The Channel logo

News

By | Timothy Prickett Morgan 4th February 2009 23:34

IT questions Obama's IT stimulus

Don't Buy American

As Republicans in the US Senate take their sharp knives to President Obama's stimulus plan, the Computing Technology Industry Association (CompTIA) has some free advice for America's lawmakers.

CompTIA is thrilled that IT is playing such a big role in the stimulus package, accounting for $37bn of the $825bn in the House version of the bill that passed last week. But the IT lobbying group wants to throw in some extra bennies for the IT industry - and caution lawmakers about implementing so-called "Buy American" provisions in the bill, which seek to keep the stimulus packaging doing its stimulating at home.

(If Bill Clinton had done this, we wouldn't be in such a mess. But that's another story).

"As the contours of the recovery package take shape, we see much that we like," explained Todd Thibodeaux, president and CEO at CompTIA in a statement. "The package's focus on 'greening' America and its technology, boosting uptake of health information technology (HIT), promoting more broadband, and repealing government withholding taxes on government contract work, among others, excite us. That noted, we feel a few important proposals could work better to enhance the package's overall effectiveness in our recovery."

Specifically, CompTIA wants to make permanent the tax deduction for small businesses that allows them to buy up to $250,000 worth of IT equipment. This deduction was a temporary provision put into the Bush Administration's $152bn stimulus package, signed in February 2008, as the American economy was beginning to weaken. The Bush tax benefit for IT spending at SMBs does not expire until the end of 2009, and not surprisingly, CompTIA - meaning its members, who are IT vendors and their resellers - want the tax breaks to be made permanent.

Such a move would make it easier for small companies - key to the recovery in the American economy - to keep investing in new gear. They'll be able to get those investments off their books quickly rather than depreciating them over many years.

Thibodeaux banged the "IT skills shortage" drum, saying that the federal and state governments have to work together to invest in IT skills. "Though the proposals place much hope on IT to help our economy, at bedrock, technology works only at the hands of skilled IT workers. Yet, we have a perennial shortage of IT-skilled technicians in America," said Thibodeaux.

"We urge that the underlying federal and state programs that deliver those skills to workers be updated, becoming more market-driven and focused toward 21st century, IT-driven skills. If we cannot improve upon this critical investment in human capital, then IT's role in our recovery will be greatly diminished."

Oh, the Irony

The are a number of different ironies in this statement. How many IT people have been out of work for the past decade as IT industry players pumped up their imports of workers using H-1B visas or off-shored hardware or software development labs to Eastern Europe and Asia? An equally strong argument can be made that there isn't an IT skills shortage in America so much as a shortage of companies willing to pay a living wage and to provide training to existing IT employees to learn the new skills that will be required to build modern applications.

To be fair, there are plenty of lazy bastards in IT departments who have rusty skills and who have learned to keep their heads down and not make a lot of noise as they collect their paychecks. But you can't blame the government for the IT skills issue, and you can't expect the government to fix it. Bill Gates could fix it in a heartbeat. This might work: Bill G decides to take a few billion of the Gates Foundation bucks and create free scholarships to comp-sci majors who go to state schools, and IT suppliers agree to guarantee jobs to students who make decent grades. If that sounds too pricey, how about no-interest loans instead of tuition grants? Make people pay the money back to the Foundation. They'll gladly do it.

While complaining about the IT skills shortage, Thibodeaux didn't offer any practical advice on how the Obama stimulus package might address the issue.

CompTIA suggested that Congress and the Obama administration make it easier for value-added resellers, many of whom are relatively small companies, to get in on the IT parts of the proposed spending bill. "Small businesses lack the time and resources to navigate these complexities - a task made all the more difficult due to the tough economy," said Thibodeaux. "We hope that this will be taken into account as contracting and grant opportunities get ramped up. They should work for small companies, not act as added hurdles to their viability."

The IT lobby group is, as you might expect, particularly worried about the Buy American provisions, an effort to keep as much of the stimulus money circulating in the States as is practical. CompTIA is having none of that.

"We have long-held that 'Buy America' in most any of its forms imposes far greater costs than benefits on the free trade of goods and services across international borders. They run contrary to the manner in which the IT industry creates its offerings, the lion's share of which see development by small IT firms that use globally sourced components and services, and also access those growing international markets for sales. We believe that, though well-meaning, pernicious protectionism will result, ultimately shutting out U.S. companies from important foreign markets, and driving up costs for U.S. consumers. The 'Buy America' provisions should be stripped from the final package."

Given how much of IT hardware and software is created overseas - even if in many cases by companies that are technically headquartered in the United States - it is difficult to imagine how a Buy American provision would be implemented. And who is going to police it? That said, you can understand the desire to keep the dough from the stimulus package circulating on the home front as much as possible. ®

comment icon Read 17 comments on this article alert Send corrections

Opinion

Microsoft Surface bomb
Killer whale

Chris Mellor

Firm cites 'low demand' plus 'abusers'

Tim Worstall

Or why the reversal of globalisation ain't gonna 'appen

Features

No, silly... he was the fall guy for years of Finnish folly
Fraud image
Frodo and the Ring
Microsoft's strategy is to make Store apps popular. Good luck with that