The New Economy Task Force

Introduction

The U.S. economy has undergone a profound structural transformation in the last decade and a half. The information technology revolution has expanded well beyond the cutting-edge high-tech sector. It has shaken the very foundations of the old industrial and occupational order, redefined the rules of entrepreneurship and competition, and created an increasingly global marketplace for a myriad of new goods and services. In short, a New Economy has emerged.¹

This New Economy is a knowledge- and idea-based economy where the key to higher standards of living and job creation is the extent to which innovative ideas and technologies are embedded in services, products, and manufacturing processes. It is an economy where risk, uncertainty, and constant change are the rule, rather than the exception. It is an economy where hierarchical organizations are being replaced by networked learning organizations.

But most importantly the New Economy is a progressive force for increased productivity and higher incomes, more knowledge-based jobs, greater dignity and autonomy for working Americans, an expanded number of stakeholders, and greater access to information by citizens.

Yet, our economic policy framework has not caught up with these new realities. Neo-Keynesians continue to believe that government's main job in promoting economic growth is to expand government spending of all kinds to spur consumer demand. Supply-siders believe that sizable tax cuts -- particularly for upper- income Americans and businesses -- combined with regulatory relief and the removal of other corporate responsibilities will stimulate investment and growth. And, reflecting the experiences of the post-WWII era, both consider managing the business cycle, as opposed to boosting long-term growth, as the key economic task of government.

In contrast, there is a growing recognition among economists that government policies can boost long-term income growth and that the impetus for growth in the New Economy comes from increasing the knowledge base of the economy, including research and education and skills, and fostering technological innovation.

Achieving the full promise of the New Economy and increasing the rate of growth in per-capita incomes requires not just private sector innovation and entrepreneurial drive, but also concerted and strategic public policies to overcome key challenges. At a time when technological innovation is central to boosting productivity, federal government investment in research has been declining. At a time when learning and skills are keys not only to ensuring that companies have the skilled workers they need to be productive, but also that workers have the skills they need to adapt and prosper, there are troubling signs that America's workforce is ill-prepared for the knowledge economy. At a time when e-commerce and the Internet are growing, we need policies that ensure that a fully digital economy emerges. And at a time when information technology is a key to success, many communities, community organizations, and individuals are simply unable to take advantage of it.

As a result, government needs to create a progressive economic policy framework both to encourage a new era of higher income growth and to promote a broad-based prosperity that produces the widest possible "winner's circle." Policymakers need to embrace a set of policies grounded in a fundamental reality: Faster growth in incomes for American workers stems from expanding the base of knowledge and encouraging innovation.

However, as the New Economy Task Force argued in Rules of the Road: Governing Principles for the New Economy,² this new economic policy framework must be consistent with the unique properties and logic of the New Economy. Government policy must be on the side of innovation and invest in the fundamental building blocks of New Economy growth: research, education, and skills. But it must also expand the winner's circle so that all Americans reap the benefits. It must support the growth of the Internet and the digital revolution. It must promote free markets and resist the temptation to regulate economic activity and favor particular technologies. This new policy framework must empower people with information to give them control over their lives. It must reinvent and "digitize" government to create a decentralized, non-bureaucratic, catalytic, and results- oriented government. And, only through collaborative partnerships between the federal government and other organizations -- including state and local governments, networks of companies, and civic organizations -- can the goals of this New Economy policy framework be achieved.

For those who say that the New Economy inherently leads to a dramatically reduced role for government, we say that in many ways the role of government is now even more important, particularly in investing in knowledge and helping all Americans succeed. But for those who say that government should conduct that role through the old top-down, bureaucratic ways of governing, we say that a New Economy requires a new way of governing -- a learning economy requires a smart and strategic government.

The Progressive Policy Institute formed the New Economy Task Force to weigh these issues, develop a set of guiding principles for rethinking the role of government in the Information Age, and develop a New Economy policy agenda. The Task Force has identified four main areas for policy focus: research and technological innovation; New Economy training and skills; the transformation to a digital economy; and fostering digital opportunity. Through collaborative efforts between the Task Force's public sector elected officials and New Economy entrepreneurs, we have developed eight key recommendations that we believe are critical to advancing robust and widely shared growth. Each of the four policy areas and specific policy recommendations are discussed in detail on the following pages.

