Businessweek Archives

Deficit cutting = bad news for science


? Krugman Shifts on the Deficit |

Main

| Gender Balance in Finance? ?

January 08, 2007

Deficit cutting = bad news for science

Michael Mandel

You know, I pity those poor naive scientists. They believed George Bush when he announced his "American Competitiveness Initiative," in last year's State of the Union speech:

I propose to double the federal commitment to the most critical basic research programs in the physical sciences over the next 10 years. This funding will support the work of America's most creative minds as they explore promising areas such as nanotechnology, supercomputing, and alternative energy sources.

But guess what? When Congress gets out its deficit-cutting knives , science research is one of the first things to get slashed. It was true in the early 1990s under Clinton, and it's true now. William Broad had the story in the New York Times yesterday:

The failure of Congress to pass new budgets for the current fiscal year has produced a crisis in science financing that threatens to close major facilities, delay new projects and leave thousands of government scientists out of work, federal and private officials say.

''The consequences for American science will be disastrous,'' said Michael S. Lubell, a senior official of the American Physical Society, the world's largest group of physicists. ''The message to young scientists and industry leaders, alike, will be, 'Look outside the U.S. if you want to succeed.' ''

Last year, Congress passed just 2 of 11 spending bills -- for the military and domestic security -- and froze all other federal spending at 2006 levels. Factoring in inflation, the budgets translate into reductions of about 3 percent to 4 percent for most fields of science and engineering.

Representative Rush D. Holt, a New Jersey Democrat and a physicist, said that scientists, in most cases, were likely to see little or no relief. ''It's that bad,'' Mr. Holt said. ''For this year, it's going to be belt tightening all around.''

Belt-tightening all around....

The American Association for the Advancement of Science, which cheered the President's initiatives, is finally waking up:

President Bush's American Competitiveness Initiative (ACI) proposal to provide large increases for select physical sciences agencies was endorsed by House and Senate appropriators, but these proposals died at the end of the 109th Congress. These and other proposed increases for federal research and development (R&D) programs have mostly become flat funding in the current budget environment. The incoming Democratic 110th Congress could make these flat appropriations final for the entire fiscal year. As a result, the federal investment in basic and applied research is almost certain to fall in FY 2007 for the first time in at least three decades.

Let me repeat that: This will be the worst year for federal funding for basic and applied research in at least three decades.

Let's have a big round of applause, folks, for the deficit-cutters in Congress. In a knowledge-based global economy, they are systematically going to destroy the seed corn in the name of fiscal responsibility. "We can't afford R&D," they say....

10:50 AM

Fiscal Policy, Future, Growth

TrackBack URL for this entry:

http://blogs.businessweek.com/mt/mt-tb.cgi/

Name what else will be cut more deeply to supply the funds, or name what can be done to increase tax revenue to meet current and long-term obligations. We can't run the country on credit cards forever.

Here's an idea to start with: We quit sending money to Iraq to build their economy and we keep it here to build OUR economy.

Posted by: Brandon W at January 8, 2007 11:49 AM

Brandon,

How about we start by cutting and changing social programs to eliminate abuse. With the exception of the EIC, virtually all of our other anti-poverty programs are not effective and should be completely reformed. Cutting R&D, leaving us struggling to compete in a global economy is certainly not the answer. Deficit spending is not a bad thing. It keeps the value of the US dollar reasonable while holding off inflation. Your obviously a liberal, so I can understand that you don't comprehend rational economic ideas. I am sure you would prefer to simply socialize and allow the government to think for you.

Posted by: M.T. Paige at January 8, 2007 01:14 PM

M.T.,

Why am I "obviously a liberal"? Because I think the war in Iraq is utterly moronic and a waste of money? Because I think that running a country on credit cards is completely ridiculous and irresponsible?

I am a proponent of completely eliminating the IRS and all federal taxation, in addition to dissembling all federal social programs. I don't know what you want to label me now but I highly doubt your idea of "liberal" is suitable.

Please take your self-aggrandizing comments and, well, you know where you can shove them.

