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The Man in the Middle

McCain Ready to Take Center Stage on Critical Technology Issues

Just three years ago, Sen. John McCain appeared to be on the verge of seizing his party’s presidential nomination with an upstart campaign that found a groundswell of support in New Hampshire. The Arizonan, of course, came up short in his quest to become the GOP standard-bearer and returned to what has become his signature role in the Senate, railing against special interests and often confounding the leadership of his own party. His success in championing campaign finance reform legislation has changed the way Americans run for Congress and, no doubt, did little to endear him to his colleagues. But it will be impossible to ignore McCain in the 108th Congress. Restored to his perch as chairman of the Commerce, Science and Transportation Committee, he will be at the center of debates over critical topics such as the direction of NASA after the Columbia tragedy, the future of broadband legislation and the Pentagon’s Total Information Awareness Program. He recently joined Roll Call Executive Editor Morton Kondracke for a Q&A.

ROLL CALL EXECUTIVE EDITOR MORTON KONDRACKE: You described at one point the communications industry and technology, in general, as being in financial crisis owing to the decline of the NASDAQ. How bad is it, and how long term do you think it is?

SENATE COMMERCE, SCIENCE AND TRANSPORTATION CHAIRMAN JOHN McCAIN: I think it’s particularly bad in terms when you look at the numbers of people that are unemployed, who are laid off. Hundreds of thousands of people are unemployed as a result of the bubble bursting. It’s difficult for me to predict how long they will be in trouble, but I do have a fundamental optimism about the underpinnings of the information technology [industry] and its beneficial effect on our economy. Information technology drives the economy of the country and the world. We have the strongest information technology base here in the United States, and so, over time, I think we’ll have a recovering economy and I think therefore this whole industry will recover. But when? After the first quarter of last year the economy had [apparently] rebounded. Clearly that’s not the case.

ROLL CALL: What should the Bush administration be doing to help tech rebound?

McCAIN: I think one thing they need to do is have a short-term stimulus package. Tax cuts that would have an immediate effect — most of it concentrated on those who have been keeping the economy afloat, which are not the wealthiest Americans. It’s the Americans who have been buying the cars and buying the houses and spending money.

And then second of all, I see nothing wrong whatsoever with looking at ways we can increase exports, free-trade agreements. You know there’s a broad range of actions the government could take in finding more and more money in pure [research and development]. And pure R and D is something I wouldn’t be resistant to at all. The Bell labs would disappear. There’s been dramatic cutbacks on R and D. I wouldn’t be averse to that.

ROLL CALL: Is there some sort of other tax break that would help tech more than the dividend tax?

McCAIN: I’d like to see some kind of immediate relief for middle income, working families who buy their products and a payroll tax cut that could be funded by capping the estate tax at about $8 million. The elimination of the estate tax up to about $8 million per business, family, farm, individual. Because they are the ones buying the high-tech products. They’re the ones going out and buying HDTV or a TiVo or whatever the consumer product that they produce.

ROLL CALL: Let’s do space now. You’re about to launch hearings, and I realize you’re not going to prejudge what may have caused the Columbia disaster, but do you have any preliminary hypotheses about space policy? That is to say whether the shuttle is a good idea and the space station?

McCAIN: I have the belief that we should probably spend more effort in the area of unmanned space exploration, but I do not in any way believe that we should do away with manned space exploration. There are many questions that need to be answered. One, did budget cuts affect safety? That is a big question out there. And that’s part of the immediate issue of the cause of the space shuttle disaster and how you remedy it. The second phase is overall policies which would then be a broad range of questions ranging from the macro, as I said, which we need more unmanned space exploration, to what’s the future of the shuttle and what’s the future of the space station.

ROLL CALL: Are you concerned that there’s too much pork in the NASA budget? Too much of it going toward porky kinds of things, as opposed to real space?

McCAIN: I’m concerned about the cost overruns. The original cost of the space station as I understand it was going to be $4 billion. It’s now gone up to $24 [billion] or $25 billion — consistent cost overruns for a long period of time. Whether that money was spent on safety, or projects that were ant farms, it’s something I think we need to sort out. And quickly at one item — perhaps Congress and the Commerce Committee was not diligent enough in the exercise and oversight of their responsibility. We may find that.

ROLL CALL: OK. Let’s switch to Tauzin-Dingell. What do you think will happen on that front this year? It’s been bopping along for years and years and nothing ever seems to happen. Is this the year?

McCAIN: I don’t think so. I think you’ll probably see [Federal Communications Commission] action at some point. We remain gridlocked by the special interests. There’s too much money washing around to allow people to compromise. And I think that’s probably still the case, even with campaign finance reform. Look, when AT&T gives $3 million to Republicans and $3 million to Democrats, it’s not because they are schizophrenic, nor particularly interested in good government. It locks people into place and then they can’t come together and compromise. So therefore, a bureaucracy, no matter how outstanding the bureaucracy is, makes decisions that Congress should be making.

ROLL CALL: You introduced an alternative bill in the last Congress. Are you coming back with it, or do you think it’s worthwhile?

McCAIN: I think we may propose it just to have it out there. But it interested me that because it was a middle ground, that it got almost no support because people were locked in positions either for their long-distance people or for the Bells. They were not willing to look at what was fundamentally in a middle course.

