[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
AMERICA COMPETES: BIG PICTURE PERSPECTIVES ON THE NEED FOR INNOVATION,
INVESTMENTS IN R&D, AND A COMMITMENT TO STEM EDUCATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JANUARY 20, 2010
__________
Serial No. 111-70
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
______
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54-450 PDF WASHINGTON : 2010
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
DAVID WU, Oregon LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington DANA ROHRABACHER, California
BRAD MILLER, North Carolina ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York BOB INGLIS, South Carolina
JOHN GARAMENDI, California MICHAEL T. McCAUL, Texas
STEVEN R. ROTHMAN, New Jersey MARIO DIAZ-BALART, Florida
JIM MATHESON, Utah BRIAN P. BILBRAY, California
LINCOLN DAVIS, Tennessee ADRIAN SMITH, Nebraska
BEN CHANDLER, Kentucky PAUL C. BROUN, Georgia
RUSS CARNAHAN, Missouri PETE OLSON, Texas
BARON P. HILL, Indiana
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
VACANCY
C O N T E N T S
January 20, 2010
Page
Hearing Charter.................................................. 2
Opening Statements
Statement by Representative Bart Gordon, Chairman, Committee on
Science and Technology, U.S. House of Representatives.......... 7
Written Statement............................................ 8
Statement by Representative Ralph M. Hall, Minority Ranking
Member, Committee on Science and Technology, U.S. House of
Representatives................................................ 8
Written Statement............................................ 10
Prepared Statement by Representative Eddie Bernice Johnson,
Member, Committee on Science and Technology, U.S. House of
Representatives................................................ 11
Witnesses:
Mr. John Castellani, President, Business Roundtable
Oral Statement............................................... 12
Written Statement............................................ 14
Biography.................................................... 16
Mr. Thomas J. Donohue, President and CEO, U.S. Chamber of
Commerce
Oral Statement............................................... 17
Written Statement............................................ 19
Biography.................................................... 22
Governor John Engler, President and CEO, National Association of
Manufacturers
Oral Statement............................................... 23
Written Statement............................................ 24
Biography.................................................... 30
Ms. Deborah L. Wince-Smith, President and CEO, Council on
Competitiveness
Oral Statement............................................... 30
Written Statement............................................ 32
Biography.................................................... 37
Appendix: Answers to Post-Hearing Questions
John Castellani, President, Business Roundtable.................. 68
Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce... 72
Governor John Engler, President and CEO, National Association of
Manufacturers.................................................. 75
Deborah L. Wince-Smith, President and CEO, Council on
Competitiveness................................................ 81
AMERICA COMPETES: BIG PICTURE PERSPECTIVES ON THE NEED FOR INNOVATION,
INVESTMENTS IN R&D, AND A COMMITMENT TO STEM EDUCATION
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WEDNESDAY, JANUARY 20, 2010
House of Representatives,
Committee on Science and Technology,
Washington, DC.
The Committee met, pursuant to call, at 10:06 a.m., in Room
2318 of the Rayburn House Office Building, Hon. Bart Gordon
[Chairman of the Committee] presiding.
hearing charter
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON SCIENCE AND TECHNOLOGY
America COMPETES: Big Picture Perspectives
on the Need for Innovation, Investments in R&D
and a Commitment to STEM Education
wednesday, january 20, 2010
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
1. Purpose
On Wednesday, January 20, 2010, the House Committee on Science and
Technology will hold a hearing entitled ``America COMPETES: Big Picture
Perspectives on the Need for Innovation, Investments in R&D and a
Commitment to STEM Education.'' The purpose of the hearing is to
examine the role that science and technology play in promoting economic
security and maintaining U.S. competitiveness and to understand the
perspective of the business community on the reauthorization of the
America COMPETES Act.
Witnesses were asked to provide testimony on ways to build upon the
America COMPETES Act to further strengthen U.S. competitiveness.
Witnesses were asked specifically to discuss how the programs
authorized in the America COMPETES Act have affected or will affect
innovation and the ability to maintain a skilled workforce in the
United States, and whether the priorities and focus of the America
COMPETES Act will put the U.S. on course to maintain its ability to
compete successfully in the global economy.
2. Witnesses
Mr. John Castellani--President, Business Roundtable
Mr. Tom Donohue--President, U.S. Chamber of Commerce
Governor John Engler--President, National Association
of Manufacturers
Ms. Deborah Wince-Smith--President and CEO, Council
on Competitiveness
3. Background
It is widely recognized that scientific advancement and
technological innovation have contributed to economic growth in the
United States. In fact, some economists estimate that about half of
economic growth in the United States since World War II has been the
result of technological innovation. At the same time, the Organisation
for Economic Co-operation and Development (OECD) concluded that, since
World War II, leadership in science and engineering in the United
States has driven its dominant strategic position, economic advantages,
and quality of life.
Although the United States continues to be a world leader in
research and development, technological innovation, and science and
mathematics education, there is indication that this leadership is
slipping. For example, between 1990 and 2001, the United States trade
surplus in high technology products turned into a trade deficit. In
addition, in recent years, American students have been performing
poorly on international assessments of math and science proficiency and
a growing number of American companies have moved assets and jobs
overseas.
On October 12, 2005, the National Academy of Sciences' Committee on
Prospering in the Global Economy of the 21st Century released a report
entitled Rising Above the Gathering Storm: Energizing and Employing
America for a Brighter Economic Future. The report was prompted by a
request to the National Academies from Chairman Bart Gordon, former
Chairman Sherwood Boehlert, and Senators Lamar Alexander and Jeff
Bingaman to identify the top 10 actions, in priority order, that
Federal policymakers could take to enhance the science and technology
enterprise so that the United States can successfully compete, prosper,
and be secure in the global community of the 21st century.
The Rising Above the Gathering Storm report offered four
recommendations, with specific action items for implementation. The
recommendations were:
Recommendation A: Increase America's talent pool by
vastly improving K-12 science and mathematics education.
Recommendation B: Sustain and strengthen the nation's
traditional commitment to long-term basic research that has the
potential to be transformational to maintain the flow of new
ideas that fuel the economy, provide security, and enhance the
quality of life.
Recommendation C: Make the United States the most
attractive setting in which to study and perform research so
that we can develop, recruit and retain the best and brightest
students, scientists, and engineers from within the United
States and throughout the world.
Recommendation D: Ensure that the United States is
the premier place in the world to innovate; invest in
downstream activities such as manufacturing and marketing; and
create high-paying jobs based on innovation by such actions as
modernizing the patent system, realigning tax policies to
encourage innovation, and ensuring affordable broadband access.
In August of 2007, the America COMPETES Act passed the House of
Representatives by a vote of 367-57 and was signed into law by
President George W. Bush. The bill, which was the culmination of a
lengthy bipartisan effort by Members of the Science and Technology
Committee, implemented many of the recommendations of the Rising Above
the Gathering Storm report. Among other things, it increased funding
for basic research by putting funding for the National Science
Foundation, the National Institute of Standards and Technology, and the
Department of Energy's Office of Science on a path to doubling and
increased investment in science, technology, engineering and
mathematics (STEM) education. The legislation was endorsed by a wide
range of stakeholders, including the U.S. Chamber of Commerce, the
National Association of Manufacturers, Business Roundtable, and the
Council on Competitiveness.
Many of the provisions and programs in the America COMPETES Act are
set to expire at the end of Fiscal Year 2010 and must be reauthorized.
4. Summary of America COMPETES Act
TITLE I-Office of Science and Technology Policy (OSTP)/Government Wide
Science
The legislation directed the President to convene a National
Science and Technology Summit to examine the health and direction of
the U.S. STEM enterprise; required a National Academy of Sciences study
on barriers to innovation; changed the National Technology Medal to the
National Technology and Innovation Medal; established a President's
Council on Innovation and Competitiveness; required prioritization of
planning for major research facilities and instrumentation nationwide
through the National Science and Technology Council; and expressed a
sense of Congress that each Federal research agency should support and
promote innovation through funding for high-risk, high-reward research.
TITLE II-National Aeronautics and Space Administration
The legislation established the National Aeronautics and Space
Administration (NASA) as a full participant in all interagency
activities to promote competitiveness and innovation and to enhance
science, technology, engineering and mathematics education. The
legislation affirmed the importance of NASA's aeronautics program to
innovation and to the competitiveness of the United States. It urged
NASA to implement a program to address aging workforce issues at NASA
and to utilize NASA's existing Undergraduate Student Research program
to support basic research by undergraduates on subjects of relevance to
NASA. The legislation also expressed the sense of Congress that the
International Space Station (ISS) National Laboratory offers unique
opportunities for educational activities and provides a unique resource
for research and development in science, technology, and engineering
which can enhance the global competitiveness of the U.S.
TITLE III-National Institute of Standards and Technology
The legislation authorized a total of $2.652 billion over fiscal
years 2008-2010 for NIST.
The legislation established a Manufacturing Extension Partnership
(MEP) Advisory Board and required the Board to provide advice on MEP
programs, plans, and policies; assessments of the soundness of the MEP
plans and strategies; and assessments of current performance against
MEP program plans. It also established a program to award competitive
grants among MEP Centers, or a consortium of Centers, for the
development of projects to solve new or emerging manufacturing
problems.
The legislation authorized a manufacturing research pilot grants
program to make awards to partnerships that foster cost-shared
collaborations among firms, educational and research institutions,
state agencies, and nonprofit organizations in the development of
innovative, multidisciplinary manufacturing technologies. It required
such partnerships to include at least one manufacturing industry
partner and one non-industry partner, and to conduct applied research
to develop new manufacturing processes, techniques, or materials that
would contribute to improved performance, productivity, and
competitiveness of U.S. manufacturing.
The legislation established a program to award postdoctoral
research fellowships at NIST for research activities related to
manufacturing sciences and senior research fellowships to establish
researchers in industry or at institutions of higher education who wish
to pursue studies related to the manufacturing sciences at NIST.
The legislation created a new initiative called the Technology
Innovation Program (TIP), which is based on the proven success of the
Advanced Technology Program (ATP), but is focused on high-risk, high-
reward, pre-competitive technology development through small- and
medium-sized companies. TIP allowed for greater industry input in the
operation of the program and allows university participation for the
first time.
TITLE IV-National Oceanic and Atmospheric Administration
The legislation established a coordinated ocean, Great Lakes,
coastal and atmospheric research and development program at the
National Oceanic and Atmospheric Administration (NOAA) in consultation
with the National Science Foundation (NSF) and NASA. The bill required
NOAA to build upon existing educational programs and activities to
enhance public awareness and understanding of the ocean, Great Lakes,
and atmospheric science, and to develop a science education plan. It
required NOAA to be a full participant in any interagency effort to
promote innovation and economic competitiveness through basic
scientific research and development and the promotion of science,
technology, engineering, and mathematics education.
TITLE V-Department of Energy
The legislation provided nearly $17 billion to Department of Energy
(DOE) programs over fiscal years 2008-2010. It specifically authorized
$5.8 billion for the DOE Office of Science for Fiscal Year 2010.
The legislation also established an Advanced Research Projects
Agency for Energy, or ARPA-E. ARPA-E will address long-term and high-
risk technological barriers in energy through collaborative research
and development that private industry or the DOE are not likely to
undertake alone. ARPA-E is specifically structured to respond very
quickly to energy research challenges, as well as terminate or
restructure programs just as quickly. A fund is established in the U.S.
Treasury, separate and distinct from DOE appropriations, for ARPA-E.
The legislation authorized $300 million in FY 2008, and such sums as
are necessary thereafter for fiscal years 2009 and 2010.
The legislation provided $150 million for K-12 STEM education
programs that capitalize on the unique scientific and engineering
resources of the national laboratories. These programs include a pilot
program of grants to states to help establish or expand statewide
specialty high schools in STEM education; a program to provide
internship opportunities for middle and high-school students at the
national labs, with priority given to students from high-needs schools;
a program at each national lab to help establish a Center of Excellence
in STEM education in at least one high-need public secondary school in
each lab region in order to develop and disseminate best practices in
STEM education; and a program to establish or expand summer institutes
at the national labs and partner universities in order to improve the
STEM content knowledge of K-12 teachers throughout the country. All of
these programs are coordinated by a newly appointed Director for STEM
Education at the Department, who also serves as an interagency liaison
for K-12 STEM education.
The legislation highlighted the critical role of young
investigators working in areas relevant to the mission of DOE by
establishing an early career grant program for scientists at both
universities and the national labs, and a graduate research fellowship
program for outstanding graduate students in these fields. The
legislation also brought attention to research and education needs in
the nuclear sciences and hydrocarbon systems sciences by establishing
grant programs to universities to establish or expand degree programs
in these areas.
Finally, the legislation helped DOE recruit distinguished
scientists to the national labs and foster collaboration between
universities and the labs by providing competitive grants to support
joint appointments between the two.
TITLE VI-Department of Education
To enhance teacher education in the STEM fields and critical
foreign languages, the legislation authorized two new competitive grant
programs. One program specifically enabled partnerships to implement
courses of study in STEM fields and critical foreign language that lead
to a baccalaureate degree with concurrent teacher certification.
Another program implemented two- or three-year part-time master's
degree programs in these areas for current teachers to improve their
content knowledge and pedagogical skills. The legislation authorized
$151,200,000 for the baccalaureate degree program and $125,000,000 for
the master's degree program for fiscal year 2008 and the two succeeding
fiscal years.
The legislation authorized competitive grants to increase the
number of highly qualified teachers serving high-need schools and to
expand access to AP and IB classes. It also authorized the Secretary of
Education to contract with the National Academy of Sciences to convene
a national panel within a year after the enactment of this Act to
identify promising practices in the teaching of science, technology,
engineering and mathematics in elementary and secondary schools.
The legislation authorized grants to states to implement
mathematics programs or initiatives that are research-based, provide
professional development and instructional leadership activities for
teachers and administrators on the implementation of mathematics
initiatives, and conduct student mathematics progress monitoring and
identify areas in which students need help in learning mathematics. It
also established a demonstration program which awards grants to states
for the provision of summer learning grants to disadvantaged students.
It also authorized grants to states to establish new service and
activities to improve the overall mathematics performance of secondary
school students.
The legislation also authorized a competitive grant program to
increase the number of students studying critical foreign languages,
starting in elementary school and continuing through postsecondary
education programs.
The legislation also authorized competitive grants to states to
promote better alignment of elementary and secondary education with the
knowledge and skills needed to succeed in academic credit-bearing
coursework in institutions of higher education, in the 21st century
workforce and in the Armed Forces. It also authorized the Secretary of
Education to award grants of $50,000 to three elementary and 3
secondary schools, with a high concentration of low-income students in
each state, whose students demonstrate the largest improvement in
mathematics and science.
TITLE VII-National Science Foundation
The legislation provided $22 billion to NSF over fiscal years 2008-
2010. Particularly large increases were provided for K-12 STEM
education programs. These programs, including the Noyce Teacher
Scholarship program and the Math and Science Partnerships program, are
geared to preparing thousands of new STEM teachers and provide current
teachers with content and pedagogical expertise in their area of
teaching.
The legislation increased support for the STEM talent expansion
program (STEP) and the Advanced Technological Education (ATE) program
in an effort to help create thousands of new STEM college graduates,
including two-year college graduates.
The legislation provided support for young, innovative researchers
by expanding the graduate research fellowships (GRF) and integrative
graduate education and research traineeship (IGERT) programs,
strengthening the early career grants (CAREER) program, and creating a
new pilot program of seed grants for outstanding new investigators.
Finally, the legislation included provisions to help broaden
participation in STEM fields at all levels. These include several
programs of outreach and mentoring for women and minorities, a request
for a National Academy of Sciences report to identify barriers to and
opportunities for increasing the number of underrepresented minorities
in STEM fields, and an emphasis on inclusion of students and teachers
from high-needs schools.
