Lots of industries are switching their hopes for the future to the incoming Trump administration. The technology sector thinks about maintaining U.S. leadership in domains like artificial intelligence. One group is calling on the new administration and Congress to create the necessary tax and regulatory environment. Jason Oxman, president and CEO of the Information Technology Industry Council, joined the Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: And I think maybe the tax and regulatory domains are probably the most important thing other than say, well, use Java instead of C# or this kind of thing to develop systems. But what do you think should happen for technology leadership, both industrially and for the government itself?

Jason Oxman: Well, it’s a great question. Technology is obviously central to the U.S. economy. It’s central to job growth in the U.S. economy. And really, the right policy approach is what’s going to drive the continued success of the technology industry in the U.S. and global innovation comes from America. We invented the internet and we want to continue that global leadership. The U.S. invented the semiconductor. We want to continue that global leadership. And so the right policy environment is key. So we’re spending a lot of time, as you noted, talking to the incoming Trump-Vance administration, talking to the new Congress about how the tech industry can be a partner in accomplishing all of these goals. And the specific policy recommendations that we’ve made are focused on making sure there aren’t regulatory roadblocks to innovation, making sure that tax policy, as you noted, is aligned on really promoting research and development in the U.S. and also maintaining our global edge in the AI race, which is so important, particularly vis-à-vis China.

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Tom Temin: Yeah. On tax policy, really how fast you can write off R&D spending. That’s always a contentious issue. And I think there is a move to preserve the year of spending write-off. Was that one of the things you’re hoping for?

Jason Oxman: That’s exactly right. You’ve characterized it exactly right as well. So back in 2017, the Tax Cut and Jobs Act Congress implemented and President Trump signed into law a number of measures, including focused on research and development and the amortization of research and development. In other words, the ability to write off your spending on research and development as a company in the year in which you did that. Spending is obviously very important to provide an incentive for spending on R&D and that tax incentive expired last year, which now means that companies that invest in research and development have to amortize that spending over five years, which makes it a lot harder to justify the spending on R&D. R&D spending is crucial to technology innovation. We need that tax measure to be reinstated so the companies can write off that research and development investment in the year in which they do it.

Tom Temin: And then there’s the issue of federal spending itself, which is in some measures, out of control. And there’s a lot of, let’s say, factors that contribute to that sense of it being out of control, some controllable, some not or some purportedly out of control. But then that adds to the increasing deficits that are getting out of control also, squeezing out so many other things the government would like to do. What, if anything, does the industry think can be done to at least bend the curve of future spending so that maybe there’s some more rationality down the line?

Jason Oxman: Well, I think we have an opportunity, particularly with the creation of the new Department of Government Efficiency, or the DOGE as it’s called, under the joint leadership of Elon Musk and Vivek Ramaswamy. And in fact, ITI published recommendations to the DOGE just a couple of weeks ago after it was announced. And those recommendations are focused, not surprisingly, on government modernization and particularly IT modernization because it is with a more efficient IT infrastructure that government is able to do its job better. It’s better able to address important issues like fraud and waste in ways that the current administration hasn’t really been focused on. But the new administration will be when the Trump administration starts in. And the federal government, as the largest purchaser of IT in the world, has an opportunity to really lead on encouraging the private sector to engage in cybersecurity protections, for example, in making sure that IT modernization includes the latest and greatest commercial products. So the government isn’t in the business itself of designing technology for its own use. So a lot of great opportunities here.

Tom Temin: We’re speaking with Jason Oxman, president and CEO of the Information Technology Industry Council. And by the way, I would say that renewing your passport online through the State Department is easier than getting a Caps ticket onto your Apple wallet from downloading. I can just say, having been through both processes, I’d rather renew my passport. So a call out to State Department on that one. But I wanted to ask you about artificial intelligence. And semiconductors is capital equipment. It’s engineering. It’s all of these things. It’s plant and equipment and real estate. AI is just code. And so what would leadership or maintenance of leadership in AI look like do you feel for the United States?

Jason Oxman: It is an interesting way to think about AI. It is an algorithm. It’s software. It is code, but it’s also a game changer for every industry. There’s a tendency to think of AI as a technology industry issue. It is an all-industry issue. All industries are invested in making AI a part of their product set, doing a better job serving their customers. And as you noted, AI is not just about the software, of course. It’s about the compute power that goes into programming. These AI models are so important and keeping them up to date. It’s about the semiconductors that go into the servers, that go into the data centers, that go into the networks that are run by AI systems. And so we are taking in the technology industry a whole industry approach to AI, making sure that the U.S. maintains its global edge in the AI race is not only about AI itself for end users, but it’s about the semiconductors that go into AI. It’s about those servers, the data centers, the systems, the power, the energy issues that are behind all of this. So what we’re really focusing on is making recommendations to the incoming administration about how to upgrade our energy infrastructure, about how to upgrade our system of manufacturing and global trade, to make sure that U.S. leadership in AI is maintained and increased. A lot of really important issues for us to address this year.

