US stimulus bill smiles on IT

Big Blue cries heard

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The beleaguered IT industry is salivating as the US Congress has taken one more step towards putting a massive stimulus package together that will, among other things, put tens of billions of dollars of borrowed money into the industry's coffers.

David Obey, Democratic chairman of the House Committee on Appropriations, introduced a stimulus package proposal yesterday that closely tracks many of the suggestions that incoming President Barack Obama has made to goose the American economy. The American Recovery and Reinvestment Bill of 2009 starts off by reminding us that the country has lost more than 2 million jobs in the last four months and adds that employers in the United States are expected to cut another 3 to 5 million jobs in 2009.

To that end, the stimulus package being proposed by the House has $275bn in tax cuts and $550bn in investments that House members believe could create or save somewhere between 3 and 4 million jobs across the US economy. That $825bn ticket exceeds $700bn bailout of the banks last fall, and considering that the Senate will now want to put its imprint on the stimulus package before it becomes law, it is hard to believe that the tax cuts will not grow and infrastructure spending will not be boosted further before a final bill is sent President Obama.

The tech industry does pretty well in the bill, available here (PDF). Which just goes to show you that networks and systems are just as important in the early 21st century as bridges, roads, and schools were in the 20th century. (The only trouble is that in 21st century America, we still need bridges, roads, and schools, which are not in a great state of repair these days).

The bill coming out of the House sets aside $32bn for energy initiatives, including $11bn for research and development for an upgrade to the nation's electrical power grid. This "smart grid" effort aims to make the power system more efficient in its own right and to give energy users smart meters that will encourage them to change their behavior. The idea is that once people can see what it costs to use power throughout the day, they will change their energy use patterns, thereby putting less strain on the system while saving money at the same time.

The idea is smart grids will make us smarter energy users, and it is one that IBM chairman Sam Palmisano and a Washington think tank called the Information Technology and Innovation Foundation have pitched to the Obama transition team as a means of creating and maintaining jobs in America. IBM and the ITIF cooked up some numbers together suggesting that if the gov spends $30bn on smart grids, healthcare IT, and expanded broadband internet service, it would not only improve the country's infrastructure, but also create or maintain around 900,000 jobs in the economy.

Most of those jobs from the $30bn in spending proposed by IBM and the ITIF are produced through "network effects" in the economy. Very few come directly through the tech suppliers that are installing the gear involved in these three areas.

Anyway, in less glamorous energy initiatives, the House bill includes $16bn in spending to repair public housing and make it more energy efficient and another $6bn to help most-income homeowners weatherize their homes. The energy portion of the bill also sets aside $2bn for research and deployment of energy efficiency and renewable energy technology and $2bn to support U.S.-based makers of batteries so they can catch up to companies in Asia that have better products.

The bill includes $6bn to expand broadband Internet access around the country for rural and other under-served areas like the inner cities, which both usually get technology last. Exactly how this money will be distributed is unclear, but the idea that the telecom and cable companies will be paid to do a job that they should have already been required to do by law is one that will rankle more than a few tax payers who already resent their high phone and Internet bills.

The bill assets that "for every dollar invested in broadband technology, the economy sees a ten-fold return on that investment." I love stats like that. They sound great, and they assert causality when even correlation is dubious. It's simple, really. You build out the internet because everyone has a right for access. Because it is the right thing to do.

The bill includes $10bn for investment for science facilities and research as well, some of which will end up aimed at IT and related fields.

And in another bumper for the IT sector, the House is proposing to spend $20bn on computerizing the medical records at medical offices, clinics, and hospitals that do not currently do this. Only 1 in 20 of the medical offices in America have computerized patient records. That may seem odd given the ubiquity and cheap nature of PCs and servers these days and the availability of applications to do this may seem odd. But paper doesn't crash and writing is easy, which is why doctors offices still depend on paper records.

President-elect Obama and plenty of others in his incoming administration believe that medical care could be improved - and preventive healthcare be given - through computerization of medical records. To that end, the bill includes $4.1bn in initiatives to measure and evaluate preventive healthcare treatment, which will feed back into whatever healthcare overhaul President Obama and his team come up with to overhaul the healthcare insurance industry.

America has plenty of "shovel-ready" infrastructure projects that can create or maintain jobs, and these are being funded by the bill to the tune of $30bn for highways, $31bn to make Federal building more energy efficient and to upgrade other public buildings, $19bn for water and flood control projects, and $10bn for public transportation and rail system improvements.

Other big items include $41bn pumped into local school districts and $79bn kicked into the states to help them prop up their educational institutions. There's another $15.6bn for increasing Pell grants for college students and $6bn to modernize higher education. The rest of the money is spent on extended unemployment benefits, healthcare insurance payment assistance for the unemployed, and food stamps. There is a whopping $87bn being kicked into the Medicare system too.

The tax cuts are promised to give "tax relief to 95 per cent of American workers, and spur investment and job growth for American Businesses." ®

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