Much is being written about President George W. Bushs first 100 days in office. Well join the chorus but from the point of view of IT. The Bush administrations top priority has been its income tax cut plan. In principle, we see nothing to dislike here. Cutting taxes has always tended to aid in capital formation as individuals seek investment vehicles for their tax savings such as technology stocks and venture funds. The current Wall Street washout notwithstanding, the tax cuts could have benefits that will be felt in IT during the next two to five years. There is at least some risk, though, that the slowing economy will generate less tax money. That, combined with the tax cuts, could return us to the days of annual federal deficits.
Meanwhile, the Bush administrations making permanent the Research and Development tax credit and increasing federal spending on R&D by 6 percent is more clearly positive for IT in that they should stimulate the creation of new technologies.
The administration has nominated Bruce P. Mehlman as assistant secretary of commerce for Technology Policy. Mehlman has favored H1-B visa expansion, permanent normal trade relations with China, crypto liberalization, and industry protections in securities and liability law. Wed remind Mehlman that merely raising the H1-B limit is not a permanent solution to our technology manpower needs.
During the campaign last year, Bush took a shot at the FBIs Carnivore technology, which reads e-mail messages, saying that although preventing crime is important, citizens rights must not be violated. As far as we know, there have been no Bush administration initiatives to change the way Carnivore is used.
Recently, the FBI hacked into a Russian database in an effort to gather evidence against Russians who attacked U.S.-based systems. This method of evidence gathering is questionable. Further, the tenure of outgoing FBI Director Louis Freeh was marked by the Clipper chip and other FBI-accessible back doors into digital communications. The appointment of a successor to Freeh is a good opportunity to turn over a new leaf in an attempt to bring civilized legal principles to the prosecution of cyber-crime.
Finally, on Internet taxation, the president supports extending the Internet tax moratorium and permanently banning Internet access taxes. Our view is that these measures are merely stopgaps and will not satisfy state governors, including some Republicans, who chafe at the loss of substantial sales tax revenues.
One hundred days is not much time, but theres plenty of time before the next election to move IT issues higher on the agenda with an eye toward keeping this engine of our economy running smoothly.