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#### #### #### | A TECHNOLOGY POLICY FOR AMERICA
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EFFector Online November 4, 1992 Issue 3.08
A Publication of the Electronic Frontier Foundation
ISSN 1062-9424
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A TECHNOLOGY POLICY FOR AMERICA Six Broad Initiatives
by Bill Clinton
(September, 1992)
The Clinton-Gore technology policy consists of six broad initiatives
that together will restore America's technological leadership:
1. Building a 21st Century Technology Infrastructure.
Infrastructure has traditionally been the responsibility of federal and
state governments. Investing in infrastructure means more than repairing
bridges, harbors and highways. Today, the United States faces a new
series of communications, transportation and environmental needs for the
21st century. The creation of a 21st century infrastructure program
would serve as a critical technology driver for the nation. It would
stimulate major new national R&D efforts; create large, predictable
markets that would prompt significant private sector investments; and
create millions of new jobs.
A 21st century infrastructure would address many practical problems. For
example, the government can serve as a catalyst for the private sector
development of an advanced national communications network, which would
help companies collaborate on research and design for advanced
manufacturing; allow doctors across the country to access leading
medical expertise; put immense educational resources at the fingertips
of American teachers and students; open new avenues for disabled people
to do things they can't do today; provide technical information to small
businesses; and make telecommuting much easier. Such a network could do
for the productivity of individuals at their places of work and learning
what the interstate highway of the 1950s did for the productivity of the
nation's travel and distribution system.
Each year, I plan to devote a significant portion of my four year, $80
billion Rebuild America fund to laying the groundwork for the nation's
infrastructure needs in the 21st century. Federal funding for the
National Research and Education Network is one example of how the
federal government can serve as a catalyst for private sector
infrastructure investment. We will also provide additional funding to
network our schools, hospitals and libraries.
As part of the effort to assess U.S. needs and develop appropriate
programs, the federal government must monitor, or "benchmark", what
foreign governments are doing. For example, the Japanese government has
committed to invest over $120 billion by 1995 to develop a digital
broadband communication infrastructure called the Information Network
System, and plans to invest another $150 billion to establish model
programs for business and residential users.
A comprehensive infrastructure program must also include effective
standards and regulations. By establishing reasonable standards and a
constructive regulatory environment, the government can send clear
signals to industry about important, emerging markets and spur private
sector investment. For example, the digital standard that the Federal
Communications Commission (FCC), in cooperation with industry,
established for high resolution television provides an excellent
indication of the future technical direction of the industry and will do
much to facilitate private sector R&D.
A 21st century infrastructure program should consist of the following
five elements:
Funding the establishment of key networks and demonstration
projects;
Benchmarking U.S. programs against those of other major industrial
nations;
Establishing standards and a regulatory climate that fosters
private sector investment;
Involving the federal labs, companies, and universities in
conducting R&D on key technical issues; and
Providing training for users of networks and databases.
2. Establishing Education and Training Programs for a High-Skill
Workforce.
The U.S. education system must make sure that American workers have the
requisite skills. The focus should be not only on the top American
students who measure up to world-class standards, but also on average
and disadvantaged students. It must also take into account the need to
upgrade workers' skills and help people make the difficult transition
from repetitive, low-skill jobs to the demands of a flexible, high-skill
workplace. Unlike Germany, the United States does not have a
sophisticated vocational education program, and unlike Japan, U.S. firms
do not have a strong incentive to invest in the training and retraining
of their workers. We need more of both, geared to meet the needs of the
mobile U.S. workforce.
I will implement the following programs to strengthen the skills of
America's workforce:
Establish tough standards and a national examination system in
core subjects like writing, communication, math and science;
level the playing field for disadvantaged students;
reduce class sizes;and give parents the right to chose the public
schools their child attends.
Establish a national apprenticeship program that offers non-
college bound students training in a marketable skill.
Give every American the right to borrow money for college by
establishing a National Service Trust Fund. Students can repay
their borrowing as a percent of their earnings over time, or by
serving their communities for one or two years doing work their
country needs.
Stimulate industry to provide continuing, high skills training to
its front-line workers.