Posted by: Brandon W at January 8, 2007 03:57 PM

Brandon obviously is a leftist, as he has routinely embarassed himself over here for months.

He thinks tax cuts only benefit the rich (even though all tax brackets dropped). He also thinks outsourcing will take away all US jobs (even though people have been saying that for 5 years and the unemployment rate is just 4.5%).

His inability to grasp the Iraq War in any terms other than "any war the US does is evil" is also proof of his leftism.

Posted by: GT at January 8, 2007 05:56 PM

These last five years have held the greatest corporate profits in history, these same high profit corporations, are investing more and more not here but in foreign R&D because of the cost advantage of lower wage R&D in these nations. Our own corporations are not supporting this expanded national academic research at our cost structure.

So you could say this R&D supported by government is no more the best use of national money than any other welfare service. Money put into the welfare system translates into money placed into local services and salaries. Food stamps do go to support national grocery stores more than local mom and pops, and health services to the poor underwrite doctors nationally while the illegal poor subsidies Rite Aid and CVS clinics.

Now I believe there is greater return on some government spending than other programs. This years project for the Congress could be to define better return on government programs. Academic R&D and teaching and health care, gets to compete with food stamps and grants to farmers and transportation. The one supported by tax structure or deep enough incentives over the next, is the one that can gain profits for business. Maybe this could be worked at to define better government programs that conservative business opposition could support.

Posted by: Mike Reardon at January 8, 2007 06:38 PM

Brandon,

My sincere apologies. I guess I would have to label you a libertarian. I would get angry about the insults at the end of your statement, but I totally had those coming!

Posted by: M.T. Paige at January 8, 2007 08:53 PM

Not so fast, MT, notwithstanding his current disavowal of government spending, I also would have guessed that Brandon is a liberal, based on his many previous comments at this blog. As to the original post, I would argue that while science and R&D are important in the increasingly technology-dominated future, that the basic science/R&D that is being funded isn't (and even if it were important, government funding is not the right answer as government-funded scientists are not held accountable). I'd argue that the type of innovation that Mike has talked about in the past, where ideas are commercialized and brought to market, is much more important and doesn't require government funding to get it going. Given this situation, the basic science budget is going down the drain anyway, might as well cut it. As Mike Reardon says, there are other places where government spending will bring a higher return so we might as well invest there.

Posted by: Ajay at January 9, 2007 12:50 AM

Bush's science record has been nothing short of terrible - his doubting of evolution infuriated the scientific community! The bookstore at the Grand Canyon sells a book endorsing creationism! The stem cell ban was put in place to placate religious conservatives.

The new Moon/Mars program will use money needed for basic research - the 70s all over again.

Just read "The Republican War Against Science."

Enough said!

Posted by: Gary at January 9, 2007 07:09 AM

GT,

First of all, perhaps you have me confused with a different "Brandon" that posts here; which is why I try differentiate by adding the "W" on my post-name.

Secondly, do refer to the response I posted to M.T., substituting "liberal" with your label, "leftist", as is necessary. Particularly pay attention to my last sentence.

Thirdly, you're putting words into my mouth when you claim I've made an assertion - which I did not - that "any war the US does is evil", for which you can shove it all a little further.br />

It's interesting how people are so quick to label other people, and all too often they are so-called-conservatives tossing socialist straw-men around.

Posted by: Brandon W at January 9, 2007 08:21 AM

Inlight of all the budget deficits/Soc Sec and Medicare shortages, our failing infrastructure, our substandard schools, the cost of defending the Japanese, Koreans and Taiwanese, to say nothing of Israelis, Saudis, Kuwaits...ad nauseum, please inform the readers how we can afford: 1)some $19 billion for NIH in Bethesda, MD. - how much 'positive result' research is given to the pharma 'machine' in exchange for token royalties and juicy campaign contributions 2) heaven only knows how much beyond the $480 Billion Pentagon Budget - to say nothing of 'Black Ops' slush funding,is squandered as easily as FEMA 3) the unbridled over-runs for NASA to pursue a whole galaxy of minimal benefit pork projects - dont forget the $100 Billion+++++++ International Space Station that escalates higher and higher for less and less benefit/reward... do you get the point?

