Innovation and the Economy. Science and technology have been responsible for over half of the growth of the U.S. economy since WWII, when the federal government first prioritized peacetime science mobilization. But several recent reports question America's continued leadership in these vital areas. What policies will best ensure that America remains a world leader in innovation?
Representative Timothy Bishop, New York State–1 (D) and ranking member of the Subcommittee on Water Resources and Environment, writes:
In order for the U.S. to remain competitive in the 21st Century, we must continue to support policies that invest in basic research encourage entrepreneurship, and bolster education for the next generation.
I am a strong supporter of research programs like those found at our Department of Energy national labs. Brookhaven National Lab, in my district not only has made monumental scientific discoveries, but has also been the breeding ground for hundreds of innovations that have led to economic gains for business and entrepreneurs, and which have improved the quality of life for millions of Americans. Similarly, investments in research through the National Institutes of Health, National Science Foundation, the Defense Advanced Research Projects Agency and the Advanced Research Projects Agency for Energy, to name a few, have resulted in billions of dollars in economic activity, created thousands of jobs, and help position the U.S. to maintain its global leadership in innovation.
A highly-skilled workforce is essential to maintaining American's role as a leader in innovation and economic growth. It is critical to support investments in education to ensure our next generation has the skills and knowledge necessary to reach their goals. One of the most important tools to prepare our youth for the challenges of tomorrow is science, technology, engineering and math (STEM) education. As a member of the Education & Workforce committee, I strongly oppose recent efforts to reduce federal funding in these areas, and I am the author of H.R. 258, the STEM Master Teacher Corps Act, which would award competitive grants to school districts or states to partner with colleges and universities or nonprofit organizations to establish a program which will develop, support and retain exceptional teachers in the STEM disciplines.
Representative John Boehner, Ohio–8 (R) and Speaker of the House, declined to respond to the science eight questions that we asked. As of press time we have not found public statements that pertain to this question.
Senator Dianne Feinstein, California (D) and chair of the Subcommittee on Energy and Water Development, writes:
California is home to the transformative innovation of Silicon Valley, home to more than 100 universities and colleges, more than a quarter of U.S. venture capital investment and six of the top 10 patent-producing U.S. cities. Our high-tech industry is critical to the growth of the global economy. A top priority for me is my 'patent box' legislation to make the United States more attractive for manufacturing companies, including many in Silicon Valley. Under the bill, companies that domestically manufacture products based on U.S. patents will pay a lower corporate tax rate—15 percent compared to the usual 35 percent. This bill is not only good for U.S. manufacturers, it will serve a powerful role as a catalyst for innovation.
Representative Ralph Hall, Texas–4 (R) and chair of the Committee on Science, Space and Technology, writes:
Science and technology remain essential factors in the strength and growth of the U.S. economy. Basic research has long been recognized by expert organizations such as the National Academy of Sciences as key to driving innovation and ensuring long-term economic growth. Unfortunately, the Obama Administration has focused much of its R&D spending—particularly in areas such as energy—on late-stage technology development and commercialization activities with poor track records. Basic research should be restored as the top Federal R&D investment priority.
Additionally, it's important to recognize that people innovate, not governments. Public policies that encourage rather than stifle innovative business practices and permit rather than inhibit university and industry scientists in furthering their research are essential to ensuring that the U.S. remains a leader in innovation and are key to our future economic growth. U.S. entrepreneurs are currently hindered by the high-tax and heavy-handed regulatory and economic policies pursued by President Obama, greatly limiting private-sector risk-taking and innovation. We need a competitive and predictable corporate tax structure to allow our innovative companies to compete globally; we must reduce the regulatory costs and federal red tape imposed on U.S. employers; and we must continue to seek strong and secure trading relationships to allow the opening of new markets for our innovators. We must return to an economic environment that rewards, not punishes, our best and brightest for pursuing transformative ideas.
Senator Tom Harkin, Iowa (D) and chair of the Committee on Health, Education, Labor and Pensions, writes:
For decades, one of the defining features of the American economy has been the innovative and creative spirit of American entrepreneurs and researchers. What is often overlooked, however, is that across our history, an often visionary Federal government has funded and spearheaded initiatives that have expanded private commerce, given birth to countless inventions and new industries, and created tens of millions of jobs. For instance, the Defense Advanced Research Projects Agency invented the Internet, researchers at NASA have made dozens of breakthroughs, including the computer microchip and CAT scanner technology, and over 80 Nobel Prizes have been awarded for National Institutes of Health supported research.
