Stimulating US innovation

In a sign of the times, US President Barack Obama faced tough questions last week from a TV comedy show host Jon Stewart, who asked why he ran his presidential campaign with audacity, but was timid about reforming healthcare in office.

It’s a mantra that was applied more broadly to the run-up to the mid-term elections this week, when politicians used the administration’s $814-billion American Recovery and Reinvestment Act (ARRA) economic stimulus as a lightning rod, with some singling out spending on science. 

Under the obfuscation of finger pointing, vitriol, and a record-breaking $2-billion-plus in campaign spending, however, successes of the stimulus remained largely unspoken. White House senior adviser David Axelrod admitted the administration did not do enough to explain the Democrats’ accomplishments to the public over the past two years.

For example, as a result of stimulus spending, the US now holds more than 80 per cent of the lithium battery market, according to Patrick Clemins, director of the R&D Budget and Policy Program at the American Association for the Advancement of Science (AAAS). While lithium batteries were invented at the University of Texas overseas companies, particularly in Asia, dominated the industry until recently. “Through stimulus investment, the jobs were brought back here,” Clemins said.

Measuring the stimulus

Job creation and preservation is a major metric used by the US government to determine the success of ARRA. Those job numbers are self-reported by the people who get the grants, and so far, they show patchy successes or failures. The Joint Economic Committee two weeks ago said 17 of the largest 20 US cities lost more than one million jobs despite the stimulus. Boston, Baltimore and Washington added jobs, but the rest of the cities saw decreases, including Los Angeles, San Francisco, Miami-Fort Lauderdale and Chicago.

Such numbers give grist to stimulus naysayers like Representative Kevin Brady (Republican-Texas), who said the numbers show the programme is a terrible disappointment.

AAAS’s Clemins said some jobs numbers can reflect a positive impact of the stimulus. “With grant funding, universities hired additional technicians or graduate students,” he said. “This is a short-term job impact, so it does fit the role in the recovery act to keep people employed. It is a way to decide early on if it worked.” He added that there is no strong metric for measuring the economic impact of research, though he did say it is estimated to be $2 for every $1 invested.

One of many schools that benefited from stimulus monies is the University of North Carolina (UNC)-Chapel Hill. Its research grants and contracts totalled $803 million in the 2010 financial year, the largest amount in campus history, and up 12.2 per cent over the $716 million last year. The contracts and grants were primarily from the federal government, especially the National Institutes of Health (NIH) and the National Science Foundation (NSF).

Of the total, some $126 million came from ARRA. In the 12-month period, 308 UNC projects were selected for ARRA funding, taking to 319 the total number of ARRA-funded projects selected between the start of the federal initiative in February 2009 and the end of the 2010 financial year.

“Given the current economic climate, it’s impressive that we’ve continued to keep growing the pool of research funding here at UNC,” said Barbara Entwisle, interim vice chancellor for research and economic development. Entwisle has been quoted as saying that stimulus funds created more than 530 jobs at the university.

In terms of measuring the projects themselves, some politicians have honed in on examples they say waste stimulus money. Republican senators Tom Coburn (Oklahoma) and John McCain (Arizona) issued a report, “Summertime Blues: 100 Stimulus Projects that Give Taxpayers the Blues”, that includes more than twelve research projects, one of which is a $1.9 million grant to send researchers to the Southwest Indian Ocean Islands and east Africa to study exotic ants. Scientists have countered that such projects create jobs.

Vice President Joe Biden issued his own report, “The Recovery Act: Transforming the American Economy through Innovation”, which found that ARRA’s $100 billion investment in innovation is transforming the economy, creating new jobs, and helping accelerate significant advances in science and technology that cut costs for consumers, save lives and help keep America competitive in the 21st century.

Secretary of Energy Steven Chu said, “We are unleashing the American innovation machine to change the way we use and produce energy in this country. Just as importantly, these breakthroughs are helping create tens of thousands of new jobs, allowing the US to continue as a leader in the global economy and helping to provide a better future for generations to come.”

The cliff – coping with the funding fall-off

Whatever the outputs of stimulus spending, perhaps more troubling to the scientific community – and reflecting the continuing economic uncertainty – is what happens now, since neither party actually revealed its plan for future science funding.

“It’s hard to say what will happen,” Clemins said. “Science is pretty bipartisan. The impact of the elections on science is indirect rather than direct.” While Republicans tend to be more fiscally conservative, meaning science funding may get cut to the 2008 level, Democrats also talked about a 5 per cent cut in the 2012 budget. “So there will be budget cuts done any way,” Clemins said.

R&D in general has been pretty flat in constant dollars since 2004: accounting for inflation it is up 0.4 per cent, he explained, and if inflation hits next year when the budget numbers fall, it will be even more challenging for scientists to stretch their research dollars.

The preliminary fiscal 2011 budget from the President was a bit shy of $150 billion, and it was basically flat except for a shift of some funding from defence to non-defence agencies. Still, that would seem to leave US scientists sitting pretty compared to their counterparts in Europe, where the UK recently announced a freeze in its science budget over the next four years, Spain announced cuts, and Norway actually expects an increase after years of little or no growth.

Clemins said Europeans still look to the US for how to do innovation. “But Americans see their innovation system in peril. They are facing strong cuts in federal funding, and assuming R&D will be impacted as well.” Looking at 2008, the most recent R&D numbers, the US still funded one third of the world’s R&D. The next closest was Europe, with one quarter of R&D investment. “The US still is definitely a leader in terms of raw money, but people are worried about the next 10-15 years,” he said.

While UNC, Duke, the University of Michigan and other schools have basked in stimulus funding, the recipients are all too aware of the coming dry-up of funds. All ARRA funds had to be allocated by September 30. About 5 per cent of the total was doled out by agencies that extended the payments over three years or more, but most were for two years. That means this year or next, scientists will once more be returning, hands extended, to the grant wells at NIH, NSF and other government agencies after stimulus funds dry up.

But both NSF and NIH, as the primary individual grant funders in the US, face a tough road ahead, with federal budget tightening and the end of stimulus funds that pumped up their budgets over the past couple years. NSF, which benefitted from federal funding increases in the early 2000s, has managed to spread out grants, so only a certain number of scientists will come back every year. NIH, by comparison, has doled out most grants for two years, Clemins said, so all grant receivers will need to return this year or next.

“A large number of people are looking for transition funds,” he said. “There is a general push by the administration for more innovation and keeping jobs created by researchers in the US. It is pushing bridges between universities and between universities and businesses with workshops and other means.”

But continued economic uncertainty leaves the future of science funding and innovation, and US competitiveness, in question for now. “The US still is in the phase of spending its way out of the recession to avoid depression,” explained Clemins. “The situation will become clearer next year.”