TITLE VIII-General Provisions
The legislation required the Secretary of Commerce to report to
Congress on the feasibility, cost and potential benefits of
establishing a program to collect and study data on export and import
of services; expressed a sense of the Senate that the Securities and
Exchange Commission and the Public Company Accounting Oversight Board
should promulgate final regulations implementing the section of the
Sarbanes-Oxley Act that are designed to reduce burdens on small
businesses; directs the Government Accountability Office, after three
years, to assess a representative sample of programs under this Act and
make recommendations to ensure their effectiveness; expressed a sense
of the Senate that Federal funds should not be provided to any
organization or entity that advocates against a U.S. tax policy that is
internationally competitive; directed a National Academy of Sciences
study on the mechanisms and supports needed for an institution of
higher education or non-profit organization to develop and maintain a
program to provide free access to on-line educational content as part
of a degree program, especially in science, technology, engineering,
mathematics and foreign languages, without using Federal funds;
expressed a sense of the Senate that deemed exports should safeguard
U.S. national security and basic research and that the President and
the Congress should consider the recommendations of the Deemed Exports
Advisory Committee; and lastly, expressed a sense of the Senate that
U.S. decision-makers should take the necessary steps for the U.S. to
reclaim the preeminent position in the global financial services
marketplace.
Chairman Gordon. This Committee will come to order. We
would like to get things started here on time. Governor Engler
is stuck in traffic. We have all had that situation, and he
will be joining us shortly. Also, just so that you will know,
he also has to leave at 11:30 and we will try to get everyone
out of here by 11:30.
So good morning, and I am sure we will have some more that
will be coming in later. Welcome, everyone. Before we start the
hearing today, I want to quickly take care of a little bit of
housekeeping, and I want to thank you all for having a
productive last session and particularly for the subcommittees
for all the work that you did. At your desk you will find an
agenda for this coming year. On it says ``draft.'' The reason
that it says draft is that, you know, we welcome your
continuing thoughts on that. Much of it reflects what we have
been discussing over the last year.
And this morning we are going to kick off one of the most
important efforts of the year, to reauthorize our Committee's
landmark legislation, the America COMPETES Act. We will also
reauthorize NASA [National Aeronautics and Space
Administration] this year, setting up a path for the next 10 or
20 years, and Ms. Giffords and Mr. Olson are going to have
their hands full putting that together for us, and we welcome
that.
Among other initiatives, we also expect the Committee to
take a closer look at advancing several energy technologies
including those associated with nuclear energy, carbon capture
and sequestration, marine and hydrokinetic energy, as well as
energy efficiencies and conservation technologies. These
technologies not only have the potential to help curb climate
change, they also are poised to create new industries and new
jobs to go along with them, and Mr. Ehlers, we are going to
take another crack at that organic NOAA [National Oceanic and
Atomospheric Administration] Act. You worked on that quite a
bit and we will continue to work there.
And finally, we need to finish the work that this Committee
has started. Last year, the Committee passed a total of 37
bills and resolutions of the House with strong bipartisan
support. We are currently working with the Senate to speed up
progress on 21 bills that are still waiting for action in that
chamber. So this year poses a tall order for this Committee.
However, I am optimistic that through our bipartisan approach
we will be able to produce good legislation for the American
people, and I look forward to continuing good counsel with my
friend, Ralph Hall, and the Republican Members of this
Committee.
Now, thanks to our panelists for being here and for their
patience as we took care of some quick housekeeping. Now we
move on to the reason that we are here this morning, and that
is the America COMPETES Act.
As you know, in 2005, I, along with former Chairman Sherry
Boehlert, Senators Lamar Alexander and Jeff Bingaman, requested
that the National Academies conduct a study to assess the state
of the Nation's competitiveness, the science and technology
infrastructure in the United States and how it would affect
future U.S. prosperity. The result was ``Rising Above the
Gathering Storm.'' This report included a comprehensive set of
recommendations to create jobs and further U.S. competitiveness
in an increasingly global marketplace. The Committee used these
recommendations to create the America COMPETES Act, which was
signed into law in August of 2007.
The bill also established an Advanced Research Project
Agency for Energy, better known as ARPA-E. This federal agency
has already awarded its first round of $4 million to $5 million
grants to researchers who are conducting high-risk, high-reward
research in the energy field.
The funding process amazed everyone involved. They received
a shocking 3,700 initial concept papers, asked 344 of those to
submit full proposals, and eventually selected 37 proposals for
first-round funding. The speed with which this agency was
organized and processed these applications seemed unprecedented
in the Federal Government. This efficiency is a direct result
of the countless hours spent by ARPA-E Director Arun Majumdar
and his dedicated staff working to achieve the agency's
mission. Last month, ARPA-E announced that it is accepting
applications for a second round of funding, which will soon go
out.
But federal funding can only go so far. Many of the
finalists have projects that are certainly just as deserving
for grant funding as the award winners. That is why I suggested
to Secretary Chu that he set up or create a fair in which these
finalists could display their ideas and meet with potential
investors. They agreed, and the first ARPA-E Innovation Summit
will be held March 1st through 3rd at the Gaylord Convention
Center in nearby National Harbor, and we are going to be
looking for additional ways to try to bring in private-sector
dollars for these good proposals as well as finding ways to try
to get them to market as quickly as possible.
Now, this morning, however, we are here to discuss the need
to reauthorize the America COMPETES Act, which expires at the
end of the current fiscal year. We learned from the Gathering
Storm, in order to create a sustained, well-educated workforce
for an innovative economy, we need to establish sustained
funding streams for these programs. Our witnesses this morning
will help us to better understand how critical this Committee's
commitment is to our prosperity and to our economic growth. I
look forward to hearing from them about how COMPETES has
affected or will affect U.S. innovation in the workforce and
how these programs will help them sustain a skilled workforce
in the future.
Chairman Gordon. Now I would like to I yield to my friend
from Texas, Mr. Hall.
[The prepared statement of Chairman Gordon follows:]
Prepared Statement of Chairman Bart Gordon
Good morning. Before we start our hearing, I want to quickly talk
about the Committee's agenda for this year. Members have a draft agenda
at their desk. Much of it reflects what we have already discussed, and
I welcome your further thoughts.
This morning, we are kicking off one of most important efforts of
the year--to reauthorize our committee's landmark legislation, the
America COMPETES Act.
We will also reauthorize NASA this year--setting it on a path for
the next 10 to 20 years.
Among our initiatives, I also expect the Committee to take a closer
look at advancing several energy technologies including those
associated with nuclear energy, carbon capture and sequestration,
marine and hydrokinetic energy, as well as energy efficiency and
conservation technologies. These technologies not only have the
potential to help curb climate change, they are also poised to create
new industries and the jobs that go along with them.
Finally, we need to finish the work that we started last year. This
Committee passed a total of 37 bills and resolutions out of the House
with strong bipartisan support. We are currently working with the
Senate to speed up progress on the 21 bills that are still waiting for
action in that chamber.
So, this year poses a tall order for this Committee, however I am
optimistic that through our bipartisan approach we will be able to
produce good legislation for the American people. I look forward to
continued good counsel with my friend, Ralph Hall, and the Republican
members during this next year.
Thanks to our panelists for being here and for their patience as we
took care of some quick housekeeping. Now, we'll move on to the reason
we're all here this morning--the America COMPETES Act.
As you all know, in 2005 I, along with our former Chairman Sherry
Boehlert and Senators Lamar Alexander and Jeff Bingaman, requested that
the National Academies conduct a study to assess the state of our
nation's competitiveness, the science and technology infrastructure in
the United States and how it would affect future U.S. prosperity. The
result was Rising Above the Gathering Storm.
This report included a comprehensive set of recommendations to
create jobs and further U.S. competitiveness in an increasingly global
marketplace. The Committee used these recommendations to create the
America COMPETES Act which was signed into law in August 2007.
COMPETES authorized a total of $33.6 billion over fiscal years
2008-2010 for science, technology, engineering and math education
programs across the Federal Government. The bill also authorized
multiple grant programs to help educate current and future teachers in
the areas of science and math education, as well as invested in support
for young researchers by expanding early career grant programs.
And, the bill also established the Advanced Research Projects
Agency for Energy, better known as ARPA-E. This Federal agency has
already awarded its first round of $4 to 5 million grants to
researchers who are conducting high-risk, high-reward research in the
energy field.
The funding process amazed everybody involved--they received a
shocking 3,700 concept papers, asked 334 of those to submit full
proposals, and eventually selected 37 proposals for funding.
The speed with which this agency was organized and processed these
applications seems unprecedented in the Federal Government. This
efficiency is a direct result of the countless hours spent by ARPA-E
director, Arun Majumdar and his dedicated staff working to achieve the
agency's mission.
Last month, the ARPA-E announced that it is accepting applications
for the second round of funding, and expect to announce those winners
``soon.'' With this track record, I would not be surprised if ``soon''
means some time this Spring.
But, Federal funding can only go so far. Many of the finalists have
projects that are certainly just as deserving of grant funding as the
award winners. That's why I suggested to Secretary Chu and Director
Majumdar that they create a fair in which those finalists could display
their ideas and meet with potential investors. They agreed, and the
first ARPA-E Innovation Summit will be held March 1st-3rd at the
Gaylord Convention Center at nearby National Harbor in Maryland.
This morning, however, we are discussing the need to reauthorize
the America COMPETES Act which expires at the end of the current fiscal
year. As we learned from Gathering Storm, in order to create a
sustained, well-educated workforce for an innovative economy, we need
to establish sustained funding streams for these programs.
Our witnesses this morning will help us better understand how
critical this commitment is to our prosperity and our economic growth.I
look forward to hearing from them about how COMPETES has affected or
will affect U.S. innovation and the workforce, and how these programs
will help them sustain a skilled workforce in the future.
Mr. Hall. Mr. Chairman, thank you, and what a panel. Thank
you very much, all of you, for your very valuable time.
You know, it has been nearly three years since we sat in
this room with Norm Augustine and officially kicked off what
was to become the America COMPETES Act. As everyone here is
aware, America COMPETES was the culmination of recommendations
from the off-quoted Gathering Storm report, former President
Bush's American Competitiveness Initiative and efforts begun by
this Committee under Republican leadership and continued very
well by this chairman, one of the great chairmen in the history
of this committee. We all worked in a bipartisan fashion to get
to where we are today with this measure, and I am very proud of
our accomplishments.
My message hasn't changed much since then. If America is
going to remain on top of the evolving world economy, we have
to be dedicated to encouraging innovation and entrepreneurship
while simultaneously cultivating the scientifically and
technologically astute future workforce. While my message
hasn't changed, unfortunately, our economy has.
America COMPETES was a step in the right direction to
accomplish what was needed to be done. In H.R. 2272, we set out
to double funding for the National Science Foundation, the
National Institutes of Standards and Technology, and the DOE's
Office of Science over a 10-year period. By the time we got
through conference, this timetable was accelerated to seven
years, plus these agencies received enormous amounts of
stimulus funding, results of which have yet to be seen. That
goes for COMPETES and for the stimulus funding.
Therefore, I am very much looking forward to the testimony
of our very distinguished panel today because there is no doubt
that we still have a lot to accomplish. At the same time, I
would urge you, Chairman Gordon, to proceed cautiously through
this reauthorization process as I believe it is prudent for us
to ensure that we are reaping the benefits of the numerous
initiatives already set forth in America COMPETES before
creating others. Furthermore, and I hope our witnesses will
attest to this today, COMPETES is just one aspect of improving
America's competitiveness. President Bush once said, ``The role
of government is not to create wealth; the role of government
is to create an environment in which the entrepreneur can
flourish, in which minds can expand and which technologies can
reach new frontiers,'' and I understand that that is in the
Competitive Initiative today, that statement. Encouraging
private-sector innovation through tax credits, a positive
regulatory environment and other such programs will also
improve the American economy, make us more competitive globally
and bring new products and jobs to the American people.
I look forward to working closely again with you, Mr.
Chairman, in this reauthorization and hear what our esteemed
witnesses have to say.
With that, I yield back my time.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Representative Ralph M. Hall
Thank you, Mr. Chairman. It's been nearly three years since we sat
in this room with Norm Augustine and ``officially'' kicked off what was
to become the America COMPETES Act. As everyone here is aware, America
COMPETES was the culmination of recommendations from the oft-quoted
Gathering Storm report, former President Bush's American
Competitiveness Initiative, and efforts begun by this Committee under
Republican leadership and continued by you, Mr. Chairman. We all worked
in a bipartisan fashion to get to where we are today with this measure,
and I am proud of our accomplishments.
My message hasn't changed much since then: If America is going to
remain on top in the evolving world economy, we must be dedicated to
encouraging innovation and entrepreneurship, while simultaneously
cultivating a scientifically and technologically astute future
workforce. While my message hasn't changed, unfortunately, our economy
has.
America COMPETES was a step in the right direction to accomplish
what needs to be done. In H.R. 2272, we set out to double funding for
the National Science Foundation, the National Institute of Standards
and Technology, and the DOE's Office of Science over a 10-year period.
But by the time we got through Conference, this timetable was
accelerated to seven years. Plus, these agencies received enormous
amounts of stimulus funding, the results of which have yet to be seen.
This goes for COMPETES and for the stimulus funding.
Therefore, I'm very much looking forward to the testimony of our
distinguished panel today, because there is no doubt that we still have
much to accomplish. At the same time, I would urge you, Chairman
Gordon, to proceed cautiously through this reauthorization process, as
I believe it is prudent for us to ensure that we are reaping the
benefits of the numerous initiatives already set forth in America
COMPETES before creating others. Furthermore, and I hope our witnesses
will attest to this today, COMPETES is just one aspect of improving
America's competitiveness.
President Bush once said, ``The role of government is not to create
wealth; the role of our government is to create an environment in which
the entrepreneur can flourish, in which minds can expand, in which
technologies can reach new frontiers.'' \1\ Encouraging private sector
innovation through tax credits, a positive regulatory environment, and
other such programs will also improve the American economy, make us
more competitive globally, and bring new products and jobs to the
American people.
---------------------------------------------------------------------------
\1\ --President George W. Bush, May 2001.
---------------------------------------------------------------------------
I look forward to working closely with you, Mr. Chairman, on this
reauthorization and to hearing what our esteemed witnesses have to say
on the subject.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Representative Eddie Bernice Johnson
Thank you Mr. Chairman for holding today's hearing. I would like to
thank today's witnesses for their commitment to increasing the
competitiveness of our Country and sharing their perspectives on the
need for innovation and STEM education.
In 2005, Members of this committee learned some startling facts
from experts at the National Academy of Sciences ``Gathering above the
rising storm'' report. We learned that children in other developed
Nations may be better prepared for the jobs of the future than our own
children here in the States. We learned from the experts that there are
clear signs that the United States has begun to lose its status as a
global economic and technological leader due to an inadequate
investment to Research and Development and STEM development.
In response, I along with other Members of Congress, many on this
committee today, worked to draft the America COMPETES Act in a bi-
partisan fashion. This legislation represents a concerted effort to
create a more competitive science and engineeringworkforce.
Today in 2010, as many components of the original COMPETES bill are
just now taking effect, the need for the reauthorization of this act is
now more pressing than ever. Our nation's students are still falling
behind our international competitors due to a lack of commitment. We
have allowed ourselves to fall behind because we are not consistently
investing in our future. The time to act is now.
In order to achieve these goals, I have always fought to make sure
we legislate effectively in an equitable fashion.
Socioeconomic stature, race, or gender should not stand in the way
of a child's career. I fought for the America COMPETES Act to include
special provisions to include and encourage women and under-represented
minorities to pursue science and technology careers. As minorities and
women continue to be under-represented in most STEM fields, we must do
more to create opportunities to educate and retain them, especially at
the university faculty level.
Year after year, my colleagues on this committee as well as those
on the Congressional Black Caucus, Diversity and Innovation Caucus and
others fight to urge support for programs that broaden participation in
science, technology, engineering and mathematics: also called STEM.
A few weeks a go, I attended the President's ``Educate to
Innovate'', kickoff event at the White House. One of the goals of this
campaign is to expand STEM education and career opportunities for
under-represented groups, including women and girls. I am pleased the
administration is stepping forward to address these challenges.
