Bush Address Boosts Tech Industry

WASHINGTON - In his approximately 3900-word State of the Union address, President Bush used the word technology just three times. Even so, the president buoyed the hopes of the high-tech industry on several key items.

First, his emphasis on security will likely mean a rise in federal security-related spending. In particular, Bush called for increased use of technology to track arrivals and departures at national borders. The federal government spent $3 billion last year on IT-related security. How much it might spend in the coming fiscal year will be better known after the president's proposed budget is released Monday.

"The federal government is our industry's number one customer worldwide," says Robert Cresanti, vice president of public policy at the Business Software Alliance, a trade group in Washington. "It's pretty clear that when the federal government spends more, the industry does better."

Taxing Ideas

Second, the president reiterated his support for an economic stimulus package. With that in mind, the U.S. Senate late Tuesday approved a compromise two-year, 30 percent depreciation bonus that allows all businesses to immediately write off a much larger share of equipment and software purchases than they could previously. The compromise bill was approved 62-33.

The accelerated depreciation bonus "is clearly the most important issue for the tech community right now," says Ralph Hellman, senior vice president of government affairs for the Information Technology Industry Council in Washington. "There are no silver bullets to get the tech community revived, but this is certainly one of the things that can be very helpful."

Third, Bush is pressing Congress for "fast-track" trade promotion authority, which would enable the administration to negotiate trade agreements without congressional approval. With about 50 percent of the high-tech industry's revenue coming from overseas, technology groups say the president needs this authority to end prohibitive duties and other restrictions that put U.S. firms at a competitive disadvantage.

That authority "means growth and jobs" for U.S. firms, says Cresanti.

Broadband Plans

Bush didn't say anything about broadband, which has been the focus of an intensive push in recent weeks by CEOs from Microsoft, Intel, Dell Computer, and Motorola, among others. According to one source close to the effort, the White House hasn't decided how to handle the issue, though officials are giving the impression that they're committed to it.

As for the depreciation bonus, the U.S. House of Representatives last year approved a three-year, 30 percent bonus. But a similar bill in the Senate, sponsored by Sen. Gordon Smith (R-Oregon), failed last week. Smith, in an amendment cosponsored by Sen. Max Baucus (D-Montana), finally won approval yesterday for a two-year bonus.

The bonus would work this way: If a computer costs $1000, the purchaser would be able to write off a bonus 30 percent of the cost in the first year, or $300, plus 20 percent (the normal depreciation spread over five years) of the remaining $700.

The ultimate fate of the bonus, however, hinges on passage of an economic stimulus package.