America is at risk of losing its will to win. With last week's S&P downgrade of U.S. credit to AA+, along with market uncertainty pervading our nation's psyche, the prospects of a prosperous future seem increasingly out of reach. Add a near-default on the national debt, low consumer confidence and modest job creation, and it's clear that the danger posed by distraction is very much real.
Yet despite recent events, as well as a wave of fear that shows no sign of dissipating anytime soon, one shining light of America's economy is high-tech. While largely understated, it also provides our best hope at warding off a double dip recession.
Consider the following: Until last week, Silicon Valley was home to a number of high-profile IPOs -- LinkedIn, Zynga, Fusion-io, etc. -- that ignited speculation that a new Internet-era was upon us. Forrester Research recently estimated that the cloud computing market, in particular, will grow from $41 billion in 2011 to $241 billion in 2020. As a result, leaders from both parties, including President Obama and Speaker Boehner, are flocking to Silicon Valley to meet with high-tech leaders; However, they are leaving without taking away the key lessons that would help revive our economy.
Amidst all the turmoil, a number of companies planned for and successfully navigated the recent recession. The tech-heavy medical and education sectors, alone among the 11 major categories of private employment the government tracks, have added jobs every quarter since the severe 2008 recession Further, over the past five years, American technology businesses have gained share in markets like mobile telephones by investing in innovation, competing internationally, and using collaborative technologies to improve performance and productivity.
For policymakers in Washington, the options to further drive growth and ensure that the next Google or Apple comes out of Silicon Valley (vs. Shandong Province) are quite straightforward. Case in point is legislation allowing the auction of electromagnetic spectrum segments that currently aren't being used to their full potential could bring at least $25 billion in tax revenue while also boosting the vibrant mobile communications network that has created 1 million new jobs over the past decade. A recent study from the Analysis Group concludes that releasing just one part of the spectrum that many technology companies believe has immediate potential could create 200,000 new jobs and add $155 billion to the economy.
A similar windfall to every other economic sector could come from efforts to lower trade barriers to high-value exports. Passing already negotiated trade agreements with Colombia, Panama, and South Korea could raise GDP by $100 billion a decade and create thousands of new jobs here in the U.S. Economically and politically, it makes enormous sense. The recent commitment of the Democratic and Republican Congressional leadership to press forward with a bipartisan compromise on these agreements would get it done.
America also needs to make sure that it retains its position as the world's most innovative economy. A patent system that allows investors to profit from their inventions is vital to this and America's current system -- which is far too open to nuisance lawsuits and offers far too little certainty -- needs to bring itself into line with world norms. The right patent system can yield breakthroughs that will improve our lives and economy. Legislation to fix things has been debated in Congress for over a decade. Today's economic challenges should give our elected officials a push to see the bill over the finish line.
Finally, tabling divisive elements of the tax reform debate and embracing pro-growth ideas like allowing repatriation of overseas profits and lowering the corporate rate to compete with countries in Europe and Asia ought to be considered.
Whatever happens in the next 6-8 months, America cannot regain its economic footing without a high-tech resurgence led by both the public and private sectors. Since the dawn of the republic, new inventions ranging from interchangeable machine parts to integrated circuits to laptops and data centers have been the cornerstone of growth and success. Two major recessions of the last 30 years -- 1981-1982 and 1990-1991 -- were directly tempered by the birth of both the PC and the Internet.
Congress alone, of course, can't create an economic recovery, but in the face of markets in turmoil and rising deficits, failure to invest in our nation's fundamentals and embrace common sense policies will remove the cushion of previous recessions at best and open floodgates to a double dip recession that America can ill afford.