Facing an innovation deficit

Is interest in information technology research declining? High-tech industry leaders warn that federal spending trends indicate the Bush administration's declining interest in IT research. They worry that U.S. jobs and national competitiveness will suffer if the federal government fails to support IT research that is not directly related to national defense or homeland security.

White House science and technology officials insist that federal funding levels are appropriate for now, although they acknowledge that it is difficult to make sound long-term science policy decisions in a new era of globalization.

But some lawmakers are sufficiently concerned about the overall state of research and development activity that they plan to host an innovation summit this fall. They will try to reach a consensus on dealing with what they view as an R&D deficit that could weaken the U.S. economy. A related issue of IT outsourcing is likely to be another focus of the summit.

"What's at stake is the future of the U.S. economy," said Harris Miller, president of the Information Technology Association of America, a group representing high-tech companies. He offered a baseball analogy to explain the nature of the R&D challenge. "In baseball, you can often tell about five years ahead of time when a franchise is going to hit the doldrums," he said. For example, the franchise stops investing in farm teams and puts its money elsewhere.

"R&D is a lot like that," Miller said. Few research ideas make it beyond the idea stage to become commercial products, but risk-taking is what put the United States in a position of global leadership economically, he said. The nation will lose its international competitive edge in five to seven years, Miller added, if more money is not spent on IT research.

He also believes that federal tax relief for companies that conduct R&D should be a priority. A permanent R&D tax credit, which President Bush supports, would be an incentive for more tech companies to invest in long-term IT research projects, he said.

Miller has urged lawmakers to approve a bipartisan bill that would cement the tax credit, which has been extended 11 times since its enactment in 1981. "It continues to wreak havoc in corporate planning rooms because Congress keeps letting it expire," he said.

A 2005 report by the American Electronics Association states that federally sponsored non-defense IT research has declined during the past decade and a half. The proposed fiscal 2006 budget shows a similar pattern.

With the exception of NASA's exploration systems programs, most civilian programs in the proposed budget for science and technology efforts would be cut. The National Science Foundation's IT research funding would fall 16 percent below the fiscal 2005 level and 33 percent below the fiscal 2004 level.

In response to some lawmakers' and lobbyists' concerns, White House officials say that budgets, institutions and policies will protect R&D in the short-term. But John Marburger, director of the White House's Office of Science and Technology Policy (OSTP), has suggested that long-term policy-making is difficult in the new era of globalization.

Speaking at a science forum in April, Marburger said that critics have misinterpreted the president's fiscal 2006 budget. He highlighted examples of R&D funding increases, including increased amounts for IT research.

OSTP's fact sheet on the office's proposed fiscal 2006 budget cites a five-year, $10.4 billion cumulative investment in R&D for networking and IT as evidence that the Bush administration has not ignored R&D.

Marburger said non-defense R&D accounts for 5.6 percent of total discretionary outlays in the president's proposed fiscal 2006 budget, which is greater than the 5 percent average of the past three decades.

Funding for basic research, which stands at $26.6 billion in the president's fiscal 2006 budget request — down from the $26.9 billion enacted level for the previous year — has not dropped, Marburger said. The reduction is due entirely to accounting for earmarks, he added. Because earmarks are appropriations that lawmakers give for specific projects in their districts, that money is not funneled through the standard competitive process for obtaining research funds.

Marburger said the Bush administration's fiscal 2006 request also includes a $71 million, or 28 percent, increase for NSF's K-12 Math and Science Partnership program, an initiative to enrich math and science curricula nationwide.

But in his remarks at the forum, Marburger said policy-makers are in uncharted waters when they make long-term R&D policy. Approaches that factor in globalization are impossible without more sophisticated research on how international, technological and financial changes will affect the technical workforce, he said.

Marburger said the social science of science policy needs to grow up quickly to provide a basis for understanding the complex dynamic of today's global, technology-based society. "I am confident about America's near-term future in science and technology, but I share the concerns of many about the longer term," he said.

Marburger said he worries that tools for making wise policy decisions are not yet sufficient "to manage the complexity of our evolving relationship with the awakening globe."

Talking about answers

IT outsourcing is another cause for concern among lawmakers and public-interest officials who worry about U.S. innovation and competitiveness. A significant portion of federal R&D in science, engineering and IT is now outsourced, said John Palguta, vice president of policy and research at the Partnership for Public Service, a nonpartisan, nonprofit group.

A challenge for federal agencies is making sure they retain the expertise needed to manage federal research programs and contracts, Palguta said. "If they don't, they are in danger of basically losing control over costs, time frames and the quality of the end product," he said.

House lawmakers insist they want to re-energize federal supercomputing. However, researchers fault congressional leaders for not authorizing additional money. The Energy Department owns the world's fastest supercomputer, called the IBM BlueGene/L System, but other countries are close behind.

Suzy Tichenor, vice president of the Council on Competitiveness and director of its High Performance Computing Initiative, said a recently passed House bill — the High-Performance Computing Revitalization Act of 2005 — acknowledges supercomputing's positive influence on the economy. "People might think of supercomputing as very high tech, but a company like Proctor and Gamble can refine the packaging and manufacturing of Pringles and shave cents off the cost, which translates into millions of dollars of savings."

Tichenor said the nation needs more computational capacity than is available. "Oil companies need peta-scale supercomputing, as do automotive manufacturers for advanced design and safety work," she said.

To combat what he sees as a growing research and innovation deficit, Rep. Frank Wolf (R-Va.), chairman of the House Appropriations Committee's Science, State, Justice, Commerce and Related Agencies Subcommittee, has secured funding for a National Conference on Science, Technology, Innovation and Manufacturing. He has dubbed it the "innovation summit."

Some public interest officials, however, are skeptical about what can be accomplished at the summit. "The sum of those conferences we hope will be a doable innovation agenda for the federal government," said Kei Koizumi, director of the R&D Budget and Policy Program at the American Association for the Advancement of Science.

"It's easy to talk," Koizumi said. "But actually implementing policy proposals or legislation is more difficult ... because implementing means investing more money."

"The U.S. is still leading in research computing and applying our computing to scientific questions," Koizumi said, adding that the proposed fiscal 2006 budget for networking and IT R&D is about $2 billion. "I don't want to minimize what's going on now because it is a significant commitment," he said. "But the question is, is it enough to meet our future needs and our current economic competitiveness situation?"