ITIF recommends high speed Internet to stimulate economy

In a new paper recently released by the Information Technology & Innovation Fund (ITIF), Robert Atkinson continues to build the strong case for Congress to include high speed Internet funding in its forthcoming economic stimulus efforts.

As we noted last week, the National Governors Association and the Telecommunications Industry Association have sent letters to both parties' Congressional leadership urging them to invest in high speed Internet as a way to boost the economy. Now Atkinson is expanding upon their argument, citing the importance of enacting a policy that stimulates economic activity both in the short-term and the long-term:

"Indeed, in an era of increased international economic competition, we can no longer afford a 'consumption-based' stimulus package that leaves the nation with little to show after consumers spend the money and the economy gets back on track. It’s not enough to just consider the amount of short-term 'bang for the buck' that any stimulus will create, policymakers need to also consider what kind of long-term 'bang for the buck' it creates."

Atkinson -- who has previously argued for improved high speed Internet data collection and outlined a comprehensive national broadband policy -- then lists nine recommendations for the upcoming stimulus bill. Two notable ones:

1. Allow information technology investments to be completely expensed in 2009

IT investments produce outsized productivity gains, spurring higher company productivity and higher real wages. Companies in the United States invest around $400 billion per year in IT equipment and software, but these investments must be depreciated over a number of years.  Allowing companies to write off all the costs for tax purposes in 2009 would raise the rate of return of new equipment and software, spurring companies to invest more and more rapidly turn over older, less productive equipment and software.  As a result, companies would not only boost their productivity and international competitiveness, they would be installing equipment that would be both safer for workers using it and more energy efficient.

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5. Allocate $735 million to fund computers and broadband for educational opportunity

There is increasing evidence that having an Internet-connected computer at home increases education performance. Yet, as of 2007 approximately one quarter of American households with children under the age of 18 did not have an Internet-connected computer at home.  And for children living in households with incomes less than $30,000, 49 percent did not own a computer in their homes. Moreover, not having a computer at home is one of the major factors limiting broadband take up in the United States and is a reason why the United States ranks just 15th in broadband adoption of the 30 OECD nations.

In the 21st century, high speed Internet is essential infrastructure for a healthy economy. Both of these measures recommended by ITIF would be crucial investments -- both to get the economy out of its current slump and to ensure that it continues to grow in the future.

Information Technology & Innovation Fund (ITIF)

Timely, Targeted, Temporary and Transformative: Crafting an Innovation-Based Economic Stimulus Package (ITIF)

High speed Internet as an economic stimulus (Speed Matters)

Taking it to the FCC (Speed Matters)

What a national high speed Internet policy should look like (Speed Matters)