Making the New Economy Grow

Key Policy Recommendations: Research and Technological Innovation 1.) Increase Federal Support for Research 2.) Make the Federal Tax Code an Agent of New Economy Innovation New Economy Training and Skills 3.) Encourage Companies to Invest More In Training 4.) Work with Industry to Boost the Number of Americans With High-Tech Skills The Transformation to a Digital Economy 5.) Take a Light Touch on Regulating E-Commerce, but Intervene to Stop Abuses 6.) Create Digital Government Fostering Digital Opportunity 7.) Help All Regions Prosper in the New Economy 8.) Support Public-Private Partnerships to Empower Community Organizations Through Information Technologies

RESEARCH AND TECHNOLOGICAL INNOVATION

Innovation is the driving force behind economic growth.³ At least two-thirds of per-capita economic growth comes from technological innovation. The New Economy places an even higher premium on continuous innovation now that most industries are affected by rapid technological change. And there is compelling evidence that federal support for research boosts both innovation and economic growth.

Congress needs to affirm a bipartisan understanding that government support for basic and applied research is not the same as government funding of the production of cars, widgets, or other items that markets now efficiently allocate. It is an investment in a public good with large payoffs for society.

But policymakers must also rethink how to make these increased investments. Support for science still operates under a model developed by Vannevar Bush (a noted MIT electrical engineer) in his 1945 report to President Truman entitled Science: The Endless Frontier. The Bush model "reinforced the simplified demarcation between basic and applied research... [and] implied a linear relationship between them, with basic research directly giving rise to applied research and product development." The model led to a simple policy prescription: Government should keep mission-oriented research in the hands of federal agencies and be the main funder of scientific research in universities, allowing individual scientists to decide how research funds are allocated and how research is conducted.

While this model may have fit the old economy, it no longer fits the New Economy where innovation is inherently collaborative. Firms increasingly form alliances with suppliers, customers, and users for technology and innovation. Industry-university partnerships are growing. Cross-disciplinary innovation is also increasing, requiring the contributions of different disciplines and organizational expertise. The basic structure of the innovation system is now the network -- interlinked public and private organizations that together foster innovation. Innovation is boosted significantly when the process is collaborative.

As a result, Congress should articulate a new means to foster innovation and establish an expanded set of policy tools that simulate research linkages, collaboration, and partnerships.⁴ It should also articulate new goals for science and technology policy that move beyond a curiosity-directed pursuit of knowledge and explicitly include solving pressing societal problems -- such as boosting productivity growth, protecting the environment, and preventing and curing human diseases.

Recommendation 1: Increase Federal Support for Research

At a time when it should be rising, federal support for research and development (R&D) has been steadily dropping, from about 1 percent of gross domestic product in the 1960s on non-defense R&D to 0.5 percent today. The decline gained steam this decade, with federal investments in research shrinking at an average annual rate in inflation- adjusted dollars of 2.3 percent between 1987 and 1997. While federal support for research increased approximately 4 percent in FY99, it is expected to decline by 7.8 percent (inflation-adjusted) by FY05, more than five times faster than the decline in total federal spending. And while industry is investing more in R&D, increased competition has led firms to increase funding for lower-risk and short-term R&D much faster than for riskier and mid- to long-term research. Therefore, we should:

Significantly Increase Investments in Federal Civilian Research
A bill introduced by Sens. John D. Rockefeller (D-WV), Bill Frist (R-TN), Joe Lieberman (D-CT), and Phil Gramm (R-TX), and passed in the Senate in 1999, S. 296, proposes doubling federal funding for basic civilian scientific, medical, and pre- competitive engineering research over 11 years. Similar legislation should be passed in the House, and appropriation levels should reflect the legislation's targets.

Increase Department of Defense Research 2 Percent per Year
In the last six years, DOD research funding has declined by 8 percent (inflation- adjusted), to $7.8 billion, and it is projected to decline another 14 percent by 2005. And since DOD funding accounts for a large share of federal support for research, such declines lead to significant reductions in federal support for research overall. To reverse this trend, Sen. Jeff Bingaman (D-NM) has led an effort to increase DOD research funds 2 percent per year in inflation-adjusted funding.

