Kerry makes pitch to high tech

Democratic candidate promises investments in research and broadband, plus tax breaks for start-ups and other small businesses.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
5 min read
SAN JOSE, Calif.--Democratic presidential candidate John Kerry called for tax cuts on long-term investments in start-ups and other small businesses, as part of a speech focusing on his proposed technology policy.

Flanked at a rally here by former Chrysler Chairman Lee Iacocca, Kerry on Thursday called for a more "innovative economy," with greater investment in broadband Internet technology, science and math education and research.


What's new:
Democratic presidential candidate John Kerry promises investments in research and broadband, plus tax breaks for start-ups and other small businesses, at a rally in Silicon Valley.

Bottom line:
Details of Kerry's technology platform have been long awaited by the Silicon Valley community, which has been avidly courted by both political parties in recent election cycles.

More stories on this topic

"Technological revolution is the foundation of a 21st century economy," Kerry said. "But it's up to us to build on that foundation, so we can create and expand 21st century jobs. We won't get very far with a government that wants to stifle or ignore the creativity and entrepreneurship that's going to produce the next big idea."

Details of Kerry's technology platform have been long awaited by the Silicon Valley community, which has been avidly courted by both political parties in recent election cycles. High-tech endorsements translate into considerable campaign cash, as well as a more intangible aura of key business support.

President Bush gave his own speech in Washington on Wednesday, focusing on his high-technology initiatives. He concentrated specifically on the benefits of high-speed Internet connections for education, health care, business and homeland security.

Click here to Play

He cited his previously announced support for extending the ban on Internet access taxes, a key part of his drive to stimulate universal broadband access by 2007. He also urged Congress to pass legislation that would free up some government-controlled wireless spectrum for use by broadband services.

"As broadband expands, it's going to enable us better to protect our homeland, which is a vital concern of any of us in our government," Bush said, according to a transcript provided by the White House.

Kerry's proposal involved several components, including:

• cutting long-term capital gains taxes resulting from investment in small businesses and "reforming or eliminating" regulations that he said block America's high-tech competitiveness. He specifically cited venture capital investment in technology start-ups.

• offering a 20 percent tax credit to companies that invest in next-generation high-speed Net infrastructure. First responders, such as fire fighters and emergency crews, should have universal access to broadband services by the end of 2006, he said;

• increases in government-funded university research, including the extension of the research and development tax credit;

• more investment in elementary and secondary math and science education, and incentives for colleges to increase the number of science and engineering graduates.

Kerry said he would pay for these proposals by auctioning off TV spectrum, after a transition to digital television, for other licensed use. That and other spectrum auctions would raise $30 billion in revenue, he said.

Other positions
Kerry also staked out detailed positions on a number of issues close to the technology industry but less known in mainstream America. He said he would shift security policies that currently limit some computer hardware exports to focus more on classified software products used to design weapons. He also said he would end diversion of patent fees, something that technology advocates have sought for years in order to cut down on bogus intellectual-property claims.

President Bush has made his own appeals to the technology industry in recent months, calling for universal access to broadband Internet connections by 2007 and touting his tax cut policies. One group of technology executives, including Cisco Systems Chief John Chambers and eBay CEO Meg Whitman, has already endorsed the incumbent.

Kerry has already tread on some toes in Silicon Valley, telling union leaders that he supported making businesses expense stock options and referring to company executives that send jobs overseas as "Benedict Arnold CEOs."

An unrelated rally in Palo Alto, Calif., on Thursday featured Silicon Valley employees protesting against proposals to treat stock options as corporate expenses for accounting purposes.

Kerry's event echoed a similar trip that then-candidate Bill Clinton made in September 1992, when he held a 5,000-person strong rally on the San Jose State campus shortly before an event announcing the endorsement of key Silicon Valley executives.

That moment proved critical for the Democrats in 1992, as many of the business leaders had previously been staunch Republicans.

Kerry was appealing to a Silicon Valley that was in some senses similar to what Clinton faced in his first national election year. In 1992, the region was still suffering through the tail end of a deep recession, and Santa Clara county itself had lost 20,000 manufacturing jobs in 18 months.

Special report
Offshoring: The reality
behind the politics

CNET News.com looks hard
at the problem, solutions.

The boom-and-bust cycle of the dot-com era led to much more severe losses, however. The Silicon Valley region has lost closer to 200,000 jobs since the peak of the Internet bubble, or close to a fifth of its total employment base, local economists say. Unemployment now stands at about 5.9 percent, a figure that hides the migration of many workers out of the region altogether.

On Thursday, Kerry weighed in on the hot-button issue of offshoring, reiterating his position on ending tax breaks for companies that send jobs overseas. "We can and we must, and when I'm president, I will end the tax breaks that force American workers to subsidize the loss of their own jobs."

The valley also has become more politically active over the past 12 years, driven by bread-and-butter issues such as tort reform and stock option expensing, as well as longer-term issues such as education.

In the 2000 election cycle, computer-related companies, individuals and political-action committees gave more than $39 million to federal campaigns, skewing slightly to the Democratic side, according to the Center for Responsive Politics. Through April of 2004, computer-related groups had given nearly $12 million, with 52 percent going to Republicans.

Iacocca, who endorsed George Bush in 2000, announced his switch on Thursday. "The world is changing. Our country is changing," he said. "We need a leader who understands the change that is taking place."

Noticeably absent from the rally were top Silicon Valley executives. Santa Clara County Democratic Party Chairman Steve Preminger said business leaders had been in attendance at Kerry fundraisers held Wednesday in the San Francisco Bay Area.

The audience, made up largely of supporters, reacted favorably to the speech.

Otto Lee, a Sunnyvale, Calif., patent attorney and City Council member, said Kerry's proposals for investment tax credits and research would be good for Silicon Valley. "It's very clear that he is willing to commit the dollars to research of new ideas," Lee said. "That will help create new jobs, and jobs are what we need."