Copyright 2004 Knight Ridder/Tribune News Service

San Jose Mercury News

June 25, 2004, Friday

With Silicon Valley finally recovering from the dot-com bust, both Sen. John Kerry and President Bush pitched themselves as advocates of high-tech Thursday.

Kerry spoke at San Jose State University about creating jobs through investment in technology, particularly high-speed Internet access. He repeated a call to bring a national broadband network to the remotest rural areas "just the way we brought electricity to every home in America."

Kerry was buoyed by an endorsement from former Chrysler Chairman Lee Iacocca, who supported Bush in 2000 but now says he wants a change at the top. "We need a new CEO and president," Iacocca said. "I say this not as a partisan but as an unabashed patriot."

The Bush campaign pointed out that the president has been endorsed by tech leaders, such as E-Bay's Meg Whitman. Not to be outdone on technology issues, Bush on Thursday reiterated the plan he announced this spring for affordable broadband to be available nationwide by 2007.

"We're seeing the spread of broadband throughout the country," he said, while speaking about the nation's business climate at the Commerce Department in Washington. "Yet, on a per capita basis, America ranks 10th amongst the industrialized world. That's not good enough."

Kerry and Bush do not differ radically on their approach to the issue of broadband. Kerry would rely more on giving tax credits to the companies that build the networks in rural areas or at faster speeds anywhere in the country, while Bush focuses more on removing regulatory obstacles.

"Tech issues really do not break down on partisan lines," said Rick White, the CEO of TechNet, a bipartisan advocacy group for the high-tech industry. The group estimates that building a network could spur the creation of 1.2 million jobs nationwide, a figure that Kerry used in his speech.

Broadband has failed to take off as fast as technology advocates would like, largely because the economy has been so slow to recover from the tech bust. The tech meltdown was itself brought on in part by excessive investment in telecom networks that failed to connect to large numbers of homes. Even as high-speed Internet has become more available, reaching about half the homes in urban areas, new applications have demanded more bandwidth and greater speed than is now available in most places.

As the economic picture has brightened, with the creation of more than 1 million new jobs nationwide since January, Kerry has shifted his focus from attacking Bush for losing jobs to promoting himself as the better candidate to return the country to boom times. Bush, in turn, says the recovery is a result of his tax cuts.

Terry Christiansen, a political science professor at San Jose State University, said the candidates were shrewd to seize on the broadband issue as a means of promoting their high-tech credentials. Unlike the arcane question of expensing stock options, broadband can readily be understood by Americans who use the Internet.

"I think it's an issue that enables them to talk about high-tech but not so narrowly that it only appeals to Silicon Valley," he said.

Kerry said Bush's remarks on promoting broadband access were just "rhetoric" that the president included only as a retort to Kerry's focus on technology.

"The president talks, period. He has no policy," Kerry said in a conference call with reporters after his speech. "He's had no initiative. He's been president for four years and he's only been talking about it because I've been talking about it. I have a plan."

Bush also spoke about the need for broadband this spring in speeches in Minnesota and New Mexico, although his remarks then also came as Kerry was focusing on the issue.

Kerry also proposed eliminating the capital gains tax for investments in small businesses for at least five years, an idea he floated at a Stanford University appearance in December. The cut would help venture capitalists who put money into start-ups.

The idea was warmly received by several venture capitalists, although it was not at the top of their list of things a president should do to spur the economy.

Andy Bechtolsheim, a founder of Sun Microsystems and an early investor in Google, was more interested in stopping the Federal Accounting Standards Board from adopting new rules to require companies to expense stock options. But he said Kerry's idea would help.

"It enhances the return for investors," he said at a rally in downtown Palo Alto to protest the proposed stock option rules, an issue that Kerry did not address directly. Kerry once opposed expensing stock options, but changed his mind after the corporate accounting scandals.

The Bush campaign said the president had done more to stimulate the Silicon Valley economy through his tax cuts.

"The technology industry has always needed a strong economy for it to flourish," Floyd Kwamme, a venture capitalist who has been one of Bush's most prominent Valley supporters, said in a statement released by the campaign. "The president's pro-growth policies have helped restore the economy."