Increase Federal Support for Information Technology and Productivity Research
To maintain our current rate of innovation, the President's Information Technology Commission recommended investing $1 billion more per year on information technology by 2004. The House recently passed legislation to increase funding for information technology research by $4.8 billion from 2000 to 2004. The Senate should pass similar legislation. In addition, because automation (e.g., robotics, machine vision, expert systems) is a key to boosting productivity in both manufacturing and services, funding for research focused on increasing the efficiency of industrial or service processes should be increased.

Spur Innovation Through Industry Research Alliances
Through industry research alliances, companies establish (and pay for) technology "road maps" that they use to co-invest with government in research conducted at universities and federal laboratories. Roadmaps were pioneered by the semiconductor industry and adopted by several other industries. For example, the non-profit Microelectronics Advanced Research Corporation (MARCO) is an industry-government research alliance that supports long-range research at universities throughout the nation. Such alliances can help all parties, including universities, understand and invest in research that is too long-term for industry to otherwise invest in alone. They not only foster knowledge creation but can also spur commercialization and eventual diffusion. Congress should allocate a share of total federal research funding, perhaps initially 1 percent, for investment with industry in these alliances.

Recommendation 2: Make the Federal Tax Code an Agent of New Economy Innovation

The tax code is too often a reflection of special interest pressures. The tax code has tended to favor old economy industries because of their economic power. It has seldom been explicitly designed to foster innovation. And when it has, as in the case of the R&D tax credit, it has not been modernized to reflect the changed conditions of the New Economy. Therefore, we propose to:

Expand and Make Permanent the R&D Tax Credit
The R&D tax credit has been shown to stimulate increased industry research. In 1999, Congress extended the credit for five years. However, the credit should be made permanent. But just as importantly, the credit needs to be modernized and expanded. S. 951, introduced in 1999 by Sens. Jeff Bingaman (D-NM) and Pete Domenici (R-NM), and H.R. 1682, introduced by Reps. Harold Ford Jr. (D-TN), Heather Wilson (R-NM), Tom Udall (D-NM), and Joe Skeen (R-NM), would make the credit permanent, modify its two-tier structure to give more firms access to the higher marginal rate; create a new credit covering all industry expenditures (not just the increases) in research consortia and partnerships between industry and universities or federal laboratories; and make it easier for new entrepreneurial firms to take advantage of the credit.

Adjust Tax Depreciation Schedules to More Accurately Reflect the Current Depreciation Rates of Equipment, Particularly Information Technology
Under the current tax code, companies can depreciate investments in equipment according to depreciation schedules set by the Department of the Treasury. In the old economy, when equipment life cycles were longer, tax depreciation schedules were normally in sync with investment patterns and did not slow investment rates. However, today's competitive, information technology-driven economy leads to rapid development and introduction of new innovations and new generations of equipment that make existing equipment obsolete. In this environment, tax depreciation schedules have not kept up with the rate of change. For some classes of investments, particularly rapidly evolving information technology equipment, these schedules no longer match actual replacement rates. These mismatches can affect the true costs of these assets and negatively impact investment levels. As a result, where appropriate, depreciation schedules should be shortened to reflect replacement rates. More broadly, the Treasury Department should develop methods to add new types of equipment and regularly evaluate existing equipment asset lives.

For example, innovation in the semiconductor industry is among the fastest in the world, leading to an equally quick level of technological obsolescence of chip-making equipment. Currently, firms can depreciate semiconductor equipment over five years, whereas the economic lifespan of much of the equipment is only three years. Similar issues occur with software, computers, Internet servers, and other information technology and telecommunications equipment. Longer-than-lifecycle depreciation schedules discourage development and deployment of new technologies by raising the true cost of investments.

NEW ECONOMY TRAINING AND SKILLS

In the old economy, the relatively large number of low-skilled jobs meant that individuals needed fewer years of formal education and less continuous education to participate successfully in the workplace. The New Economy requires higher levels of education up front, including high-tech skills, and also opportunities for lifelong learning so that workers can keep pace with the high speed of developments in technology, globalization, and new business practices. Moreover, in the new knowledge economy, a more educated workforce is critical not only to raising per-capita incomes but also to reducing income inequality.

