October/November 2000

Opinion

Our Tech Future is at Stake
in this Election. (cont.)
Page 2 ... by Jill B. Hart

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If you need proof that Al Gore isn't good for tech, consider the following:

E-Commerce Taxes

Al Gore would allow states and cities to tax Internet activity.

He told Smart Business magazine (Nov. 2000) “We cannot ignore the fact that our democracy thrives in a federal system in which state and local governments derive one-third of their revenue from sales taxes. Put yourself in the position of governors and mayors. I do not think that we can just stiff them as they contemplate a potential fiscal catastrophe.”

Al Gore cares more about giving local governments yet another tax (as if we're not paying enough in local sales taxes, property taxes, income taxes and even restaurant taxes) than giving Internet businesses room to grow.

In contrast, George W. Bush told Smart Business “I applaud the House of Representatives for extending the moratorium on Internet taxation for five years. This is a reasonable approach that I have consistently supported. This legislation will provide time to analyze the full impact of e-commerce and ensure that the rapid growth of the Internet is not slowed by new taxes.”

The contrast between these two positions is dramatic, and the choice is clear for the tech sector.

Growth Capital

This year, we've seen the collapse of the stock market as an engine of growth for investors and tech businesses. For much of the past decade, tech businesses relied upon stock sales to fund their operations and expansion plans. That all changed this year with the crash of the tech and Internet sectors on Wall Street.

One of the best ways to get the markets moving again is to adopt the tax cutting policies of the 80's that started the whole bull market in the first place. This would also have the effect of cushioning the effect of the Fed's interest rate hikes -- which are strangling struggling tech companies.

Some economists and market-watchers think the Fed has overdone interest rate hikes and that a mild recession will hit next year. The best way to avoid this is to inject some entrepreneurial realism into our tax code.

Al Gore has proposed highly targeted tax breaks that reward public/business activity that he favors.

George Bush favors marginal tax rate reductions that let all tax payers keep more of what they earn. Yes, the top 1% of taxpayers would benefit from Bush's tax cut, but so would the bottom 1%. In fact, lower income taxpayers get the greatest rate reductions.

(Personal Note: The Bush plan also favors younger workers. Under the Bush plan, I wouldn't have paid income taxes until I was well into my 30's. This would have given me a great opportunity to save and invest.)

Regulatory Policy

George Gilder wrote in the Wall Street Journal (Oct. 21) “Perhaps most menacing is the threat of Gore regulatory policies and attitudes on the advance of wireless technology. Wireless access will fuel the next phase of Internet growth. But the environmental and regulatory passions central to Mr. Gore's entire career are now driving wireless innovation overseas.”

Clinton-Gore administration policies regarding the awarding of frequencies for use by wireless Internet access companies have become a fiasco. According to Gilder: “Predictably the auctions have become a briar patch in which only bureaucrats and telopolies can thrive.”

The problem with government regulation is that it usually puts power into the hands of people who have never created anything -- never started a business, never met a payroll, never created a new product or service -- and yet it assumes that these people have the depth and breadth to tell those who have done these things how to run their businesses.

It's no coincidence that the least regulated part of our economy (the tech and Internet sectors) have been the most productive and wealth-generating.

Energy Policy

Finally, whenever we consider technology- we must remember its life's blood -- electricity. The Internet now accounts for 8% to 10% of electricity consumption in the U.S. Without electrical power, the Internet cannot exist. Without electricity, our computers can't boot, our cell phones can't connect, and our PDA's can't organize.

Over the past eight years, the Clinton-Gore administration has not given the nation a coherent energy policy. Though they now claim their policy was stymied by a Congress that refused to fund alternative energy programs, they conveniently forget that spending is the result of a policy -- not a substitute for one.

In truth, even if the Clinton-Gore administration had gotten all the money they wanted, alternative energy sources are not going to provide the kind of power the Internet needs.

Another problem is the Clinton-Gore administration's propensity for taking resource rich lands and turning them into national parks or other protected lands.

According to a Wall Street Journal editorial (10/23), “About 40% of our natural gas reserves are located in the West on lands that are either closed to exploration or under restrictive provisions, and another 35% could be found in the Arctic National Wildlife Refuge that is also closed to exploration. Messrs. Clinton and Gore have bellowed and bragged about these closures.”

The natural result of these closures is that supply becomes limited and prices go up. This seems to be Gore's covert energy policy -- make energy prices high in order to reduce energy consumption.

The Veep actually supported this approach in his book, Earth in the Balance. The problem is, of course, that this is an elitist policy that harms middle and lower-income people. It would also strangle growth of the Internet.

George Bush has proposed an energy policy that would meet both long term and short term energy needs. He too supports alternative energy research (Texas produces more electrical power through windmills than any other state). But to meet today's needs he would open public lands to limited oil and gas exploration (5% of the Alaska National Wildlife Refuge, for example).

As a former oil industry businessman, he knows that modern drilling and pumping technology is more environmentally sound than importing oil. In the South and Mid-West many farmers have oil pumps amid their crops. Oil tankers, on the other hand, are notorious for accidents that result in spills.

Ultimately, if you care about a growing tech sector, and the rest of our society, there's only one way to vote in this year's presidential election -- George W. Bush is the only way to go.