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Campaign finance -- the IT industry learns to play the game

© Alan Kotok

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Only in recent years has the information technology (IT) industry become a major player in the game of influencing legislation, including the use of political action committees (PACs) and soft money donations. But even with reform in the campaign finance laws becoming a real possibility, IT companies have shown how to use their muscle, with the battle over proposed broadband legislation providing a good case study.

Earlier in February 2002, the House of Representatives passed the Shays-Meehan bill outlawing much of the previously unregulated soft-money donations that go ostensibly to political parties for general election activities. Contributions to specific candidates, called hard money, has been regulated by Watergate-era reforms. Last year the Senate passed a comparable, but not identical, McCain-Feingold bill. The Senate now takes up the Shays-Meehan bill, and since the Senate needs 60 votes to pass any major legislation (the number needed to break a filibuster), its outcome is not a slam-dunk certainty.

IT industry came late to the party

Unlike manufacturing industries and labor unions that dominated the political agenda during the latter part of the 20th century, the IT industry came to the world of politics reluctantly and for the most part, in a small way. Even during the late 1990s, with the dot-com boom going full blast, the IT industry as a whole shied away from politics and lobbying. During this time, the industry went through dramatic growth and change, but more as a result of new business opportunities than serious public policy issues affecting the industry.

The Center for Responsive Politics (CRP) has collected public data on campaign contributions for over a decade, and that group's statistics provide a lot of the raw material about the IT industry's new-found enthusiasm for politics. In the 1996 election year, with the President, Vice-President, House of Representatives, and one third of the Senate on the line, the IT industry spent $8.9 million dollars in campaign contributions, ranking only 32nd among all industries. Also, about 40 percent ($3.6 million) of the $8.9 million total went into soft money donations.

By the 2000 election year, the IT industry shed its reticence about politics and campaign donations. In the 2000 election, the industry spent some $40 million, over four times the amount spent in 1996, propelling the industry to the number 7 ranking. The industry also increased its share of soft money contributions that grabbed over half ($20.6) million of the total. CRP attributes much of the increase in donations to the need for action on various key issues: encouraging trade with China, Y2K liability protection, tax credits for research and development, and preventing taxes on Internet commerce.