San Francisco Chronicle


Candidates Bow at High Tech's Altar
Both Republicans and Democrats claim Silicon Valley as their own
Carolyn Lochhead, Chronicle Washington Bureau Thursday, January 20,
2000

_________________________________________________________________

If there is any campaign stop that could be called a favorite in this
presidential contest, it is Silicon Valley.

Democrat or Republican, the next president will have visited the
Valley an untold number of times, raised millions of dollars there and
courted advice from its industrial titans.

And for good reason: Silicon Valley is the portal to the Digital Age,
which promises to alter American life as profoundly as the Industrial
Revolution did more than a century ago.

``The prominence of high tech as a transformative agent of American
society has become so obvious as to make any politician foolish for
not at least learning how to talk the talk, if not walk the walk,''
said Jim Pinkerton, a domestic policy adviser in the last two
Republican administrations and a campaign strategist for former
President George Bush.

Each of the four leading contenders for president, Democrats Al Gore
and Bill Bradley and Republicans George W. Bush and John McCain, has
been so supportive of the industry that it is often difficult to
discern their policy differences.

Yet apart from high-minded statements about embracing the future, the
candidates have yet to flesh out detailed positions on everything from
the growing immigration of skilled workers to the Microsoft Corp.
antitrust trial.

The first president of the 21st century will make decisions that will
have a profound and enduring influence on the high-tech industry and
the development of the Internet. Issues now on the table range from
how homes will connect to the Internet to setting standards on
privacy. There will be many more critical issues that no one can yet
imagine.

All but overlooked is the next president's power to tip the balance of
the federal judiciary, which will have the last word on the vast body
of commercial and regulatory law that will govern the Internet.

HANDS-OFF POLICY IN VOGUE

The old ideological divide that pitted Chamber of Commerce Republicans
against labor union Democrats has blurred into a new libertarian
strain from both parties that emphasizes markets and plays down
government intervention.

Even Bradley, who is running to the left of Gore for the Democratic
nomination, declared in a major address this month, ``The market
economy has triumphed, and governments everywhere are finding that
free markets engender free minds.''

Such is the zeitgeist that Ellen Stroud, spokeswoman for the Silicon
Valley lobbying group TechNet, said, ``What's good for technology
companies is good for America.''

That brings to mind President Calvin Coolidge's famous declaration in
the 1920s, an era with many parallels, that ``The business of America
is business.'' And certainly none of the candidates is quite so blunt.
But all are unabashed in their courtship of the high-tech industry.

Gore supports a ``duty-free cyberspace'' just as vociferously as does
Bush, and Bush argues for bridging the ``Digital Divide'' between rich
and poor just as adamantly as Gore.

All four advocate China's entry to the World Trade Organization, one
of the Valley's top priorities. All want looser controls on computer
exports and encryption technology, all support tax credits for
research and development, all want free trade, all are for fixing
primary education.

Even on the issue of Internet taxes, where differences are sharper,
none advocates mining electronic commerce for revenue. (McCain has
made a permanent ban a campaign theme, forcing a reluctant Bush to say
he favors extending the current moratorium for ``several'' years; Gore
and Bradley say they do not want to tax Internet commerce, but do not
embrace a ban.)

Rather, each has gone out of his way to position himself as a leader
who understands and appreciates the New Economy.

With just that symbolism in mind, the Republican National Committee
chose the Bay Area for its winter meeting. ``Things have changed,''
said spokesman Mark Pfeifle. ``Now San Jose and Silicon Valley have
become the Main Street of the world. What's going on there is more
important to our futures than anything that's happening on Wall Street
or Pennsylvania Avenue combined.''

Democrats agree. ``I ultimately believe that whichever candidate is
seen as presenting the most modern economic vision that is going to
create opportunity in this new economy . . . is going to be the one
who will win the presidential race in 2000,'' said Simon Rosenberg,
executive director of the New Democrat Network in Washington.

