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Tech lobbying group focuses on R&D

Silicon Valley lobbying group TechNet says its primary focus this year is getting lawmakers to extend funding and tax credits for high-tech research and development.

The Silicon Valley lobbying group TechNet said today that its primary focus this year is getting lawmakers to extend funding and tax credits for high-tech research and development.

The bipartisan TechNet said that if the government funnels more money into university and corporate research in science, engineering, and technology, the outcome will be better for both the economy and education.

"We're calling for a doubling of research funding. Increasing investment in research benefits the whole economy," said John Doerr, who is TechNet's cofounder and partner at the venture capital firm Kleiner Perkins Caufield and Byers.

"We think this is one of the most effective ways to improve education," Doerr said. "For one thing, around the country there are hundreds of thousands of volunteers who come out of the college system that go spend time in our K-12 system mentoring kids."

When TechNet launched in July 1997, its agenda was thin but got results. The group helped usher in legislation to curb shareholder lawsuits against high-tech start-ups with volatile stock prices. It also successfully endorsed education reform plans, such as convincing California lawmakers to boost the number of charter schools in the state. Later this year, TechNet also will announce its agenda for K-12 education, which will likely focus again on California.

Still, TechNet's strength has been getting its members to contribute cash to politicians, making it the premier "meet and greet" organization for Silicon Valley by landing executives valuable face time with members of Congress and other Washington insiders. This year will be the true test of TechNet's influence with policy-makers, although it has picked an issue that already is gaining widespread support on Capitol Hill.

As expected, the group has set its sights on securing a permanent research and development (R&D) tax credit for the science and technology industries. Congress has extended the credit nine times over the past two decades, according to the House Science Committee.

TechNet contends that making the credit permanent will increase R&D expenditures by $41 billion over the next ten years. For now, the uncertainty of the credit deters companies from relying on it, thereby stifling overall investment, said TechNet president Reed Hastings.

"Because it's done so temporarily on a short and ad-hoc basis, it does not have the salutary effect on a company's R&D expenditures that it would if it were a long-term credit," he said.

The Clinton administration has pledged its support for the R&D credit and an increase in funding for high-tech research. The president's Information Technology Advisory Council tomorrow will release a report about how government investment affects technology industries and the economy as a whole.

In addition, Rep. James Sensenbrenner (R-Wisconsin), chairman of the Science Committee, and Sen. Barbara Boxer (D-California) already have introduced legislation to make the credit permanent.

Reps. Nancy Johnson (R-Connecticut) and Robert Matsui (D-California) and Sens. Orrin Hatch (R-Utah) and Max Baucus (D-Montana) also are expected to introduce similar bills tomorrow. Their legislation will provide a 20 percent credit for companies' incremental investments.

There are many supporters behind securing the permanent tax credit, but obtaining more federal dollars for research may be a harder battle to win. Since 1987, federal funding for research decreased by an average of 2.6 percent per year, according to TechNet.

"By providing the spark for innovation, federal investment in basic, long-term research is the pilot light, which can ignite whole new industries," Doerr said. "In the case of the Internet, for example, federal investments in the 1960s provided a technological launch pad for thousands of companies in the 1990s, enabling the creation of billions of dollars in value and wealth."