Recommendation 3: Encourage Companies to Invest More in Training

In the old economy, it was assumed that workers with basic skills would be hired by companies that would then train them in company-specific skills and the workers would advance up the career ladder. The role of the public sector was to provide an adequate K- 12 education, support post-secondary education, and help unemployed workers get needed skills. Federal training efforts generally ignored workers already in the workforce. Moreover, public training efforts generally were disconnected from private, internal, company-run training systems.

These assumptions clearly cannot hold in the New Economy. Many workers lack the basic skills necessary to even begin work at many companies. Moreover, individuals are less able to rely on companies to provide training, particularly to make up for prior skill deficits. Increased competitive pressures coupled with reduced employment tenure make it harder for companies to justify investment in training, particularly for hourly workers.

If government is going to play a meaningful role in skill enhancement, it will need to develop new approaches that recognize these changes in the marketplace. Most important, federal policies need to encourage companies to increase investments in training, particularly in basic skills and remedial education. Therefore, we should:

Establish a 30 Percent Tax Credit for Company Investments in Remedial Education, Literacy Training, and English as a Second Language
Many companies seeking to upgrade the skills of their workforce are having to first make sizeable investments to simply make up for the skill deficits produced by the K-12 education system. Because too many workers did not learn the basic math, reading, and language skills in school, companies are having to fix these deficiencies first, before they can train their workers on more advanced skills. As a result, it makes sense to provide incentives for companies to offer this kind of basic skills training.

Provide Matching Grants to States for Incumbent Worker Training Programs
Compared to the federal government, states are better positioned to work with companies to encourage worker training. But only a few states have established incumbent worker training programs to help existing companies upgrade the skills of their workforce. To encourage more states to do this and to leverage more state resources, the federal government should establish a $500 million a year matching grant program. Funds should, however, not be used as inducements to get firms to relocate from one place to another.

Invest In Industry-Led Regional Skills Alliances
The most effective programs to train technical workers are industry-led collaborations among firms in an industry. A small but growing number of these regional skills alliances (RSAs) have been formed to identify common areas of skill shortages and develop and implement effective training solutions. But we need more. The federal government should provide matching funds for the first three years of alliances, with companies providing at least one-third of the costs of the alliances. Federal funds would be allocated through a competitive grant process administered by the Department of Commerce with consortia of firms as applicants.

Recommendation 4: Work with Industry to Boost the Number of Americans with High-Tech Skills

In the New Economy, skill requirements are increasing in many industries. In particular, the rapid growth of the technology industry has led to an expansion of technology-related jobs and an increased demand for engineers and scientists. For example, there were fewer than 5,000 computer programmers in America in 1960; today there are more than 1.3 million.

Firms in a wide range of industries face serious difficulties in hiring workers with needed technology skills. One reason is the fact that the United States is not educating enough scientists and engineers. For example, the number of students receiving bachelor's degrees in engineering has fallen to a 17-year low. The number of bachelor's degrees awarded in math and computer science, and electrical engineering has fallen 35 percent and 39 percent respectively from their peaks in 1987, even though the number of bachelor's degrees is increasing and the economy is becoming more technology oriented. Moreover, in spite of shortages, the number of students enrolled in science and engineering at the graduate level fell for the fourth year in a row in 1997. The federal government must significantly increase its commitment to boost science, math, and technology, education in K-12; support college and graduate level education; and encourage training and retraining of the existing workforce. Therefore, we should:

Institute a Tax Credit for Companies Donating Computers to Schools and Invest in Technology Including Professional Development for Teachers
It is essential that policymakers continue to ensure that resources are available to increase the use of technology in elementary and secondary schools. In particular, Congress should pass the New Millennium Classrooms Act (S.542), which would provide a 30 percent tax credit for companies donating computers that are less than three years old to schools (and a 50 percent credit for donations in disadvantaged areas). In addition, teachers need to receive high quality professional development so they can integrate technology effectively into the curriculum. Finally, we should continue to support existing federal technology programs designed to provide low income schools in particular with access to technology.