We have a giant pork/welfare state for researchers who provide minimum benefit for maximum political capitol.

Posted by: robert joseph at January 9, 2007 12:23 PM

I have to disagree with Ajay's comments posted on Jan 9, 12.50pm:

"...the basic science/R&D that is being funded isn't (and even if it were important, government funding is not the right answer as government-funded scientists are not held accountable).... the basic science budget is going down the drain anyway, might as well cut it."

Does Ajay know that the origin of Internet technologies (and therefore, this blog and all the wonderful benefits of Internet) grew out of government funded research? There is a long list of basic government funded research turned into commercial applications in the areas of material sciences, biology, electronics etc. I guess Ajay probably should read up more about the history of sciences in this country before commenting.

Posted by: wise guy at January 9, 2007 01:05 PM

Regarding some comments that have been posted since my last comment,

Brandon W - Perhaps we have been guilty of lumping your comments together with Brandon's. It is confusing to keep the two apart, especially since you also raise concerns that the liberals often raise.

Robert Joseph - Are we defending the koreans, japanese and saudis or maintaining a military presence there for our own interests? Anybody involved with the situation and I would characterize it as the latter, still reason to pull out, but not altruistic as you make it out to be. That said, I completely agree with your characterization of the pork/welfare state for researchers.

wise guy - I suspect I know far more about the origins of the internet than you do. It is true that the early research was funded by the government, specifically the military, as they were looking to build a robust communication network that might withstand nuclear war. However, many of the researchers involved were frustrated over the years as the great technology they were building never got commercialized. The reason for this is that the hardware needed to deploy the internet on a wide scale depends on components like computer chips that were not made cheaply enough until recently. Once these ancillary technologies were cost-effective to build out, the internet was brought to consumers in the 90s. Now, why did the commercial implementers use the existing technology/research that had been funded many years before by the government? Because it was there and was free to use. I'd argue that if it hadn't been funded previously by the government, engineers would have invented it on the spot, as TCP/IP is technically not that big a deal (they might have even done a better job as the existing internet infrastructure has its problems). To blithely give credit for the internet to the government is to not really understand what it takes to build it.

Even if we were to give credit to the few inventions like the internet that were first gestated by government spending, that raises the question of all the wasted research spending. Has it been worth the few supposed good results to spend the vast amount of money that has been wasted, as detailed by Robert Joseph? I argue that it hasn't.

Posted by: Ajay at January 9, 2007 02:01 PM

Ajay, et al...

More than anything else, I'm more annoyed that several are quick to use (and mis-use) the "liberal" label as a dismissive tactic rather than actually answering a question or addressing a concern. It is that sort of straw man strategy and ignorance that has this country where it is; and it isn't good. Your so called "liberals" aren't innocent of this tactic either, but I see it oozing from every pore of most Republicans/so-called-"conservatives". It's old. And childish. Really.

Posted by: Brandon W at January 9, 2007 03:33 PM

Ajay - right on dude.

Although some government funded science projects have been necessary and/or beneficial to our country at various times, it is a mistake to therefore assume that we "need" to increase or even maintain government spending on scientific research in order to help the economy.

When a private company decides whether to invest in R&D, they must weigh the risk vs. reward for that investment.

When R&D is put in the hands of the government, the important process of weighing risk vs. reward goes out the window for the most part. In many cases no results need to be achieved, and there is very little reward for actually achieving results. In some cases, people assume that results need to be achieved no matter what. In a very small number of cases this is true, particularly in cases of national defence. But for the most part, it just leads to a lot of waste.

For the most part, if a private company is not willing to risk it's own capital to invest in a product, then the product is probably not worth the risk at the current time. However, this is not a universal truth.

Posted by: bjg at January 9, 2007 05:59 PM

I am afraid people are too short-sighted about government funded basic research. It is impossible to expect industry or short-term oriented CEO's these days to invest in long-term research, let alone basic scientific research that may or may not have immediate or foreseeable commercial applications. Notice what happened to some of the previously high profile industry research labs like Bell labs and Xerox PARC?

