Federal budgeteers should ramp up funding for scientific research

Federal budgeteers should ramp up funding for scientific research
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As the federal budget careens toward a shutdown at year’s end, it’s important to recognize that a strong intellectual and political consensus exists for the federal funding of science research — and in particular for spending on basic science. Support of basic science funding — the kind aimed at acquiring new knowledge without specific, immediate commercial use — is one of the most important investments a government can make to boost a country’s economic growth rate and to encourage dynamism.

Indeed, the Trump administration currently has a golden opportunity to improve the quality of the federal government’s scientific investment and if proper budgetary discipline is put in place, to increase funding over the long-term.

Since the 1990s, the consensus view has been that it is necessary to spend the equivalent of three percent of gross domestic product (GDP) on scientific research in order to sustain U.S. leadership in science and technology.

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Unfortunately, the U.S. has not reached the three percent threshold since the turn of the century, which has allowed other nations to surpass us. The most recent data shows that the U.S. invests roughly 2.7 percent of its $18 trillion in gross domestic product in research and development (R&D) in 2015. This $486 billion per year sounds impressive, but these numbers don’t tell the whole story. 

 

Currently, nine countries spend more than the U.S. as a portion of their economy on science research. Israel tops the list, spending 4.2 percent of its GDP, followed by South Korea, which also spends over four percent. Japan, Finland, Sweden, Denmark, Switzerland and Austria all spent at least 3 percent, while Germany is not far behind. China currently invests 2.1 percent and is gaining quickly as its economy continues to grow. In fact, according to the Organization for Economic Co-operation and Development (OECD), if current trends hold, its total research spending will surpass that of the U.S. as early as 2019.

Additionally, while private investment on science has trended upward during the past decades — thanks to Silicon Valley spending — this private spending has mostly only offset the concurrent decline in federal R&D spending. The federal share of funding for basic science has fallen below 50 percent for the first time since World War II. Accordingly, basic research now comprises only one-sixth of the country’s spending on all types of R&D.

Most Silicon Valley R&D spending does not qualify as “basic research,” the kind of spending that is unattached to market pressures and is “the pacemaker of technological progress” according to President Franklin Delano Roosevelt’s chief science advisor Vannevar Bush, who was the first to argue the value of basic research in the post-war era. While Silicon Valley’s research is important, it cannot be a lasting substitute for investments in the kind of basic scientific research questions with long-run and often uncertain return horizons.

Additionally, basic science funding does not crowd out Silicon Valley’s efforts or other private investment. It also does not distort markets like tax incentives, subsidies and other programs that pick winners and losers. As a result, it is less vulnerable to special interests, as the funding goes to activities much higher up the value chain and thus it does not require governments to bestow advantages on particular market actors.

For example, subsidies and tax incentives to encourage the development of more efficient solar panels could be replaced by greater funding for the basic science behind photovoltaic panel technology. This should be of interest to both sides of the political spectrum: the left can support greater funding for scientific endeavors in clean energy, climate change and public health, while conservatives have a credible alternative to the distortion of market signals by Federal and state governments. Greater funding for basic science is also popular: 71 percent of adult Americans think this kind of government funding pays off in the long run — and this number includes 66 percent of conservatives and 83 percent of liberals. Particularly in today’s polarized political climate, that’s a popular initiative. 

If the Republican-controlled Congress and the Trump administration are serious about returning America to our pre-Great Recession rates of economic growth, increased public support for basic science research would have a demonstrably significant return on investment. Recent research suggests that thanks to diminishing returns from past work, new, impactful ideas may be getting harder to find. This makes it even more important to consider the beneficial impact greater public support of basic science could have on the rate of technological progress and economic productivity.

What’s more, even under difficult budgetary conditions, America has done it before. In the mid-1990s, at a time when the government shutdowns first entered the American political landscape, a Republican Congress and Democratic White House agreed to double the fund of the National Institutes of Health (NIH) between 1998 and 2003 — at a total of over $30 billion per year.

Currently, this double funding for NIH continues and has been sustained for the past 15 years. It acts as a primary driver of the development of many of the immunotherapies which have improved survival rates for many types of cancer.

Accordingly, lawmakers should use the struggle over the federal budget to their advantage and unlock increased federal funding for basic scientific research. If the horse-trading over the current tax plan shows us anything, it’s that Congress can get things done if there is enough political will. Choosing to boost scientific funding would boost economic productivity over the longer term, and this is something both parties can support.

William Murray (@theotherbillmur) is federal energy policy manager and Garrett Watson (@GS_Watson) is project manager for the R Street Institute