The United States is slipping in STEM competitiveness worldwide,
and it is a matter of our international standing in the world, and
national security that we maintain adequate funding for science and
technology education. Our country benefits the most if we ensure all
Americans have the skills necessary to compete in the 21st Century.
I would like to commend today's panelists for their hard work. It
is consistent commitment like yours that will help create new jobs,
invoke new innovation, and prepare a strong, diverse STEM workforce for
our future.
Chairman Gordon. Thank you, Mr. Hall, and you can be well
assured that we are going to move with care as we reauthorize
this. As Mr. Castellani and others have pointed out in their
written testimony, there does need to be reviews, evaluations
and accountability for COMPETES, and within the original bill
there were a number of reports that were required to be
submitted to us concerning accountability. The first one has
come in and the others will be coming in as we go through this
authorization.
I also concur with you, and this is a very distinguished
panel. We have been fortunate to have Bill Gates, the Speaker,
many Nobel laureates speak before us, but no panel has been
more distinguished than this panel, and I say that sincerely
and we welcome you.
Now it is my pleasure to briefly introduce you so we can
get on with business.
Mr. Hall. Mr. Chairman?
Chairman Gordon. Yes, sir.
Mr. Hall. First, can I tell you, I couldn't help but ask
Bill Gates for some money. I asked him for $300. He said he
hasn't had that little amount of money in his pocket since he
was 12.
Chairman Gordon. It is my pleasure to first introduce Mr.
John Castellani. He is the President of the Business
Roundtable, an association of chief executive officers of
leading U.S. corporations. These corporations represent a
combined workforce of nearly 12 million employees. Second, Mr.
Tom Donohue is the President and CEO of the U.S. Chamber of
Commerce. Since assuming the role in 1997, Mr. Donohue has
helped the Chamber grow to represent more than three million
businesses, nearly 3,000 state and local chambers, 830
associations and over 90 America Chambers of Commerce abroad.
Governor John Engler is President and CEO of the National
Association of Manufacturers, the largest manufacturing
industry trade group in America representing small and large
manufacturers in every industrial sector in all 50 states. And
Ms. Deborah Wince-Smith is President and CEO of the Council on
Competitiveness, an association where CEOs, labor leaders and
university presidents work together to ensure that the United
States remains competitive in a global economy.
Your written testimony will be included in the record, and
when you complete your testimony, we will then begin questions.
Each Member will have five minutes to question the panel.
Mr. Castellani, please begin.
STATEMENT OF STATEMENTS OF MR. JOHN CASTELLANI, PRESIDENT,
BUSINESS ROUNDTABLE
Mr. Castellani. Thank you, Mr. Chairman, Ranking Member
Hall, Members of the Committee.
As the Chairman said, the Business Roundtable is an
association of chief executive officers. In addition to the 12
million employees that they represent, they also represent
nearly $6 trillion in annual revenue, and most relevant for
this Committee, they spend more than $111 billion annually in
research and development. That is nearly half of all of the
total research and development, private research and
development, in the United States.
I welcome the opportunity to appear before you today to
address reauthorizing the America COMPETES Act, which Business
Roundtable views as a fundamental prerequisite to restoring
stable, long-term economic growth and job creation.
America's CEOs are committed to accelerating American
innovation and boosting worldwide competitiveness of the United
States. They understand that investments in science research
and math and science education help create the platform for
sustained long-term growth.
The formula is simple. Investments in research and
education provide the tools for accelerated technological
innovation, which drives productivity growth. Innovation leads
to new products and processes and even whole new industries,
generating high-wage employment and a higher standard of living
for all Americans.
The Business Roundtable's commitment to fostering U.S.
innovation and competitiveness is not new. In 2005, the
Roundtable, together with other national business associations,
including my friends on this panel, created Tapping America's
Potential campaign, or TAP, with the goal of significantly
increasing the number of American science, technology,
engineering and mathematics graduates with bachelor's degrees.
We believe that expanding the talent pool is a critical
element, perhaps the critical element, of the innovation agenda
that America must pursue to remain competitive in the 21st
century.
When Congress passed the America COMPETES Act in 2007, the
United States faced major competition from powerful new
economic rivals. Some were minor competitors only a decade ago.
Today, those rivals have emerged from the economic downturn in
an even stronger position, and while the United States
struggles with high unemployment and crippling budget deficits,
China is pouring billions into research and education.
Reauthorizing the Act and providing sustained support for its
key provisions will help attract more young Americans into
technical fields and expand American workers' employment
horizons and earning potential.
The America COMPETES Act authorized significant increases
in research investments that directly enhance America's ability
to innovate and create new jobs. COMPETES also authorized
scholarship and training programs to recruit high-performing K-
12 math and science teachers to enhance the skills of existing
teachers. The lack of qualified math and science teachers in
American public schools are a major impediment to improved U.S.
educational achievement in math and science. In many respects,
the state of America's public education system is one of our
Nation's greatest weaknesses. Nearly every job created in the
United States over the next ten years will require more math
and science fluency than the average job today. The question
is, will America produce the skilled workers to fill these
positions?
Last month, Business Roundtable released the final
recommendations from The Springboard Project, which is an
independent commission we convened to ensure that American
workers thrive after the economy rebounds. The commission found
that the gap between worker skills and the needs of employers
is widening, exactly the opposite of what we would hope to see
if every American is to gain fulfilling employment.
Strengthening STEM [Science, Technology, Engineering, and
Mathematics] education at all levels needs focused attention
now and in the future.
One of our greatest challenges going forward is securing
stable funding commitments from Congress for the America
COMPETES Act. It is our job to persuade you that nurturing
America's innovation's ecosystem, even in the face of severe
fiscal constraints, is necessary for the near term and for the
long term.
The Business Roundtable is proud to have been an early
supporter of the original America COMPETES Act, and we strongly
support its reauthorization. With the right policy choices, we
believe that America will recover from its current economic
circumstances and provide prosperity and opportunity for all
its citizens.
I want to thank you again, Mr. Chairman and Ranking Member
Hall and the Members of the Committee. Mr. Chairman, under your
leadership, this Committee has been a model for developing
bipartisan solutions that address critical issues. We will miss
that leadership. We look forward to the remainder of your term,
and I would be delighted to answer your questions. Thank you.
[The prepared statement of Mr. Castellani follows:]
Prepared Statement of John Castellani
Mr. Chairman, Ranking Member Hall, Members of the Committee, good
morning. My name is John Castellani, and I serve as President of the
Business Roundtable, an association of chief executive officers of
leading U.S. companies with more than $5 trillion in annual revenues
and more than 12 million employees. Business Roundtable member
companies are technology innovation leaders, with more than $111
billion in annual research and development spending--nearly half of all
total private R&D spending in the U.S.
I welcome the opportunity to appear before you today to address the
vitally important task of reauthorizing the America COMPETES Act, which
Business Roundtable views as a fundamental prerequisite to restoring
stable, long-term U.S. economic growth and job creation.
America's CEOs are committed to accelerating American innovation
and boosting the worldwide competitiveness of the United States. They
understand that investments in scientific research and math and science
education help create the platform for sustained, long-term growth.
The formula is simple. Investments in research and education
provide the tools for accelerated technological innovation, which
drives productivity growth. Innovation leads to new products and
processes-even whole new industries-thereby generating high-wage
employment and a higher standard of living for all Americans.
Business Roundtable's commitment to fostering U.S. innovation and
competitiveness is not new. In 2005, the Roundtable, together with
other national business associations, including those on this panel,
created the Tapping America's Potential campaign, or TAP, with the goal
of significantly increasing the number of American science, technology,
engineering and mathematics graduates with bachelor's degrees. We
believe that expanding the talent pool is a critical element-perhaps
the critical element-of the innovation agenda that America must pursue
in order to remain competitive in the 21st century. The America
COMPETES Act is an important tool in achieving that goal.
When Congress passed the America COMPETES Act in 2007, the United
States faced major competition from powerful new economic rivals, some
of which were minor competitors only a decade ago. Today, those rivals
have emerged from the worldwide economic downturn in an even stronger
position. While the United States struggles with persistent high
unemployment and crippling budget deficits at every level of
government, China continues to pour billions intoresearch and education
in a determined effort to move up the value chain and produce more
high-value-added products and services. At a time when America's
ability to finance critical investments in national innovation capacity
is constrained, our global competitors are redoubling their efforts to
challenge U.S. innovation leadership.
Mr. Chairman, as you know, after you and your colleagues on the
Committee led Congress to pass the America COMPETES Act, it took nearly
two years and the worst economic crisis since the Great Depression
before the provisions of the Act were adequately funded. It is perhaps
ironic that as Congress prepares to reauthorize the Act, its original
enactment is just nowbeginning to be implemented and the programs have
not yet been rigorously evaluated. Yet we can say with confidence that
reauthorization of the America COMPETES Act is absolutely vital to
ensuring future U.S. innovation leadership and prosperity and security
for America's workers.
Reauthorization of the Act will provide support for the foundations
of America's innovation system at a time when some question America's
commitment to continued worldwide technological and economic
leadership. Reauthorizing the Act and building on its key provisions
will help restore confidence in America's future, attract more young
Americans into technical fields, and expand the employment horizons and
earnings potential of millions of new American workers.
The America COMPETES Act authorized significant increases in
physical science and engineering research sponsored by key civilian
science agencies, research that directly enhances America's ability to
innovate and create new jobs. These research investments will also help
America address its energy and sustainability challenges. In June of
last year, Business Roundtable released a major economic study, The
Balancing Act: Climate Change, Energy Security and the U.S. Economy,
which outlined six key technology investment pathways that can lead to
efficient greenhouse gas reductions without harming long-term economic
growth. Extending the authorized increases for physical sciences and
engineering research will provide the knowledge creation necessary to
accelerate development of the advanced energy technologies recommended
in Business Roundtable's report.
Mr. Chairman, you and your colleagues on this Committee have led
Congress in adopting a farsighted approach to energy technology
development that focuses on a balanced, portfolio of research
investments that will yield dramatic gains in energy efficiency,
renewable energy technology, carbon capture and storage for coal-fired
power plants, advanced nuclear energy technology, and smart grid and
transmission technologies that will enable greater use of electric
vehicles and renewable power. The fact is that we will need every one
these new technologies to address climate change and power our economy.
Technology is not a silver bullet, but it does offer a critical
advantage in smoothing the transition to more sustainable economic
growth, greater energy security and a cleaner environment. This is a
clear case of science in service of national need. Reauthorizing the
America COMPETES Act is an essential component of our national effort
to address America's energy and sustainability challenges.
The America COMPETES Act authorized new and expanded scholarship
and training programs to recruit new K-12 math and science teachers and
enhance the skills of existing teachers. Business Roundtable has
identified the lack of qualified math and science teachers in America's
public schools as a major impediment to improved U.S. educational
achievement in math and science. In 2008, Business Roundtable and our
partners released the TAP progress report, Gaining Momentum, Losing
Ground, which documented how U.S. student achievement in math and
science continues to fall short compared with students from our global
economic competitors--despite commitments from the White House and
Congress to improve U.S. math and science education. When it comes to
innovation, the state of America's public education system is our
nation's greatest weakness. Extending the math and science education
provisions of the America COMPETES Act and evaluating their
effectiveness helps give America's children the preparation they need
to succeed in the 21st century workplace.
Mr. Chairman, this is a critical issue for America and for this
Committee. The persistent poor performance of U.S. students in math and
science threatens our security and long-term prosperity. Over the fast
twenty years, occupations that require technical proficiency have grown
nearly three times faster than the overall rate of employment growth.
Workers in technical fields earn more and enjoy greater job security
than most other workers. Technical professionals have weathered the
economic downturn better than other workers, and there is some evidence
that the technology-intensive industries that employ these workers are
leading America's economic recovery. Nearly every job in America
requires more math and science proficiency than those same jobs
required twenty years ago. Nearly every job created in the United
States over the next 10 years will require more math and science
fluency than the average job today. Will America produce the skilled
workers to fill these positions?
Last month, Business Roundtable released the final recommendations
from The Springboard Project--an independent commission it convened--to
ensure that American workers thrive after the economy rebounds. Based
on surveys of workers and employers, the commission found that the gap
between worker skills and the needs of employers is widening, exactly
the opposite of what we would hope to see if every American is to find
gainful, fulfilling employment. It will come as no surprise to you, Mr.
Chairman, that the commission found that improving education and
training in the United States is essential to building a more highly
skilled workforce. The need is pressing. Seventy-three percent of the
U.S. Bureau of Labor Statistics' projected fastest growing occupations
require some level of postsecondary credentials, yet the United States
ranks second-to-last among developed countries in postsecondary
completion rates.
As you and your colleagues examine the America COMPETES Act, the
math and science education provisions of the Act have the potential to
offer the most promise for beneficial results for the American people.
Strengthening K-12 math and science teacher recruitment and training,
expanding proven math and science education programs, and supporting
math and science education in the nation's community colleges provide
the foundation to advance overall U.S. competitiveness and the
individual economic success of Americans. It also is critical for you
to coordinate closely with the Education and Labor Committee during the
reauthorization of the Elementary and Secondary Education Act in order
to ensure a coherent strategy to improve science, technology,
engineering and math education.
One of our greatest challenges going forward, Mr. Chairman, is one
that you are intimately familiar with and that is securing stable
funding commitments from Congress for the programs authorized by the
America COMPETES Act. Our nation's science and technology enterprise is
a miraculous font of knowledge and wealth creation. The technology that
has flowed out of this enterprise over the last century has transformed
our lives, created an ever-rising standard of living for all Americans,
and unleashed an astonishing wave of productivity and economic growth.
The economic data are clear. Investments in research and education are
among the most productive investments available to Federal policy
makers. It is our job to help persuade Congress that nurturing
America's innovation ecosystem, even in the face of severe fiscal
constraints, is the right policy choice for the near term and the long
term. Our future depends on it.
Business Roundtable is proud to have been an early and robust
supporter of the original America COMPETES Act, and we strongly support
its reauthorization. It embodies a sound, positive agenda for growth
that will help lift America out of the economic doldrums and open up
new opportunities for U.S. workers.
Mr. Chairman, it is up to us to ensure that America remains the
world's technological and economic leader for the remainder of this
century. With your help, and the help of all of the Members of the
Committee on Science and Technology, Business Roundtable believes that
America will recover from its current economic circumstances and
continue to lead the world in providing prosperity and opportunity for
its citizens.
Thank you again Mr. Chairman, Ranking Member Hall, and Members of
the Committee. Under your leadership, Mr. Chairman, this Committee is a
model for developing bipartisan solutions that address critical issues.
I appreciate this opportunity to express Business Roundtable's views on
this important legislation. I welcome your questions.
Biography for John Castellani
John J. Castellani is President of Business Roundtable, an
association of chief executive officers of leading U.S. corporations
with a combined workforce of nearly 10 million employees and $5
trillion in annual revenues. Business Roundtable has been cited by the
Financial Times as ``the most influential chief executive lobbying
group in the U.S.'' and is at the forefront of public policy debates,
advocating for a vigorous, dynamic global economy.
Business Roundtable companies give more than $7 billion a year in
combined charitable contributions, representing nearly 60 percent of
total corporate giving. They are technology innovation leaders, with
more than $70 billion in annual research and development spending--more
than a third of the total private R&D spending in the U.S.
Since joining Business Roundtable in May 2001, Castellani has
significantly strengthened the Roundtable's reputation in Washington,
DC, nationally and internationally and has led the Roundtable's efforts
on key public policy issues ranging from trade expansion to civil
justice reform to fiscal policy. He has been cited by Bloomberg as one
of Washington's six most influential lobbyists.
