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. This is equivalent to taking away from U.S. consumers all the new motor vehicles purchased over six months, over two years of airline travel, or six years of attendance at professional sporting events.
Beginning in January 2013, the Budget Control Act requires automatic cuts in discretionary spending - known as sequestration - in order to achieve $1.2 trillion in savings by 2021. The sequester will result in a cut of $12.5 billion to federally funded R&D in 2013, with further cuts accumulating to $95 billion when compared to 2011 funding levels through 2021. More significantly, because of the role that federally funded R&D plays in boosting U.S. economic growth, these cuts will negatively affect the ability of the economy to grow and create jobs.
Because over a third of R&D and over 60 percent of basic R&D are funded through federal sources, the impact on the economy and industry will be significant. The impact will be felt across life-sciences, IT, defense and broader manufacturing. For example, over $80 billion in economic output per year would not exist in the IT sector alone if it were not for the init