For small manufacturers to compete today, it is not good enough simply
to have access to new equipment and new technologies if their workers do
not have the skills and know-how to operate them efficiently, and engage
in truly flexible production. Yet, too much of our training is for only
top executives or workers after they have lost their jobs.
My plan calls for companies with over 50 employees to ensure that 1.5
percent of their payroll goes to training throughout the workforce --
not just for the top executives. But we must do more for smaller
companies who cannot afford to set up the training programs. These
companies need to adapt to new technologies and new equipment and the
constantly new demands.
New production technology should be worker-centered and skill-based, not
skill-eliminating. In the high-performance workplace, workers have more
control over production and worker responsibility is increased. Some
companies that have invested billions in new capital equipment have
found that genuine employee involvement and good labor-management
relations are ultimately more important. Therefore we need to undertake
the following:
Manufacturing training centers:
We need to promote private sector-led efforts to set up training
for small companies. These can be done by building off community
colleges training and should be an integral part of the network of
Manufacturing Extension provisions. These would also be integrated
with my Apprenticeship initiative so that young people will have
the opportunity to learn specific skills needed for specific
manufacturing jobs or industries. Councils including private
sector and academic leaders as well as workers would help decide
generic areas for training.
Certificate of training guarantees:
In order to be eligible for federal funds for manufacturing
training centers, such centers would have to provide all future
employers with a Certificate of Guarantee. This would ensure that,
when workers do not pick up the necessary skills the first time,
these centers would provide additional training -- at no
additional cost to the employer.
Best Practices on Worker Participation:
An integral function of the Manufacturing Extension Centers will
be to collect and disseminate information on "best practices" with
regards to worker participation. Increasing worker productivity is
one of the keys to increasing overall manufacturing productivity.
3. Investing in Technology Programs that Empower America's Small
Businesses.
A healthy and growing small-business sector is essential to America's
economic well-being. America's 20 million small businesses account for
40 percent of our GNP, half of all employment, and more than half of the
job creation. My technology policy will recognize the importance of
small and medium-sized business to America's economic growth with:
Market-driven extension centers:
Creating 170 manufacturing centers will put the best tools in the
hands of those companies that are creating the new jobs on which
the American economy depends by helping small- and medium- sized
manufacturers choose the right equipment, adopt the top business
practices, and learn cutting-edge production techniques. In order
to enhance U.S. industrial competitiveness, public policy must
promote the diffusion and absorption of technology across the U.S.
industrial base. Some state and local governments are already
involved in technology diffusion using manufacturing centers. They
are helping small businesses improve the productivity of their
existing machinery and equipment, adopt computer-integrated or
flexible manufacturing techniques, and identify training needs.
The Commerce Department has five Manufacturing Technology Centers across
the country and has plans for two more. Unfortunately, these efforts are
only a drop in the bucket compared to those of our major competitors.
Germany has over 40 contract R&D centers (Fraunhofer Gesellschaft) and a
broad network of industry associations and research cooperatives that
effectively diffuse technology across industry. In Japan, major
government-sponsored research projects, 170 kohsetsushi technology
support centers for small businesses, and tight links between companies
and their suppliers serve much the same function. There is no comparable
system in the United States.
A Clinton-Gore Administration will build on the efforts of state and
local governments to create a national technology extension program,
designed to meet the needs of the millions of small businesses that have
difficulty tracking new technology and adapting it to their needs.
The involvement of workers is critical to developing and executing
successful industrial extension programs. In technology, as in other
area, we must put people first. New production technology should be
worker-centered and skill-based, not skill-eliminating. In the high-
performance workplace, workers have more control over production and
worker responsibility is increased. Some companies that have invested
billions in new capital equipment have found that genuine employee
involvement and good labor-management relations are ultimately more
important.
No less than 25 of these new manufacturing centers will be regional
technology alliances devoted to regions hit hard by defense cut-backs.