It is no accident that the candidates fighting older battles have been
marginalized, political strategists say.

``The high-tech existence brings with it a kind of open-minded,
secular, tolerant world view,'' said Pinkerton. ``If you walk around
Silicon Valley, half the people there are immigrants from somewhere
else. They're not necessarily white or Christian or anything else.
Technology is shaping people's perceptions in a much different way
than Americans are used to, and you can't be on the wrong side of
that.''

CANDIDATES AVOID SPECIFICS

So far, the industry is pleased. ``By and large, these candidates are
getting up to speed, and they're very supportive of what we're trying
to do, which is first do no harm,'' said Intel Corp.'s Michael
Maibach, head of government affairs for the Santa Clara chipmaker.

Still, detailed positions on the more controversial issues -- such as
privacy restrictions or regulation of online pharmacies -- are often
lacking.

``Everything is stuck in bumper- sticker mode,'' said Adam Thierer, a
technology policy analyst for the conservative Heritage Foundation.
``At this point, it's easier to say you're in favor of high-tech
deregulation and Internet freedom and be no more specific than that.''

As the campaigns move out of the farms and small towns of Iowa and New
Hampshire and into California, differences are expected to sharpen.

Despite the appearance of a rough new centrism, the appetite for
libertarianism goes just so far in both parties, whether it is a
predeliction for economic regulation among Democrats or social
regulation among Republicans.

A sticking point for Democrats, some argue, is their loyalty to trial
lawyers and labor unions that puts them squarely on the wrong side of
two issues dear to Silicon Valley. The high-tech industry fought long
and hard to pass legislation limiting securities lawsuits, and its
congressional allies ultimately overrode President Clinton's veto.
Gore's reluctance last year to back another hard-fought bill limiting
Y2K-related liability angered industry leaders.

One of the industry's most pressing priorities this year is to
increase the number of so-called H1B visas to admit skilled
immigrants, a move that unions oppose. The Clinton administration is
not backing more visas for now, and neither Gore nor Bradley has
specifically addressed the issue.

McCain, by contrast, would eliminate the current cap altogether, and
Bush wants an increase, saying, ``We need to send a message of welcome
to earnest skilled workers from all over the world.''

Peter Huber, a senior fellow at the conservative Manhattan Institute,
contends that Democrats are also ``really quite eager to set standards
and protocols for a lot of ordinary economic discourse on the Web,''
citing the Clinton administration's move to have the Food and Drug
Administration regulate sales of prescription drugs via the Internet.

The weak spot for Republicans is their fondness for social regulation,
whether banning pornography and gambling from the Internet or a
general alliance with religious conservatives that is anathema to the
Silicon Valley ethos.

McCain is touting a measure that would require schools and libraries
to use filtering software to screen out Internet pornography, violence
and other unwelcome content. Bush has avoided that position, calling
instead for encouraging a more wholesome popular culture.

BUSINESS VS. SOCIAL VALUES

``High-tech issues cut across the traditional partisan divide,'' said
Mark Rozell, professor of politics at Catholic University, ``and it's
a problem for many Republicans, because they want to maintain the
support of the business community, but many are being pushed very hard
to regulate the content of the Internet.''

Take Utah Sen. Orrin Hatch, running for the GOP nomination, who
insisted that he wants to ``keep the government's mitts off'' the
Internet.

Yet Hatch is sponsoring legislation that would clamp down on Internet
alcohol sales, a position that California's wine industry contends
would open the door to much wider regulation of electronic commerce.

And even Democrat Bradley voted in the Senate in 1995 for the
GOP-sponsored Communications Decency Act that banned the transmission
to minors of any material deemed ``indecent'' or ``patently
offensive.'' The Supreme Court struck down the act 7 to 2.

Candidates make an attempt ``to claim high-tech'' said David Hart,
associate professor of public policy at Harvard University's Kennedy
School, ``but when you get down to the nitty-gritty on some of these
issues, there are some pretty powerful (opposing) forces out there --
on taxes you have state and local governments, on encryption you have
military intelligence and police, and on immigration you have
unions.''

