In the coming weeks, a plethora of reports will emerge enumerating the most urgent priorities for the next Administration and Congress to address. TechElect’s Six Steps to Jobs, Prosperity, and Innovation cuts through the thicket and succinctly highlights the six key steps that should be the starting point for policymakers after the November 6 election.

We need a real debate about the proper role of the government as a partner to help the private sector in winning the race for global innovation advantage. Stale debates about "makers and takers" and "who made this or that" miss the key issue: how would each candidate propose to structure federal policy so it helps our businesses win in intensely competitive global markets? This means helping businesses field a workforce with skills second to none and supporting science and technology so firms have access to the flow of innovation to help them to get to market with globally competitive products. While America has fallen behind and lost our game, it's still possible we can get back in the race and create the millions of well-paying jobs that come with winning. But only if Washington takes these challenges seriously and examines the global race closely. And that begins with an honest and on point debate about how to win the innovation race.

Why would we automatically expect that America can win in clean energy when it’s losing in so many others? The answer is: we shouldn’t. For all the gains made in clean energy over the last few years, its future looks ominous. To say otherwise is disingenuous. Of course, it doesn’t have to be this way. America losing the global clean energy race is not set in stone. The United States must triple its investments in innovation to make clean energy cheap and competitive everywhere. It must aggressively fight international green mercantilism to level the playing field. And it must implement a cohesive national manufacturing strategy that will help all manufacturing sectors not just clean energy.

Because of the Budget Control Act, budget enforcement procedures known as sequestration will commence January, 2013 unless Congress and the Obama Administration act otherwise. The sequester requires cuts in discretionary spending to achieve $1.2 trillion in savings from 2013- 2021. When compared to 2011 spending levels, this will lead to a cut of 8.8 percent (or $12.5 billion) of federally-funded research and development (R&D) in 2013. Because of the key role federal R&D plays in driving U.S. innovation, productivity, and economic growth; we estimate that the projected decline in R&D will reduce GDP by between $203 billion and $860 billion over the nine year period, depending on the baseline used. At $203 billion, the loss is equivalent to taking away from U.S. consumers all the new motor vehicles purchase over six months, over two years of airline travel, or six years of attendance at professional sporting events.

These R&D cuts will also result in job losses of approximately 200,000 in 2013. Reducing the budget deficit is important, but it should not and does not have to come at the expense of growth-inducing investments in areas like federal support for R&D. In fact, undermining growth capability is disruptive of a deficit control policy.

The report first explains how sequestration will impact R&D expenditures and the U.S. innovation system. Next, the report presents the conceptual model and previous research explaining how R&D funding impacts the economy at large. Subsequently, based on the latest academic research, we estimate the effects of the R&D expenditure cuts on: productivity and GDP, the knowledge base (patents and publications), the U.S. standings in the global innovation system, and finally employment. While ensuring that the federal budget crisis comes under control is critical, everything should not be “on the table” when doing this. Cutting federal support R&D, a key “fuel” for the U.S. innovation economy engine, would not only lead to a relatively smaller U.S. economy and higher unemployment , it would reduce U.S. global competitiveness precisely at a time when the U.S. economy is struggling to stay in the race for global innovation advantage.