These alliances could promote the development of dual-use technologies
and manufacturing processes on a regional basis. Extending the Small
Business Innovation Research Program (SBIR)
In addition to creating a national technology extension service for
small and medium-sized businesses, I will also expand the Small Business
Innovation Research Program. By requiring that federal agencies set-
aside 1.25 percent of their R&D budget for small businesses, this
program has helped create billions of dollars of new commercial activity
while improving the research programs of the federal government. Given
this track record, the SBIR program should be doubled over a period of
four years to 2.5% to accelerate the development of new products by
innovative small businesses.
Funding private sector-led training centers:
We also need a fundamental change in the way we deal with R&D and
technology if we are to lead a new era of American manufacturing.
Currently, our R&D budget reflects neither the realities of the post-
Cold War era nor the demands for a new national security. At present,
60% of the federal R&D budget is devoted to defense programs and 40%
percent to non-defense programs. The federal government should aim to
restore a 50-50 balance between defense and non-defense R&D. That is why
I have called for a new civilian research and development program to
support research in the technologies that will launch new growth
industries and revitalize traditional ones.
This civilian technology program will:
Invest in Private-Sector Led Consortia: When the private sector
creates consortia to share risks, pool resources, avoid
duplication and make investments that they would not make without
such agreements, government should be willing to do its part.
Support for consortia such as the SEMATECH, National Center for
Manufacturing Sciences and the Advanced Battery is appropriate. By
requiring firms to match federal contributions on at least a 50:50
basis, the government can insure that we are leveraging public
dollars and that they are market-led and market-oriented. Often
major companies are reluctant to invest in their suppliers and
assist them in quality management techniques, because they fear
they will go to another company. Private-sector-led consortia
allow the major companies to cure that problem by coming together
and agreeing on industry-wide efforts to invest in smaller
suppliers. Some of these consortia will be funded by the Advanced
Technology Program.
Inward Technology Transfer: While we must strengthen the links
between American R&D and American jobs, we must also develop a
strategy for acquiring, disseminating, and utilizing foreign
technologies. Our Government must increase the collection,
translation and dissemination of foreign scientific and technical
information.
4. Increasing Dramatically the Percentage of Federal R&D for Critical
Technologies.
I will view the support of generic industrial technologies as a priority
mission. The government already spends $76 billion annually on R&D. This
funding should be refocused so that more resources are devoted to
critical technologies, such as advanced materials, information
technology and new manufacturing processes that boost industrial
performance.
At present, 60% of the federal R&D budget is devoted to defense programs
and 40% percent to non-defense programs. This level of support for
defense R&D is a holdover from the massive arms build-up of the 1980s.
At the very least, in the next three years the federal government should
shift the balance between defense and non-defense programs back to a 50-
50 balance, which would free-up over $7 billion for non-defense R&D.
Having achieved this balance, the government should examine whether
national security considerations and economic conditions warrant further
shifts.
I will also create a civilian research and development program to
support research in the technologies that will launch new growth
industries and revitalize traditional ones.
This civilian technology program will:
Help companies develop innovative technologies and bring new
products to market;
Take the lead in coordinating the R&D investments of federal
agencies;
and Cooperate and consult with industry, academia and labor in the
formulation and implementation of technology policy and R&D
programs.
Advanced Manufacturing R&D:
The United States is currently underinvesting in advanced manufacturing
R&D. The federal government should work with the private sector -- with
the private sector taking the lead -- to develop an investment strategy
for those technologies critical to 21st century manufacturing.
Following the lead of my running mate, Al Gore, and several of his
colleagues, we must do more to support industry's efforts to develop the
advanced computer-controlled equipment ("intelligent machines") and the
electronic networks that will enable American factories to work as
quickly and efficiently as their Japanese counterparts. These
technologies also include flexible micro- and nanofabrication,
simulation and modeling of manufacturing processes, tools for concurrent
engineering, electronic networks that allow firms to share business and
product data within and between firms, and environmentally-conscious
manufacturing. According to industry experts, the United States has an
opportunity to capitalize on the emerging shift from mass production to
flexible or "agile" manufacturing.
5. Leveraging the Existing Federal Investment in Technology to Maximize
its Contribution to Industrial Performance.
R&D conducted at the federal labs and consortia should be carefully
evaluated to assure that it has a maximum impact on industrial
performance. Furthermore, cooperation between universities and industry
should be encouraged.
