Is U.S. ready for future economy?

14:50, February 28, 2010      

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by Matthew Rusling

Is the United States doing enough to ensure its post-recession prosperity?

Apparently not, according to Intel CEO Paul Otellini, who on Tuesday criticized both the public and private sectors for investing too little in a number of areas key to U.S. survival in what he said will be tomorrow's super-competitive global business environment.

"Unfortunately, long term investments in education, research, digital technology and human capital have been steadily declining in the U.S.," he said at a talk in Washington. "So, too, has the commitment to policies that made us such an entrepreneurial powerhouse for more than a century."

While the economy is slowly crawling out of the worst recession since the 1930s, Otellini said "we are not out of the woods, and I'm concerned that we are not taking all of the right steps as a nation to ensure that our economy is on a long term trajectory of growth and leadership."

Congress and U.S. President Barack Obama have engaged in endless debates on how to move the economy forward, but there has been little action, he said.

The Intel chief also said there are "dis-incentives to invest in America" that must be addressed.

Indeed, U.S. corporations rank among the world's most heavily taxed, and critics have long contended that tax burdens stifle growth and investment, especially in a recession.

Otellini pointed to France, long known for the high taxes necessary to run its vast welfare state, as an example of a country that is creating incentives for companies to grow. French companies receive what the CEO billed as more generous incentives for research and development than their U.S. counterparts.

The Obama administration, however, said it has an eye on the future economy, and last month the president announced an 8 billion dollar project for 13 high-speed rail projects nationwide, which many experts called an important step toward improving the nation's transportation system and one that can bring economic benefits.

Otellini said another factor stifling U.S. growth is the difficulty companies have in obtaining talent from overseas.

"Our immigration policies seem deliberately designed to prevent us from attracting the best minds in the world," he said.

"American companies are given a tiny allotment of visas for foreign-born engineers and scientists."

The U.S. education system has also not done enough to interest children in math and science, he said, echoing an often heard criticism.

Otellini made the comments during a speech to unveil a 3.5 billion dollar initiative to support investment in growth-oriented industries and voiced a commitment to boosting jobs for recent college graduates.

Some experts echoed the CEO's criticisms, saying that one area where government investment is needed is broadband, as many Americans lack high speed Internet access that could link them to employment and educational opportunities.

"In terms of national broadband policy, which people view as the contemporary equivalent of the national interstate system, we are only investing 7.2 billion dollars," said Darrell West, fellow at the Brookings Institution, noting that the Federal Communications Commission (FCC) estimates the United States may need up to 350 billion dollars to achieve universal high speed broadband.

"There are several Asian countries that have made remarkable progress (in broadband access)," he said. "(The Republic of) Korea basically has universal access at high speeds." Singapore and Japan have also made inroads, he said.

In a poll conducted by the Census Bureau and sponsored by the National Telecommunications and Information Administration, 40 percent of respondents said they lacked access to high speed Internet or broadband, and 30 percent said they had no access to the Internet.

On Tuesday, however, the FCC unveiled a National Broadband Plan to connect 93 million Americans to high speed Internet in an effort to help them gain better access to education, jobs posts and health care, Reuters reported.

On March 17, the FCC will submit findings of a number of "fact-finding workshops" to Congress in a bid to boost the United States' ranking among the world's broadband users, where it occupied 19th place behind frontrunners Japan, Korea and France, Reuters reported.

But critics contended more government spending is the last thing the economy needs in this worst recession in decades, echoing fears of the consequences of record budget deficits.

Last year, Obama passed the controversial 787 billion dollar Recovery Act, a piece of legislation critics billed as profligate but one that most economists said was necessary to keep the recession from spiraling out of control.

Some observers note that heavy federal spending began under the Bush administration, although Obama's spending also stands at record highs.

"I think it's really time for the government to step out of the way and reduce spending, not increase it," said James Gattuso, research fellow at the Heritage Foundation.

"The government has no market signals so it's not going to spend the money well," he said, adding that government involvement often results in the misallocation of funds.

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