2007 represented a year of empty promises for high-tech.   It appeared to be the year that U.S. political leadership would take America’s declining competitive advantage seriously as bipartisan politics were pushed aside with the passage of the America COMPETES Act.  Earlier this year, the COMPETES ACT called for increased spending in government funded research and development and the expansion of science, technology, engineering, and math educational programs.  However, in the final days of legislative action this year, Congress failed to increase the budgets at key science agencies.  The result is our premier national laboratories, who have produced specific innovations like the Internet, MRIs, and the Doppler Radar to name a few, are forced to reduce operations significantly.  Furthermore, many of the promised STEM education programs remain unfunded. 

Congress also failed to extend the R&D tax credit, which amounts to an $8 billion tax hike on American businesses.  Furthermore, the President and Congress’s failure to reform high-skilled immigration to increase the cap on H-1B visa and Green Card holders has restricted the high-tech community’s ability to hire the best and brightest from around the world.  The President and Congress’s inaction represents a failure in keeping high-wage, high-skilled jobs in the United States, and have inflicted damage to America’s innovation infrastructure.

John Palafoutas (bio)
Senior Vice President for Domestic Policy & Congressional Affairs

When it comes to working with Washington, my sense is that our smaller companies sometimes think that they do not matter and that DC is only for the big guys.  That is simply not true.  Our smaller companies bring a different perspective to the various debates in Washington that can in fact be especially compelling and effective.  This is especially true when it comes to politically sensitive issues such as corporate finance and high-skilled visa reform, in which legislators do not want to be seen as catering to “Big Business.”

On December 12, AeA Board member Tom Brandt, the CFO of TeleCommunication Systems, testified before the House Small Business Committee on behalf of AeA.  The hearing was on Sarbanes-Oxley Section 404, and SEC Chairman Chris Cox was the opening witness.  Tom Brandt was extremely effective in telling his company’s story and the reasons why he thinks changes are necessary in Section 404 implementation for smaller companies.  Members of Congress kept going back to Tom with questions, and his answers were all persuasive.  Members of Congress and other members of the audience were all impressed.  After the hearing, another association represented during the hearing sent us a note to say that AeA’s “witness did a superb job,” a sentiment reiterated by a congressional staff member that day.

As the chairman of AeA’s Sarbanes-Oxley Committee, Tom has come to Washington for various meetings with SEC Commissioners, PCAOB Board members, and others, but he had never testified before Congress.  Simply thinking about the kind of access AeA members like Tom have had as a result of their membership is remarkable.  One might not be surprised to learn that the CFO of a multi-billion dollar company had been meeting with high-level regulators and testifying before Congress, but Tom works for a $125 million company based in Annapolis, MD.  He has had the ear of everyone in a position to bring about changes to one of the most significant corporate laws in history, and he has been directly responsible for many of the changes we have seen to date, and the many more we hope to see in the future.

Yes, we would like to see regulators and Congress do more to reduce the burden of Section 404.  If such changes are promulgated, it will be because of the efforts of smaller companies like Tom’s. 

AeA also believes that the impact of small- and mid-sized companies weighing into the high-skilled visa debate going on in Congress will convince legislators that it is not just a big-company issue.  Bringing the best and the brightest into the U.S. to work for American companies does not just benefit these big guys, but it impacts companies of all sizes.  In December AeA circulated a letter to our membership and had nearly 100 companies, who were mostly small, sign up to support the industry's efforts to create more H-1B visas and Green Cards.  If you want to learn more about getting involved with these efforts, please contact me at john_palafoutas@aeanet.org.