Silicon Valley Emerges As a Force In Politics
Divided party loyalties put in 2000 spotlight
Carla Marinucci, Marc Sandalow, Chronicle Political Writers
San Francisco Chronicle
Monday, May 10, 1999

Vice President Al Gore has visited Silicon Valley dozens of times. He
has raised millions of dollars from technology leaders. He has been
such a presence on high-tech issues that he recently took credit for
``creating the Internet.''

But when it comes to his quest for the presidency in the year 2000,
Gore hardly has Silicon Valley wired.

Contrary to political perceptions dating back to the early days of
President Clinton's administration -- when high-profile news events
like NetDay showcased the vice president's computer literacy -- there
is little evidence that the titans of the computer industry favor
Gore, or even the Democratic Party.

Increasingly, the socially liberal, sometimes offbeat entrepreneurs
who lined up with Clinton to push issues like welfare-to-work and
education reform, are being challenged by business-minded, high-tech
CEOs, whose libertarian leanings are often more in line with the GOP's
``lower taxes, less government'' philosophy.

Those divided loyalties, coupled with the region's enormous resources
and symbolic richness, have transformed Silicon Valley into one of the
premier battlegrounds of the 2000 presidential campaign.

POLITICAL BATTLE LOOMS

``There is going to be a battle royale in Silicon Valley,'' predicted
Connie Correll, communications director at the Information Technology
Industry in Washington. ``Neither party has a lock on the high-tech
industry.''

Since 1996, when Silicon Valley took its first baby steps organizing
campaign money and endorsements, the region's industry leaders have
amassed such influence that candidates routinely include Silicon
Valley -- often at the expense of San Francisco -- as a regular
destination on their whistle-stop tours through the state.

Politicians flock to hamlets of the South Bay to raise money, pay
homage and wrap themselves in the garb of the future. And so President
Clinton arrives Friday to scoop up campaign cash at a Democratic
National Committee fund-raiser. Gore is heading west later this month,
and a parade of Republican hopefuls including front-runners Elizabeth
Dole and George W. Bush are right behind them.

``Nothing short of phenomenal,'' is the way Netscape head Jim
Barksdale recently described the industry's success in flexing its
political muscle.

``We've held 150 events last year and raised millions of dollars,'' he
told industry leaders at a gala to celebrate the success of the
Technology Network, the Silicon Valley lobbying powerhouse comprised
of Republicans and Democrats. ``Not a week goes by that we don't host
several (political) people.''

MOMENT OF TRUTH

Barksdale, a Republican, and many of his Democratic colleagues, sees a
critical moment of truth approaching. The 2000 vote will be the first
campaign to reflect the full impact of the technology community's
political clout.

``So much has happened in one election cycle,'' said Wade Randlett,
the Democratic liaison to TechNet. In the last presidential election,
familiar companies like Yahoo, Amazon.com and Netscape were mere
startups, Randlett notes.

Today, the Internet giants of Silicon Valley alone command a
staggering $365 billion in revenues -- and the wealth of high tech,
biotech and computer firms represents a 20 percent slice of the
American economy.

``The valley's just growing up and starting to accept its role,'' said
Dave House, president of the Santa Clara- based Nortel Networks, who
demonstrated new communications equipment for GOP presidential hopeful
John Kasich on a recent campaign stop.

The demand for Silicon Valley executives to attend political meet-
and-greets and roundtable discussions and to host political candidates
has mushroomed so much this year, House said, that ``you could spend
all of your time doing this.''

BIG BUSINESS ISSUES

Many of the issues important to tech leaders are classic big business:
protection from lawsuits, larger government subsidies and an end to
restrictions on imports. Others have a particular high-tech twist,
such as easing immigration caps to allow more trained workers into the
valley, or pushing education reform to better train potential
employees. The competition for high-tech support has forced
presidential candidates to become fluent in a range of complex issues
that dominate the valley's agenda.

For Gore, who first popularized the term ``information superhighway''
two decades ago, computer literacy has long been a strength, and much
of the reason for his assumed advantage.

The vice president can navigate nuances of everything ``from
interoperability to complexity, to thermodynamics to scientific
inquiry and feudalism in the nation state . . . to rocks, scissors and
paper,'' said prominent venture capitalist John Doerr, a Republican
who is nevertheless a trusted Gore loyalist.

Some Silicon Valley leaders say that for the 2000 election, computer
literacy is not good enough.

``When you are a national leader, being technology-friendly means more
than logging on to the Net,'' said Robert Grady, managing director at
BancBoston Robertson Stephens in San Francisco and a director of the
Technology Network.

CONTRIBUTIONS DIVIDED

An analysis of the campaign contributions shows the tech industry is
deeply split on its presidential loyalties.

So far, Gore has received about 40 percent of the donations from the
computer industry, barely beating Texas Governor George W. Bush.

