On tech issues, Obama falls short of high expectations

WASHINGTON — He was the embodiment of the modern, high-tech president when he took office: the first to fully harness the Internet to build a political movement, the first commander in chief to carry a BlackBerry, the first to promise to instill Silicon Valley sensibilities in the federal bureaucracy.

However, halfway through President Barack Obama’s first term, he has yet to deliver on much of his sweeping tech agenda, tempering the high expectations many in the industry had when he took office.

A research and development tax credit that Obama pledged to make permanent lapsed at the end of last year and remains dormant. Legislation to invest in basic research and math and science education is bottled up in Congress. And while the federal stimulus bill directed tens of billions of dollars to clean energy, health IT and broadband deployment — money long sought by the tech sector — Obama has disappointed the industry in critical areas such as tax policy and trade.

It’s not that the president has abandoned his positions on key issues or doesn’t appreciate technology and innovation, industry representatives say. On issues such as cleantech and broadband, he’s done more in two years, some of them argue, than his predecessor, George W. Bush, did in two terms.

But there is still a palpable sense of disappointment. The recurring complaint is that the administration so far hasn’t prioritized tech issues or devoted the time or energy to surmount resistance in Congress. And that resistance is certain to grow stronger after the Republican takeover of the House of Representatives, especially to any tech proposals that require more federal dollars.

“It is such a big improvement, it’s awkward to say they’re not doing enough,” said Ed Black, president and CEO of the Computer & Communications Industry Association. “But although they have articulated some wise, important goals when it comes to tech issues, implementation and achievement are sorely lacking.”

A lot of big ideas

Obama’s tech platform as a candidate included a laundry list of items, but fundamentally he saw the federal government’s role as part investor, part regulator. Strategic spending on clean energy, broadband deployment and research and development, he said, would help the U.S. compete globally and potentially yield new cutting-edge industries. On the regulation front, Obama proposed Net neutrality, the idea favored by many Silicon Valley innovators that the owners of Internet networks should not be allowed to prioritize traffic of their choosing.

Obama’s proposals on taxes and trade — two other areas of major importance to Silicon Valley — were seen as somewhat less friendly to big high-tech companies. He proposed preventing multinational companies from deferring taxes on overseas profits, and he supported expanding free trade agreements only when tougher labor and environmental standards were included.

White House officials say Obama has made good headway on his proposals to make the federal government more open and transparent through the Web, and to accommodate the explosion of wireless devices with a plan to free up radio spectrum. The president is still committed to double federal spending on basic research during the next decade, one of his main tech-related campaign proposals, they say.

On other issues, such as taxes and Net neutrality, the aides say, it’s too early to judge Obama.

“The plane hasn’t landed yet,” said Aneesh Chopra, the White House’s chief technology officer, a position newly created by Obama.

$814 billion stimulus

Much of the progress Obama has made was through the $814 billion stimulus bill. Though that spending was temporary, it provided the biggest federal investment in alternative energy, high-speed Internet deployment and health IT in decades.

“There is no idea in alternative energy that the recovery act did not touch,” said Wade Randlett, a Silicon Valley clean-energy entrepreneur and Obama supporter who predicted that the spending “would pay dividends for decades.”

The president also receives kudos for an ambitious plan to extend broadband to all Americans, unveiled by the Federal Communications Commission earlier this year. The commission has begun to take steps on some of the recommendations, such as freeing up airwaves known as “white spaces” to accommodate the proliferation of wireless devices.

But little has happened in other areas. An early push for net neutrality rules by Obama’s FCC chairman, Julius Genachowski, has sputtered since a court decision challenged the commission’s authority over broadband. Obama’s trip to Asia last week ended without a much-anticipated trade agreement with South Korea. Trade pacts with Columbia and Panama have also stalled.

Tax policy issues

On taxes, Obama antagonized the business community, including big high-tech firms, with a proposal to increase taxes on overseas profits. Though the initiative went nowhere, Obama hasn’t said the idea is off the table.

“The administration has been very helpful on innovation funding, rhetorically helpful but ineffective on opening markets and fundamentally unhelpful on international tax policy,” said Bruce Mehlman, a Republican lobbyist and former Commerce Department assistant secretary for technology policy.

Others say Obama’s rhetoric has outpaced his accomplishments in some areas. The president has gone out of his way to highlight the importance of science and math education, hosting science fairs at the White House and recruiting companies to advocate for the cause.

Roadblock in Congress

But legislation to boost the country’s competitiveness with funding for basic research — during the campaign, Obama proposed doubling the National Science Foundation’s budget — and for science and technology education remains bogged down in the Senate. And an R&D tax credit widely used by high-tech firms expired at the end of last year, despite Obama’s call to expand the credit and make it permanent.

With mounting concerns about federal debt and a new class of Republican lawmakers bent on curbing government spending, getting either item through Congress could become more challenging because of their multibillion-dollar price tags.

The R&D credit “has never lapsed for that long before, and it’s just outrageous,” said Robert Atkinson, president of the Information Technology and Innovation Foundation, a technology think tank. “The administration could have done a lot more to say this is a high priority, it has to happen.”

Philip Weiser, a senior White House adviser on technology and science issues, said the president will continue to press for spending on basic research and science and math education.

“You’re going to see this two-pronged message,” he said. “We have to be fiscally responsible but we also have to lay the groundwork for future prosperity.”

Contact Mike Zapler at 202-662-8921.