Science and R&D

In an economy powered by innovation and technology, more proactive R&D policies are key to success.

Healthy Funding: Ensuring a Growing and Predictable Budget for National Institutes of Health

February 26, 2015 - 11:00am - 12:30pm
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Healthy Funding: Ensuring a Growing and Predictable Budget for National Institutes of Health

February 26, 2015
| Reports

The current budget and appropriations process coupled with a lack of consensus among policymakers on how to address our long-term fiscal challenges makes it seemingly impossible to deliver the level of funding for biomedical research that the American public overwhelmingly supports. This report reviews the implications of a reduced federal commitment to research funded by the National Institutes of Health (including a look beyond our shores) and then examines possible options for altering the budget process so that Congress can continue to invest in the nation’s biomedical leadership even as it makes progress on addressing broader fiscal challenges.

 Members on both sides of the aisle understand that the federal government has an essential role in funding biomedical research and often point with pride to the advances made and lives saved or improved on account of research undertaken by scientists in their home states. Government funding for biomedical research brings large health benefits. It also reduces the burden of fiscal debt both by reducing the long-term cost of medical care and by boosting economic growth.

There also seems to be a growing awareness that the failure to provide both growing resources and increased predictability has negative effects on the pace of medical breakthroughs and the strength of the U.S. biomedical industry. Several other nations have succeeded in making long-term public commitments to biomedical research, partly because of its importance in attracting private research.

Unfortunately, political battles over the broader federal budget have prevented legislators from translating this support into rising, or even stable, budgets. This has resulted in tremendous uncertainty about what NIH’s budget will be from year to year. Although there is a general willingness to increase the agency’s budget, members differ over whether any increases should be offset by cuts to other programs. As a result, policymakers should consider separating NIH’s budget from the broader deficit battles and implement a number of budget reforms that could provide NIH with greater resources and flexibility. These include:

  • Increase discretionary spending caps and ensure additional funding flows to NIH;
  • Provide NIH with permanent appropriations, limiting the agency’s exposure to annual budget battles;
  • Establish a biomedical research fund to supplement annual appropriations;
  • Remove NIH from the discretionary budget, making the program mandatory; or
  • Streamline regulatory processes to ensure efficient use of existing funding.



New Report Highlights Alternative Approaches to Securing Predictable NIH Funding

New Administration Budget has Smart Proposals for Boosting R&D

February 12, 2015
| Blogs & Op-eds

Businesses under-invest in R&E because they can't capture the broad benefits for society. This is why since 1981 we have had the R&E tax credit, and it's done a great job encouraging R&E investment that wouldn't have happened otherwise. The new budget proposal makes some important updates and improves the way the credit can work for new companies.

American Innovation Under Structural Erosion and Global Pressures

February 9, 2015
| Reports

For most of the postwar era, the United States has enjoyed superior leadership in innovation, whether measured by student skills, research and development spending, patents, or high-technology industry output. However, as Western European economies caught up with the global innovation frontier and Japan followed, this superiority began to erode. The U.S.-led IT revolution of the 1990s seemed to slow down this innovation convergence, but only until the bubble burst in the early 2000s. While America has recovered faster from the global financial crisis than other nations, structural trends in innovation convergence have not disappeared. On the contrary, the technological advancement of large emerging economies, such as China, has even more clearly delineated different nations’ impacts in global innovation.

In the absence of significant government investment in innovation (from both direct spending and tax incentives for business to invest more in innovation), the current budget sequestration is likely to pave the way for further relative decline in innovation with accompanying slower economic growth. It is not an inevitable scenario, however. The United States could once again lead in the race for global innovation advantage with an appropriate innovation strategy — one that’s credible, bipartisan and medium- to long-term in nature.

This report assesses the current state of the American innovation ecosystem, compares it to the systems of our top global competitors and argues that we need a comprehensive national innovation strategy, backed by significant government investment, to restore the United States to global leadership.

R&D Credits Essential for Competitiveness: New Evidence

February 2, 2015
| Blogs & Op-eds

New research shows how tax breaks stimulate R&D, and that R&D in turn helped U.S. manufacturers stay ahead of Chinese competitors.

Boost R&D by Easing Repatriation Rules

January 12, 2015
| Blogs & Op-eds

A policy compromise that lets companies repatriate funds at a low tax rate, provided they spent at least half of these funds on research and development, would accomplish the mutual goals of freeing up foreign earnings and boosting research, while not contributing to the federal debt-to-GDP ratio.

New Evidence from Canada: Tax Policy Does Affect Research Spending

December 15, 2014
| Blogs & Op-eds

In “Do Tax Credits Affect R&D Expenditures for Small Firms? Evidence from Canada,” the authors find that firms that qualified for a larger tax credit did spend more on R&D in the following years compared to firms of similar income whose tax situation did not change. 

Congress Should Make the R&D Tax Credit Permanent

December 2, 2014
| Blogs & Op-eds

Congress has an opportunity now to permanently extend the research and development (R&D) tax credit, an essential tool for promoting innovation, competitiveness and economic growth. While neither the timing nor the substance of the proposed legislation is perfect, Congress and the president should take action this year. Although it would be preferable to treat this business provision on its own, political realities dictate that Congress should take the best deal that it can and make the credit permanent now.

How the Silicon Valley Innovation Ecosystem Creates Success

November 30, 2014
| Presentations

Silicon Valley boasts perhaps the most unique, difficult-to-replicate regional innovation ecosystem in the world. The presentation explores five key characteristics that make Silicon Valley so distinct: 1) its five world-class research universities, five U.S. national laboratories, and dozens of world-class corporate and private research institutions; 2) a half-century of intense federal R&D investment; 3) 40 percent of U.S. venture capital invested and seven of America’s top ten VC investors; 4) 6 of the world’s top 10 ICT companies located with a ten-square-mile radius; and 5) a concentration of both advanced-degree holders and foreign-born start-up founders more than twice the national average. The presentation  also explains how companies in the Valley are different, particularly that they use a “need-seeker” strategy that strives to address unarticulated needs and seeks to be first-to-market with the resulting new products and services.

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