Catalyze the Formation and Expansion of State "SciTech Scholars" Programs
In response to the decline in the number of science and engineering graduates, several states have established scholarship programs for students who major in science, math, or engineering. For example, Pennsylvania provides a 3-year science scholarship for students who maintain a B average and undertake an internship with a Pennsylvania technology company. Maryland has adopted a similar program. Federal matching funds should be provided to expand the scope of state programs and encourage more states to establish their own programs.

Establish Forgivable Loans for Students Majoring in Math, Science, or Engineering and Agreeing to Teach in Elementary or Secondary Schools
We need more teachers qualified to teach math and science. Forgivable loans would not only help reduce the shortage of qualified science and math teachers, it would also reduce the number of teachers teaching outside their fields and increase the amount of science, math, and engineering bachelor's degrees awarded.

In Collaboration with Industry, Fund Fellowships for Science and Engineering Graduate Students
Currently most science and engineering graduate students receive support through research grants of their professors. However, as Stanford economist Paul Romer has pointed out, this system reduces the amount of inter-disciplinary and practical research and education, and the number of students likely to go into industry. In order to increase both the number of Americans enrolled in science and engineering graduate programs and the amount of cross-disciplinary and industry-relevant graduate education, more graduate support should flow directly to students. The federal government should establish a matching grant fellowship program where it pays a portion of the costs (perhaps between one-half and three-quarters), with industry and universities funding the rest.

THE TRANSFORMATION TO A DIGITAL ECONOMY

Like past major waves of technological innovation, today's information technology revolution is changing the landscape of virtually all economic activities. A driving force for productivity and wage growth in the New Economy will be the pervasive use of digital technologies to increase efficiency and productivity, particularly in the heretofore low technology service sector. This "digitization" in the 21st century promises to bring the kinds of economic benefits that mechanization brought in the 20th century. Fostering the growth of the digital economy must be one of the foundations of New Economy policy.

Virtually all of the indicators of the transformation to a digital economy forecast steady progress. The fact that computing and telecommunications costs have been falling dramatically and that the U.S. Internet economy is already worth an estimated $350 billion are both harbingers of the potential in business-to-business, business-to-consumer, and government-to-citizen e-commerce. By the end of 2000, 72 million American adults are expected to be online -- over 40 percent of the adult population. By 2001, 30 percent of U.S. businesses are expected to have their own Web sites. Finally, by 2005, 43 percent of all residential households will likely have high-speed telecommunications capacity.

Recommendation 5: Take a Light Touch on Regulating E-Commerce, but Intervene to Stop Abuses

Because of the rapid pace of change and the unique nature of the Internet, the best thing government can do in many policy areas is tread lightly and avoid overly regulatory approaches. For example, in the areas of privacy, while a limited government role may be necessary (for example, regulating medical and financial privacy), it is too early for a strong government role in regulating privacy. However, in some areas such as fraud and "spam," government action may be required to halt abuses.

Encourage the World Trade Organization to Adopt a Treaty Designating Cross-Border E-Commerce a Tariff-Free Zone
E-commerce is by its very nature borderless. Consumers in Australia pay their utility bills online with the transactions going through IBM's facility outside of Chicago. Japanese music fans download music from servers in Los Angeles to their MP3 players. The Internet is fostering a new era of global economic (and social) integration. However, to fully blossom, it will need to be free of tariffs and other trade barriers.

Countries should not be allowed to impose tariffs or discriminatory taxes on e- commerce transactions originating in other nations. In addition, the WTO should work to reduce non-tariff barriers to e-commerce. For example, some nations prohibit the sale of services (e.g., legal services, advertising) unless the firm is licensed nationally. The proliferation of service delivery over the Internet will mean that such regulations will significantly inhibit global e-commerce.

Stem the Tide of Unsolicited Commercial E-mail ("Spam")
Spam is a huge problem on the Internet, accounting for at least 10 percent of Internet Service Providers' operating costs, and as much as $2 of consumers' monthly fees. Spam also costs consumers time and aggravation. Without legislative action, the problem is likely to only get worse. Legislation should: 1) outlaw spammers' most common fraudulent and deceptive practices (e.g., using false header information); 2) require commercial e-mail marketers to offer consumers the chance to opt out of future mailings, and instruct the FTC to prosecute marketers not honoring consumers' opt-out requests; 3) give ISPs legal course of action to take spammers to court for breaking clearly posted policies; and 4) require e-mail marketers to clearly label their messages as advertisements.

