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INVESTING IN INNOVATION

Science Makes a Comeback at the White House

President Obama’s 2012 Budget Invests in “Winning the Future Through Innovation”

SOURCE: AP Photo/J. Scott Applewhite Copies of President Obama's 2012 budget are delivered to the Senate Budget Committee on February 14, 2011. The budget puts a strong emphasis on science and innovation, but the fight between investment and deficit reduction is just beginning.
U.S. Scientific R&D 101

Our “charticle” puts the current debate about science and technology budgets into historical context. A few things might surprise you. Click here to download the PDF.

The White House Office of Science and Technology Policy earlier this week unveiled its plan for the fiscal year 2012 science and technology budget in an event at the American Association for the Advancement of Science in Washington, D.C. The budget echoes the priorities identified by the president in his State of the Union address and in his “Strategy for American Innovation,” which the White House released last week. Here’s a look at how the two documents match up the strategy with the money.

A tough-love budget

In what OSTP Director John P. Holdren referred to as a “tough-love budget” at the release event, this year’s request to Congress keeps overall nondefense spending flat while increasing the crucial investments in science and technology R&D, so-called STEM (science, technology, engineering, and math) education, and 21st century infrastructure that we need to “out-innovate, out-educate, and out-build” our economic competitors. Proposing $147.9 billion for federal research and development overall, the budget provides increases for areas identified by the president as critically important to America’s competitive future, such as sustainable energy, information technology, advanced manufacturing, and STEM education initiatives.

Programs that were uncompetitive with these high-priority areas were reduced, including the R&D programs at the Department of Veterans Affairs (falling 12 percent from the 2010 enacted level) and the Environmental Protection Agency, which was cut by $11 million. Developmental research overall saw a decrease in funding from previous budgets with a total of $79.4 billion—a decrease mostly due to cuts made in defense research. The budget proposes a $4 billion decrease for the Department of Defense R&D budget from 2010 levels, putting it at $76.6 billion.

Holdren credited tactical, hard-nosed financial discipline as the reason why the 2012 budget, which begins in October this year, achieved what most people thought wasn’t possible. This year’s budget calls for a total nondefense R&D budget of $66.8 billion ($4.1 billion or 6.5 percent more than the 2010 enacted budget).

Doubling path for key science agency budgets

The FY 2012 budget proposed by the White House does not lose focus on previous long-term agency goals set by the Obama administration. The three key agencies identified by the president as crucial to national competitiveness—the National Institute of Standards and Technology, the National Science Foundation, and the Department of Energy’s Office of Science—maintain financial momentum to reach their budget-doubling goal by 2017. The budget proposes an increase for these agencies of 12.2 percent from the 2010 enacted budget for a total of $13.9 billion in funding. The NSF increases 13 percent from 2010 enacted levels to $7.8 billion, the DOE Office of Science increases 10.7 percent to $5.4 billion, and NIST intramural laboratories increase to $764 million, a 15.1 percent increase over 2010.

Clean energy innovation

To further advance American clean energy innovation, $550 million was directed to continue to fund DOE’s Advanced Research Projects Agency-Energy, or ARPA-E. Additionally, the budget provides financial support to double the number of Energy Innovation Hubs from three to six in order to promote collaboration between industry and academia.

The three new hubs will focus on rare earth materials, advanced car batteries, and new materials to advance the smart grid. Funding for the existing hubs for building energy efficiency, fuels from sunlight, and nuclear modeling continue to receive funding.

Educating our children in science, technology, engineering, and math

Recognizing that a workforce well trained in science, technology, engineering, and math, or STEM, is a critical building block for long-run, innovation-driven economic success, the budget also includes $3.4 billion across the federal government for STEM education. New STEM initiatives include a $100 million “down payment” on preparing 100,000 new STEM teachers within the upcoming decade with 80 percent going to the Department of Education and 20 percent of the down payment going to NSF.

Also included is $90 million for the Department of Education to create a new agency called Advanced Research Projects Agency-Education, or ARPA-ED. This new agency mimics the successful model used by DARPA and ARPA-E to develop and commercialize game-changing and transformational new technologies of national importance. ARPA-ED, according to the OSTP, will:

Push the field of education research, development, and demonstration forward by: sponsoring synthesis and vetting of public and private R&D efforts; identifying breakthrough development opportunities; shaping the next wave of R&D; investing in the development of new education technologies, learning systems, and digital learning materials; and identifying and transitioning the best and most relevant R&D from other federal agencies.

Infrastructure to keep people, goods, and information on the move

At the budget-release event at the AAAS on Monday, U.S. Chief Technology Officer Aneesh Chopra discussed how investments in 21st century infrastructure will provide the foundational capacity to foster the growth of new jobs and industries. Specific infrastructure investments that the budget makes include a one-time $5 billion investment in the Universal Service Fund to ensure all Americans have access to 4G high-speed wireless, even those living in remote areas. Some of this will be paid for by increasing the wireless spectrum available for mobile broadband. The auction of these new frequencies to companies will cut the deficit by nearly $10 billion over the next decade.

Advancing manufacturing innovation

We’ve pointed out at Science Progress many times that innovation does not just take place in labs; it also happens on assembly lines. The president’s budget would increase funding for the National Science Foundation, the National Institute of Standards and Technology, the Department of Energy, and the Defense Advanced Research Projects Agency to support development of advanced manufacturing technologies. Investments in nanomanufacturing, biomanufacturing, next-generation robotics, and cyber-physical systems are important to keeping American manufacturing on the cutting edge of innovation. In addition, the budget proposes reauthorizing the wildly successful and oversubscribed section 48(c) clean energy manufacturing tax credit for $5 billion.

Leveraging private-sector investment in innovation

The FY 2012 budget also displays a solid realization of the importance of private-sector investment in innovation. The government simply does not have the size, expertise, or resources to directly develop the technologies of the future. The research and experimentation tax credit helps unlock private investment in research and development by encouraging companies to develop new technology.

But since 1981 the R&D tax credit has been renewed by Congress on a temporary basis every two to three years, creating considerable uncertainty for businesses trying to make the necessarily long-term investments in technology research and development. The president’s budget proposes finally to expand, simplify, and make permanent the R&D tax credit.

The budget also includes a new Innovation Fund within the Small Business Investment Company, or SBIC, program. The new fund will specifically address the “valley of death” financing gap that prevents promising technical ideas from becoming job-creating business plans by making $200 million in matching grant funds available to augment private investments that support job-creating and innovative startup technology companies with high growth potential.

In addition, the budget includes $15 million for the Small Business Administration’s Emerging Leaders initiative to “enhance small business participation in regional economic clusters.” By signaling to the private sector that investments in research and development will carry tax benefits long into the future, this administration hopes to help kick start innovation across all of America’s industries.

Looming budget battle

Though these key investments in science and innovation have made it into the president’s budget, they still face a long road ahead to secure funding in the eventual FY 2012 budget that Congress must pass and the president must sign. President Obama’s budget can be thought of as an “opening bid,” as he characterized it earlier this week, in a long process of haggling that will take place between the Republican-controlled House and the Democrat-controlled Senate and White House.

Elaine Sedenberg is an Intern at Science Progress and an undergraduate in honors biochemistry at the University of Texas at Austin. Sean Pool is Assistant Editor for Science Progress. Also see our new “charticle” on U.S. Science R&D 101 (pdf).

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