Yes, of course, plenty of money has gone nowhere in government research labs - this is to be expected for basic and exporatory research. I am deeply concerned that all the fundamental discoveries in particle physics, math, genetic sciences will go to China, India, Japan and Europe in this current generation. So do most of the Noble prizes in future.

I am happy that Ajay know so much about the origin of Internet. But I doubt that TCP/IP will be better designed by the industry - yes hindsight is always 20/20. Without the strong funding from the defence, I believe Internet will take much longer to evolve into what we know today.

Posted by: wise guy at January 10, 2007 01:12 PM

...Anyway... I've been thinking about this a bit.

I'm quite anti-federalist, so my opinion is coloured by that, and I think the type of stupidity displayed in current government spending is a pretty good indication of how little we can trust a federal government. Having said that, I think that California's funding of stem-cell research is probably the right idea. States should decide what type of research they wish to encourage in their state - and by extension what kind of economic development - then fund those kinds of projects at their public universities. Since states will want research that is applicable and generates business and economic growth, they will make more efficient use of the funding. Additionally, the funding can target the economic advantages their particular region holds. It seems to me that this would result in a more efficient use of financial resources. And it would take the money out of the hands of the clowns in D.C. who clearly can't handle it (regardless of which party they affliate with).

Posted by: Brandon W at January 10, 2007 01:49 PM

I'll have to agree with the other posters that Brandon W is a leftist. He becomes irrational when one of his shibboleths is questioned, just like Krugman and DeLong do.

He also suffers from Bush Derangement Syndrome, and cannot admit that this is a strong economy. Actually, the pessimism of leftists like Brandon W itself inhibits their own success in this strong economy. Thus, American ideology is self-cleansing.

Posted by: Gingo at January 10, 2007 03:44 PM

wise guy, I agree that industry has often been too short-sighted about basic research and that research by definition will have some waste as it's hit and miss (the two examples of industry research you cite are actually extensions of the government as they were based on government-granted monopolies, AT&T was given exclusive control of the phone system for efficiency reasons and Xerox was sitting on its copier patent monopoly). The question is how much waste is too much and are there better ways to do research where the funding is better allocated? I'd argue that the government has wasted way too much money on research and that there are better ways. Further, "fundamental discoveries in particle physics, math, genetic sciences" and Nobel prizes are irrelevant. It's perfect that you have chosen those three fields as important or necessary. I challenge you to name one discovery in those fields that has made a difference in people's lives. I hope the developing countries don't waste their time chasing fundamental discoveries in these fields, emulating the stupid behavior in richer countries. As for the Nobels, they are awarded decades after someone has proven to have done something worthwhile so they're neither here nor there.

You obviously know nothing about the internet's beginnings. There was no "strong funding" and it doesn't take much funding to come up with basic transmission protocols. As I said before, technically it's not that hard. The fact that the old protocol won out had more to do with the fact that it already existed and was simple, open, and free than anything else.

Brandon, why pass the buck to state government? I would rather the slightly smarter dimwits at the federal level, rather than the yokels at the state level, control the research budget, if I had to choose between the two. But I don't have to choose between the two. There are alternatives.

Industry consortia could fund research based on what is necessary to their industry's future (I believe the semiconductor industry has something approximating this at the moment). Based on which projects the companies decide to fund and how much money they put in, they could be given royalty shares and voting rights on any discoveries produced. A certain amount could be set aside for even more far-sighted research that would not be narrowly controlled and would benefit society as a whole. Why hasn't this been done? One could argue that public funding of research crowds out efforts like this. One could also fault the lack of imagination of those in industry.

Posted by: Ajay at January 10, 2007 03:50 PM

Fine... call me a "leftist" or a "liberal". Call me "Henry the 8th" if it amuses you. But don't create sham arguments, put them in my mouth, and then attack me for them. This isn't the Bill O'Reilly or Lou Dobbs show.