America's 726 federal laboratories collectively have a budget of $23
billion, but their missions and funding reflect the priorities that
guided the United States during the Cold War. Approximately one-half of
their budget is directed toward military R&D. By contract, the budget
for the National Institute for Standards and Technology (NIST) - the
only federal agency whose principal mission is to assist industry -
accounts for less than one percent of the total federal lab budget.
Despite several years of legislative reform and many new directives, the
labs still do not have the autonomy or funding to pursue joint ventures
and industry aggressively.
These labs and other private non-profit research centers are national
treasures because they house large, multi-disciplinary teams of
researchers who have honed the skills of balancing basic and applied
research for long-term, mission-oriented projects. It would take years
to match these special capabilities elsewhere. Today, the labs and
industry cooperate on defense needs; we need to change regulations and
orientation to get this cooperation on technology development for
commercial usage.
To remedy these problems, I propose the following:
The budget of the National Institute of Standards and Technology
should be doubled. Federal labs which can make a significant
contribution to U.S. competitiveness should have ten to twenty
percent of their existing budget assigned to establish joint
ventures with industry.
Private corporations should compete for this funding through
review by panels managed by the labs and made up of corporate and
academic experts. Lab directors should have full authority to
sign, fund and implement cooperative R&D agreements with industry.
Some labs, such as NIST, already have this authority, but others
do not.
Industry and the labs should jointly develop measures to determine
how well the technology transfer process is working and review
progress after 3 years. If these goals have not been met, industry
and the labs should reevaluate their involvement, and funds should
be redirected to consortia, universities and other organizations
that can work more effectively with industry for results.
University research accounts for a large part of the federal basic
research budget. Funding for basic university research should
continue to be provided for a broad range of disciplines, since it
is impossible to predict where the next breakthrough may come.
While maintaining America's leadership in basic research,
government, universities and industry must all work together to
take advantage of these new breakthroughs to enhance U.S.
competitiveness.
Cooperative R&D programs represent another opportunity. Consortia can
help firms share risks, pool resources, avoid duplication, and make
investments that they would not undertake individually. By requiring
that firms match federal contributions on at least a 50:50 basis, the
government can leverage its investments and ensure that they are market-
oriented.
Many industries are demonstrating a new found willingness to cooperate
to meet the challenge of international competition: SEMATECH has proven
to be an important investment for the industry and the Nation. It has
helped improve U.S. semiconductor manufacturing technology, helped
reversed the decline in world-wide market share of U.S. semiconductor
manufacturing equipment companies, and improved communications between
users and suppliers. U.S. automakers have recently formed the United
States Council for Automotive Research to develop batteries for electric
cars, reduce emissions, improve safety, and enhance computer-aided
design. The Michigan-based National Center for Manufacturing Sciences,
which now has 130 members, is helping to develop and deploy the
technologies necessary for world-class manufacturing. The
Microelectronics Computer Technology Corporation (MCC) is developing an
information infrastructure which will enable businesses to develop,
manufacture, deliver and support products and services with superior
speed, flexibility, and quality. U.S. steel-makers are cooperating to
develop manufacturing processes which would use less energy, create
fewer pollutants, and slash the time required to turn iron ore and coal
into steel.
A Clinton-Gore Administration will work to build a productive
partnership between government, research labs, universities, and
business.
6. Creating a World-Class Business Environment for Private Sector
Investment and Innovation.
Changes in America's tax, trade and regulatory policies are also needed
to help restore America's industrial and technological leadership. In a
global economy in which capital and technology are increasingly mobile,
we must make sure that the United States has the best business
environment for private sector investment. Tax incentives can spur
investment in plant and equipment, R&D and new businesses. Trade policy
can ensure that U.S. firms have the same access to foreign markets that
our competitors enjoy in the U.S. market. Antitrust reform will enable
U.S. firms to share risks and pool resources. Strengthening commercial
sections of our embassies will increase our ability to promote U.S.
goods abroad. Streamlining export controls will reduce the bureaucratic
red tape which can undermine competitiveness. And an overhaul of
cumbersome defense procurement regulations will strengthen both our
civilian and defense industrial bases. Permanent incentives for private
sector investment:
Too many federal incentives meant to spur innovation are on-again-off-
again programs that industry views as unreliable. As a result, they have
not realized their full impact. Several permanent tax measures should be
put in place immediately to stimulate commercial activity. They include
the following:
Make the R&D tax credit permanent to provide incentives for U.S.
companies that invest in developing new technology.