Castellani and the Roundtable played vital roles in the adoption of
long-awaited civil justice reform legislation in 2005, approval of the
Central America Free Trade Agreement, and enactment of critically
important legislation to lower tax rates and slash taxes on dividends
in 2003. He also has been a leader of the coalition working in support
of Social Security reform. Other significant areas of leadership for
Castellani and the Roundtable include passage of bilateral free trade
agreements with partners including Australia, Chile and Morocco;
passage of the SarbanesOxley corporate governance reforms; organizing
the Partnership for Disaster Response to improve the flow of private
sector resources, services and staff following a major disaster; and
development of the Business Roundtable Institute for Corporate Ethics,
a first-of-its-kind business ethics center designed to renew and
enhance the link between ethical behavior and business practices.
Castellani is called frequently by the news media for comment on
business and public policy issues, and has appeared on such programs as
NBC's ``Meet the Press,'' PBS' ``The NewsHour with Jim Lehrer,'' Fox
News Channel's ``Special Report,'' and CNBC's ``Street Signs.'' He
regularly provides testimony before Congress on issues of key concern
to Business Roundtable, and has discussed the Roundtable's agenda for
economic growth in speeches to the Detroit Economic Club and the
National Conference of State Legislatures.
Prior to becoming President of Business Roundtable, Castellani was
Executive Vice President of Tenneco Inc., and part of the senior
management team that led the transformation of the ailing conglomerate
into seven strong companies.
Castellani's Washington experience includes serving as Vice
President for Resources and Technology with the National Association of
Manufacturers, and as Vice President of State, Federal and
International Government Relations for TRW Inc. He started his career
at General Electric as an environmental scientist and strategic
planner.
In 2007, Castellani was named one of the 100 most influential
people in corporate governance by Directorship Magazine.
A graduate of Union College (Schenectady, New York), Castellani now
serves on its board of trustees. He is also an Ethics Resource Center
Executive Fellow and a member of the Advisory Council of the Business
Roundtable Institute for Corporate Ethics in addition to being a member
of The Economic Club of Washington, D.C. He and his wife, Terry, reside
in Washington, DC, and have two sons.
Chairman Gordon. Mr. Donohue is recognized.
STATEMENT OF MR. THOMAS J. DONOHUE, PRESIDENT AND CEO, U.S.
CHAMBER OF COMMERCE
Mr. Donohue. Thank you very much, Mr. Chairman, Ranking
Member Hall and Members of the Committee.
As the Chairman indicated, the Chamber is the world's
largest business federation representing companies of every
type. My colleagues here have special relationships with many
of those companies and we all are going to testify today in a
way that you will probably find a lot of common spirit and
common thought in our remarks.
In the wake of the worst economic crisis since the Great
Depression, our Nation is engaged in a vigorous debate on how
to create jobs, how to force long-term growth and how to
enhance our global competitiveness. There are many different
voices and viewpoints and plans but almost everyone agrees on
one thing: the fate of our economy, the hopes of our children
and the viability of the American dream begin and end with
education.
There was a time not long ago when America was the
unquestioned leader in education. We led in math and science.
We led in the number of post-graduate degrees. Our K-12 system
was the envy of the world. Our research fueled tremendous new
discoveries in every field. Those days are gone. The rest of
the world is catching up and we are running in place or falling
behind in some places.
Our education system still has many great strengths. We
have the best universities and research facilities in the
world. We have many outstanding teachers. We have ambitious
students eager to learn and to realize their potential, but it
is not good enough. Our Nation can't do well by simply doing
okay.
The statistics tell a very alarming tale. High school
dropout rates are approaching 30 percent for all students and
nearly 50 percent for minorities. American 15-year-olds rank
21st out of 30 in science literacy among their peers from
developed countries and 25th out of 30 in math literacy. More
than half of the U.S. science and engineering postdoctoral
students in the United States are on temporary visas from other
countries, and even though IBM topped the 2009 list of new
patent awards, only four U.S. companies were in the top 10. So
we can't continue this way and expect to compete and win in the
worldwide economy. We can't continue this way if we hope to
lead the world in science, technology, engineering and math,
and we can't continue this way if we hope to provide better
opportunities and a higher standard of living for our children
and our grandchildren. That is why the U.S. Chamber and the
business community it represents strongly supports the
reauthorization of the COMPETES Act.
This legislation is moving America in the right direction.
It is improving the number and quality of STEM teachers,
increasing support and access for STEM students, attracting
underrepresented groups to STEM courses, supporting basic
research, and establishing programs that will help create new
forms of energy and commercialize these innovations. The
COMPETES Act puts the focus right where it should be, on
increasing the number of American students proficient in STEM
and ensuring that we have sufficient R&D funding to drive
innovation and to propel technological progress. When it comes
to research and development, the Chamber also strongly supports
the permanent extension of the R&D tax credit. It will
encourage needed investments in important areas of the economy
such as renewable energy, energy efficiencies technologies,
health care and biotechnology. Taken together, these
initiatives can move us in the right direction, and I encourage
you to move aggressively on it.
Mr. Chairman, with your permission, there is another area
that I would like to just mention. I spent a good deal of time
this morning at Walter Reed with the wounded veterans. We had a
big job fair out there, and there are thousands of these people
coming out of the military both wounded and otherwise who need
our support, and the STEM program can go a long way to do that.
One of the points that I would like to suggest is that many of
these veterans are certified in important skills, and I hope
that the Committee working with the government will look at how
that certification can be done in a way that it is accepted in
the private sector when they leave the military. Clearly it
would help us recruit and it would help us place our veterans
who need our support.
So, Mr. Chairman, the time runs short but I want to suggest
that we move forward, and when you do so you vigorously
evaluate the Act's progress as Mr. Hall suggested so that we do
the right thing, get the major bang for the buck, be vigilant
about duplicating of funding of efforts among different
departments. I am more interested that they know what each
other is doing, and encourage public-private partnerships. This
is a very important thing that you have given much of your
skill and energy and the Committee has as well, and we would do
anything we can to help you complete this progress, complete
this reauthorization and get it to work out in the real world,
and I thank you very much for your time and I hope you will
take a special look at the wounded veterans. They have earned
our support.
[The prepared statement of Mr. Donohue follows:]
Prepared Statement of Thomas J. Donohue
Thank you Chairman Gordon, Ranking Member Hall, and members of the
Committee, for inviting me to present this statement on the importance
of a robust research and development program and rigorous Science,
Technology, Engineering, and Math (STEM) education programs that will
put the U.S. on course to maintain our ability to compete successfully
in the global economy.
I commend Chairman Gordon and the Committee for your foresight in
2005. By joining Senator Lamar Alexander and Senator Jeff Bingaman in
urging the National Academies to examine the top ten actions that
Federal policymakers could take to enhance the science and technology
enterprise, you brought this issue to the forefront of the national
debate on American competitiveness.
Your efforts resulted in the 2005 groundbreaking report Rising
Above the Gathering Storm. From this report, the American public
learned that the Internet had not only brought the world closer
together and created a global marketplace, but that ``the Death of
Distance'' had created international competition for jobs.
In the early years of the information age, America led the way in
global innovation. We believed that the education system we had and
that the research and development investments we had made would keep us
in the lead. But Mr. Chairman as you stated at the 50th anniversary of
this committee in March of 2008, ``I fear that our country has coasted
on the investments we made 50 years ago.''
We are faced today with four challenges, a leaky pipeline for
future talent; a lack of a national strategy for research and
development; an aging workforce; and a set of national policies that
need to be updated in order for America to regain its competitive edge.
At the heart of the knowledge economy is the notion that we can
gather, manipulate, and convey information to create things and solve
problems. There was a time when America topped the list for many key
indicators such as: performance of students on international math and
science exams, postsecondary degree attainment in the U.S. workforce,
and number of patents awarded to U.S. companies. Today's results on
those same indicators reflect a nation that is falling behind. I have
seen these numbers and the trends are moving in the wrong direction.
Our students' results on national and international exams are
especially troubling because they give us a glimpse of how deficient in
STEM our future workforce will be. While we know that there are great
schools, dedicated teachers, and high-achieving students across the
country, we must recognize that our STEM performance has reached a
plateau while other countries have improved dramatically.
High school dropout rates in the United States are approaching 30
percent for all students and nearly 50 percent for African-American and
Hispanic students. Unfortunately, for those who make it to college, 35
percent will need remedial math in the first year, 23 percent for
writing, and 20 percent for reading (NCES 2004).
On the 2009 Nation's Report Card, also known as the National
Assessment of Education Progress (NAEP), U.S. 4th graders who took the
math test showed no improvement over previous years. Even more
troubling, our 8th graders demonstrated only nominal gains after
showing steady increases for years.
In the 2006 Programme for International Student Assessment (PISA)
comparison, American 15-year-old students ranked 21st out of 30 in
science literacy among their peers from developed countries, and 25th
out of 30 in math literacy.
The OECD's Education at a Glance 2009 report, shows university-
level graduation rates have virtually doubled from 18 percent in 1995
to 36 percent in 2007 in other OECD countries with available data. In
contrast, the United States dropped from Rank 2 in 1995 to Rank 14 in
2007.
Our universities are preparing more graduate students from other
nations than our own. Temporary visa holders accounted for 55% of U.S.
science and engineering postdoctoral students in academic institutions
in fall 2005.
The 2009 annual report by IFI Patent Intelligence, states that 51
percent of new patents issued by the U.S. Patent and Trademark Office
were awarded to companies from outside the United States. While IBM was
still number one with 4,186 patents, only four U.S. companies were in
the top 10 down from five in 2008 and of the top 35, only 12 are U.S.
companies.
I agree with President Obama that we must be makers of things and
not just consumers of things. But in order for us to make things
whether we are talking about nanotechnology, green energy, or life-
saving medical devices, we must have people who possess the skills to
do this work.
One challenge is that the American workforce is aging across all
sectors. The Aerospace Industries Association reported in 2008 that
Lockheed Martin conservatively estimates it will need to hire 140,000
people in the next 10 years, but that figure could be as high as
190,000 with half of that number being STEM professionals.
The aging of the baby boomer generation means a growing percentage
of the industry's workforce will be eligible to retire in coming years.
Nearly 6 percent of the R&D workforce retired in 2008, up from 2
percent the year before. Retirement eligibility remained roughly the
same at 13 percent but is forecast to rise to more than 20 percent of
the workforce by 2013. (Aviation Week)
The nature of work has evolved with the knowledge economy, and if
America is to remain competitive, we must move from a model where only
the elite STEM professionals are trained in these disciplines, to a
model where all citizens have a common foundation in these subjects and
are STEM-capable.
We must create a new definition of what it means to be a STEM
professional. They are not just doctors, engineers, research scientists
and information technology specialists. They are also electrical line
workers, skilled technicians, and allied health professionals among
others.
This means we must invest in an education system that will produce
the workers we need, and invest in R&D so that our universities and
private industry can continue to innovate.
The Carnegie Corporation of New York joined with the Institute for
Advanced Study to create a STEM commission that released a report last
year entitled the Opportunity Equation. The report emphasizes the
importance of changing the way that math and science are taught.
``Learning math and science from textbooks is not enough: students must
also learn by struggling with real-world' problems, theorizing possible
answers, and testing solutions.''
Through the Math and Science Partnerships at the Department of
Education and the National Science Foundation, there is ample
opportunity to improve teaching in math and science. We are encouraged
that there are preliminary efforts to coordinate programs between the
Department of Education and the National Science Foundation. Hopefully
this will increase shared learning, provide a framework for evaluating
programs, improve efforts to scale success throughout schools,
districts and states, and reduce duplication of effort when possible.
The Institute for a Competitive Workforce (ICW) at the U.S. Chamber
of Commerce is working with Carnegie and others to bring the business
community together around these concepts. In November, ICW released the
second report in its Leaders and Laggards series focused on education
reform in America. We will encourage our members to support the
policies and programs that will help to move the nation forward.
We must change the attitudes in this country about STEM and create
a new paradigm where young people and adults understand the connection
between STEM learning, career opportunities, and improving our society.
We applaud President Obama for advancing the development a national
STEM agenda. The President and Secretary Duncan should be commended on
their efforts to improve STEM learning by making it a priority in the
Race to the Top competitive grant applications and through the
Investing in Innovation Fund.
In November of 2009, President Obama launched the ``Educate to
Innovate'' campaign which aims to increase STEM literacy so that all
students can learn deeply and think critically in science, math,
engineering, and technology; move American students from the middle of
thepack to top in the next decade; and expand STEM education and career
opportunities for underrepresented groups, including women and girls.
The business community firmly supports these goals and has pledged
to engage its employees in state and local activities that support
teaching and learning in STEM subjects. Several corporations have
aligned their corporate philanthropy programs with these goals as a way
to scale successful programs quickly. ExxonMobil supports the UTeach
program and the National Math and Science Initiative. IBM s transition
to teaching program directly addresses the STEM teacher shortage. The
Knoxville Chamber of Commerce has launched the Volunteers 4 STEM
initiative that will pair 500 STEM teachers with professionals in
relevant fields who can provide them with advice and support.
The America COMPETES Act of 2007 laid the foundation for a
revitalization of a national STEM agenda. In conjunction with the
American Recovery and Reinvestment Act, the COMPETES Act addresses the
concern about public investments in STEM education, workforce
development, and research.
In relation to Federal research and development much of the
American COMPETES Act has yet to be implemented fully which makes it
difficult to truly assess its impact to date. However, progress has
been made and the incremental impacts have largely been positive. The
creation of ARPA-E represents a, bold step toward bypassing some of the
traditional ``stovepiping'' that frequently hinders the efficiency and
expediency of research and development at DOE and its National
Laboratories. While implementation was initially slow, the $400 million
cash infusion from the Stimulus Bill has already led to significant
movement. The projects that this program supports, ranging from
advanced batteries to electricity generation, are projects that would
probably not otherwise receive Federal funding because they are simply
too risky. As the Congress recognized in creating ARPA-E, it is vital
that we keep an eye well beyond the horizon and take chances on these
high risk--high reward projects that might just change the entire
landscape of how we produce and use our energy resources.
While several of the education programs that were authorized
through America COMPETES have not been running long enough to evaluate
how well they are working, we believe that the focus on improving the
number and quality of STEM teachers; increasing support and access for
STEM students at the postsecondary level; attracting underrepresented
groups to STEM courses and careers; supporting basic research; and
establishing programs that will help create new forms of energy and
commercialize new innovations moves the right direction.
We encourage the committee to focus on evaluation as a priority
when considering funding for new programs so that we can better
understand where resources will do the most good. We also urge the
committee to continue to be vigilant about duplication of funding and
efforts among the Department of Education, the National Science
Foundation, NASA, the Department of Energy and other Federal agencies.
Coordination should be encouraged whenever possible to maximize the
impact of government resources for individuals and for communities.
When possible, the committee should look at incentives that lead to
public-private partnerships, the commercialization of new technologies,
and regional STEM initiatives. These innovation ecosystems drive job
creation, economic development, and regional stability that will
contribute to regaining America's lead in the global innovation market.
There are thousands of civilians and military personnel who have
extensive STEM education and training. Unfortunately, the
certifications that they have often do not translate from the military
to the civilian, world or vice versa. The lack of reciprocity in
certifications and licensure creates two problems, it discourages
people from entering or leaving the military due to the need for
retraining, and it wastes time and taxpayer dollars when people must be
trained again to do something that they have already been certified to
do. Inova Hospital in Virginia has a created a joint program with the
Army Reserve so that together they can recruit, train, credential,
license and certify qualified Soldier candidates who are entering the
health care field. I encourage the committee to find ways to replicate
and scale programs like this one. We must find a way to make skills
more transferable if we are going to expand and strengthen our
workforce.
While I realize it's not necessarily within the scope of the
COMPETES Act or this Committee's jurisdiction, but given the focus of
this hearing on innovation and American competitiveness, I would be
remiss if I didn't note perhaps the single most important policy the
Federal Government has for helping the private sector develop the
products and ideas that will continue to keep the U.S. economy
competitive for generations to come. The research and development (R&D)
tax credit encourages businesses of all sizes to undertake cutting-edge
research projects in the United States. Research and development is the
very lifeblood of our knowledge economy. At a time when the American
economy is weak, research and development across industry sectors makes
it possible to create and maintain good, high-paying jobs at home and
sharpens the ability of companies to compete in the global marketplace.
