High-Tech Issues To Challenge Congress

High-Tech Issues To Challenge Congress

By Nick Wakeman
Staff Writer

Sens. Spencer Abraham, left, R-Mich., and
Craig Thomas, R-Wyo., are players in high-tech issues
Congress faces this fall.
Final action by members of Congress on a host of issues dear to the information technology industry will take place in September, when legislators will also turn their attention to key appropriations bills.

Overall, the summer session brought some progress and some frustration for the IT industry as lawmakers tackled issues such as visas for high-tech workers, taxes on the Internet and copyright protection.

"A lot of issues remain unresolved," said Harris Miller, president of the Information Technology Association of America, an Arlington, Va.-based trade group. Among them are measures to limit government outsourcing and renewal of the U.S. research and development tax credit.

But competition for lawmakers' attention should be fierce as members of the House and Senate, fresh from their August recess, try to wrap up work on appropriations measures before the end of the fiscal year.

One appropriations measure that will get considerable industry attention in the coming months is the House version of the defense appropriations bill, which contains provisions that could curtail outsourcing.

The House bill would require defense officials to notify Congress when outsourcing is being considered, and it calls for studies and cost analyses. A conference committee will have to reconcile the House and Senate versions of the defense appropriations bill before it goes to President Clinton. The Senate version does not include the outsourcing provisions.

The IT industry will be joined by a broad coalition of other industries in lobbying Congress to renew the research and development tax credit, which expired June 30.

"We are hoping for at least an 18 month extension," said Mark Rosenker, vice president of public affairs for the Electronics Industries Alliance, formerly the Electronics Industries Association. The Arlington, Va.-based group represents U.S. electronics manufacturers.

"I'm guardedly optimistic it will pass," said Rosenker, who noted many in Congress understand the tax credit helps fuel economic development. The credit was created in 1981 and has been renewed eight times, he said.

But with a plethora of appropriations bills to be considered, and November elections looming, it will be easy for the research and development tax credit to get lost, Miller said. "It's a small flea on a big dog."

Also likely to see activity in September is the Freedom from Internet Taxes Act, industry and congressional sources said. The House passed the bill to place a moratorium on Internet taxes; the Senate Commerce and Finance committees have approved different versions of the bill.

Differences between the bills will have to be reconciled before the Senate votes, said Emily Hackett, manager of public policy for the Computing Technology Industry Association, a Chicago-based trade group that represents resellers, manufacturers and distributors.

The bills differ on the length of the moratorium and what to do with the eight states that already tax Internet commerce, Hackett said. The House version calls for a three-year moratorium, as does the Senate Commerce Committee's version. The Finance Committee, however, recommended a two-year moratorium.

Because the bill mostly will impact state and local taxes, what state governors say about the issue in the next month will have a major effect, Hackett said.

The amount of attention garnered by the Internet tax bill has been a pleasant surprise for the industry, Miller said. "We didn't expect it," he said. "But a lot [of legislators] realized taxing the Internet would hurt the economy and our competitiveness."

Support has been extremely strong for the World Intellectual Property Organization Treaties Implementation Act, which fortifies copyright protection on the Internet. The House and Senate passed slightly different versions of the bill, which will need to be reconciled during a conference committee during September. Clinton is expected sign the legislation.

Although the House-Senate compromise on the visa bill sponsored by Rep. Lamar Smith, R-Texas, and Sen. Spencer Abraham, R-Mich., was in trouble as the summer session ended, the issue is likely to get resurrected, officials said. That's because the rate at which the visa limit is reached has been accelerating each year. In 1997, the ceiling was reached by May.

The White House has threatened to veto the bill, which would boost the number of temporary work visas from 65,000 to more than 100,000 annually.

But a veto won't mean the end of the bill, said David Byer, vice president for government affairs of the Washington-based Software Publishers Association, a trade group whose 1,200 members include software giants Microsoft Corp. of Redmond, Wash., and Oracle Corp. of Redwood Shores, Calif.

One of the more contentious issues could be outsourcing, mainly because of widespread concern among lawmakers fearing it could spell lost jobs in their districts.

The House provisions "are an opportunity to delay and obstruct what would otherwise be logical moves to outsource and privatize," said Bert Concklin, president of the Professional Services Council, an Arlington, Va.-based group that represents IT services companies. "This is going to be a fundamental test."

ITAA's Miller agreed. "This is important to the whole issue of efficiency of the government."

Outsourcing did get a slight boost in another bill in the Senate. After four futile years, that chamber finally passed the Freedom from Government Competition Act, sponsored by Sen. Craig Thomas, R-Wyo. A version sponsored by Rep. Pete Sessions, R-Texas, is pending in the House.

The bill does not go as far as earlier attempts that called for agencies to outsource functions, such as information technology, that are not inherently part of their missions. Instead, the Senate bill calls on them to do an inventory on what activities are not part of their missions.

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