Place a permanent moratorium on Treasury Regulation 1.861-8: This
regulation increases the effective rate of U.S. taxation of R&D
and creates a disincentive for companies to conduct R&D in the
United States.
Provide a targeted investment tax credit to encourage investment
in the new equipment that we need to compete in the global
economy, and ensure that depreciation schedules reflect the rapid
rate of technological obsolescence of today's high-tech equipment.
Help small businesses and entrepreneurs by offering a 50% tax
exclusion to those who take risks by making long-term investments
in new businesses.
An effective trade policy:
The Bush-Quayle Administration has failed to stand up for U.S. workers
and firms. We need a President who will open foreign markets and respond
forcefully to unfair trade practices. I will:
- Enact a stronger, sharper Super 301 to ensure that U.S.
companies enjoy the same access to foreign markets that foreign
companies enjoy to our market.
- Successfully complete the Uruguay Round. This will help U.S.
manufacturers and high-tech companies by reducing foreign tariffs,
putting an end to the rampant theft of U.S. intellectual property,
and maintaining strong disciplines against unfair trade practices.
- Insist on results from our trade agreements. Although the U.S.
has negotiated many trade agreements, particularly with Japan,
results have been disappointing. I will ensure that all trade
agreements are lived up to, including agreements in sectors such
as telecommunications, computers and semiconductors. Countries
that fail to comply with trade agreements will face sanctions.
- Promote manufactured goods exports by small and medium
companies: To promote exports of manufactured goods, I will
strengthen the commercial sections of our embassies abroad so that
they can promote U.S goods, participate in foreign standards-
setting organizations, and support the sales efforts of small and
medium-sized businesses. We should also provide matching funds to
trade associations or other organizations who establish overseas
centers to promote U.S. manufactured goods exports.
Streamline Exports Controls:
Export controls are necessary to protect U.S. national security
interests and prevent the proliferation of nuclear, biological and
chemical weapons. Nonetheless, these controls are often overly
restrictive and bureaucratic, creating a mountain of red tape and
costing the U.S. tens of billions of dollars in exports -- while
undermining the competitiveness of the high-tech industries on which our
national security depends. The United States should:
- Further liberalize East-West export controls that are
unnecessary given the end of the Cold War.
- Avoid unilateral export controls and controls on technology
widely available in world markets. Unilateral controls penalize
U.S. exporters without advancing U.S. national security or foreign
policy interests.
- Streamline the current decision-making process for export
controls. While our competitors use a single agency to administer
export controls, the United States system is often characterized
by lengthy bureaucratic turf wars between the State Department,
the Commerce Department, the Pentagon's Defense Technology
Security Agency, the Arms Control and Disarmament Agency, the
Department of Energy, and the National Security Agency.
Antitrust Reform:
Increasingly, the escalating cost of state-of-the-art manufacturing
facilities will require firms to share costs and pool risks. To permit
this cooperation, the United States should extend the National
Cooperative Research Act of 1984 to cover joint production ventures.
Civil-military integration:
Department of Defense procurement regulations are so cumbersome that
they have resulted in an unnecessary and wasteful segregation of our
civilian and defense industrial bases. The military specification for
sugar cookies is 10 pages long. Government procurement is so different
from private sector practices that companies now set up separate
divisions and manufacturing facilities to avoid distorting the
commercial part of their business. The U.S. must review and eliminate
barriers to the integration of our defense and civilian industrial base.
These barriers include cost and price accounting, unnecessary military
specifications, procurement regulations, inflexibility on technical data
rights, and a failure to develop technologies in a dual-use context.
Taken together, the six initiatives discussed above comprise a
technology policy that will restore economic growth at home, help U.S.
firms succeed in world markets, and help American workers earn a good
standard of living in the international economy.
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