McPherson: Maintaining America’s Role as the World’s Innovation Leader

Posted February 25, 2013 at 5:00pm

You may not realize it, but your day-to-day life is full of technology born out of federally funded research that was often conducted at universities across the country. Basic research has been the wellspring for innovation and applied research, producing much of our modern society, including the Internet, GPS and large-scale integrated circuits.

And with those innovations have come the creation of tens of millions of directly and indirectly related jobs and an economy that, despite its troubles, continues to outshine other nations. The federal government funds 60 percent of basic research, with universities undertaking a substantial part of that work. Research has been a primary driver of the U.S. economy, which is exactly why we must stop the sequester and its roughly $330 billion in research-and-development cuts.

I have seen and worked in our economy as a senior executive in business and at the U.S. Treasury as well as president of a major public university and now as the head of the Association of Public and Land-grant Universities. I know full well how severely the sequester would harm our nation.

The sequester is a reckless and blunt tool that would force deep spending reductions across critical investments in research and education this year and for the next eight years. I’m deeply concerned that massive cuts to our education and innovation capacities, which are critical to both economic growth and deficit reduction, would have severe, long-term effects that would put our nation at an extreme disadvantage for decades to come.

This year, the sequester would cut about $10 billion in research and development. Through 2021, the sequester would cut R&D by more than $90 billion from 2011 levels. However, when maintaining R&D investments relative to gross domestic product growth, that shortfall becomes $330 billion, according to an Information Technology & Innovation Foundation study. This would result in approximately 200,000 fewer research-related jobs per year through 2016, which would cause the U.S. unemployment rate to be 0.2 percent higher than it would be without the cuts.

It’s senseless to make cuts to research and education initiatives that have proved time and again to yield far more economically than what they cost as government investments on the front end. Our country effectively makes a profit from these research investments, which underscores why such a broad stroke of the sequester is wrong and would actually deepen our deficit and debt woes.

Moreover, if we’re not going to develop the next technology at our universities then other nations will. China and others are rapidly increasing their research as a percentage of GDP. They are also dramatically increasing investments in university education.

China’s GDP is smaller than the United States’, but its economy is growing much faster. Unless the U.S. makes significant research and education investments, we can expect that the increases in research funding of China and others will mean that their relative competitiveness improves, likely in some ways that go to our core historical strengths.

The leaders of public universities work closely with the business community, which further develops and utilizes the technology that is created to spur economic growth. My organization, APLU, is an active member of the Task Force on American Innovation — an alliance of America’s most innovative companies, leading research universities and largest scientific societies. The task force recently urged President Barack Obama and congressional leaders to avoid the sequester. This show of unity illustrates how devastating the sequester would be for all sectors of our economy.

We have to deal with budget deficits and a rising debt responsibly, but massive, indiscriminate cuts to areas that will actually grow our economy are misguided at best. A true solution should involve revenue as well as serious entitlement and tax changes. We also must make targeted investments in things like research and education that will grow our economy and lead to better days. This show of unity illustrates how devastating the sequester would be for all sectors of our economy and how important federally supported research is to these diverse sectors.

Technology leads to new and growing companies, which leads to new jobs, which leads to new revenue, which leads to more funding to invest in new innovation. This economic circle of life is critical for our people and the long-term success of our country.

We’re just days away from having these massive cuts enacted. At this writing, Washington is engaged in blaming the other guy with few prospects of an immediate solution. But the problem does not go away on the morning of March 1.

The White House and Congress must pull together wisely and quickly. Otherwise at some date in the future a critical technological breakthrough will be developed in Shanghai that should have been done at Berkeley. It’s a sad and unnecessary possibility that’s all too close to becoming reality. The U.S. deserves better for the sake of this and future generations.

Peter McPherson is president of the Association of Public and Land-grant Universities. Previously, he served as president of Michigan State University and deputy secretary of the Treasury.