Science and R&D

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

Winning the Race 2012 Memos: Science and Technology

October 29, 2012
| Reports

Innovation powers competitiveness and boosts living standards. Science and technology, in turn, are key enablers of innovation. This premise helped drive robust federal investment in science and technology in the 1960s, 70s, and 80s that fueled our post-war prosperity. It set the stage for the IT revolution, advances in life sciences, and the creation of millions of jobs and thousands of companies in the 1990s. But today we are shortchanging our future. The United States is now just eighth among OECD countries in R&D as a share of GDP. A key reason is that federal R&D investment grew in constant dollars at just 0.3 percent per year from 1987 to 2008. To restore federal support for research as a share of GDP to 1987 levels, we would have to increase federal funding by almost $110 billion per year. Unfortunately, we are moving in the opposite direction. Fiscal hawks want to put “everything on the table” when cutting the budget, even federal support for science. Many policymakers (usually, but not exclusively, Republicans) are wary of government funding for applied research and technology commercialization and prefer to confine public funding to basic science. While most Democrats are more willing to support R&D funding, too often they are willing to trade it off for increased social welfare spending. If we are to once again become a globally competitive innovation economy we will need to do what other nations are doing: boost public investment in research and put in place new efforts to spr commercialization of this research.

Eroding Our Foundation

October 16, 2012
| Blogs & Op-eds

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. Cutting federal support for R&D, a key "fuel" for the U.S. economic growth 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.

R&D Tax Credits: They Work! Will Policy Maker’s Listen to the Evidence?

October 15, 2012
| Blogs & Op-eds

R&D Tax Credits do increase innovative activity. With no policy currently in place, will the United States become even less competitive by failing to create an environment that properly induces firms to innovate? Policy makers must act by making increasing and making permanent the R&D tax credit, or we will all pay the price.

Cuts to R&D from sequestration will result in job losses of approximately 200,000 in 2013.

ITIF estimates that sequestration of R&D would result in the U.S. economy having approximately 200,000 fewer jobs per year between 2013 and 2016. This would result in the U.S. unemployment rate being 0.2 percentage points higher than it otherwise would be.

Research Advocates Raise Alarm as Sequester of Federal Budget Funds Nears Deadline

The Chronicle of Higher Education
ITIF issued a report concluding that the threatened cuts in federally sponsored research would reduce U.S. economic output by $203-billion to $860-billion over nine years.

Eroding Our Foundation: Sequestration, R&D, Innovation and U.S. Economic Growth

September 20, 2012 - 12:45pm - 1:45pm
Russell Senate Office Building
Constitution Avenue and 1st Street NE
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Washington
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The Budget Control Act enacted in the summer of 2011 requires automatic cuts in discretionary spending to occur starting in January of 2013, commonly known as the sequestration, in order to achieve $1.2 trillion in savings through 2021. Read more »

Eroding Our Foundation: Sequestration, R&D, Innovation and U.S. Economic Growth

September 20, 2012
| Reports

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.

Sequestration's Effect on Federal R&D Will Reduce GDP by Hundreds of Billions

WASHINGTON (September 20, 2012) - If Congress and the Obama Administration cannot agree on a long-term debt reduction plan later this year, across-the-board spending cuts required by law will hit R&D especially hard, resulting in GDP being at least $203 billion smaller in 2021 than it otherwise would be; according to Eroding Our Foundation: Sequestration, R&D, Innovation and U.S. Economic Growth, a report released today by the Information Technology and Innovation Foundation. Read more »

Eroding Our Foundation: Sequestration, R&D, Innovation and U.S. Economic Growth

September 20, 2012
The Budget Control Act would be a hard hit to federal R&D investments in life sciences, aerospace, defense and more, with significant long-term consequences to economic growth.

The Budget Control Act enacted in the summer of 2011 requires automatic cuts in discretionary spending to occur starting in January of 2013, commonly known as the sequestration, in order to achieve $1.2 trillion in savings through 2021. Among the areas that would be hardest hit are federal R&D investments in life sciences, aerospace, defense and more, with significant long-term consequences to economic growth. In an upcoming ITIF report, Eroding Our Foundation: Sequestration, R&D, Innovation, and U.S. Economic Growth, Drs. Read more »

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Impact of Sequestration on Technology and Innovation

September 17, 2012
| Blogs & Op-eds

Overall, it is abundandly clear that the across-the-board cuts are bad policy and should be avoided if possible. As ITIF wrote in Taking on the Three Deficits, while budget cuts are a necessary piece of debt reduction, indiscriminate budget cuts that harms America’s ability to innovation and grow are far from rational economic policy. Hopefully, as the impact of the potential sequestration cuts becomes more clear, this will provide Congress the motivation it needs to act and create a more innovation-friendly budget.