The Iowa Caucuses kick off this evening and the Republican candidates have been pulling out all the stops to woo the voters, including (and this is of particular interest to us) championing an innovation agenda. We took a minute to investigate who is really prioritizing innovation, and who is just paying lip service. In no particular order:
The former House speaker is a self-described “conservative futurist”. Way back in the mid-90’s, when the internet was still fairly new and vaguely ominous, he came out against a bill that no other Republican would touch with a 10-foot pole: the Communications Decency Act, which basically criminalized smut on the internet. He said that the bill amounted to censorship and was therefore unconstitutional, and supported an alternative bill that didn’t compromise the openness of our internet. Score one for Newt.
Gingrich also led the pack a few weeks ago in the November 22nd debate when he advocated for skilled-worker immigration reform, saying that “we ought to have an H-1 visa that goes with every graduate degree in math, science and engineering so that people stay here.”
Gingrich’s economic plan is pure Reaganomics – with a proposed 12.5% Corporate Income Tax (cut from the current 35%) and the complete abolition of the Capital Gains Tax. Cutting the capital gains tax makes small businesses a more attractive option for investors, because their returns become tax-free. Gingrich also wants to repeal Sarbanes-Oxley, a set of regulations that make it difficult for startups to go public because compliance is both very costly and fraught with difficulties for smaller, less established businesses.
Fmr. Gov. Mitt Romney (R-MA)
Romney, who knows a little something about starting a business, having founded a private equity company, Bain Capital, has also focused his economic plan on tax cuts and reduced governmental regulation. Like Gingrich, he wants to cut the Capital Gains Tax, but without favoring the wealthy too much – his economic plan eliminates the tax for anyone earning up to $200,000. He also will repeal Sarbanes-Oxley.
In the November 22nd debate, Romney heartily agreed that high-tech graduates should be encouraged to stay in the country with an H1 visa upon graduation “to make sure we’re able to bring in the best and the brightest”.
Romney’s dedication to innovation isn’t new, and it’s a core part of his agenda. In 2009, in the midst of the worst of the recession, he told the Salt Lake Tribune that “The best thing the country can do is unleash the power of entrepreneurs and get of the way”. He is in favor of less regulation, and more enticement for potential investment in startups. His education policy includes an emphasis on high tech education, so American can grow some more of its own entrepreneurs.
Fmr. Sen. Rick Santorum (R-PA)
Santorum likes the internet as much as anyone – when asked what he thinks the greatest benefits of broadband access are, he fumbled for just a few seconds and then said that e-commerce helped his busy wife and himself keep their lives running smoothly. Hopefully he has since been schooled on the innovative and economic potential of a comprehensive and fast broadband network.
Santorum’s “Made in America” economic plan promises to “spur innovation” by increasing the Research and Development tax credit from 14% to 20% and making it permanent. The R&D credit is little used by startups but it should be – it’s available to pretty much any business with an engineer on staff. The plan includes lowering the Capital Gains Tax to 12% and cutting the Corporate Income Tax in half. Santorum also advocates for deregulation to “unleash innovation in telecommunications and Internet consumer options”, but doesn’t go into detail on how he plans to do so. As far as skilled immigration goes, Santorum said he believes in legal immigration and that it is “a great wellspring of strength for our country”.
The Rest of the Field
Rep. Michelle Bachmann (R-MN), who says government overregulation is the single biggest jobs killer, is in strong support of skilled-worker immigration. She said of Steve Jobs’ moving his business operations to China to be able to take advantage of high-tech workers there, “If we can utilize these workers, like Steve jobs wanted to, then we need to offer those visas. That will help the United States.”
Gov. Jon Huntsman (R-UT), who isn’t competing in Iowa but rather staking his campaign in New Hampshire, wants to make America more business and investor friendly and create opportunities for what he calls the “creator class” – the newest generation of college graduates who he sees as innovators.
Rep. Ron Paul (R-TX), in his succinct way, when questioned on how he would feel about federal regulation or taxing internet use, replied “Not very good, I’ll tell you that”. Us too, Ron. Paul also opposed the SAFE act in 2007, a piece of legislation that would potentially have led to internet censorship and privacy concerns. As far as Research and Development subsidies? Paul says they are “bound and determined to always misdirect money to political cronies”.
What the Obama Administration has been doing:
The current administration has been focused on these issues too. Pres. Obama promised to eliminate the capital gains tax on investments made by small and startup businesses in 2008, which he has done – although there are some restrictions which make it more difficult for all startups to take advantage of the tax credit.
The administration also has a set of visas its pushing for skilled immigration, including the H1-B and the EB-2, specifically designed to attract high-tech workers from overseas and spur innovation. There’s also the EB-5, designed to reward a green card to foreign nationals who invest hefty sums in American businesses.
Probably Obama’s biggest commitment to innovation, though, is his alliance with the Startup America Partnership. Obama committed $1 billion in funds to be put towards early-stage investment, promising to match the investments of venture capital firms in small business startups. You can read what we said about this here.
The good news is, no matter who you support, most of the candidates seem to be wise to the fact that innovation and entrepreneurship are a big deal to American voters right now – it just remains to be seen how their final policies will shape up and what will result from Iowa and beyond. And it’s up to us to hold their feet to the fire to make sure whoever comes out of the rugby scrum that is our electoral process is faithful to their commitments to champion an industry that drives the Engine of our economy.
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