Obama's 'innovation' agenda would get only small spending hike

McClatchy NewspapersFebruary 14, 2011 

WASHINGTON — One of the few areas in the fiscal 2012 budget that President Barack Obama unveiled on Monday where he actually called attention to his plans to increase spending was for what he called "innovation."

Obama said the nation would prosper again "if we out-build and out-innovate and out-educate as well as out-hustle the rest of the world."

In his State of the Union speech last month, he called this a "Sputnik moment," when federal investment to stay ahead of China is as key to America's future as the space race against the Russians once was.

His actual spending proposals are far more modest than his rhetoric.

The $148 billion Obama is proposing for innovation — a combination of research and development, and targeted education and infrastructure spending — is an increase of just $772 million or about a half a percent.

But Obama is proposing a substantive shift in how federal R&D money is allocated. He would decrease federal investment on the development end, especially in defense, and increase spending for early-stage research, where the private sector has been less eager to spend because profit is less certain, but where there's potential for transformational discoveries.

"If you start with the premise that the pie isn't going to grow that much, then the president's right, you're better off moving it toward earlier stage applied and basic research," said Rob Atkinson, president of The Information Technology and Innovation Foundation, a Washington-based think tank.

"What really drives prosperity is earlier-stage research like the research that the government supported that created the Internet," he said. Furthermore, Atkinson said, studies show that more public R&D spending can spur more private sector R&D.

Experts voiced concern that Republicans in Congress will be determined to cut research spending even though Obama's proposed increase is modest.

"I'm afraid Congress does not understand how innovation happens in the United States," said Burton Richter, a Nobel laureate in physics, professor emeritus at Stanford and former Department of Energy science lab director. "Industry does not do the innovation on which the products of the future are going to be based. That's done with government money."

Atkinson said that to get back to the nation's high-water mark for federal R&D as a share of the economy — that came in 1987 under President Reagan — Obama would need to invest $60 billion more per year in science and technology.

"That would require an increase of almost 50 percent, as opposed to .5 percent," he said.

Under Obama's budget, Defense Department technology development would drop nearly 16 percent, while basic defense research would rise 14.5 percent, to about $2.1 billion.

The overall federal portfolio for basic and applied research would increase 11.6 percent, or $6.9 billion. Overall development would decrease 4.7 percent, down about $3.9 billion.

The National Science Foundation's budget would get a 13 percent increase, to $7.8 billion.

The Energy Department budget would increase spending on energy efficiency and renewable energy by 44 percent. That covers everything from making cars, buildings and factories less wasteful of energy to improving technology and lowering costs for solar, offshore wind, bio-fuels and geothermal energy.

The Energy Department's Office of Science would get a 10.7 percent hike, to $5.4 billion. Obama wants to double, from three to six, the number of Energy Innovation Hubs where scientists are developing battery, smart grid and other technologies.

The U.S. Global Change Research Program's funding would rise more than 20 percent, to $2.6 billion, focusing more research on climate change.

Obama also is calling for spending $100 million this year on a plan to prepare 100,000 science, technology, engineering and math teachers over the next decade. And he's calling for spending to expand high-speed Internet access, and make permanent an expanded R&D tax credit.

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