Tom Temin: And I guess there’s going to be some speaking truth to power here because especially on that electricity front, that basic commodity is becoming really a big issue. And maybe it hasn’t affected all Americans equally yet, but it will. I can recall when personal computers first came into being a big volume operation in areas of California. The fact that you had switching power supplies on the grid were affecting local distribution of electricity. Today it’s the data centers that are the locus of where execution takes place for artificial intelligence. They’re talking about putting in their own nuclear power plants. Some of the companies, Microsoft and paying to start up old plants, this kind of thing. So do you feel, does the industry feel that electricity, which is a commodity like water in some sense, is really starting to be synonymous with the issues of IT and technology?

Jason Oxman: It absolutely is. And you’re right, Tom, to highlight this as a technology issue. It’s not just an energy issue because there are demands on the energy grid with the introduction of new technology. Now that’s always been the case going back to the PC or even further back in history. Every time a technology revolution takes place, there are questions about how the power is going to be available for it. And that’s why we focused on our recommendations to the incoming administration on making AI policy, include energy policy. And so investments in data centers are a great example. You saw the Trump administration, the president-elect himself announcing a $20 billion investment from overseas companies and want to build more data centers here in the U.S. That’s a great thing. Infrastructure investments and data centers are important, but key infrastructure investments in power generation and distribution are equally important, and that our AI leadership in the U.S. is not going to work unless we also have an energy infrastructure that supports it. That’s key. Now we need to do a better job of doing energy demand, forecasting, workload management. You see these pockets of the country, geographies that are concerned about the energy demands of data centers, but at the same time, they want the jobs, they want the prestige, they want the tax revenue that comes with these great new infrastructure investments. So we want to make sure to balance that. We’re working together with the tech industry and other industries and lawmakers to make that balance happen.

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Tom Temin: Right. And to be more specific, we’re not going to be able to power the world of a growing economy and U.S. leadership with windmills. It’s just simply not going to happen. And it may not be popular with, say, the Sierra Club, but we’re sitting on hundreds of years of oil and hundreds of years of natural gas in addition to some of these other sources. And it may not be, I don’t know, culturally popular, but is the industry willing to say, ‘You know what, we got to use them, too,’ as well as windmills and solar?

Jason Oxman: Yeah, the tech industry has absolutely, as our friends in the energy industry has done as well, embraced a ‘all of the above’ energy solution. And as you noted, we have member companies at ITI that are investing in nuclear energy as they are with other alternative revenue streams across solar and other areas as well, renewables. But they’re also very focused on existing energy streams as well. And that’s something that we’ve seen the incoming Trump administration really focus on that ‘all of the above’ energy strategy, and we think that’s the right pathway forward.

Tom Temin: And real briefly, what are your thoughts? What are the members’ thoughts on some of the more prosaic close-to-home issues like other transaction authorities, the Technology Modernization Fund, which has been a really good vehicle for a lot of agencies? And what should happen with something like CISA, which has been really a pivot point between industry and government?

Jason Oxman: Yeah, cybersecurity I’ll start with that is an enormously important role of government. We’ve seen state actors and state-sponsored actors attacking our critical infrastructure in recent months, and that’s something we absolutely have to address. Look, Congress saw the importance of a unified whole-of-government approach to cybersecurity with the creation of the Office of the National Cyber Director, something that we’ve supported. Something we’ll hope will continue. CISA plays an important role. All of the cabinet agencies have cybersecurity functions within them. We need to make sure those are coordinated at the administration level as high a level as possible. We think that’s really important going forward. And then as to IT modernization, the Technology Modernization Fund, other areas of government investment in it, our key recommendation there is let’s not reinvent the wheel. Let’s make sure the government is using the best solutions that are out there. Let’s make sure that they’re using commercial products and services with common commercial contract terms. Let’s make sure we’re not causing the government to do something that it doesn’t need to do. It doesn’t need to build and operate and own its own data centers. The private sector can do that very well. It doesn’t need to insist on one-year service contracts like the rest of the world uses multiyear contracts. They can do that well as well. So a lot of information sharing, a lot of investment in IT modernization that we think is really important. And we’re hopeful the new administration will focus on as well.

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