Create a System of Regional E-Commerce Assistance Centers to Help Small Businesses Embrace the Digital Revolution
Sen. Bingaman (D-NM) has introduced S.1494 authorizing the Commerce Department to co-fund Electronic Commerce Extension Centers. The idea is to have a service that can provide small businesses throughout the nation low-cost, trusted, impartial advice on e-commerce technologies and techniques. Just as our agricultural and manufacturing sectors have benefitted from extension services (e.g., the Manufacturing Extension Partnership centers funded by the Department of Commerce's National Institute of Standard and Technology) our emerging "e-conomy" should also.

Recommendation 6: Create Digital Government

Old economy government is organized around agencies and bureaucracies that operate like "stove pipes" with little information flowing between them, and with operations developed to meet the requirements of agencies, not the needs of citizens. New Economy government will be organized around functions and needs of citizens, with information and communication technologies a key enabler of this reinvented government. A key next step in reinventing government involves the widespread application of information technologies to the delivery of government services -- in short, fostering digital government. Digital government efforts, however, should complement, not compete, with private sector commercial efforts. To foster digital government we need to:

Establish the Position of a Chief Information Office (CIO) for the Federal Government
Currently, individual federal agencies have CIOs, but the federal government as a whole does not. The result is that there is little agency coordination when it comes to establishing cross-cutting digital government applications. Rep. Jim Turner, (D-TX), has introduced H.R. 4670 to create a federal CIO who would report directly to the President and direct the process of developing a concerted digital government conversion plan. He or she would have a small staff and a budget independent of individual agencies to help drive the next generation of digital government, much of it involving cross-agency applications. This position would also take the lead in shaping the administration's policy regarding the Internet and e-commerce security, and working with state and local governments to promote digital government.

Establish a $500 Million Fund to Invest in Cross-Agency Digital Government Projects
One of the reasons why the federal government has been slow to embrace digital government is because many applications cut across agencies, and agencies have been by and large unwilling to work together. Providing the federal CIO with funds to invest will spur the development of cross-agency projects.

FOSTERING DIGITAL OPPORTUNITY

The Internet opens up whole new avenues of access for Americans: all kinds of information; government and commerce; services and education. Moreover, technological innovation, including access to high-speed telecommunications technologies, will play an increasingly important role in determining the economic health of regions and communities. In both areas -- helping disadvantaged individuals and communities prosper in the digital economy -- government can play a key enabling role. But the government must work in partnership with the private sector, not supplant it.

Recommendation 7: Help All Regions Prosper in the New Economy

In the old economy, both urban and rural areas had reasonably strong and stable economic bases to support economic growth and jobs. Moreover, many rural regions could rely on innovative economic activities "filtering down" from urban areas. The keys to success were low costs, ample labor, and adequate physical infrastructure. Federal policy toward disadvantaged areas is still largely focused on helping them develop physical infrastructure more suited to old economy needs: roads, industrial parks, and sewer systems.

However, with the increased agglomeration of innovative businesses in the suburbs of metropolitan areas, some urban and rural economies have been slow to make the transition to the New Economy. Moreover, access to high-speed telecommunications technologies, especially for business, is becoming more important in determining business location and expansion decisions. Public policy needs to help communities -- particularly rural communities and some inner city communities -- adapt to the New Economy and develop innovative, technology-based economies. Therefore we propose to:

Fund a $200 Million Technology Communities Initiative to Support Technology-Based Economic Development in Disadvantaged Communities
Funding for the Department of Commerce's Economic Development Administration (EDA) has declined in the last 15 years, and by law much of it is focused on old economy factors of physical infrastructure. EDA needs to develop a new initiative to fund technology-based economic development initiatives (e.g., seed venture programs, technology-incubators, industry-university research partnerships, telecommunications infrastructure, and industry collaborative technology modernization initiatives) in economically distressed communities. Ideally, these initiatives would be run by nonprofit entrepreneurial organizations linked to the private sector.