But perhaps the most far-reaching and overlooked technology issue of
the 2000 campaign -- one where ideological differences will come into
full flower -- is the next president's power to name probably two and
as many as four new Supreme Court justices, and fill the ranks of the
rest of the federal judiciary.

Right now, the judiciary is in a ``virtual balance'' between judges
appointed by Democratic Presidents Jimmy Carter and Clinton and
Republican Presidents Ronald Reagan and Bush, said William Kovacic,
professor of antitrust law at George Washington University.

``You have almost an ideological divide between liberals and
conservatives, judges who have a strong case for government
intervention and those who are skeptics,'' said Kovacic. ``The next
president will tip the balance.''

That could determine whether Microsoft is broken up.

But far beyond that, for the high- tech industry and the millions who
use the Internet, the judiciary ultimately may set the course of
intellectual property, commercial and regulatory law -- including new
legislation -- for the Digital Age.

``I think the ability to pick judges,'' Kovacic said, ``is one of the
largest underestimated prizes in the November 2000 elections when it
comes to the business community and the design of legal rules that
affect them.''
_________________________________________________________________

KEY ISSUES IN THE HIGH-TECH INDUSTRY

The president has immense authority over issues that affect the
high-tech industry through the power to propose, support or veto
legislation. The chief executive also appoints the heads of regulatory
agencies, such as the Federal Communications Commission, and can issue
executive orders to regulatory agencies to lift or impose certain
rules. The Chronicle asked each candidate, through his campaign staff,
to state positions on seven related issues:

INTERNET TAXES(x)

Republicans George W. Bush Has said would favor extending the
moratorium for five years. John McCain Supports a permanent ban on
Internet taxation. Steve Forbes Supports permanent ban on Internet
taxes and would reduce or eliminate existing excise taxes on
telecommunications. Gary Bauer Opposes Internet taxes. Orrin Hatch
Supports permanent ban. Alan Keyes No response.

--Democrats Al Gore Supports current moratorium, but thinks state and
local governments face a ``fiscal catastrophe'' if they are denied
sales tax revenues from electronic commerce. Bill Bradley Supports
current moratorium, but also believes it would be ``irresponsible and
short-sighted . . . to discard all other options in the future.''

TEMPORARY VISAS FOR SKILLED WORKERS

George W. Bush Supports raising current annual cap of 115,000 and
wants to ``send a message of welcome to earnest skilled workers from
all over the world.'' John McCain Would eliminate the cap altogether
and admit an unlimited number of skilled workers. Steve Forbes
Supports raising cap. Gary Bauer No response. Orrin Hatch Supports
raising cap. Alan Keyes No response.

--Democrats Al Gore The current administration is not backing an
increase for now. Says ``as president, I would be prepared to revisit
this issue, but I really think we should emphasize preparing Americans
to fill these high-tech jobs.'' Bill Bradley No response.

BLOCKING PORNOGRAPHY

George W. Bush Supports requiring schools and libraries receiving
federal funds to use filtering software. John McCain Sponsoring ``The
Children's Internet Protection Act'' to require all public schools and
libraries that receive funds for Internet access (from a $1
telephone-bill surcharge) to install filtering software for Internet.
Steve Forbes Supports use of filtering software in schools and
libraries, but would leave decisions at local level. Gary Bauer Would
reopen obscenity prosecution at Department of Justice and create new
sections in other law enforcement agencies to pursue obscenity cases,
including Internet pornography. Orrin Hatch Supports requiring schools
and libraries receiving federal funds to use filtering software. Alan
Keyes Likes the ``V-chip'' that Congress mandated for televisions to
allow parents to control content, but he would not have required it.