The Chamber has long supported the enactment of a permanent and
stronger R&D tax credit. The Chamber believes the R&D credit spurs
economic growth and encourages investments we need to make in important
areas of the economy such as renewable energy and energy efficiency
technologies, health care, biotechnology, manufacturing processes, and
information and communications technologies. Making this credit
permanent would bring certainty which would encourage businesses to
make long-term, high risk investments in the United States.
We commend the committee for its work on this issue and its
dedication to ensuring that the America COMPETES Act achieves its
purpose. Global competitiveness is a top priority for the business
community and we will not be able to compete and win without strong
national policies that support innovation.
Biography for Thomas J. Donohue
Chairman Gordon. Thank you, Mr. Donohue.
Governor Engler, you are recognized, and we also recognize
your time constraint at the end of the hearing too.
STATEMENT OF GOVERNOR JOHN ENGLER, PRESIDENT AND CEO, NATIONAL
ASSOCIATION OF MANUFACTURERS
Governor Engler. Thank you, Chairman, Ranking Member Hall,
distinguished Committee Members. It is a pleasure to be here
today and we appreciate the invitation to testify on behalf of
the Nation's manufacturers on the America COMPETES Act. The
National Association of Manufacturers [NAM] is the Nation's
largest industry association representing manufacturers in all
50 states, every sector. We are also a very proud founding
member of the Task Force on American Innovation formed to
support basic research in the physical sciences and
engineering, and I want to begin by thanking the Committee for
championing the America COMPETES Act. I note behind you,
``Where there is no vision, the people perish.'' Well, the
bipartisan vision that led to this legislation and its
enactment in 2007 and then the funding recently under the
Recovery Act has really worked to fulfill some of the promise
to the country, and I think this panel will be strongly in
support of the issue of federal funding for basic research, and
I certainly want to lend strong words of support as well,
continued support. I point out, as John Castellani did, that
research has long been a priority for the manufacturing sector
in this country.
In December of 2005, the manufacturers joined the
Department of Commerce in sponsoring a competitiveness summit
that Deborah was very much a moving force in as well where
basic research in that meeting was identified as a key
contributor to economic growth and innovation, and so we
certainly want to demonstrate broad support for programs we are
addressing today. In the interests of time, let me focus on
three other areas quickly: ARPA-E, the Advanced Research
Projects Agency for Energy, STEM education, science,
technology, engineering and math education, and the Hollings
Manufacturer Extension Partnership, or the MEP.
First, ARPA-E. One of the most exciting elements of the
America COMPETES Act was the establishment of ARPA-E.
Manufacturers know you can't separate energy from the economy.
ARPA-E supports research in both while also attempting to usher
in new generations of clean, efficient sources of energy. The
COMPETES Act calls for ARPA-E to accelerate transformational
technological advances in the areas that industry by itself is
not likely to undertake because of technical and financial
uncertainty. ARPA-E's first funding opportunity released last
May produced an outpouring of applications and award agreements
are now being finalized, and the agency has also announced a
second round totaling approximately $100 million, and we want
to work with the Committee certainly to evaluate the work of
the agency as part of the preparation for this reauthorization
so that ARPA-E can continue to encourage high-risk, high-reward
projects and technological innovation, and I commend the Chair
for the mention of the upcoming ARPA-E fair that is coming. It
sounds like a very good idea.
Let me talk about STEM, preparing our next generation of
manufacturers by improving education. Strong science,
technology, engineering and math education is a foundation of a
technical workforce, helps students and workers prepare to
develop the essential skills for a competitive manufacturing
economy. However, the government's emphasis on STEM skills
often begins and ends with the academic side of science and
math. That is essential, of course, but the best R&D in the
world can't go to market without the ability to produce the
product. For manufacturers, the application of STEM skills for
real-world workplaces is critical to developing this Nation's
technical workforce. Programs outlined in the America COMPETES
Act take a step toward this integration of skills needed by
employers. We can move that integration to the next level
through a series or a system of portable skills certification,
not unlike what Mr. Donohue mentioned for our veterans coming
back, recognize these portal skills certification by broad
industry partners and implement it in high school and local
two- and in some cases four-year colleges. The National
Association of Manufacturers and our Manufacturing Institute
have worked with key partners, world leaders in skills
certification programs to develop a new system of credentials
for students in postsecondary education, and Mr. Hall, the Bill
and Melinda Gates Foundation, they did give us a couple of
bucks, about a million and a half dollars, actually, of a grant
to help bring this vision to reality. When the academic and
technical programs are aligned with industry-recognized skill
certifications, students can demonstrate and transfer their
skills throughout the country and companies gain access to a
richly enhanced pool of skilled workers. The recently
introduced H.R. 4072, the AMERICA Works Act, sponsored by
Congressman Minnick but also cosponsored by Congresswoman
Dahlkemper of this very Committee, it elevates these programs
such as these to proper standing and their educational
priority. The NAM strongly supports this legislation.
Finally, just on MEP, I will close with that. High-tech
manufacturing assistance to small manufacturers, we think it is
a key program. It has received increased funding. The Hollings
Manufacturing Extension Partnership, or MEP, as we all know it,
is a network of not-for-profit centers that provides small and
medium-sized manufacturers with expert advice on an array of
business operations, and let me mention that a vast majority of
American manufacturers are actually smaller companies, fewer
than 500 employees. They account for something like two-thirds
of manufacturing employment, and about half the value of all
domestic production. In 2008, there were 59 of the NIST
[National Institute of Standards and Technology] MEP centers
serving nearly 32,000 manufacturers, helping them streamline
plant operations, improve the bottom line, and that was
opportunity then for growth in the market. In the previous
years, just a couple of data points. The partnership
contributed to more than 57,000 manufacturing jobs, helped
deliver in excess of $1.4 billion in cost savings and played a
role in generating more than $10.5 billion in sales. So we
think that program pays a big dividend, a great ROI [Return on
Investment] for our economy and helps the next generation of
manufacturers.
So Members, we thank you very much for the opportunity to
be here today. We strongly support the reauthorization of the
America COMPETES Act. It is going to pay off for more jobs,
more manufacturing and a more competitive U.S. economy.
[The prepared statement of Governor Engler follows:]
Prepared Statement of Governor John Engler
Introduction
Chairman Gordon, Ranking Member Hall, and distinguished members of
the Committee: thank you for inviting me to testify on ``America
COMPETES: Big Picture Perspectives on the Need for Innovation,
Investments in R&D and a Commitment to STEM Education.''
I am the President and CEO of the National Association of
Manufacturers (NAM), the nation's largest industrial trade association,
representing small and large manufacturers in every industrial sector
and in all 50 states. We are also a member of the Task Force on
American Innovation,\1\ whose mission it is to support basic research
in the physical sciences and engineering. I am pleased to testify on
behalf of our nation's manufacturers and all those who wish to preserve
our nation's competitiveness and prosperity, on a critical issue--
reauthorizing the America COMPETES Act.
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\1\ http://www.InnovationTaskForce.org/
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I want to thank you, Mr. Chairman and Ranking Member Hall for
championing and supporting the America COMPETES Act. Although the
America COMPETES Act was signed in 2007, only recently did it achieve
the funding necessary to fulfill its commitment to America.
I can tell you that the programs authorized in the America COMPETES
Act are working to strengthen innovation in the U.S. manufacturing
sector, and are helping us to build a stronger workforce. Today, I
would like to highlight four programs that are of significant interest
to America's manufacturers. They are Federal funding for basic R&D; the
Advanced Research Projects Administration for Energy (ARPA-E); science,
technology, engineering and mathematics (STEM) education, and the
Hollings Manufacturing Extension Partnership (MEP).
The Connection Between Federal R&D and Innovation in Manufacturing
Technology and the ability to translate innovation into products
and services that meet the needs of businesses and consumers bolster
the United States' economy and our standard of living. Just as
technology is key to strong economic growth and U.S. global
competitiveness, manufacturing is key to technological advancement. No
one sector has played a more important role in developing new
technologies than manufacturers. Similarly, manufacturers lead the way
in adopting new technologies to maximize efficiency and productivity.
Despite these advances, international competition continues to grow
and America's advantage in developing new technology can no longer be
taken for granted. In order for the U.S. to maintain its competitive
edge, it must promote forward-looking policies that encourage
technology, and by extension, the U.S. economy. Our global
competitiveness, in part, depends upon two important goals: encouraging
growth in technology sectors that benefit U.S. manufacturers, and
incentivizing manufacturers to further embrace advances in technology
that will strengthen and secure the place of American manufacturers in
the global economy.
The public sector plays a critical role in innovation. Over the
past 60 years, government-funded research has contributed to major
breakthroughs in science and technology. Through the Manhattan Project,
we harnessed the atom; through NASA,\2\ we unleashed space travel;
through ARPA,\3\ we grew the Internet; and through SEMATECH,\4\ we
shrunk the microchip.
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\2\ National Aeronautics and Space Administration.
\3\ Advanced Research Projects Agency was the forerunner of DARPA,
the Defense Advanced Research Projects Agency, an agency of the United
States Department of Defense responsible for the development of new
technology for use by the military.
\4\ SEMATECH (SEmieonductor MAnufacturing TECHnology) is a non-
profit consortium that performs basic research into semiconductor
manufacturing, created to solve common manufacturing problems and
regain competitiveness for the U.S. semiconductor industry that had
been surpassed by Japanese industry in the mid-1980's.
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Federally-funded R&D is what sets the United States apart from the
rest of the world, but it is a distinction that we can lose. In 2008,
the U.S. spent $116.5 billion on federally funded R&D, facilities and
fixed equipment--or 2.62% of its Gross Domestic Product (GDP).\5\ In
the same period, China's government invested $52.4 billion in R&D
(about 1.49% of GDP; up from $29.4 billion in 2005). This does not
include R&D expenses at labs owned by foreign companies. If China
continues a ratio of R&D spending of about 1.5% of GDP for 2009, its
research will total about $72 billion.\6\ However, China has one of the
fastest-growing research budgets in the world, and by 2020 the
government's goal is to invest 2.5% of GDP annually in research, which
will cause China to rank third in the world in terms of total annual
investment.\7\
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\5\ Federal R&D Support Shows Little Change in 2008.'' National
Science Foundation, Info Brief September 2009.
\6\ ``Engineering & Research'', Plunkett Research, website visited
January 14, 2010.
\7\ Ibid.
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In order to ensure that ground-breaking achievements continue, it
is critical that policymakers both authorize and appropriate adequate
funds for important government research agencies such as the National
Science Foundation (NSF), the Department of Energy, the National
Institute of Standards and Technology (KIST) and NASA. The America
COMPETES Act put these key research agencies on a glide path to
doubling their 2006-funding levels by 2016. The America COMPETES Act
needs to be reauthorized to ensure that this goal does not fall to the
wayside. As I mentioned earlier, only recently have sufficient funds
been appropriated to fulfill our commitment to the COMPETES Act,
funding that has come through the American Reinvestment and Recovery
Act, the 2009 Omnibus Appropriations Act, and the pending passage of
the FY' 10 appropriations bills. We are greatly encouraged by the
President's commitment to fulfilling the promise of the America
COMPETES Act by his pledge to double the funding for these important
research agencies through the President's Plan for Science and
Innovation.\8\
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\8\ See ``The President's Plan for Science and Innovation, Doubling
Funding for Key Basic Research Agencies in the 2070 Budget,'' Office of
Science and Technology Policy, Executive Office of the President, May
7, 2009.
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The increase in NSF funding to $7 billion in 2010, or 8.5 percent
more than the 2009 enacted level, will support many more researchers,
students, post-doctoral fellows and technicians contributing to the
innovation enterprise. The 2010 DOE Office of Science Budget of $4.9
billion, 3.5 percent more than the 2009 enacted level, will help us
improve our understanding of climate science, continue the U.S.
commitment to international science and energy experiments, and expand
Federal support at the frontiers of energy research. And the 2010
Budget of $652 million for NIST's intramural laboratories will improve
NIST's research capabilities by providing high-performance laboratory
research and facilities for a diverse portfolio of basic research in
areas such as health information technology, the digital smart grid,
and carbon measurements. Separately, the 2010 Budget also sustains
NIST's external programs, including $125 million in 2010 (a $15 million
increase over the 2009 enacted level) for the Hollings Manufacturing
Extension Partnership (MEP) to enhance the competitiveness of the
nation's manufacturers.\9\
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\9\ Source: Office of Management and Budget, Budget of the United
States Government FY 2010.
Federal R&D Funding: Creating Jobs, Now and in the Future
The funds authorized by America COMPETES and released by the
Recovery Act are going to help basic R&D create jobs in two ways:
building infrastructure necessary to do cutting edge science, and
funding grants that will help spur innovation. Infrastructure building
includes completion of ``bricks and mortar'' projects at national
laboratories, procurement of commodities for major Federally-funded
research programs, purchases of modern scientific instrumentation
associated with ongoing grants at universities and investments in both
the scientific workforce and ``green energy'' initiatives. Short term,
infrastructure building means that construction projects can begin in
local areas, creating manufacturing and construction jobs and economic
benefits now. Long term, the science done at these new facilities may
bring about whole new industries, which will in turn create new jobs
and economic benefits--as well as enhancing innovation, public safety
and environmental protection--well into our future.
Economists can easily determine job creation numbers from physical
infrastructure programs; determining job creation from federally funded
R&D research projects is a bit more speculative. However, from these
research projects industries are created, products are produced,
Americans are employed, savings are realized, and our future is
strengthened.
For instance, when the laser was first created using basic research
from the Department of Defense, it was dubbed ``a solution looking for
a problem.'' However, through other federally sponsored research
programs, applications were discovered and advances made; today, the
laser. is a critical component to the U.S. military, to health care, to
consumer and business electronics, and especially to the manufacturing
industry. It is just one example of how basic research--which may begin
with no specific technology or product in mind--can lead to important
discoveries, life-changing inventions, and economic growth.
The benefits that can be reaped from federally funded research from
the NSF, NIST and DOE Office of Science also produce ancillary benefits
in areas that are critical to the American manufacturing sector, such
as the economic health of the United States, health care, and energy
consumption. Here are a few examples:
Economic Development: According to a joint analysis by the
Commerce Department's Bureau of Economic Analysis and NSF, if
R&D spending were treated as investment in the U.S. national
income and product accounts, U.S. GDP would have been nearly 3
percent higher each year between 1959 and 2004. In 2004 alone,
the U.S. GDP would have been $284 billion more with the R&D
satellite account.\10\
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\10\ See ``Toward Better Measurement of Innovation and
Intangibles,'' BEA Briefing, Ana M. Aizeorbe, Carol E. Moylan, and
Carol A. Robbins, January 2009.
Health Care: The life expectancy of Americans rose from 47 to
78 between 1900 and 2009, largely due to advances gained from
Federal biomedical research conducted with National Science
Foundation, National Institute of Health, and Centers for
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Disease Control funding.
Energy Consumption: Buildings are the largest energy users in
the United States. Federal research at agencies like the
Department of Energy focused on emerging technologies for
components, such as heating, cooling, ventilation, and
refrigeration could lead to energy savings of 3.3 quadrillion
BTU, or the equivalent to up to 200 million tons of coal.
Because of the America COMPETES Act, the Recovery Act and the 2009
Omnibus Appropriations bill, research grants are being awarded that
will create jobs, foster innovation, and help revolutionize current
industries and perhaps create new industries. Below is a sample of the
dollar amounts of some of the grants that are now flowing into key
research states.
ARPA-E and the Future of American Manufacturing
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\11\ Source: National Science Foundation, January 14, 2009.
\12\ Source: U.S. Department of Energy, January 14, 2009.
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As this country and the manufacturing economy seek to remain
competitive in an ever-evolving global marketplace, we must avail
ourselves of every opportunity to drive economic growth, bolster our
domestic energy resources and protect the environment. In order to
secure these opportunities, significant and consistent investments must
be made; we cannot let American ingenuity and innovation become a
success story in other countries.
