“Our nation’s competitiveness continues to be compromised by significant and arbitrary cuts across our discretionary budget and by year-to-year, sometimes month-to-month uncertainty in the budget. Now is not the time to let up on our shared efforts to shore up and even grow our science and innovation capacity to build a better future for our children and grandchildren. The message we risk sending to the nation and the world by not reauthorizing the America Competes Act is a message of defeat.” Ranking Member Eddie Bernice Johnson
The deal to end the shutdown and avoid breaching the debt ceiling established yet another continuing resolution extending funding at FY 2013 levels continuing a long period of U.S. underinvestment in R&D. It is time for Congress and the Administration to commit to restoring the R&D funds imperiled by the current sequestration and to more broadly create a forward-looking policy agenda that would make the U.S. a magnet for new jobs by addressing R&D, education, immigration, and tax reform.
A solution driven Congress would be a great economic advantage to the U.S.; the current gridlock is untenable. Retaining U.S. Global leadership in science, technology and innovation is not a partisan issue. A sensible policy agenda would focus on: supporting manufacturing, providing excellence in STEM education, addressing the need for high-skilled immigration and improving the tax code. All work to support job creation.
In order for the US to be a magnet for manufacturing, we must maintain our leadership in scientific research as well as the infrastructure that undergirds modern manufacturing. This infrastructure is composed of both physical and human capital: instrumentation, prototyping facilities, commercial scale testbeds and the manufacturing expertise that allows small- and medium-sized enterprises to test new ideas at scale and maximize their yield. This pre-commercial phase is where we generate critical intellectual property – and high value jobs. When this activity is in the United States, we reap the return on our investments in the underlying research. When, on the other hand, we cede this activity to other shores, we are in effect, subsidizing their economic growth. It’s like building the frame of a house, sending it elsewhere and then wondering why you have no shelter.
Similarly, better aligning our investments in STEM education and allowing immigrant graduates to remain in the U.S. would result in a better-educated workforce. Education policy should focus investments on priority STEM education areas. These investments should include programs that demonstrate success through rigorous metrics and measurement of outcomes. The U.S. must address the current skills and education mismatch in order to help grow a highly skilled workforce of tomorrow. Such a strategy must address a broader cross-section of the population in order to be effective. In light of a national need for a more skilled workforce, there is no excuse for under-representation of women and minorities among our STEM graduates.
As noted above, immigration reform is a critical component of having a skilled workforce, particularly when people who benefit from an excellent higher education in the U.S are finding that they can not stay and put those skills to use in the U.S. economy. Current immigration policy often drives businesses to establish R&D operations in other nations due to strict quotas on both Permanent Resident Cards and work visas as well as the difficult, bureaucratic, and time-consuming process of sponsoring workers for visas and green cards. This posture makes no sense, as numerous high tech CEOs have attested.
Tax policy should provide incentives for activities that support high value-added growth. The importance of the R&D tax credit is well established, but other tax credits could also be extremely effective in driving high value production. A simple tax credit for companies who establish manufacturing operations in the US, for example, would provide a much-needed break for small businesses for whom capital is exceedingly scarce. Such a credit would be technology-neutral, keeping the government out of the practice of “picking winners and losers” but rather creating a climate that supports and encourages growth.
A forward looking policy agenda can contribute greatly to the revitalization of America’s manufacturing sector and will fuel economic growth. Measures such as the ones outlined above would be a good start.