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US House OKs Obama's IT stimulus

$825bn bill hits Senate

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The U.S. economic stimulus bill espoused by President Obama - and a bunch of IT luminaries hoping to benefit from spending on infrastructure projects - was approved yesterday by the House and will now move on to the Senate.

The president used the occasion to invite some IT heavy hitters to the White House for a roundtable meeting and to show their support for his plan, which has been adopted without much change by the House other than increasing spending levels and tax cuts. The vote in the House was 244 Democrats for, and 11 Democrats and all 188 Republicans against.

The Republicans want more tax breaks for businesses and individuals and a lot less spending to build out infrastructure and to extend unemployment, healthcare, and other benefits to citizens either directly or indirectly through grants to the states. No amount of bipartisan friendly talk and arm twisting by top execs like IBM chairman and CEO Sam Palmisano - who has been running astride President Obama on the basic shape of a stimulus package to help the IT industry since the election - is going to change their minds.

Republicans have to show the new president that they have big ideological differences with the Democratic leadership. Presumably, this kind of posturing is not just a show of toughness for the voters back at home. But with politicians, it is best not to presume too much on either side of the aisle.

As previously reported, the American Recovery and Reinvestment Bill of 2009 proposed $275bn in tax cuts and $550bn in investments, the latter being for projects that the House leadership believes could create or save somewhere between 3 and 4 million jobs across the U.S. economy.

The main reason why the IT industry cares about the stimulus bill is that it has provisions to computerize the record keeping at doctors' offices and hospitals that don't have it, expansion of broadband Internet service to the 40 per cent of households in the country that don't have it, and research and development into giving the electrical grid an electronic IQ upgrade so it is smarter about distributing juice and also makes us smarter about how we use it. The bill that passed the House has $37bn in IT network infrastructure spending.

The Senate version of the stimulus package bill could swell to nearly $900bn after yet another $69bn tax cut proposal, and at least two Republican Senators are going to have to vote for the Senate version of the bill for it to pass if the Republicans try to filibuster. If any Democrats defect to the other side of the aisle, this will spell trouble for the new Obama administration, but as the House vote shows, there can be defections. This is why the president has been trying to woo Republicans on the Hill as well as business leaders who tend to embody Republican values of lower taxes and limited government spending except when it comes to the military-industrial complex.

At the White House yesterday, President Obama met with the leaders of some heavy hitters in industry, with most of them coming from technology companies. The group included Palmisano of IBM as well as his CEO counterparts: Eric Schmidt of Google, Greg Brown of Motorola, Steve Appleton of Micron Technology, Michael Splinter, Applied Materials, Anne Mulcahy of Xerox, Wendell Weeks of Corning, and David Cote of Honeywell.

"In the end, the answer to our economic troubles rests less in my hands, or in the hands of our legislators, than it does with America's workers and the businesses that employ them," President Obama said, speaking from the East Room, being both upbeat and stern at the same time. "They are the ones whose efforts and ideas will determine our economic destiny, just as they always have. For in the end, it's businesses - large and small - that generate the jobs, provide the salaries, and serve as the foundation on which the American people's lives and dreams depend.

"All we can do, those of us here in Washington, is help create a favorable climate in which workers can prosper, businesses can thrive, and our economy can grow. And that is exactly what the recovery plan I've proposed is intended to do. And that's exactly what I intend to achieve soon."

Palmisano did the speaking for the group of tech bigwigs. "I think we'll agree that across America and around the world - from board rooms, to cabinet rooms, to kitchen tables - people are fixated on what's necessary to address the present economic emergency. There's a gathering global consensus that bold and aggressive steps are needed, on both business and government working together to address what’s required to help the worldwide economies. In the past several days, I have been in contact with many leaders in the corporate world. But I think there is a unanimous commitment to support the President."

That sure doesn't sound like a Republican politician. But, then again, there's $37bn in goodies at stake here.

The president has said that he would like to sign a stimulus package into law before Congress goes on recess for the President's Day holiday week. So the Senate is going to have to act fast to meet that deadline. ®

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