In President George W. Bushs 2002 budget, information technology will find a few pats on the head, as well as some swift kicks in the pants.
If the budget is approved unchanged, the federal government will spend $45 billion on IT in the next fiscal year, including $20 million for an interagency e-government fund and $145 million toward the Department of Justices efforts to combat cybercrime.
The budget proposal suspends funding for the Department of Commerces Advanced Technology Program, which serves as a public venture capital fund for technology companies.
The budget also proposes to cut $13 million from the U.S. Geological Surveys information delivery systems, which provide Web access to geographic and cartographic data.
The federal governments IT budget is of special interest to New Economy companies because Uncle Sam buys hardware and software in massive quantities and agencies increasingly contract out much of the work required for IT projects.
In 2002, according to the budget, IT spending will total $400 million more than in the current fiscal year; the boost is one of the smallest in recent years.
Among the IT victories is Bushs proposal to permanently extend the research and development tax credit. Industry has enjoyed the credit since 1981, but Congress haggles over it every few years. If Congress accepts Bushs proposal, companies that increase their R&D can depend upon tax credits to offset the expenditure.
The episodic battles over extending the tax credit were always "an enormous heartache for industry," said Robert Cresanti, general counsel at the Information Technology Association of America, a leading IT trade organization. "This will help serve as a stabilizing force."
Cresanti was pleased overall with the Bush budget. "I think most of the news is good news for us," he said.
The president proposed putting $100 million over five years — $20 million this fiscal year — into an e-government pool to fund interactive projects in disparate agencies. Currently, its difficult for agencies to work together on anything, because their funding is "stovepiped," meaning every dollar is dedicated to something specific within each department. At present, there is no way for Congress to pay for interagency projects.
Government officials have long said that for the federal government to fully realize the Internets e-government potential, the sprawl of agencies and their Byzantine bureaucracies must work together on interactive projects.
It took three torturous years for the feds to merely launch a Web portal to the government, at www.firstgov.gov, which got off the ground last year only after a Silicon Valley millionaire donated much of the grunt work required to build the site.
Rob Atkinson, director at the Technology and New Economy Project at the Progressive Policy Institute, a centrist Democrat think tank, said he was "disappointed" that Bushs interagency fund wasnt bigger, and called it "vaporware."
The Bush budget will soon be taken up by Congress, and must be debated and signed into law before the federal fiscal year ends Sept. 30.