``There's a perception that Silicon Valley is Clinton-Gore country,
and that Gore is going to vacuum up all the contributions,'' said
Holly Bailey, of the Center for Responsive Politics. ``Judging from
contributions so far, that doesn't seem to be the case.''

Bailey credits Republicans with having ``learned the Democrat's secret
in terms of Silicon Valley. Every other week we hear about Republicans
touring Silicon Valley or visiting a technology company. . . .They are
going to these companies and saying, `We are your party, we support
your issues.' ''

Overall, the computer industry contributed $8.8 million to candidates
and political parties during the 1997-98 election cycle, according to
a recent study by the nonpartisan campaign watchdog group, with 57
percent going to Republicans.

Some of the key technology players, like Doerr, one of the nation's
biggest political donors, have put considerable resources exclusively
behind one party -- in his case, Al Gore. But increasing numbers of
tech bigwigs are hedging their political bets by spreading around the
largesse. Apple Computer co-founder Steve Jobs, who has hosted
President Clinton at his home for big Democratic fund-raisers,
recently put $1,000 on Bill Bradley, and Novell CEO Eric Schmidt
recently donated $2,000 each to rivals Gore and Bush, campaign finance
statements show. Larry Sonsini, the Republican head of a Palo Alto
tech firm and a big Bush donor, was seen in April at Bill Bradley's
$1,000-a-head San Francisco fund-raiser.

Of course, Silicon Valley has come to take on a significance far
beyond the mere financial -- or electoral -- influence of its
inhabitants.

``The real cache is in associating yourself with the industries that
represent our future,'' said Republican strategist Dan Schnur. ``A
dollar from Silicon Valley doesn't count any more than a dollar from
anywhere else. . .(but) associating yourself in the public's mind with
these emerging technologies and emerging industries is a huge
political benefit.''

That point was not lost on Kasich during his latest swing through the
South Bay.

``Silicon Valley represents the bottom-up power of the individual to
change the world,'' the Ohio congressman said, motioning out his car
window at block after block of burgeoning tech firms. ``(It's) about
the individual having the power to make the difference.''

``We know that Al Gore invented the Internet,'' said Kasich, in a not-
so-subtle dig at the vice president's self-proclaimed tech leadership.
``What we can offer is to keep the government's mitts off this town.''

LIBERAL LEANINGS

There are, of course, issues that matter to tech leaders -- many of
whom tend to favor Democrats -- that have almost nothing to do with
their bits and bytes existence.

``Silicon Valley is diverse,'' said Representative Zoe Lofgren, D-San
Jose. ``It's pro-environment, it's pro- choice, it's in favor of
substantial public investment in public education. . . .You can't come
in here as a Bible belter and cut it.''

For political insiders, the race for the 2000 presidential election is
just beginning -- and like technology, the changes will come fast and
furiously.

What's important, and lasting, tech leaders say, is that the impact of
the industry -- and the ``New Economy'' it helped create -- has been
carved into the political landscape.

The 2000 political election will test efforts ``to build the bridges
between two communities that formerly didn't talk to each other -- the
political community and high tech,'' said Roberta Katz, the new
president of TechNet.

``We now have leaders from the Republican Party and the Democratic
Party who all want to embrace and advance the New Economy,'' said
Doerr. ``That's a big victory.''
_________________________________________________________________

SILICON VALLEY'S POLITICAL AGENDA: PROS AND CONS

Among the issues of most concern to leaders of Silicon Valley's
Internet, biotech and computer firms:

RESEARCH AND DEVELOPMENT TAX CREDIT:

-- Tech leaders argue a permanent R&D tax credit will stimulate
private investment, jobs, and more major technological advances.
They're also lobbying for a boost in federal research funding --
saying it will benefit universities.

-- Opponents warn that overburdened taxpayers must subsidize such tax
credits -- $2.2 billion this year alone -- while tech firms and
executives continue to reap staggering profits.

ENCRYPTION AND COMPUTER SECURITY CONTROLS:

-- With the proliferation of financial and sensitive materials
on-line, tech firms demand more sophisticated data-scrambling
technology. They argue that government export controls on that
technology creates a serious disadvantage with overseas competitors
who have no such controls.

-- Opponents want some access to encryption data for government and
law enforcement agencies; they say that would guard against criminal
elements and preserve national security interests, and won't
compromise the competiveness of high tech firms.

EDUCATION:

-- Tech leaders complain about a scarcity of qualified graduates to
fill jobs, saying public schools aren't meeting goals. They're pushing
for more accountability, measuring and publicizing results,
deregulation, even a ``principal-as-CEO'' concept.

-- Opponents say improving public schools is complex work -- requiring
more than running them like a business. Groups like the California
Teachers' Association oppose more charter schools, a tech favorite,
saying California must first boost the public schools serving the bulk
of the state's kids.

