Stakes high for Silicon Valley this election

Nov. 6, 2012, 2:44 a.m.

Silicon Valley and Washington D.C. are 3,000 miles apart, but policy and economics tie them closely together. Though technology policy and regulation rarely make it into candidates’ stump speeches, the policies of the next president will impact the hiring of foreign workers, government investment in technology and privacy laws — all of which have profound impacts on companies based in Silicon Valley.


Political trends in the Valley

Silicon Valley, like most of Northern California, traditionally votes democratic. According to Mark Lemley, director of Stanford Law School’s program in Law, Science and Technology, the Democratic Party favors big government and is more likely to invest in innovation.

While President Obama received significant support from Silicon Valley donors in 2008, there has been a noticeable drop in enthusiasm for this coming election. Although Lemley acknowledged Silicon Valley’s democratic inclinations, he noted a tension between support for Obama’s stance on technology innovation and opposition to government regulation in the technology industry.

“My guess is that if you had to describe a dominant political philosophy [for Silicon Valley], it would be libertarian,” Lemley said. “Neither the Democrats nor the Republicans are particularly libertarian these days. Republicans want to lower taxes, but want to regulate personal life. Democrats traditionally want more government … regulation but more personal liberties.”

Bruce Cain, political science professor, echoed Lemley in a statement.

“The Silicon Valley is a little more divided this election as compared to last,” Cain wrote. “Romney offers lower tax rates and a light regulatory touch, but is less invested in green tech.”

According to a recent article published by The New York Times, some Silicon Valley CEOs who had supported Obama in 2008 switched allegiances this year, donating money to the Romney campaign. The same article stated that many of these CEOs find Governor Romney’s business background appealing. In addition, as attention moves to Internet policy and privacy issues, many technology companies find Romney’s stated aversion to regulation appealing.

Still, Obama has raised significantly more funding from the tech industry than Romney. According to the Center for Responsive Politics, the computers/internet industry donated a total of $7,092,464 to the Obama campaign and $2,966,214 to the Romney campaign.



Immigration policy is another issue of concern for Silicon Valley voters. While the candidates’ discussion of immigration policy most often refers to illegal immigration policy, members of the tech industry remain concerned about the candidates’ decisions with regard to H-1B visas.

The H-1B visa program allows U.S. companies to employ foreign workers with a particular specialty. At present, the H-1B program limits visas to 65,000 foreign nationals. One of the criticisms of the H-1B visa program is that it causes job outsourcing. There does not appear to be a significant difference on H-1B positions between the candidates. Obama outlined in the White House immigration blueprint a plan to strengthen the H-1B program, while Romney favors removal of the visa cap.

Yet, Cain believes Romney’s stance on immigration could challenge his ability to attract voters from the Silicon Valley.

“The [Silicon Valley] has long wanted an easing of H-1B visa limits as part of a comprehensive immigration policy, but Romney is more committed to a restrictive immigration policy given pressure from his activist party base,” Cain said.

Hank Greely, professor at Stanford Law School, expressed more ambivalence, stating that the immigration of highly skilled workers could bode well for either candidate’s platforms and ideologies.

“I think the Obama administration would be more open to [the immigration of highly skilled workers],” he said. “They’re more open to immigration reform generally, but, then again Romney himself would likely be sympathetic to the high-tech industry’s concern to hire and keep high-tech citizens but his party seems unlikely to accept any change.”

Congresswoman Anna Eshoo indicated that small startups in the area are most concerned about immigration policy for highly skilled workers. The majority of her constituents support immigration reform, hoping to retain a greater proportion of international students, who come to the United States to refine their technical skills.

Venture capitalist Theresia Ranzetta further emphasized the importance of H-1B visas, during a seminar in the Election 2012 series. Ranzetta cited that 15 percent of tech companies have a foreign founder or co-founder. She stated that while the United States is able to attract technical talent to its universities, the current immigration policies prevent such talent from remaining in the country. She added that many of the beneficiaries of H-1B visas go on to start companies that, in the long run, are large net job creators.

University President John Hennessy stated in the Election 2012 panel that his main concern was companies deciding to establish international divisions to make up for insufficient technical talent in the United States.


Business impact

On Oct. 13, both candidates released statements detailing their plan to grow the technology startup industry. Obama cited that in his first term he created the chief technology officer position, overhauled patent reform and legalized crowd funding. Romney stated he would reform immigration policy for high-skilled workers and create the “Reagan Economic Zone” or an organization “committed to the principles of free enterprise.”

Predictably, the winner of today’s election will influence Silicon Valley’s future business practices.

“There is … the question of whether companies like Apple that do so much of their manufacturing overseas in China will run into problems with a second-term Obama administration committed to not favoring companies that ship jobs overseas,” he said.

During his 2008 campaign, Obama stated he would eliminate tax breaks for companies that outsourced labor. The president revisited this campaign promise in his State of the Union address this past January.

“Companies get tax breaks for moving jobs and profits overseas. … Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. … It makes no sense … so let’s change it,” he said.

In particular, policy toward China will have an impact on Silicon Valley manufacturing techniques. While both candidates have emphasized a tough policy toward China, Romney reiterated in the Oct. 22 presidential debate that he would label China a currency manipulator on the first day of his presidency.

“One area where Silicon Valley is probably very concerned is Romney’s position with regard to trade and China,” Greely said “China is practically an adjunct to Silicon Valley. … Major implications would follow that would have negative consequences for Silicon Valley and for the whole country. It’s hard to believe he’ll actually do it.”

Science, Technology, Engineering and Math (STEM) funding is also a major concern.

“The Obama administration has been much more willing than a Romney administration [would be] to invest in science and technology, to get the government involved in research and clean energy,” Lemley said. “One area where Romney has spoken out is to criticize the federal government’s investment in Tesla. We can infer something from that for support for government funding.”

While Romney indicated in his statement that the government should avoid picking “winners and losers,” he did state he would “focus government resources on research programs that advance the development of knowledge, and on technologies with widespread application and potential to serve as the foundation for private sector innovation and commercialization.”


Tech policy

In spite of the need for technology policy reform, the panelists at Tuesday’s elections class agreed that the majority of lawmakers fail to understand the technical complexities behind the policies they wish to implement. Ranzetta also cited that technology’s rapid progress could make policies obsolete. Regulation of technology will continue to be a topic of discussion, regardless of who is elected.

Congresswoman Eshoo said Obama’s appointment of Todd Park as chief technology officer reflected his commitment to technology innovation.

On Oct. 20, tech industry leaders released a two-minute video, endorsing Obama. LinkedIn founder Reid Hoffman and Entelo founder Jon Bischke were among the leaders featured in the video.

“I support Obama because I personally realized how much he cares about innovation and future to which we all aspire to build,” Hoffman said.

In addition, Obama has gained endorsements from Yahoo CEO Marissa Mayer and former Google CEO Eric Schmidt. Former Hewlett-Packard CEO Meg Whitman, on the other hand, has endorsed Romney.

“If the industry wants to avoid regulation, it is probably better off with a Republican president,” Greely said. “To the extent they want regulation, like privacy regulation, they might be better off with a Democratic president.”

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