I commend the House Science Committee for recognizing the
importance of supporting high-risk, high-reward projects by bringing
the Advanced Research Projects Agency--Energy (ARPA-E) online. As the
Director for ARPA-E, Arun Majumdar, notes in his open letter of
December 15, 2009, the nation that successfully grows its economy with
more efficient energy use, a clean domestic energy supply, and a smart
energy infrastructure will lead the global economy of the 21st
Century.'' \13\ ARPA-E is designed to ensure that the U.S. can do just
that.
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\13\ http://arpa-e.energy.gov/public/dir-ltr.pdf.
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The NAM has long advocated that, in order to move this country
forward, we need a fundamental transformation in how we produce,
distribute, and consume energy. This transformation should start with a
shift in how we view and approach energy research. While quality
research is successfully conducted by U.S. manufacturers and the DOE, a
new approach is needed that will expedite the development and
deployment of technological innovations. This approach should leverage
the vast intellectual capital throughout our country that we hope will
lead to market success, the building of the necessary infrastructure
and high paying jobs. This is the goal of ARPA- and it presents a
unique platform to integrate innovative industry, research and
development, and yield results.
The NAM was pleased to see that ARPA-E released its first funding
opportunity announcement in May 2009. After the unprecedented response,
award agreements are now being finalized. Additionally, ARPA-E has
announced the launch of its second round of opportunities for a total
of $100 million. Knowing that demand for ARPA-E resources is so
significant, the NAM looks forward to working with this Committee to
ensure that the Agency is reauthorized and its funding remains at
levels that will continue to support high-risk, high-reward projects
and technological innovation.
The goals are simple--reduce our reliance on foreign sources of
energy, improve the energy efficiency of all economic sectors, slow and
reduce greenhouse gas emissions; and maintain US technological
leadership in the world and in the development and deployment of energy
technologies. Long term, this research will form the foundation of new
R&D investments that meet the size and complexity of the challenges
facing the energy sector.
Preparing our Next Generation Manufacturers by Improving Education
Strong Science, Technology, Engineering, and Math (STEM) education
is the foundation for a technical workforce, and provides the
fundamental skills necessary for a vibrant and competitive
manufacturing economy. Improving the quality of K-12 STEM education and
creating stronger educational pathways for graduate students in these
fields, as supported in the America COMPETES Act, will provide
employers with candidates that possess the necessary educational base
to drive innovation in the manufacturing industry.
However, far too often our policies and investments related to the
STEM skills begin and end with a focus on high science and math
academic theory. For manufacturers, it is the application of science,
technology, engineering, and math skills in real world workplaces that
is critical to developing this nation's technical workforce and
preparing an educated and skilled manufacturing workforce for the 21st
Century.
It is in this area where we are experiencing a tangible skills gap.
In a recent study by the Manufacturing Institute and Boston Consulting
Group, over 1000 manufacturing executives identified a skilled educated
workforce as the single most critical element of innovation
success.\14\ In turn, they reported that innovation is the single most
critical element of business success. So, if manufacturers require an
educated and skilled workforce for business success, job creation, and
the ability to compete in a global market, we must ensure we have the
policies and investments in place to train our future workforce in
critical STEM skills. The fundamentals developed with a strong STEM
education program are not only for use as a pathway to advanced science
research. No company can take R&D to market without the ability to
produce the product. Strong STEM skills create a competitive business
environment by contributing to skills on the production line as well as
in the research lab.
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\14\ ``The Innovation Imperative in Manufacturing,'' The
Manufacturing Institute, Boston Consulting Group, 2009.
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As manufacturers, we take pride in measurable successes. Just-in-
Time inventory management and Six Sigma process management defines how
manufacturers look at business. It is therefore important to the
manufacturing sector that modifications to the education system have
quantifiable advantages. While many education and workforce reforms can
take many years to have an impact, some reforms yield results much more
quickly. For example, there is a direct statistical correlation between
quality of workforce and innovation performance.\15\ Stated more
directly, quality input means quality output. We need to ensure that we
continue to train workers with the right skills to keep pace with the
increasingly technical demands of the productivity-oriented
manufacturing sector.
---------------------------------------------------------------------------
\15\ Ibid.
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The P-16 program outlined in the America COMPETES Act takes a step
toward integration of the skills needed by employers and education
systems calling for education alignments with the private sector.
Driving students toward advanced degrees in STEM areas is critical for
competitive success; however, so is continuing the education for those
who may not follow the traditional educational path. Preparing students
and transitioning workers with applied STEM education to real world
skills is just as important, and engages a sector of the workforce
without a four-year college or graduate degree.
A portable skills certification system \16\ developed and
recognized by broad industry partners, and implemented in high school
and local two- and four-year college programs, moves the integration to
the next level. When academic and technical programs are aligned with
industry needs and standards, students gain recognized credentials and
companies gain skilled workers. By creating more STEM pathways for
secondary and post-secondary education, and aligning education with
industry-recognized skills credentials, the United States can create
the kind of manufacturing workforce that will facilitate ever-needed
product and process innovations in an evolving global business climate.
In fact, the recently introduced H.R. 4072, The America Works Act,
sponsored by Rep. Minnick and co-sponsored by Rep. Dahlkemper who sits
on this Committee, takes programs like these and prioritizes them
within current educational programs.
---------------------------------------------------------------------------
\16\ Nationally portable, industry-recognized certifications
validate that workers have the skill sets necessary to perform in a
manufacturing environment and provide flexibility for the employee to
take those skills anywhere in the marketplace, while also providing a
streamlined hiring process for the employer.
The Hollings Manufacturing Extension Partnership: Bringing High-Tech to
Small Manufacturers
Another key program in the America COMPETES Act that has received
increased funding is the Hollings Manufacturing Extension Partnership
(MEP). The MEP is a nationwide network of not-for-profit centers that
provide small- and medium-sized manufacturers with services ranging
from process improvements and worker training, to business practices
and information technology.
Small manufacturing enterprises--defined by the Federal Government
as companies with fewer than 500 employees--are critical to the U.S.
manufacturing base as well as to the national economy. Over 99 percent
of American manufacturers are smaller companies, and these
manufacturers account for two-thirds of manufacturing employment and
half of the value of all domestic production. Faced with steep downward
cost pressures as a result of the global business environment,
efficiency and innovation are critically important to these companies.
The MEP provides small- and medium-sized manufacturers affordable
access to technical expertise, so that they can create more high-paying
manufacturing jobs--despite today's daunting economic cost pressures.
MEP's mission is to support, strengthen, and grow U.S.
manufacturing. To do this, it provides customized and direct assistance
to manufacturers through its nationwide network of MEP centers, with
nearly 392 locations across the country, and more than 1600 field staff
working every day with companies in their plants and offices. The
nation's manufacturers, thanks to MEP assistance, have streamlined
their plant operations and improved their bottomline--and as a result,
have been able to create opportunities for growth via new sales, new
markets, and new products. In 2008, MEP served 31,961
manufacturers.\17\
---------------------------------------------------------------------------
\17\ Source: NIST MEP Website, January 14, 2009.
---------------------------------------------------------------------------
The impact of the MEP program on the U.S. economy is truly
impressive. In FY' 07 alone (from projects completed in 2007), the MEP
helped to:
create or retain more than 57,000 jobs;
deliver $1.44 billion in cost savings annually;
generate more than $10.5 billion in sales; and
stimulate more than $2.19 billion in economic growth.\18\
\18\ See ``Making a Difference for America's Manufacturers,'' NIST
MEP Publication, February 11, 2009.
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Thanks to the vision of this Committee, Congressional Leadership,
and the Administration, the MEP program received increased funding this
year, authorizing and appropriating $122 million for its parent agency,
the National Institute of Standards and Technology--Unfortunately, due
to an uncertain economy, the future of this important program is in
jeopardy. The NAM greatly supports the NIST MEP as it is a program that
consistently reaps an enormous return on investment for our economy and
fosters the next generation of American manufacturers.
Conclusion
Chairman Gordon, Ranking Member Hall, and other members of the
Committee, thank you for the opportunity to testify today and represent
our nation's manufacturing industries. We strongly support the
reauthorization of the America COMPETES Act as the small investment in
its critical components--doubling Federal R&D funding for the NSF, NIST
and DOE Office of Science, reauthorizing ARPA-E, strengthening STEM
education, and renewing our commitment to the Hollings Manufacturing
Extension Partnership--will reap considerable returns by helping to
create jobs today, and ensure our economic security in the future.
Biography for Governor John Engler
John Engler is president and CEO of the National Association of
Manufacturers (NAM), the largest industry trade group in America,
representing small and large manufacturers in every industrial sector
and in all 50 states.
Mr. Engler is a leading advocate for the 12 million American
manufacturing workers. He promotes a broad-based agenda for maintaining
U.S. competitiveness by lifting unnecessary burdens on manufacturing:
excessive taxation and regulation, the high cost of health care,
expensive litigation and soaring energy costs.
Recognizing that manufacturing provides the bulk of U.S. exports,
Mr. Engler promotes opening foreign markets to this country's
manufactured goods. He also has emerged as one of the nation's top
advocates for developing the abundant domestic energy supplies in the
U.S. He strongly supports expanding renewable energy and clean-coal
technology and revitalizing America's nuclear power industry.
Mr. Engler sees the looming shortage of skilled manufacturing
employees as a growing threat to American competitiveness in the 21st
century's high-tech global economy. A former three-term governor of
Michigan, he signed 32 tax cuts into law and helped create more than
800,000 new jobs during his tenure.
Prior to becoming Michigan's 46th governor in 1991, Mr. Engler
served for 20 years in the Michigan legislature, including seven years
as state Senate majority leader.
Chairman Gordon. Thank you, Governor.
Ms. Wince-Smith, you are up to bat.
STATEMENT OF MS. DEBORAH L. WINCE-SMITH, PRESIDENT AND CEO,
COUNCIL ON COMPETITIVENESS
Ms. Wince-Smith. Chairman Gordon, Ranking Member Hall and
distinguished Members of the Committee, thank you for the
opportunity to provide testimony on the reauthorization of the
America COMPETES Act. This landmark legislation was a turning
point in the effort by government and private-sector leaders to
refocus America's attention on the critical importance of
innovation as the driver of economic growth. Your leadership
and that of the Committee was crucial to its success. The
Council fully supports its reauthorization.
Mr. Chairman, when the Council on Competitiveness was
founded in 1986, our country was facing its most dire economic
challenge since the end of World War II. Today we face new and
grave challenges to our competitiveness. U.S. companies must
retool their business strategies to remain competitive and the
U.S. government must support policies to grow high-paying jobs
here and investment. STEM education, investment in R&D and a
skilled workforce are at the heart of that challenge.
The Council's 2004 National Innovation Initiative responded
to these emerging challenges by bringing together more than 400
public and private-sector leaders to shape a national agenda to
drive talent, investment and infrastructure and we were pleased
to work with our colleagues around this table. The Council
strongly supported the America COMPETES Act as it mirrored many
of these recommendations and it is also consistent with our
next-generation initiatives in technology leadership, energy
security and sustainability, and 21st century manufacturing.
Among those provisions that were included and should be
included in future authorizations are strength in STEM
education for all Americans irrespective of their future
careers, steady and predictable increases in federal research
funding for long-term basic research across all agencies,
greater coordination across federal agencies for innovation
policy and very important new models for public-private
partnerships such as ARPA-E.
As the Committee looks to reauthorize the America COMPETES
Act, let me emphasize that the importance of these provisions
has increased, further compounded by the global economic crisis
and the highest unemployment levels in America since the Great
Depression. During these years, the world has not stood still.
Global competition has accelerated, especially the rapid
advancement of emerging economies all competing for high-value
investment, manufacturing jobs and market success. In just one
generation, emerging economies' shares of global imports,
exports and foreign direct investment have nearly doubled. In a
decade, China's R&D has grown from $12 billion to $102 billion,
now placing China third in R&D spending behind only the United
States and Japan, and China is now poised to surpass Japan as
the world's second largest economy.
As companies have evolved from multinationals to global
enterprises, they are building global talent networks for R&D
for design, for manufacturing and service hubs to meet growing
global consumer-driven demand. Additionally, the real-time
global trade in tasks has also accelerated. Information,
knowledge and technology are increasingly commodities, and the
economic rewards are going to go to those nations who are
prepared to invest in their people, take risks to develop and
deploy products and services and create entirely new
industries.
If we want to see investments, jobs, and growth in the
United States, we must have a vibrant and diversified high-tech
manufacturing sector. Our national security and competitiveness
demand a strong industrial base. Under the leadership of our
new chairman, Sam Allen, the CEO of John Deere and Company, the
Council's Competitiveness Initiative is going to redefine the
manufacturing enterprise as a value creation system, not just a
product fabrication process. We will focus on productivity
drivers and lifecycle cost structures to enable us to rise
above the rising bar. We will benchmark the policy, regulatory
and capital incentives our competitor nations are using to
attract manufacturing investments at the forefront of science
and technology ranging from the atomic world to large-scale
extreme systems. We will also utilize our leadership technology
initiative, bringing together the CTOs [Chief Technology
Officer] across America's companies, led by the CTOs of
Lockheed Martin and of General Electric, to create a roadmap
for our science and technology leadership.
Clearly, energy and environmental issues and their impact
on U.S. competitiveness in a low-carbon world are at the heart
of these challenges. Our new work, released in a recent summit,
called ``Drive'' is really going to push a tremendous
generation of innovation that will transform the world. We have
to also ensure that we build on our strengths and use our
innovation accelerators such as modeling, simulation and high-
performance computing in which we still lead the world, to
leapfrog our competitors.
Mr. Chairman, Ranking Member Hall and Members of the
Committee, the America COMPETES Act was and is an urgent wakeup
call for America. The need for Congressional bipartisan
legislation and the involvement of all stakeholders in our
society has not diminished. It has accelerated. The rest of the
world is not waiting for us to act or to lead. We must act and
lead. And Mr. Chairman, thank you for your tremendous
leadership on this Committee and your service to our Nation.
Thank you.
[The prepared statement of Ms. Wince-Smith follows:]
Prepared Statement of Deborah L. Wince-Smith
Chairman Gordon, Ranking Member Hall and members of the Committee,
thank you for the opportunity to provide testimony on the
reauthorization of the America COMPETES Act. This landmark legislation
signed into law in 2007 was a turning point in the effort by many
people inside and outside of government to refocus America's attention
on the critical importance of innovation as the driver of economic
growth. Your leadership and that of the Committee was crucial to the
legislation's success and I hope the effort to reauthorize the
legislation will be similarly successful.
In my testimony today, I would like to share with the Committee a
brief history of the impetus and outcome of the Council's work on a
national innovation agenda and how critical parts of this agenda
related to the legislation passed in 2007. Then, I want to highlight
some transformational changes in the national and global economy that
have occurred in the past few years and how those shifts are impacting
where and how innovations occurs; and, as a result, what issues this
committee should consider as it seeks to reauthorize the America
COMPETES Act.
THE COUNCIL ON COMPETITIVENESS AND THE NEED FOR AN INNOVATION AGENDA
The Council on Competitiveness is a non-partisan and non-
governmental organization of CEOs, university presidents and labor
leaders working to ensure U.S. prosperity. To achieve this mission we
convene top private and public sector leaders to address America's
long-term. competitiveness challenges by generating innovative public
policy solutions and galvanizing our unique coalition to translate
ideas into action. We also seek to measure U.S. performance in the
global marketplace to identify key obstacles and opportunities facing
the nation.
The Council on Competitiveness was founded in 1986 during a time
when the United States was facing its most dire economic challenges
since the end of World War H. The country had slid from being the
world's largest creditor to its largest debtor, its position as a
global leader in technology and innovation was being challenged and
American industries were losing market share to international
competitors. To meet these mounting challenges, two-dozen industrial,
university and labor leaders joined together to found the Council, a
forum for elevating national competitiveness to the forefront of
national consciousness.