--Democrats Al Gore ``I have generally supported industry
self-regulation over legislation.'' Would require every school and
library that receives funds from the $1 telephone-bill surcharge
(which Gore pushed) to ``come up with its own plan for protecting
children.'' Bill Bradley Urges caution using filters that can censor
material protected by the First Amendment.

INTERNET COMMERCE(y)

George W. Bush Takes no position on either wine or pharmacy issues.
John McCain Recuses himself on all alcohol issues because of his
wife's beer distributorship. On online pharmacies, says the Internet
is ``helping increase access to affordable prescription drugs.'' Steve
Forbes No specific position, but generally opposes government
regulation. Gary Bauer No response. Orrin Hatch Chief sponsor of
Internet wine bill. Alan Keyes No response.

--Democrats Al Gore Clinton-Gore administration proposed regulation of
online pharmacies. Administration has no position on wine bill. Bill
Bradley No position.

INTERNET PRIVACY

George W. Bush Applauds voluntary industry action to protect consumer
privacy. John McCain Believes industry self-regulation ``is taking
hold on the Internet and that further regulation may not be
necessary.'' Worries that regulation could impede the development and
deployment of new technology that may empower consumers to protect
their own privacy. Steve Forbes Would require a ``Privacy Impact
Assessment'' of all new legislation, wants a one-page census form and
would encourage development of software to allow consumers to block
Web site operators from tracking consumers. Gary Bauer Accuses
Clinton-Gore administration of ``promoting numerous measures that
intrude upon the privacy of ordinary Americans,'' including medical
record data banks. Orrin Hatch Opposes ``a regulatory model for
protection of privacy on the Internet.'' Says there are ``signs that
industry efforts to date have largely been responsive to consumer
needs.'' Alan Keyes No response.

--Democrats Al Gore Proposes an ``Electronic Bill of Rights'' to give
consumers a legal right to ``choose whether personal information is
disclosed, the right to know how, when and how much of that
information is being used, the right to see it yourself, and the right
to know if it's accurate.'' Bill Bradley Says encryption is essential
to privacy protection and that Clinton administration's new plan to
loosen controls on encryption exports is ``a step in the right
direction.''

COMPUTER AND ENCRYPTION TECHNOLOGY EXPORTS

George W. Bush Says controls are often ``arbitrary and irrational''
and quickly overtaken by technology. Would streamline license approval
process for computer exports and attempt to ``revitalize'' cooperation
with allies to limit exports to militarily sensitive areas. John
McCain Sponsoring an encryption bill to try to ``strike a balance''
between the interests of the industry and national security. Bill
would establish a board to review encryption exports. Steve Forbes
Advocates freeing up sale of strong encryption technology to protect
personal and commercial privacy. Gary Bauer Wants greater government
scrutiny of national security concerns before any high-tech materials
are exported. Orrin Hatch No response. Alan Keyes No response.

--Democrats Al Gore Clinton-Gore administration eased controls on both
kinds of exports after significant bipartisan pressure from Congress.
Bill Bradley No response.

RESEARCH AND DEVELOPMENT TAX CREDIT

George W. Bush Supports. John McCain Supports. Steve Forbes Tax plan
contains no R&D credit. Would allow immediate write-off of all
business investment and reduce business taxes. Gary Bauer Supports
government-funded high-tech research, especially for the military.
Orrin Hatch Supports. A keen proponent of government defense-related
research and biomedical research funding. Alan Keyes No response.

--Democrats Al Gore Supports making current five-year extension
permanent and would extend credit to small businesses. Would double
federal spending on information technology research and increase
funding for biomedical research. Bill Bradley Supports.

(x) Congress imposed a three-year moratorium on taxation of Internet
transactions and charged a bipartisan commission to issue a report on
the matter this spring. (y) Two issues: Legislation pending in
Congress to crack down on Internet sales of wine, beer and liquor, and
Clinton-Gore administration plan to have the Food and Drug
Administration regulate Internet sales of prescription drugs,
including licensing online pharmacies.