WORKERS' VISAS:

-- High tech leaders argue that the single biggest barrier to their
competitiveness and economic health is a critical shortage of skilled
workers. They cite 350,000 unfilled highly skilled positions in the
industry, arguing Congress must permanently lift the cap of 65,000 H1B
visas per year on such workers to give companies access to the
best-and-brightest in the international market.

-- Opponents insist that tech firms are simply unwilling to invest in
higher-paid American workers and foot the bill for training them for
skilled jobs. Labor leaders argue the importation of foreign workers
will drive down the pay of American workers.

LITIGATION:

-- In the notoriously volatile high tech world, CEOs are worried about
a barrage of litigation

-- particularly ``frivolous'' lawsuits for stock fraud and in the
aftermath of Y2K troubles. They argue that trial lawyers benefit from
suits which hamstring research, freeze innovation, and seriously
undermine development of new products.

-- Opponents argue consumers have a fundamental right to redress if
they're persuaded by reckless predictions about a company's profit
potential -- and end up taking a bath. And consumers should be
protected, they say, when high tech firms sell products and services
that create costly problems in Y2K.
_________________________________________________________________

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CHART:


COMPUTER INDUSTRY CONTRIBUTIONS TO PRESIDENTIAL CAMPAIGNS
------------------------
Contributions to presidential hopefuls from the computer industry
during the first quarter of 1999, according to the candidates'
fund-raising reports:
VP Al Gore, Dem. ($75,250)
Texas Gov. George W. Bush, GOP ($67,750)
Former U.S. Senator Bill Bradley, Dem. ($19,925)
Commentator Gary Bauer, GOP ($16,750)
U.S. Senator John McCain, GOP ($12,250)
U.S. Senator Bob Smith, GOP ($3,500)
------------------------
Network board member donations to Bradley, Bush and Gore from
Jan. 1 to March 31, 1999:
.
1999 CONTRIBUTOR COMPANY AMOUNT RECIPIENT
Eric Benhamou 3Com Corp $2,000 Al Gore
James Breyer Accel Partners $1,000 Bill Bradley
Charles Geschke Adobe Systems $2,000 Bill Bradley
Charles Geschke Adobe Systems $1,000 Al Gore
David Lane Alpine Technology $1,000 George W. Bush
Ventures
Steven Jobs Apple Computer $1,000 Bill Bradley
John Shoch Asset Management Company $2,000 Al Gore
William H. Draper III Draper International $2,000 George W. Bush
Arthur Levinson Genentech Inc $2,000 Al Gore
Daniel Case Hambrecht & Quist $1,000 Bill Bradley
Daniel Case Hambrecht & Quist $1,000 Al Gore
Gary Bridge Horsley Bridge Partners $1,000 Bill Bradley
Harris Miller Information Technology $1,000 Al Gore
Assn. of America
Ken Kay Infotocol Strategies $1,000 Al Gore
Gary Hunt Irvine Group $1,000 George W. Bush
Brook Byers Kleiner, Perkins $1,000 Al Gore
Caufield, & Byers
Kevin Fong Mayfield Fund $1,000 Al Gore
Kevin Fong Mayfield Fund $1,000 Bill Bradley
Regis McKenna McKenna Group $2,000 Al Gore
Gregory Slayton My Software Company $2,000 George W. Bush
Lew Coleman Nationsbank Montgomery $1,000 Al Gore
James Barksdale Netscape Communications $2,000 George W. Bush
Eric Schmidt Novell $2,000 George W. Bush
Eric Schmidt Novell $2,000 Al Gore
Michael Goldberg OnCare Inc $1,000 Bill Bradley
Michael Goldberg OnCare Inc $2,000 Al Gore
Michael Goldberg OnCare Inc $1,000 George W. Bush
Gregory Avis Summit Partners $2,000 Al Gore
Aart de Geus Synopsys Inc $1,000 Al Gore
Joseph Cullinane Telum Group $1,000 Bill Bradley
Donald Dixon Trident Capital $250 Bill Bradley
Burton McMurtry TVI Management $2,000 George W Bush
Irwin Federman US Venture Partners $2,000 Bill Bradley
William Davidow Venture Capitalist $2,000 Bill Bradley
Sandy Robertson Venture Capitalist $1,000 Al Gore
Alfred Stein VLSI Technology $1,000 George W. Bush
Larry Sonsini Wilson, Sonsini, $1,000 George W. Bush
Goodrich, Rosati
------------------------
Gore and Bradley donations are based on data downloaded
from the FEC on 4/15/99. Bush's donations were released electronically
by his campaign on 4/15/99. Member totals also include contributions
from an individual's spouse.
.
Source: Center for Responsive Politics.
Chronicle Graphic