Expand the Rural Utilities Service to Support the Deployment of Broadband Telecommunications Infrastructure
Access to high speed "broadband" telecommunications is critical if a region wants to grow or attract a wide variety of businesses. However, because the demand for broadband is most heavily concentrated in larger and mid-sized metropolitan areas, telecommunications companies have rightly focused most of their initial investment in these areas. For most rural areas, lack of demand combined with higher costs means that companies often cannot make an adequate return on investment to justify the demand. In order to jump-start development in rural areas, funding for the Department of Agriculture's Rural Utilities Service should be expanded to co-invest with telecommunications providers in rural broadband for business applications. Currently only $670 million, or 13.3 percent, of the RUS budget is spent on telecommunications, and most of this is for plain old telephone service. S. 2307, sponsored by Sens. Byron Dorgan (D-ND), Tom Daschle (D-SD) and others, establishes a loan program to foster the deployment of broadband telecommunications by rural utility providers.

Recommendation 8: Support Public-Private Partnerships to Empower Community Organizations Through Information Technologies

In the old economy, information was a valuable commodity, often only available to those who had the means to pay for it. In the Internet economy, information is becoming ubiquitous, putting the man on Main Street on the same playing field as a Wall Street trader. Through the Internet, all Americans will be able to gain access to a wide array of information, from financial information on companies, to the latest medical research findings, to live broadcasts of government hearings, to the prices and quality of virtually every good and service sold.

However, to date, the adoption of the Internet has tended to follow traditional patterns for any new technology: it is adopted first by middle- and upper-income Americans and as prices of access devices and online access fees fall, more Americans of all incomes get online. However, there is a range of issues that impede technology adoption in low- income areas and cost may be one of the least significant. It is essential that individuals in these communities see the relevance of technology to their daily lives -- and this enlightenment is best done experientially. Public policy must be aimed at ensuring that all Americans have access to the tools provided by the emerging information technology revolution. Therefore, we propose that government:

Provide Matching Funds to Support Private Sector Community Information Technology Alliances
Public support needs to stimulate the creation of initiatives that will build the technological capabilities of community-based groups, enable them to integrate the Internet and related technologies into their operations, and create Internet-enabled enriched environments and learning programs.

A number of private-sector sponsored nonprofit organizations have emerged to help schools and community-based organizations adopt and use information technologies. There is increasing interest in applying this model to wiring communities and helping disadvantaged individuals use these technologies, including creating after-school programs to help children get connected. In addition, such efforts need to focus on ensuring that community leaders, teachers, and staff working in schools and in out-of- school programs become connected to the Internet, be able to use e-mail, and be mentored in their use of technology. To have a significant impact, these efforts need to be brought to scale. Federal funding should go to those organizations that are best linked to disadvantaged communities and can best leverage private funds.

Create Regional Technology Access and Distribution Centers
As well-intended as corporate technology giving is, it is difficult for the technology vendors to interface with the myriad of community-based groups that need their support. Similarly frustrating is the lack of qualified intermediaries or distribution centers at the regional level through which technology vendors can offer their products and services. In addition, donated computers often need refurbishing, and once in place, need support. Federal funds should be provided to create regional technology access centers where vendors could make their products and services available to community-based groups and at which follow-up support and technical assistance could be provided. Organizations that might qualify as these centers include community colleges, urban universities, and nonprofit resource clearinghouses.

Create a Digital Brigade of AmeriCorps
Lower-income areas in rural and urban America need an equivalent of the 1960s Peace Corps initiative in order to be able to understand and respond to the challenge of the digital economy. This new digital brigade of AmeriCorps would be comprised of individuals who understand both the use and potential of technology -- but as users and innovators and not merely as IT or technical specialists. These individuals would work in the most challenging low-income communities to help them improve their community efforts, communications, education, economics, businesses, and so forth. A compelling "bootcamp" and Internet support network could be developed to prepare and support Corps volunteers as they serve this mission and their country. Large information technology consulting firms would contribute training resources and provide experts in Internet-enabled business processes.

Blueprint Keywords: Extra Resources, Extra Metro Extra Growth Econ