Posted by: Brandon W at January 10, 2007 04:32 PM

I know Mr. Mandel's basic complaint is that this is one more cut into the muscle of American scientific ability. I see that, like the transfer of manufacturing to lower wage production as a capitalist fact occurring inside advanced western nations. I assume that there is economic advantage to this fact, but that fact make it harder to to ask for blanket support for scientific development, even when it is down into the bone. My niece is the director for a junior college math and science aid program and it has grown 5x what it was, but four years ago basic engineering was a pushed field, it is now passed in favor of better paying employment because of competing overseas engineering at lower cost. That is why massive waist of science investment becomes a past issue, we need to invest directly in programs that will not pass away before the next four year graduation. Mr. Mandel and the academics and other business people that demand support for this scientific research need to also advance clear business models or tax advantages that supports that investment. Something like Intels participation with HP and other industrial firm to form a data base on health care, or clear scientific intern programs to support colleges participation with business in development of patient development.

Posted by: Mike Reardon at January 10, 2007 06:44 PM

Hi everyone,

I've been reading this discussion with great interest. Would focusing the government's efforts on basic basic research...the stuff that industry is never going to fund, and can't fund...pass the smell test? See, I think the U.S. has a responsibility, as the richest country in the world, to fund the advance of knowledge that can benefit everyone, including us. Competitiveness is part of the argument, but only part...

On the other hand, I'm willing to be convinced that the case for government funding for applied research is less compelling...not there yet though.

Posted by: Michael Mandel at January 10, 2007 07:53 PM

Well, what is this mythical basic-basic research that is important but that nobody is willing to fund? Why can't private research institutes funded by donations fund this basic-basic research? Your argument comes down to "there is very basic research that is important but so far-sighted that nobody will fund it. Therefore we must compel small amounts of money from everybody in the country for their own good, though they will only realize these benefits far into the future." If you really believe this, why not list examples of research that you feel passes this test? The fundamental problem with your thesis is that you assume government bureaucrats can identify what these crucial research themes are and that they will act altruistically, channeling funding in the best direction, rather than to their pet research themes or researcher friends. I don't think they can.

As for applied research, why should taxpayers fund research that is going to benefit some company, as currently happens with pharmaceutical research? The patent system exists for these companies to make their money back, why do they need further help?

Posted by: Ajay at January 12, 2007 08:30 PM

I'm just wondering why congress and the people can't see that science and R&D spending is not just spending but an investment with a return. The reason we need the government to fund it is that this type of investment comes with extreme risk. It takes the diversification of an entire society to make it viable. That?? why corporations won?? do it.

When I say return I don't just mean for society, I also mean for the federal budget. New prosperity derived from new technology fuels tax revenues. Why is this so hard for people to see? What we need is a corporation with a board of directors and shareholders running this country instead of a congress with citizens. It would still be democracy but it would be a democracy with financial sense.

Posted by: Joe Cushing at January 14, 2007 10:25 PM

Joe, I don't think you really understand these issues. Nobody would argue your straw man argument that there is no return from R&D, perhaps you should read the comments that people have posted so far and you'd see that people are arguing about the best way to fund that spending. If you really believe that there is research that is so beneficial but is too risky for any single private entity to fund, perhaps you could (echoing what I asked for from Mike) outline what these magical research fields are?

What would be the difference between your ideal government corporation and the representative democracy that now exists? Congressmen are now voted into office just as corporate boards of directors are voted on by their shareholders. Your proposed solution is what is already in place. However, I don't know why you place so much faith in corporate boards because their election and performance so far has many flaws, perhaps even worse than congress. Many of the laws enacted in the last couple of years were an attempt to get corporate directors to do a better job.

Posted by: Ajay at January 15, 2007 07:37 PM

International Institute of Management (IIM) released a new report warning about the U.S. economic health. The report provides information about U.S. Economy risks and implications on socioeconomic budgets including R&D

The complete text of the report is available at:

http://www.iim-edu.org/u.s.economyrisks/

Posted by: ThinkTank at February 28, 2007 08:47 AM

alright...

i noticed alot of label-use in this one

the problem with a our current government is the exact same problem with what happened here. division

Posted by: eric at March 9, 2007 02:04 PM


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus