With President-elect Barack Obama set to argue for urgent, massive government spending, and what is likely to be a $1.2 trillion deficit, lobbyists for technology firms are saying that any stimulus should be directed at, well, technology firms.
A report released Wednesday by the Information Technology and Innovation Foundation says that spending $30 billion in taxpayers' money in 2009 on broadband infrastructure, health IT, and electric grid technologies could create or save approximately 949,000 U.S. jobs. More than half of those jobs, the report claims, would be in small businesses.
Directing stimulus dollars toward IT infrastructure will have a greater impact on jobs and productivity than investment in traditional infrastructure, the report argues, because of the potential to indirectly create new jobs through the growth of new services and applications that depend on IT.
"With the U.S. economy now mired in a deep, and potentially prolonged, recession, increased investment is one of the best tools to stimulate aggregate demand and quickly get American workers back on payrolls," the report says. "Ignoring IT infrastructure investments will do nothing to save U.S. taxpayers' money; instead, it will simply shift the proportion of the economic stimulus money that goes to other areas, some of which, including personal consumption, do not offer many added benefits such as longer-term economic growth or innovation."
This report follows the same general path as a series of other requests for bailouts and spending. The list includes motorhome makers, home builders, governors, the city of Gary, Ind., and even some newspapers. Hustler magazine wants a porn industry bailout. The American Corn Growers Association wants handouts to ethanol plants experiencing "financial difficulty" and new "price supports" for farmers (for some odd reason, the group didn't include any antitrust investigations of Silicon Valley firms in its wish list this time).
The Information Technology and Innovation Foundation didn't say where the money would come from, but the government would presumably borrow it. Some economists support that concept as a way to recover from a recession. Others, like former Bush administration economist Greg Mankiw, say they're skeptical; George Mason economics professor Tyler Cowen says: "It is very hard to find examples of successful fiscal stimulus driving an economic recovery. Ever. This should be a sobering fact."
Nevertheless, ITIF says government spending of $10 billion over one year on broadband networks would create or sustain about 498,000 U.S. jobs for a year, the report estimates. In addition to facilitating a wide variety of services such as telemedicine, online education, and social networking, broadband networks create more high-paying jobs, the report says. IT jobs, according to the ITIF, pay 84 percent more than average jobs.
The report recommends that politicians focus on targeting broadband deployment in unserved areas and expanding network speeds with tax credits for cable and telecom companies.
Some argue that the stalled broadband adoption rates indicate that access is not the problem. A study released by the Pew Research Center in July 2008 showed 62 percent of dial-up users expressed no interest in broadband. The ITIF is also recommending the government encourage increased adoption by allowing broadband-related expenses to qualify for the Lifeline and Linkup programs, through which the government provides discounts to income-eligible individuals for the installation costs of telephone service and for monthly telephone bills.
Spending $10 billion specifically on health IT would create 212,000 new U.S. jobs, the report estimates, and would lead to fewer medical errors and reduced health care costs. The jobs related to health IT spending would come to fruition in computer hardware production, IT services, and among other things, additional job growth in related industries that develop out of the health IT sector.
The report also recommends spending federal funds for "smart grid" infrastructure, or a modernized power grid that uses two-way communication, sensors, and advanced IT to work more efficiently. About 239,000 jobs would be created, the report says, if $10 billion were spent on the smart grid. Beyond employing people directly to build the smart grid, the spending would "spur a host of innovative new products and services from hybrid plug-in electric vehicles to smart appliances to more investment in renewable energy," the report says.
CNET's Declan McCullagh contributed to this report