairman Baucus (D-MT) has indicated that he is less inclined to provide TPA to the President than to give him limited, country-specific authority. Before a hearing at the U.S. International Trade Commission, on May 17, Senator Baucus stated,

"If we cannot agree on a global fast track bill, then we should institute fast track authority for specific countries where we have strategic commercial and political interests. In doing so, we should choose countries which not only share our commitment to open markets, but also share our values for environmental quality and labor rights."

Majority Leader Daschle does not appear much more inclined to make TPA a priority. After a White House meeting regarding TPA on July 13, Daschle indicated that general TPA was far down on his list of priorities. He said he would take up Vietnam and Jordan trade legislation first. "Those are trade issues that could be resolved, hopefully, before we get to the fast-track authority bill . . . "

According to the U.S. High-Tech Coalition on Trade Promotion Authority, a group of leading high tech companies and associations, TPA is "needed now" because "the U.S. is falling behind our trading partners in opening new markets." According to the Coalition, of the 130-plus bilateral and regional FTA (free trade agreements) in force worldwide, only two include the United States (NAFTA, U.S.-Israel FTA). By contrast, Mexico alone has FTA with 25 countries, and the European Union has FTA with 17 countries.

Research and Development Tax Credit

Research and development (R&D) is a cornerstone of technological and scientific innovation. The research and development tax credit encourages investment that leads to the development of products that spur scientific and technological advances. These developments bolster the United States' position as the science and high tech leader of the world. Yet Senate Democrats defeated two opportunities in recent months to provide permanent R&D.

President Bush included the permanent Research and Development tax credit in his budget proposal to Congress. However, the permanent R&D tax credit did not become part of the final bill because Senate Democrats voted for an amendment to reduce the size of the tax relief (Roll Call Vote No. 69). Democrat success at slashing the size of the tax cut from $1.6 trillion to $1.3 trillion forced it out of the final tax relief package.

During consideration of the Patients' Bill of Rights, Senate Democrats, led by Finance Committee Chairman Baucus (MT), again defeated an opportunity to provide the R&D provision by a vote of 57-41 (Roll Call Vote No. 214). Only one Democrat joined 40 Senate Republicans in supporting the Gordon Smith-Hatch-Allen amendment to permanently extend the credit. During a time of an economic slowdown, Senate Democrats turned down a chance to finally make permanent a tax credit that would spur more American investment and more American jobs that can lead to the development of new, more cost-effective, and more efficient technology products and medicines.

William Archey, President and CEO of AeA (formerly the American Electronics Association), understands that the R&D "cannot be conducted by stopwatch." Mr. Archey stated: "To generate maximum long-term economic benefits, the R&D process must be uninterrupted and seamless. And so should be the tax credit designed to support it."

National Energy Policy

The high tech sector views with alarm the energy shortages in California and looming shortfalls in other regions of the country, and urges action on a comprehensive energy policy. If the United States is to maintain its world leadership in scientific accomplishment, technical proficiencies, and entrepreneurial spirit, the Senate must pay attention to the needs of the high tech industry -- or risk our record economic growth. Without a sensible, market-based approach to energy policy, the technology industry will be unable to maintain this lead.

Senate Democrats apparently are not committed to meeting the energy needs of the high tech sector as evidenced by their inaction and lack of understanding of the industry's energy needs. For example:

The technology industry requires real solutions, not proven failures. Yet the Democrats' approach is reminiscent of the same policies that brought California to this point in the first place: rigid government controls on the energy industry; fixed prices at the retail level; requirements on retailers to buy power through state-run central exchanges; and prohibitions against retailers from buying electricity for more than one day ahead of time.

The House of Representatives approved a comprehensive energy plan on August 2 that will help ensure Americans have access to more efficient, environmentally-friendly and sensibly-priced energy for generations. The bill was passed by a comfortable margin of 240 to 189.

Dave McCurdy, President of the Electronic Industries Alliance (EIA), stated on May 17: "In order to continue this unparalleled contribution to the U.S. economy, the high tech industry needs reliable, economical sources of power. It's that simple. Current power shortages threaten our ability to ensure uninterrupted manufacturing operations."

E-xtraordinary Stonewalling

The tools the technology industry creates and delivers allow Americans to compete and succeed in the new millennium. The unprecedented growth in the use and breadth of the Internet for electronic commerce and personal entertainment is a phenomenal accomplishment, and so too are the great leaps in other technologies utilized by our businesses, schools, and communities. If the United States is to remain the undisputed technological leader of the world, Democrats must join Republicans to aggressively advance the issues that will support this important section of the U.S. economy. To date, the Democrats' E-Strategy for Economic Growth has accomplished little more than stalling education reform, stalling trade promotion authority, and staving off the permanent R&D credit and a national energy policy. At this point, their E-strategy appears to be nothing more than an E-xtraordinary stonewalling of vital technology policy issues.

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