This article is published in the May 2005 issue.

Despite Budget Climate, Industry/Academia Argue for Fundamental R&D

Administration grows defensive over impact of proposed cuts on U.S. competitiveness

As the fiscal year 2006 budget process heats up in Congress with an austere outlook for federal research and development funding, a loose coalition of industry and scientific groups is taking its case to Capitol Hill to advocate for increased federal support for fundamental research, especially in the physical sciences.

In the wake of an FY 2005 appropriations deal in Congress that led to a two percent cut in the budget of the National Science Foundation (NSF) and the President’s FY 2006 budget submission that included a 4.5 percent cut to information technology research and development (as well as cuts to several science agencies), companies, academic institutions, and professional societies are making the case for research support by arguing that it plays a critical role in fueling the innovation necessary to keep the United States competitive in a global economy. The resonance of the message in Congress and in the national press appears to have put the Administration on the defensive.

While scientific societies like CRA have continually argued the importance of federal support for basic research, the relatively recent enthusiasm with which U.S. companies and industry groups have begun to make a similar case appears to be the reason for Congress’s attention. In December 2004, the Council on Competitiveness— representing 400 industrial CEOs and university presidents—released a report on innovation in America that argued that the U.S. had to do more to develop an innovative and talented workforce, increase federal support of long-term research, and invest in “innovation infrastructures” if the country wanted to maintain its dominant position in a world that is becoming more interconnected and competitive, and when the pace of innovation worldwide has accelerated so rapidly.

In the report, titled Innovate America (available at, the Council made a number of recommendations relating to the federal investment in research, including a call to “spur radical innovation” by reallocating three percent of all federal agency R&D budgets towards grants that invest in “novel, high-risk and exploratory research”; a call to “increase significantly the research budgets of agencies that support basic research in the physical sciences and engineering, and complete the commitment to double the NSF budget”; and “[restoring] the Department of Defense’s historic commitment to fundamental knowledge creation” by “directing at least 20 percent of the DOD science and technology budget to long-term, basic (6.1) research performed at the nation’s universities and laboratories.”

Not coincidentally—and emblematic of the tension between groups calling for increases in federal funding for fundamental research and the Administration—the White House chose the same day (indeed, the same building) that the Council planned to hold its press conference announcing the release of the report to host an economic summit with industrial and small business CEOs. At that summit the President announced that the American economy was fundamentally sound and that American competitiveness would be guaranteed by encouraging “capital flows and job creation.” His closing speech on the theme of “securing our economic future” contained considerable detail about his plans for tort reform, regulatory reform, social security reform, and tax reform, but only the following about the role of innovation: “We’ve always got to stay on the leading edge of innovation. There’s always got to be a proper role between government and the economy. The role of government is not to create wealth; the role of government is to create an environment in which the entrepreneurial spirit is strong and vibrant.”

Since the release of the Council’s report, a number of other industry groups have issued reports of their own, all echoing a similar theme: support for fundamental research, especially in the physical sciences, is crucial for fostering the innovation that will ensure America’s future competitiveness. In February, recognizing that “federal support of science and engineering research in universities and national laboratories has been key to America’s prosperity for more than half a century,” the Task Force on the Future of American Innovation, a coalition of 22 industry and academic groups—including Intel, Hewlett Packard, CRA, the National Association of Manufacturers, American Physical Society and others—compiled a set of benchmarks to assess the international standing of the U.S. in science and technology.

The benchmarks (available at, the task force argued, showed that the U.S. still enjoyed a lead in scientific discovery and innovation, but that all the long-term trends—indicators in education, workforce, knowledge creation, R&D investments, the high-tech economy and specific high tech sectors—were all headed in the wrong direction. Other influential industry groups such as the American Electronics Association, TechNet, the Semiconductor Industry Association, and the Computing Systems Policy Project have released reports or hosted events of their own, echoing many of the findings of the Council’s report or the Task Force’s benchmarks report.

Similar messages have appeared more frequently in the mainstream press in recent months. New York Times columnist Thomas Friedman reacted strongly to the NSF cut that was part of the FY 2005 Omnibus Appropriations bill, noting “[o]f all the irresponsible aspects of the 2005 budget bill that the Republican-led Congress just passed, nothing could be more irresponsible than the fact that funding for the National Science Foundation was cut by nearly 2 percent, or $105 million.” Similarly, the San Jose Mercury News editorialized about the cuts by reasoning “without a renewed commitment to funding basic and technology research, America’s leadership in science and technology is certain to slip even further. Already, the proportion of Americans winning scientific prizes or publishing breakthrough research in international journals is declining. The American share of industrial patents has also dropped steadily in recent years.”

“It looks like Congress is not alarmed by these trends. But everyone involved in innovation and research understands what they portend—a poorer, weaker, less dynamic and less vibrant America.”

Most recently, a February 14, 2005, piece in Business Week lamented President Bush’s decisions to cut federal support of R&D in his FY 2006 budget by noting that multifactor productivity—the “single biggest indicator of the economy’s true strength”—is “borne of the essence of technological innovation.” The cut in non-defense R&D spending in the President’s budget, the piece argued, “can only hurt the nation’s ability to maintain a rapid pace of multifactor productivity growth.”

The combination of pressure from industry and articles in the press garnered attention from key members of Congress and placed the Administration on the defensive regarding agency budget requests. In a testy hearing in March before the new House Appropriations Subcommittee on Science, State, Justice and Commerce, John Marburger, Director of the White House Office of Science and Technology Policy, faced questions about reconciling the Administration’s budget request for science agencies with apparently well-founded fears that future U.S. competitiveness may be at risk because of R&D cutbacks. Marburger said he hears the warnings, but feels that U.S. competitiveness is not facing an immediate crisis. “It’s kind of hard to see into the future,” he said. “The U.S. is so far ahead in these areas that we are going to be able to maintain our competitive strength. I don’t see the same danger signs.”

“I think you are in the minority in regard to our competitiveness,” responded Frank Wolf (R-VA), chairman of the subcommittee.

Although there appears to be some popular sentiment in Congress in support of fundamental research in the physical sciences, congressional staff caution that the budget environment overall is still remarkably austere. The appropriators may be sympathetic to the case for basic research, but could be held to budget caps that preclude any increases to science agencies.

CRA will continue to make the case for assigning priority to long-term R&D funding.

As always, for the latest on the budget debate, or anything else related to computing research policy, check out the CRA Computing Research Policy Blog.

Despite Budget Climate, Industry/Academia Argue for Fundamental R&D