The 21st century poses new challenges to American competitiveness--
globalization, high-speed communications, enterprise resilience and
energy sustainability issues are forcing organizations at all levels to
rethink how U.S. companies will remain competitive and how we will
sustain and grow high paying jobs. After two decades, the Council on
Competitiveness continues to set an action agenda to drive U.S.
productivity and leadership in world markets and to raise the standard
of living for all Americans.
The Council's work on innovation dates back to the late-1990's when
we held a major innovation summit at MIT. This summit brought together
private sector and government leaders to begin the conversation around
where the United States stood with regard to its long term role as the
world's innovator. By 2003, it was clear that America could no longer
assume that its past leadership in innovation would ensure its future
prosperity. The world had changed.
The United States was now competing and collaborating
globally to attract the best and brightest minds to develop new
knowledge and create the disruptive technologies that will
launch new industries and products and create jobs.
The United States was now competing and collaborating
in a world in which the power of networked communications, the
extended manufacturing enterprise and access to low-wage talent
has enabled the outsourcing of both low and highskilled jobs.
And the United States was now competing and
collaborating in a post-Cold War security environment in which
the United States must protect its citizens and homeland from
threats from terrorist groups and rogue nations which have the
technological means to wreak havoc on advanced economies.
The Council also recognized that the very nature of how innovation
occurs, where it occurs and who the innovators are were changing as
well.
It was diffusing at ever-increasing rates. It took
the radio 38 years to reach a market audience of 50 million
people, but only 13 years for television, four years for the
Internet, three years for the I-pod and one year for Facebook.
It was multidisciplinary and technologically complex
arising from the intersections of different fields or spheres
of activity encompassing physical and biological sciences as
well as social sciences and the humanities.
It was becoming global in scope--with advances coming
from centers of excellence around the world and driven by the
demands of billions of new consumers.
What became clear as the Council prepared to launch its innovation
initiative back in 2003 was that the innovation economy is
fundamentally different from the industrial or even the information
economy. It requires a new vision, new approaches and a new action
agenda. The United States must create the conditions that will
stimulate individuals and enterprises to innovate and take the lead in
the next generation of knowledge creation, technologies, business
models, dynamic management systems and high value job creation. A new
relationship among companies, government, educators and workers is
needed to ensure a 21st century innovation ecosystem that can
successfully adapt and compete in the global economy.
NATIONAL INNOVATION INITIATIVE
This is why the Council launched the National Innovation Initiative
(NIT) under the leadership of Duane Ackerman, the CEO of BellSouth and
Chairman of the Council from 2003-2005 and co-chaired by Sam Palrnisano
the CEO of IBM, and Wayne Clough, the President of the Georgia
Institute of Technology and now the Secretary of the Smithsonian
Institution. We relied on the input of more than 400 public and private
sector leaders including my colleagues testifying with me today and
other leaders such as Norm Augustine, Craig Barrett, Chuck Vest and
Bill Brody from the private sector as well as a bipartisan Honorary
Committee of Members of Congress and Governors.
The 2005 NII report, Innovate America was downloaded more than
300,000 times and coupled with subsequent reports from the National
Academies, the Business Roundtable, the National Governors Association
and many others, helped build the momentum for congressional action on
an innovation agenda for the country. It also created interest around
the world with countries like China, Korea, Brazil and Turkey
fashioning innovation agendas modeled on the NII.
Innovate America had three foundational platforms Talent,
Investment and Infrastructure--the building blocks for an integrated,
resilient innovation ecosystem and the subsequent legislation in many
ways mirrored this structure.
In brief, Innovate America called for:
Talent
Ensuring all Americans have the skills necessary to
compete and prosper in the 215E Century with a strong emphasis
on science, technology, engineering and math education (STEM).
Increased support for multidisciplinary education and
research.
Attracting the best and brightest from around the
world to study and work in the United States.
Investment
Increased national investment in a balanced basic
research portfolio.
A focus on high risk/high reward research.
A move toward regional economic development and a
transition to an advanced manufacturing infrastructure.
Infrastructure
Accelerating the deployment of 21St Century
innovation infrastructures from broadband and high performance
computing networks to a 21St Century patent system.
A manufacturing infrastructure that will enable
America to capture the economic value from our investments in
research and our people.
Tax incentives to encourage research and risk taking.
THE AMERICA COMPETES ACT
Needless to say, the Council strongly supported the America
COMPETES Act as it mirrored many of the recommendations included in
Innovate America as well as our 2006 Competitiveness Index. Among those
provisions that were included and should be included in any future
authorizations were strengthened S'lEM education for all Americans
regardless of their career aspirations; steady and predictable
increases in Federal research funding for long term basic research
across all agencies; and greater coordination across Federal agencies
and with the states on innovation policy.
Without going into great detail, I would like to highlight a few of
the provisions from the 2007 legislation that I think remain critical
and should be supported by the Members of the Committee.
1. The Council on Competitiveness strongly urged the creation
of a President's Council on Innovation and the legislation
included such a provision, yet the reality has not matched the
intent. What became clear as we sought the input and advice
from leaders within government and the private sector was that
the government's innovation policy was fragmented, poorly
coordinated and often running at cross purposes between
agencies and departments. We would urge a fresh look at this
provision.
2. Predictable and steady support for long-term research
across Federal agencies including the National Science
Foundation, DoE Office of Science, NIST and NASA is a vital
first step toward an innovation-based economy. America COMPETES
made great strides in this area. Any authorization should
continue this commitment.
3. Support for the National Institutes of Standards and
Technology's (NIST) work in the area of manufacturing is
critical to many small and medium sized manufacturers. These
companies are key job producers in America's economy. NIST has
made strides toward embracing innovation in manufacturing and
this trend is worthy of the Committee and Congress's support.
4. Strengthening STEM education through programs at the
Department of Education, the National Science Foundation and
other R&D agencies and departments is important. I realize
there are multiple programs that touch upon this issue across
the Federal Government and I will not try to analyze each one
separately here. I only urge the Committee to recognize that
almost every career today requires some grasp of or skill in
science, technology, engineering and mathematics and we must
ensure that all Americans have a solid grounding in these
fields.
Before turning to where we go from here, I want to highlight a
couple of items that were important parts of the Council's report, but
were not included in the legislation. I recognize that not all of these
issues fall under the Science Committee's jurisdiction, but any
comprehensive innovation bill is going to touch multiple committee
jurisdictions.
Attracting the best and brightest from around the
world to study, work and innovate in the United States would
benefit our economy, but our high skilled immigration system
continues to fail in this regard. This is a competitiveness
issue as much as if not more than an immigration issue and
should be addressed as such. A green card should be given to
any foreigner who passes appropriate security screening and
receives an advanced degree in science or engineering.
Innovate America called for the creation of and
support for regional innovation hot spots--locally developed
and federally incentivized regions that bring together the
public and private sectors to capitalize on local competitive
assets to create new jobs and new industries. The
Administration is currently looking at ways to achieve this
goal and those efforts should be supported.
Innovate America also sought to focus attention on
the importance of critical technologies and processes that need
to remain viable in the United States if we are to generate
value from our investments and continue to create jobs in the
United States.
Innovate America also identified over-the-horizon
issues like energy security and sustainability that led to our
recent Energy Security, Innovation and Sustainability
initiative and summit last fall.
As the Committee looks to reauthorize the America COMPETES Act, I
can only emphasize that the importance of these provisions has not
waned with the passage of time and the deterioration of the global
economy-they are critical to America's prosperity.
GLOBALIZATION CONTINUES TO CHANGE THE WORLD IN WHICH WE COMPETE
We knew the global economy was changing when the America COMPETES
Act was first debated. Now, we know the global economy has
fundamentally shifted. Global competition has accelerated--especially
the rapid advancement of emerging economies:
Because of their large and rapidly growing markets
and relatively low wage labor, they are the favored location
for foreign direct investment
In just one generation, emerging economies' shares of
global imports, global exports and foreign direct investment
have nearly doubled
And some are advancing rapidly as R&D performing
countries. In about a decade, China's R&D grew from $12 billion
to $86 billion. In 2008 China's R&D spending was $102 billion,
placing China in third place in R&D spending, behind only the
United States and Japan. China is now poised to surpass Japan
as the world's second largest economy.
The integrated global enterprise has developed rapidly. These
enterprises use global networks for developing products and services,
and for serving customers.
For example, sales from foreign affiliates of U.S.
companies are more than three times greater than U.S. exports
of goods and services.
These global enterprises are building global talent
networks for innovation. And it is vital for regions to enter
these networks.
Global trade in tasks has grown rapidly. If work is routine, rule-
based, or if it can be digitized, there's a low cost source of labor
somewhere in the world to compete for that work and those jobs.
Information, knowledge and technology are increasingly commodities.
And rewards do not necessarily go to those who have a great deal of
these things, but to those nations who are prepared to create new
industries and deploy new products and services. Besides, many nations
have rapidly built-up their own science and technology assets, so
having those alone does not ensure success.
Instead, rewards go to those who know what to do with knowledge,
information and technology once they get it. This has created an
innovation imperative for the United States that is, if anything, more
urgent today than it was four years ago.
BEYOND AMERICA COMPETES
America still has the best innovation system in the world, but if
we want to see investments, jobs and growth in the United States, we
need a vibrant and diversified manufacturing sector. Our national
security, energy security and economic competitiveness demand it.
America lacks a strategy for manufacturing competitiveness. We need
policies that make America a really attractive place to invest--a pro-
innovation, pro-investment, pro-growth, pro-opportunity environment.
And that means we need to look at manufacturing as a value chain
that spans ideas to delivered products, including cutting-edge science
and technology, sustainable design and systems engineering, supply
chain excellence and smart services--as well as lean and green
production. The integration of these systems and services creates the
value premium that captures global market share.
The Council is launching a major initiative in this area that will
seek to:
Redefine manufacturing as a value creation system,
not product fabrication
Focus on productivity drivers that enable us to rise
above a rising bar
Benchmark policy incentives and strategies competitor
nations use to attract manufacturing investment
Develop an integrated action agenda for 21St century
competitive success.
A successful manufacturing strategy will exploit the leading edge
of nanotechnology, biotechnology and digital technology. Advances in
these fields will increase technological possibilities exponentially,
unleashing a flood of innovation--creating new industries, companies,
products, services and markets.
This ability to move quickly to deploy and capture value is a focus
of the Council's Technology Leadership and Strategy Initiative, chaired
by Dr. Ray Johnson, Senior Vice President and Chief Technology Officer
for Lockheed Martin Corporation and Dr. Mark M. Little, Senior Vice
President and Director of Global Research for the General Electric
Company.
There is a great and growing need to solve global grand challenges-
food and water shortages, pandemics, security threats, the needs of
aging populations worldwide, climate change and meeting the global need
for cheap, clean energy.
Energy and environmental challenges alone have created a perfect
storm for energy innovation. As detailed in the Council's recent call
to action on energy security, innovation and sustainability--Drive--
energy and energy efficiency innovations are needed in transportation,
appliances, green buildings, materials, fuels, power generation,
industrial processes and more. I am pleased to enclose the full report
for the Committee's review.
The environment for innovation is target rich, but we also need
innovation accelerators. Modeling and simulation with high performance
computing can be a force multiplier for innovation. These tools offer
an extraordinary opportunity for U.S. manufacturers to design products
and ancillary services:
Faster
To minimize the time to create and test prototypes
To streamline production processes
Lower the cost of innovation, and
Develop high-value innovations that would otherwise
be impossible.
Driving HPC, modeling and simulation throughout the supply chain
would put these powerful tools into the hands of companies of all
sizes, entrepreneurs, innovators and inventors to transform what they
do.
CONCLUSION
Mr. Chairman, Ranking Member Hall and Members of the Committee, the
America COMPETES Act was not a perfect bill, but it was an urgent wake
up call. The bill included some provisions we did not recommend and
left some out we felt were critical. Yet, there was no question of the
need for action, by Congress. That need for action has not diminished
and, if anything, the need is greater. Other countries are making
investments in their science and technology infrastructure. They are
educating and training their people. They are attracting investment and
talent from around the world. To prosper, America must compete.
Thank you.
Biography for Deborah L. Wince-Smith
Chairman Gordon. Thank you. It is good to have a good
committee to work with.
Mr. Donohue, you mentioned your time there at the military,
or at Walter Reed this morning. Within the COMPETES bill, we
set up a program where the National Science Foundation fast
tracks STEM professionals into teaching, and I will talk with
Chairman Skelton today about trying to partner with the DOD
[Department of Defense], at least in that area. Hopefully we
will be able to accomplish something. And you also mentioned,
or cautioned, about duplication of programs. One of the themes
of this Committee has been how do we stretch $2 into $3 rather
than having to spend an extra dollar, and what we have tried to
do is look at the various research programs within our
jurisdiction and create an umbrella to coordinate that. We have
done that in nanotechnology, in water research, and we are also
now looking into the STEM areas, and we will continue to do
that.
You also mentioned public-private partnerships, and I think
what we have done here, again, is a theme in that much of our
legislation when we set up research programs, we ask that there
be a private-sector component or an advisory group set up to
advise, not for all the research, but for a portion of the
research, where should we be going with that? And I think today
really is an example of a private-public relationship in that
it was the public sector that asked the private sector, what do
we need to do to make ourselves more competitive. You gave us
recommendations. We put that into legislation. You helped us to
pass it. And so what I would like to do now is really ask the
panel what additional public-private partnerships might be
necessary, and Mr. Donohue, I know that in a recent speech to
the Chamber, you wanted to do 10 million jobs in 10 years, and
is there a role there? I suspect that probably the whole panel
would concur that less government is better but the question
now, though, is there appropriate role for public-private
partnerships? And I welcome your recommendations.
Mr. Donohue. Thank you, Mr. Chairman. We want to do 20
million jobs in 10 years.
Chairman Gordon. Oh, good.
Mr. Donohue. We need seven to replace the people that are
out of work. We need 13 for all of those people who will be
coming into the economy. And as was mentioned by a number of
the speakers this morning, many of these jobs are going to be
technologically based or far more technologically based than
they were years before, and therefore the work that your
Committee is leading here are preparing people for those jobs
is critical. Our suggestion on how to drive those 20 million
jobs we made in that speech is first of all expand our efforts
because 95 percent of the people we want to sell things to live
somewhere else, and we have the opportunity to do that right
now, and if we would double it in five and double it again, you
would create many of those jobs. And by the way, that is a
public-private partnership because we need the help of the
government to build the trade agreements and the trade
arrangement that allow the private sector to compete against
150 other countries around the world that are trying to sell in
and out of those markets.
The second thing we suggested and that I will focus on here
for a minute is the issue of infrastructure. Now, we always
think about infrastructure as roads and bridges and we have a
highway bill for that and we ought to hurry up and reauthorize
it, but there is an extraordinary opportunity and a great deal
of money waiting around for infrastructure issues on water, on
questions of power generation, power lines, ports, railroads.
Much of that money would come from the private sector. Had we
not had this recession, it is my opinion we would have bumped
up against the wall when we would have more business than we
had infrastructure to support it, and I think you can find in
those areas an extraordinary opportunity for public-private
partnership both on the technological side, on the planning and
development side, and particularly on the financing side, and I
would call to your attention and keep you posted on the
material that we are putting together on that. There are a
whole series of other issues but I have already taken more time
than you expected, and I thank you very much.
Chairman Gordon. Does anyone else want to comment there?
