Bush administration backs innovation with new American Competitiveness Initiative

US State of the Union address

George W Bush has unveiled a new American Competitiveness Initiative (ACI) to maintain and enhance US leadership in the physical sciences. The initiative should come as a timely signal to the new Conservative government in Ottawa that it ignores the government's role in competitiveness and innovation at its peril (see related article below).

The three-pronged initiative includes a commitment to double federal research support for the physical sciences over the next 10 years in nanotechnology, supercomputing and alternative energy sources, make the US R&D tax credit permanent and boost education in science and mathematics.

The ACI was announced in Bush's January 31 State of the Union Address and was the focus of a February 2 speech he made during a tour of the 3M corporate headquarters in Maplewood MA.

If adopted, the doubling of funding for R&D in the physical sciences will be achieved by increasing the combined budgets of the National Science Foundation, the Department of Energy's Office of Science and the Department of Commerce's National Institute of Standards and Technology by $910 million or 9.4% for the current FY. The plan is to increase their combined budgets by $50 billion in new funding over 10 years.

The ACI was the centrepiece of $137 billion in federal R&D spending announced by the president in his proposed FY07 Budget.

But according to analysis by the American Association for Advancement in Science (AAAS), the gains by those three agencies will be made at the expense of basic research, which is projected to decline to 3.4% government-wide to $54.7 billion. The AAAS notes that the increase in the overall R&D budget will be slightly less than inflation, with the largest increases going to new weapons and space vehicles development. The budget of the National Institutes of Health (NIH), for instance, will remain flat with all but two of the NIH institutes experiencing budget decreases.

MAKE R&D TAX CREDIT PROGRAM PERMANENT

The ACI also includes a proposal to make the federal US R&D tax credit program permanent and enact changes to "make it even more efficient at encouraging private sector innovation". Extending and expanding the program, which technically expired at the end of 2005, is estimated to cost $86 billion over 10 years. Since its introduction in 1981, the R&D tax credit program has expired 12 times, requiring new legislation each time to extend it on a temporary basis. Critics say the program's uncertainty is restricting the ability of industry to take a longer-term view of its R&D investments. The program currently accounts for about $4.6 billion in annual foregone revenue, so the intent is clearly to encourage more firms - particularly smaller companies - to increase their use of the credit.

The ACI proposal's third leg is education, with a strong focus on encouraging younger children to study math and science and improving the quality of instruction. The plan calls for $380 million in FY07 for new and expanded programs.

NEW ENERGY INITIATIVE

The State of the Union Address also includes major increases in energy-related R&D as part of the president's American Energy Initiative to decrease US dependence on foreign oil and gas. The big winner is the Department of Energy, whose Office of Science budget increases to $3.8 billion. That includes a 24% increase in R&D funding for nuclear physics, a 36% increase in computational research and a 25% boost to basic energy sciences.

The administration's decision to make innovative a central policy plank stems from a groundswell of concern from many sectors over the ability of the US to remain competitive against existing industrialized nations and emerging players such as India and China. Last year, at least five major reports were issued encouraging the federal government to take prompt action on innovation and competitiveness. The most recent and perhaps the most influential is Rising Above the Storm: Energizing and Employing America for a Brighter Economic Future, produced by the Committee on Science, Engineering, and Public Policy of the National Academy of Sciences (NAS). The NAS committee was chaired by Norman Augustine, former chairman and CEO of Lockheed Martin Corp and member of the President's Council of Advisors on S&T.

The role the NAS and other reports played in convincing the Bush administration to launch the ACI was acknowledged in a press briefing that included Dr John Marburger, the president's science advisor and director of the Office of Science and Technology Policy.

"This initiative ... comes with fairly broad support from the high tech community, from higher education ... For several years we've been getting reports from organizations like the Council on Competitiveness and other task forces on our competitive positions with respect to other countries, and culminating in a National Academy of Sciences (NAS) report," says Marburger. "The physical science priority is something that everyone has identified as very important for future economic competitiveness and innovation. It's an enhancement to existing capabilities. We're not proposing dramatically new programs. We already have priorities in nanotechnology, for example, and high-end computing - the networking and information technology is a major initiative."

Marburger notes that the Bush administration has been receiving reports with similar messages about S&T and innovation for several years and that 2005 was a particularly active year. But the final push to develop the ACI proposal was provided by the NAS's Rising Above the Storm and followed by key meetings between the president and White House officials with the heads of several prominent US technology firms including Intel and Cisco Systems. One of those executives, Intel Corp board chairman Craig Barrett, is a member of committee that produced the NAS report.

"As much as half of our nation's economic growth in the last half-century is directly due to technological progress fueled by research and development," Bush said in his 3M speech. "In order to stay competitive, we have got to lead the world in research and development and ... scientists and engineers that are capable of helping America stay on the cutting edge of technology."

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