These innovations have revolutionized the way the world does business, dramatically increasing productivity and creating untold millions of jobs. These are exactly the types of investments we need to continue to make because they form the backbone of an innovative, strong, successful economy. Finally, because much of our private sector R&D comes from manufacturing firms, we need to do more to rebuild our manufacturing base, particularly through programs like President Obama's proposed National Network for Manufacturing Innovation.
Senator Mitch McConnell, Kentucky (R) and Senate minority leader, did not respond to the eight science questions by press time. The Senator has spoken about the importance of innovation to the economy in the past. On April 20, 2007 he spoke on the Senate floor regarding the America COMPETES Act. An excerpt of the U.S. Fed News services transcription of the statement follows:
Mr. President, America has led the world in innovation for over a century. From the light bulb to the airplane to the integrated circuit, America has given the world the tools to live happier, easier, and more productive lives.
Now the rest of the world is beginning to catch up. Nations like China and India are seeing the benefits of brainpower and what it can do to remake their economies.
The America COMPETES Act is the best way to keep more of the jobs of the 21st Century right here in America, and the best way to ensure that our children have the skills to keep America at the forefront of innovation and discovery.
Representative John Mica, Florida–7 (R) and chair of the Committee on Transportation and Infrastructure, writes:
To continue America's role in innovation and economic leadership, we should remove government obstacles to innovation, streamline and improve the patent process and continue to partner in research and development. The U.S. should also improve our education system, especially by making science, technology, engineering and math more attractive for students and by rewarding quality teachers.
Representative Nancy Pelosi, California–8 (D) and House minority leader, writes:
Before I became Speaker of the House in 2007, we listened to the experts who contributed to the National Academies of Science's report Rising Above the Gathering Storm, and we heard from scientific leaders at universities and innovative entrepreneurs across the country. We took their advice and worked with Congressional leaders to spearhead our Innovation Agenda: enact the America COMPETES Act, to help ensure our nation's global economic competitiveness for generations to come—through a new emphasis on math, science, engineering, and technology education, and a renewed commitment to basic research. That bill increased funding for the National Institute of Science and Technology, National Science Foundation, and the Department of Energy. It trained more of our students in math, science, engineering, and technology, to turn ideas into innovative technologies to boost our economy and create good American jobs. It created or expanded many competitive, merit-based grants and fellowships. It increased manufacturing research and education and created a STEM Training Grant program to increase the number of teachers in those fields. It funded regional innovation clusters and science and research parks. Our reauthorization of the bill in 2010 built on those successes and went further, allowing any federal agency to come up with prize competitions.
Democrats know that these investments have a multiplier effect on private investment. More must be done, but the progress we've already made is at risk. Since 2011, we've seen the new House Majority cut funding of these programs. The Ryan budget passed this year:
- Cuts investments in R&D, science, and technology – which are needed to spark growth and create 21st century jobs – by more than $100 billion over the next decade.
- Cuts the number of National Science Foundation grants by over 11,000 over the next 10 years, eliminating support for over 13,000 researchers, students and teachers in 2014 alone.
- Cuts the number of new NIH grants for medical research by over 16,000 over the next decade.
Senator Harry Reid, Nevada (D) and Senate majority leader, did not respond to the eight science questions by press time. The Senator's website states his position on innovation and technology and a section is excerpted below:
Technology has transformed our economy over the last ten years. have been working hard to strengthen Nevada's high-technology sector by providing our students with the skills they need to thrive in high-technology industries and by closing the digital divide. I am proud to have recently been named the Information Technology Industry Council's High Tech Legislator of the Year and a recipient of TechNet's Founders Circle Award for my work in expanding America's and Nevada's innovation economy. In addition, I have been an ardent supporter of the research and development tax credit and have offered legislation to make it permanent. Developers of emerging technologies often need unique incentives in order to make new technologies commercially viable. I remain committed to maintaining our competitiveness and keeping our country at the forefront of technology and innovation.
Senator Jay Rockefeller, West Virginia (D) and chair of the Committee on Commerce, Science and Transportation, writes:
It is widely acknowledged that Federal investment in science and technology contributes to economic growth and sustained prosperity. The United States has historically led in global research and development, but other countries—notably China—are recognizing the correlation between increased funding and technological innovation. The United States now ranks eighth when research and development expenditures are calculated as a fraction of a nation's Gross Domestic Product. We have not lost our position as a global leader in science and technology innovation, but even the best policies will not lead to continued advancements and breakthroughs without financial commitments to the fields of science and technology from our Federal and state governments.
