What`s in It for IT?

By Tarak Modi  |  Posted 2009-05-18 Print this article Print

What does the American Recovery and Reinvestment Act mean for the information technology industry?

With no end in sight to the current economic downturn, a burning question for IT professionals has become, “Is President Obama’s belief in the transformational capability of technology evident in how funds are allocated in the American Recovery and Reinvestment Act, a $787 billion government economic stimulus package?”

As an IT professional, I also wanted an answer to that question. So I began my journey at the administration’s Recovery.gov Website, which has been set up to provide transparency in how the stimulus package funds are allocated and used.

The site does a useful job of dividing the funds into several major categories: Tax Relief ($288 billion), Energy ($43 billion), Health Care ($59 billion), Education and Training ($53 billion), Protecting the Vulnerable ($81 billion), State and Local Fiscal Relief ($144 billion), Infrastructure and Science ($111 billion) and other ($8 billion). However, it falls short of answering the question of IT-related spending. It might seem that the $111 billion for Infrastructure and Science might provide the answer, but a deeper inspection reveals that infrastructure includes building roads, facilities and other things completely unrelated to IT.

My next stop was the stimulus plan itself. IT-related budget appropriations are spread across multiple sections of the 1,000+-page plan. As I read the bill, five core themes became apparent:

1. Broadband Technology: There is $7.2 billion for broadband grants, split between the Department of Agriculture’s Rural Utilities Service, which gets $2.5 billion, and the National Telecommunications and Information Administration within the Commerce Department, which gets $4.7 billion. There is an additional $650 million available for the DTV transition.

2. Security: Security-related investments are pervasive. For example, the State Department will get $290 million to upgrade its IT security. About $38 million of that will go toward the creation of backup information management facilities to protect systems from mission failures, enhance cyber-security, and secure hardware and software upgrades. The Department of Homeland Security has been allocated $1 billion for border security fencing with related infrastructure and technology.

3. Science and Research: Prominently supporting science and research projects, the bill includes $1 billion for NASA,

$3 billion for the National Science Foundation, $2 billion for science research within the Department of Energy, and

$220 million for research and grants at the National Institute of Standards and Technology (NIST) within Commerce.

4. Energy: The bill includes a $6 billion Innovative Technology Loan Guarantee Program to provide grants for the development of renewable technologies. It also includes $4.5 billion to modernize and improve the reliability of the nation’s electrical grid.

5. Health Care-Related IT: The bill sets aside $2 billion for health IT, including $300 million for a regional health IT exchange and $20 million for the director of NIST to research health IT technologies. There’s also $40 million for Social Security Administration health IT research and another $500 million to replace the National Computer Center and information technology for administering Social Security.

All in all, there are more than $26 billion worth of major IT-related appropriations spread across the plan as follows:

  • Title I: Agriculture, Rural Development, FDA ($2.55 billion)
  • Title II: Commerce, Justice, Science and related agencies ($10.6 billion)
  • Title IV: Energy and Water Development ($10.5 billion)
  • Title VI: Department of Homeland Security ($1 billion)
  • Title VII: Interior, Environment and related agencies ($85 million)
  • Title VIII: Department of Labor, Health and Human Services, Education and related agencies ($2.9 billion)
  • Title X: Military Construction, Veterans Affairs and related agencies ($2 billion)
  • Title XI: State, Foreign Operations and related affairs ($290 million).

A report by the Information Technology and Innovation Foundation indicates that the technology investments in the proposed stimulus plan could create close to 1 million jobs. That’s based on its projection that more than 30,000 jobs are created for each $1 billion of government investment.

The United States typically invests 4 percent of its gross domestic product (GDP) in IT-related initiatives, and 4 percent of the $787 billion equals about $31 billion. With 1 million jobs to look forward to and a budgeted spending that’s in lockstep with typical spending on IT as a percentage of the GDP, IT professionals have reason to be pleased with the stimulus plan.

Tarak Modi is a seasoned IT executive, certified enterprise architect and author of 70 articles and Professional Java Web Services.

Tarak Modi is a seasoned IT executive, certified enterprise architect and author of 70 articles and Professional Java Web Services.

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