ROLL CALL: How is broadband ever going to get expanded — you said when you announced your bill that you didn’t want the federal government to be doing this by regulations, you wanted the market to do it — but how is broadband ever going to get expanded unless there’s some resolution of it?

McCAIN: I think technology is one of the answers — technological advances, which will improve that capability. Wi-Fi is an example of at least limited improvement on broadband access. Certainly not the answer, but very helpful. I guess technology and perhaps — and I emphasize perhaps — we can come together on a very narrowly focused [bill], just on broadband that may gain approval. And part of that would be dictated to some degree about the administration — of them weighing in. As you know, they’ve basically taken a hands-off attitude toward a lot of these issues.

ROLL CALL: Is there something the administration ought to be doing to help broadband development?

McCAIN: If they had a proposal that they would come forward with, I think it might be something that we could work on. But again, I continue to see this gridlock on particularly telecommunications issues because, one, so much money and, two, the issues are so poorly understood by most Members. This is evolving technology. Five years ago, broadband wasn’t part of our vocabulary.

ROLL CALL: Do you think that the FCC should regulate cable?

McCAIN: I think that one of two things has to happen. Either cable is regulated or there is meaningful competition. And so far, there doesn’t seem to be real meaningful competition, although satellite has been to some degree competition. But the cable rates have gone up 47 percent while the [consumer price index] has gone up 17 percent — and cable is announcing a new round of price increases to the subscribers.

ROLL CALL: So, we don’t have competition and we don’t have regulation either. How is this going to move along? The FCC can’t regulate cable without legislation, can they?

McCAIN: I think they can do things that would make satellite more available and accessible. They could look at other means of getting programming done without being monopolized by the cable industry. But I have to tell you, I’m not optimistic in the short run that anything is going to happen. If cable rates continue to rise at the rate they are, you’re going to see some kind of consumer backlash. It’s bound to happen. The economy’s not good.

And average citizens can’t afford to continue to pay more for what they now believe is an essential service. If you said to the average citizen that you were going to take away the ability for them to subscribe to cable, they would believe that it’s an essential service.

ROLL CALL: Should the public interest standard apply to cable? Meaning, the public doesn’t own the cable the way it owns the airwaves, but is that something that should happen?

McCAIN: Because of my frustrations about cable rates, I’d like to say yes. But, the cable companies do pay for the fiber that goes underground and into the home, and it’s hard for me to argue that it’s the same as the spectrum, which is clearly owned by the American people. As much as I’d like to, I can’t say this.

ROLL CALL: Let’s move on to the Total Information Awareness Program that John Poindexter is developing. Do you have any Big Brother fears about this, or do you think it’s much ado about nothing? [IMGCAP(1)]

McCAIN: I have Big Brother fears. I have Big Brother fears when I see that we intercept conversations of Iraqis talking to Iraqis. I’m sure that they’re capable of intercepting conversations of Americans talking to Americans. Who decides that? Which Americans should be monitored and which shouldn’t? And to what use is that information put? Having said that, I understand the security concerns, and before we put such a program into operation, at least we should have Congressional hearings and full understanding of what that program is all about.

ROLL CALL: Is there some way to make sure that if the government is going to listen to everything, that it doesn’t record everything except what it needs to fight terrorism?

McCAIN: That’s one of the questions that needs to be asked. They might say, “Look, if we don’t record, we can’t analyze it.”

ROLL CALL: OK, Internet taxation. States want to tax Internet sales. Should they or shouldn’t they?

McCAIN: I have no problem with them doing it as long as there is a uniform standard, and they in their zeal to impose these taxes have failed to move forward on the other front, which is a uniform standard of taxation. We’ve proven with mail-order catalogs that when different states have different tax structures, you don’t get the revenue.

ROLL CALL: Well, is there a role for the federal government then and specifically your committee then to set forth some standards?

McCAIN: We have the right to demand a standard, but for us to impose a standard on the states is an overreach of federal authority, and I think the courts would probably say that also.

ROLL CALL: Finally, the NextWave licensing decision. Is this something that Congress should now revisit, or is this settled?

McCAIN: I think it’s largely settled because if we were gridlocked on the issue before, I think we would be again.

ROLL CALL: So should NextWave be allowed to build a network or is this going to be resolved by selling off?

McCAIN: What I’d like to see, of course, is for them to build their own network. What I think, what other people tell me, experts tell me, that they will probably sell it off, which is unfortunate.

ROLL CALL: Why is it unfortunate?

McCAIN: Because they got this spectrum to start with, not to resell it, but to build the infrastructure and apparently — and I emphasize apparently — they are not going to do it.

ROLL CALL: Any other telecom, science issues or tech issues that you plan to address?

McCAIN: We’re going to try to move forward with the authorization of the FCC, which then brings all these issues into discussion. I think that when we had the five commissioners up it was helpful both to them and to the committee. We should do that more often. They had not been up as a full commission in several years. And I think it will be interesting to watch the FCC now that they have five members and some of them [are] displaying a certain degree of independence from each other on both the Democratic and Republican side.

ROLL CALL: In the reauthorization process, is there anything you will change in the FCC’s authority?

McCAIN: I don’t think there would be any major changes there. I think there are two things about the FCC. One, they are the most powerful, unelected bureaucracy in America because of the impact they can have on the economic future. And, two, I think they’ve done a pretty good job. Given the circumstances and how important many of these pressures are and and how intense some of the pressures are, I think they’ve done overall a pretty good job. I say that about all members.

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