Luckily, we already have a comprehensive assessment of the standing of investment and productivity from which to develop policy. In 2005, the National Academy of Sciences evaluated U.S. performance in science and technology investment. Recommendations from that study informed the policy in the America COMPETES Act of 2007 and the America COMPETES Reauthorization Act of 2010. Both Acts called for a doubling of the Federal investments in basic research at the National Science Foundation, the National Institute of Standards and Technology, and the Department of Energy's Office of Science to maintain the United States' position at the forefront of global innovation. But subsequent budget requests from two administrations, annual appropriations, and legislation stretched out that doubling trajectory from seven years to anywhere from 11 to more than 18 years. Both parties have spared these areas from more significant funding cuts, but our government reduces funding and investment in proven economic drivers without consideration of the consequences.
Certainly the financial crisis and the fallout from blindly slashing agency budgets to reduce the deficit have contributed to the current political climate surrounding investment. But we must realize that forward-thinking policy and investments lead to economic prosperity that, in turn, supports greater breakthroughs in innovation. I will continue to push for science and technology research and education because they put our economic recovery on a stronger course; however, we can all do more to publicize the tangible benefits that greater investment in science and technology has on our global competitiveness.
Representative Chris Van Hollen, Maryland–8 (D) and ranking member of the Committee on the Budget, writes:
It is imperative that the United States lead the world in innovation in the 21st century. Our standard of living, job opportunities for our citizens, lifesaving cures and treatments for our loved ones, and a healthy environment for all depend on it. In my judgment, that kind of leadership will require a comprehensive and sustained effort from both our public and private sectors – including a robust investment in education (especially the STEM fields), a federal commitment to research and development, a renewed emphasis on next generation manufacturing, translating federally funded breakthroughs to commercial applications in the private sector, an immigration policy that enables us to recruit and retain the best and brightest scientists from around the world, and appropriate tax, regulatory, and legal policy.
Representative Henry Waxman, California–30 (D) and ranking member of the Committee on Energy and Commerce, writes:
Technological innovation is key for America to compete and win in an increasingly global economy. The federal government has played a critical role in fostering science and technological innovation, particularly in the latter half of the twentieth century, and the American people and our economy have benefited tremendously from those public investments.
The federal government has many tools to promote scientific and technological progress, and we should be deploying all of them to boost innovation in key sectors. These tools include conducting or funding basic scientific research, supporting science education, and providing loans and other support for commercialization of innovative technologies. We can also use innovative mechanisms to stimulate innovation, such as offering prizes for specified technological breakthroughs and using energy savings performance contracts to support deployment of advanced energy efficiency technologies in buildings.
Regulatory policy can also drive tremendous innovation and produce huge economic benefits. For example, the Clean Air Act and other environmental laws contain "technology-forcing" provisions to drive the development of new technological solutions to pollution problems. When EPA sets limits for tailpipe emissions from vehicles, it considers what could be achieved with new technology, not just the technology already on the market. Another Clean Air Act provision requires large new stationary sources of pollution, such as power plants and factories, to meet pollution limits based on what can be achieved by the "best available control technology," which ensures continuous improvement over time. The Department of Energy's appliance efficiency standards have also driven significant technological innovations across a multitude of consumer and commercial products, with tremendous benefits to the economy.
Another way regulatory policy can spur innovation is through market-based incentives. Cap-and-trade programs, such as the Clean Air Act's acid rain program, are an excellent example of this approach. By putting a price on each ton of pollution emitted, the market sends a strong signal to innovate to achieve emission reductions through methods that cost less than the cost of emitting the pollution.
The benefits of regulatory incentives for innovation are evident in America's vibrant pollution control industry. The U.S. environmental technologies industry has grown dramatically with the implementation of the Clean Air Act and other environmental laws. In 2008, the industry generated approximately $300 billion in revenues and $44 billion in exports and supported nearly 1.7 million jobs. These include high-technology jobs in engineering and computer-aided design, as well as manufacturing and transportation.
Unfortunately, in this Congress, House Republicans have repeatedly opposed federal actions needed to support and drive scientific and technological innovation. Numerous votes on the House floor have targeted funding for research and development, loan programs for clean energy, and regulatory requirements that are based in science and will lead to technological development.
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