Governor Engler. Let me pick up on the STEM issue because I
know that is of great concern to many Committee Members, and I
think that is really obvious because it is the longest standing
public-private partnership. Public education is part of the
fabric of the Nation. I always say this when you ask me what
should be done in public education: I have got a simple plan,
that every child leave high school either prepared to go to
college without needing remediation when they get there or
prepared to go to the workforce with skills that have hopefully
been measured and even certified, and the dropout rate has to
be zero. That alone would of course transform the people coming
into the workforce and would stretch $2 into probably $5. I am
not sure. But I think the ability to link--and we have formed a
first ever for us, a council of community college leaders to
work with the manufacturers to talk about how we make this
transition because there is, I think, for many people who don't
know what they want to do, the need for them to become
prepared. We have specific needs in manufacturing but there are
other needs in other parts of the economy. Tom would have a lot
of members that aren't our members that have maybe financial
services needs or whatever but people need to be prepared, and
we think that STEM education has a great value, and some of it
is less traditional than the K-12 pre-college curriculum, and
we think that there are programs, and I think if you look
across America we have solved all of our education problems
somewhere. We just are terrible at replicating it. And if we
could simply replicate what works and if everybody used best
practices that are available today, no new research, you would
get a quantum improvement in STEM specifically, we think that
the community college system and that integration has to go
much further. I think some of the steps that you have laid out,
some of the efforts that are underway are very powerful but we
probably need to measure more and report more because we still
have a problem. As Tom mentioned, there are a lot of people who
are aging out of the workforce but they are aging out with 30
years of experience. The people who are coming in to replace
them can't just walk in off the street and hope to do these
jobs. They have to have preparation.
Chairman Gordon. Ms. Wince-Smith?
Ms. Wince-Smith. Well, I would just add and pick up on what
Governor Engler just said about the material workforce. One of
the things that the Council is doing under our Tapping Mature
Workers Initiative with Atlantic Philanthropy is to identify
this tremendous pool of workers that have skills, and to work
with them across communities as part of an innovation strategy
to ensure that they can be redeployed into new occupations.
But I really wanted to mention the R&D partnership model
and the importance of bringing the power of modeling,
simulation and supercomputing down into the hands of our
entrepreneurs and throughout the supply chain. This is
something where the data and the productivity gains are huge,
and if we can get this tool to do advanced design and
prototyping, moving beyond traditional ways products are
designed and deployed, I think it will have a tremendous
impact. Excitngly, the capability for this exists in our
national labs, it exists in our universities, and we have
leading companies that are working with the Council to really
spur this partnership along. It is also something that will be
embedded into the new ARPA-E programs as well. So that is one
in particular I want to highlight as very strategic for the
future.
Chairman Gordon. Mr. Castellani?
Mr. Castellani. Briefly, Mr. Chairman, let me suggest three
areas. One, to reiterate what John Engler said, the private
sector spends, we have added it up sometimes, somewhere between
$800 million and $900 million a year trying to support
education improvement, and learning from our mistakes, learning
from what has worked I think is very important to avoid
replication of those mistakes, so I think that is very much an
opportunity--and that is $900 billion. I am sorry. I didn't
mean to shortchange it. Learning what we found has worked,
learning within the government what has worked and sharing that
information would be very helpful.
Secondly, the selection of the technologies that are
supported in the research. Clearly what would be most desirable
are making sure that those that are supported are ones that can
track private capital to be able to become commercialized that
had broad appeal within the private sector and have an
opportunity for return so that the private capital can be
applied to it.
And third, related to that, focusing on broad-based
projects, technologies that meet both critical national needs
but also are deployable and useable in a number of different
sectors of the economy would be valuable, so those are three
things that we would suggest.
Chairman Gordon. Thank you. I don't want to impose on the
Committee's time any longer. But Mr. Hall, before I yield to
you, let me just quickly say to this panel that your staff has
been very good to work with as we have gone through this bill.
We are going to have several more hearings in a few more months
that are going to be dealing with this. We want to continue to
work with you, and we will probably send you questions, and I
am not going to ask for an answer now but I want one later. Mr.
Engler and Ms. Wince-Smith, you have both talked about the
manufacturing sector, and we are interested in authorizing
comprehensive manufacturing research and development programs
and we would like to see your suggestions on that.
So now, Mr. Hall, I apologize for the overtime and I yield
to you.
Mr. Hall. If you think 20 million jobs in 10 years is
tough, you ought to have 10 questions in just five minutes.
Bear with me.
As recommended in Mr. Donohue's testimony, this Committee
should be, quote, ``vigilant about duplication of funding of
efforts among the Department of Education, the National Science
Foundation, NASA and the Department of Energy and other federal
agencies.'' This was a major concern of ours when this
Committee considered ARPA-E. Likewise, we felt that some of the
STEM programs established within DOE [Department of Energy] are
repetitious of existing programs. I would ask you all to share
with me those programs that you consider to be duplicative in
the current version of COMPETES or may have the potential for
duplication in the reauthorization, and because I don't have
time to get from each of you, I will send each of you that
question and with the chairman's good agreement we will put
those into the record. I will go to the other question that I
have. I am trying to save time.
In 2008, the U.S. trade deficit in high-technology products
was $55 billion, up from $16 billion in 2002. The U.S. trade
balance in high-technology products was last in surplus in
2001. So a portion of this deficit is from U.S. companies that
manufacture overseas and bring the products back to the United
States. Even if we invest in STEM education programs and
attract more professionals into high-technology fields, how do
we encourage companies from taking production outside the
United States other than treat them right when they are here.
Thank you, Governor.
Governor Engler. I will be glad to start on that. There are
several factors in that question. One that many Members of
Congress are now focusing on, the Administration I think is
focused on, is reform of our antiquated export control laws
which have actually cost us high-technology exports in this
country while our allies have been happy to fill the gap, and
we have got Cold War language in the statute and we really
think that while you protect national security, you also need
to recognize that national security ultimately is harmed if we
end up with our manufacturers going out of those lines of
business because they can't compete with the British company or
the Germany company, so that is a factor.
A second is one that Mr. Donohue mentioned is on export
promotion. We think that a lot of this technology in the hands
of small or medium-sized companies, if we looked at exports in
a macro sense, agriculture annually exports what manufacturing
exports each month, so we are roughly 10 to 12 times the size,
yet the agriculture export promotion budget dwarfs the Commerce
Department export promotion budget, so there is an imbalance. I
am happy to support and have an ag background. I am happy to
support agricultural exports but we need to level that up.
Again, that is something that Tom Donohue talked about.
The other factor that I would say in terms of your--and I
think there has been a lot of confusion on the way the tax laws
work but I believe that we today have policies that
inadvertently have resulted in almost disincenting the location
here. In effect, we have chosen not to make the R&D tax credit
permanent. It has now fallen to--it is about the 17th most
useful R&D credit out there in the world today. We were in the
1980s far and away the leaders there. So we are losing that
competition. In addition, there are a number of other
incentives that countries offer that sort of are added on to
that and then when you look at the ability of other countries
to impose in their countries territorial tax structures, we try
to do a worldwide one and in effect punish you if you try to
bring the capital back home. We are in effect creating an
incentive to keep capital offshore and that desperately needs
to be addressed and I think all of that would lead to more
investment at home and additional export opportunities, so that
would be the view of our manufacturers.
Mr. Hall. Governor, that is very great and being specific
on other regulatory barriers that you all see that we can
correct. Anyone else want to address that?
Ms. Wince-Smith. Building on what Governor Engler said, I
want to emphasize the importance of the entire capital cost
structure and the regulatory environment for manufacturing,
taking into consideration that our tremendous standards on
safety and health really are the best in the world, and we want
to maintain those standards. We have a collective set of
permitting and regulation that makes it very hard for some of
the advanced technologies that we don't want to deploy in the
United States to be done here. Product liability is a perfect
example. I mean, if we want to do the R&D for next-generation
batteries, are we going to be able to actually manufacture
these here? I will also give you the example of the flat-panel
display industry. We invented every technology path for
displays in the United States, and we did not make them here,
and a lot of work can go back and show why. It was a
combination. But the rest of the world is creating policies to
attract and keep this manufacturing. In fact, Sweden has a
lower capital cost structure than we do for manufacturing and
we think of the Nordic counties as having one of the highest in
the world.
Mr. Hall. I thank you.
Mr. Castellani, do you have--------
Mr. Castellani. Just two things briefly. One, let me
reemphasize what has been said. We have a tax structure in this
country that acts as a disincentive for U.S. companies to
participate in world-wide markets from a U.S. base. Even
countries like Japan and the United Kingdom last year
recognized that they had to change and did change to a
territorial system. We are uncompetitive with our tax
structure.
Secondly, because of the political environment around trade
and trade agreements, the rest of the world is continuing to
negotiate market opening opportunities for activity from their
countries in other countries while we have not been able to
forward a trade agenda. We need appropriate trade agreements to
be able to invest, to be able to export, to be able to
participate in those economies around the world.
Mr. Hall. I thank you. I think that is all the time I have.
But your answers will got to every Member of Congress because
they are being printed and taken down by--Mr. Donohue, did you
want to say a word or so?
Mr. Donohue. My colleagues have done such a good job on
this, I would just say amen.
Mr. Hall. Thank you. I yield back my time.
Chairman Gordon. Thank you, Mr. Hall.
This Committee is going to do what we can for
competitiveness. I think you are going to have to go by and
have a talk with Ways and Means, though, to take care of those
other issues.
Ms. Fudge, you are recognized for five minutes.
Ms. Fudge. Thank you, Mr. Chairman, and thank all of you
for being here.
My first question is to Ms. Wince-Smith. You mentioned in
your written testimony that Innovate America called for the
creation of regional innovation hotspots. I am very interested
in this concept as I represent a district that has the
potential to do so much. I mean, we have great research
universities, an extensive biotech industry, biomedical
research facilities, NASA Center and STEM high school as well
many other stakeholders. Could you just elaborate for me
briefly on some of the criteria that you would designate a
region as an innovation hotspot?
Ms. Wince-Smith. Thank you. Well, of course, this concept
of regional innovation hotspots has been at the heart of the
Council's work now for many years because people live and work
and innovate in regions. We can set national policies, but the
actual delivery of the goods and services occurs where people
live. Clearly having world-class universities and the network
of community colleges around them are critical to this because
this is where the knowledge and the talent generation occurs.
Then of course, having a set of policies that support
investment and keep investment as part of this menu for the
regional innovation hotspots is also important and the thing I
would emphasize most importantly in regions such as yours where
there is a lot of success and movement is that the different
stakeholders have come together in leadership networks. So if
you have foundations in regions, they are coinvesting around
their particular strengths and assets. If you think of places
like the Midwest, the heartland of our manufacturing, they are
now moving to create the green manufacturing clusters and
ensuring that all of their investments and their skills are
aligned around that. And one of the things we should be proud
of in the United States is that the rest of world does come to
look and see how we have done this in our regions. We need to
take it to the next generation, and many of the things we are
talking about here will be part of that process. Companies stay
and go and invest in places where there is a dynamic economy of
creativity and talent and infrastructure to build on.
Ms. Fudge. Thank you very much. And by the way, I am from
Cleveland, Ohio, so--------
Ms. Wince-Smith. And I am from Akron.
Ms. Fudge. And you did raise something that I would really
like for all of you to respond to, and that is, the question
is, what is the role that community colleges should play in
workforce training. We have sent a lot of money to community
colleges through our stimulus package. We have looked at how we
increase getting students involved. What do you think that role
should be across the country for community colleges?
Governor Engler. Congresswoman, I think that community
colleges have a vital role to play because they are by their
nature regional and by their hiring ability able to bring the
right personnel in quickly when things change or when they are
shifting. I personally think that community colleges need to be
sort of looking down the line. Community colleges over the
years have had visions in their head and they will become a
four-year institution by becoming a college. Well, what they
need to be--they need to look at the 11th and the 12th grades.
I think there is a wasted senior year in a lot of programs for
the non-college-bound and I think there is the possibility in
this country to take the 11th grade and 12th grade, year one,
year two that are the normal associate degree, look at four
years becoming three--that is a big cost savings, really--and
allow for that specialization to come earlier with these young
people choosing because again, back to the point. Everybody
needs to leave prepared either to go to college without needing
remediation or to go to the workplace with something that has
been measured and certified, and we ought to move them more
quickly, and as Deborah indicated, regions have different
characteristics, different industries, and that needs to be
developed. That way there is no cookie-cutter approach. That
needs to be thought through, and that was the whole promise of
WIA [Workforce Investment Act] at one time was to try to do
that and to integrate that, and I think that there is an area--
with Mr. Hall's question about where there is duplication in
the workforce area, they are falling all over each other and we
can sort that out--simplify it, and I actually think that one
of the problems we have got people thinking about workforce is
that the peer pressure to go to college is so great. Well, they
need to also look at all education is pre-work and so how am I
prepared to do some work, and we maybe can make working more
attractive if they can realize I can get a higher income if I
get prepared earlier, and guess what, you can still go to
college. This is America. You can go later if you want to go on
and then get a different kind of degree or you can become a
Ph.D. in physics like Congressman Ehlers.
Ms. Fudge. Thank you.
Mr. Castellani. We would certainly agree that community
colleges have a critical role. If you look at workforce skills
right now, their half-life is becoming increasingly shorter. So
as we have to move our economy and as a people that need to
learn to accept lifelong learning and need to develop what is
going to be critical basic analytical skills for all jobs,
community colleges play a very critical role in that and they
should be looked on to play that role.
Chairman Gordon. Thank you, Ms. Fudge.
Ms. Fudge. Thank you so much. I yield back, Mr. Chairman.
Chairman Gordon. We could have a three-day seminar on this,
it is such an interesting topic, but I will ask our witnesses
to be a little more crisp and we will try to get back on time.
Comrade Rohrabacher, you are recognized for five minutes.
Mr. Rohrabacher. Comrade Rohrabacher? All right. Well,
thank you very much. After what happened in Massachusetts last
night, I understand.
A couple things. First and foremost, when we are talking
about innovation and especially STEM education, et cetera, but
are we not dependent on patent protection for our innovators?
And I can't help but have noticed that the patent legislation
that was passed by this Congress that is now waiting action
over in the Senate has been applauded in India and China as
favoring infringers, especially in the sense that we are trying
to take out triple damages that have some major companies
intentionally infringe on a small inventor. We are trying to
take away that right of having triple damages against that
company. How do you stand on that particular issue, if you
could just very quickly?
Ms. Wince-Smith. I think that protection of intellectual
property is one of our most critical issues and that we have to
be very, very vigilant across every sector: I have many
concerns in that legislation, and indeed the rest of the world,
is going to continue to use our intellectual property as a
building block and this requires change.
Mr. Rohrabacher. And the triple damages, you are not in
favor of taking that out of the current law?
Ms. Wince-Smith. My personal opinion is that taking it out
should be very carefully considered.
Governor Engler. If you are going down the line, I think we
have tried to--we think patent reform is useful but there is
clearly two different philosophies with the tech community on
one hand and they are going to invent it quickly, use it
quickly and move on to the new, new thing. Manufacturing--and I
would include pharmaceuticals and others in there--have much,
much steeper upfront costs and then need a longer time to
recover. That is true with a lot of manufacturing processes and
a lot of--so we are hoping that Congress in its wisdom, and
this has been a debate that has been raging for too many years,
perhaps, is going to be able to divine a way to deal with that
so that we have protections. The other thing we need--------
Mr. Rohrabacher. Before you go on, because we only have a
limited time, let me just note, the electronics industry does
have a different interest in mind but that is against
intellectual property protection. As you were just stating,
they want to move on. They want to use something and move it on
without paying royalties, and they have a different interest
than other major scientific industries. So are you in favor or
opposed to the triple damages?
Governor Engler. We have not supported the effort that
passed the House hoping that there was a way to find a more
effective compromise on this.
Mr. Rohrabacher. Well, specifically about triple damages.
That is what the House is trying to take out. Our bill tried to
take that out.
Governor Engler. I don't--I am not--------
Mr. Rohrabacher. Uncertain?
Governor Engler. I want to check on what I have actually
said before, before I say it again and wrongly.
Mr. Rohrabacher. Okay. Mr. Donohue?
Chairman Gordon. That is good advice for all of us.
Mr. Donohue. Congressman, we have all walked on a tightrope
on this issue. The pressure over in the Senate on some of the
industries not to try and cut a deal with other industries has
been difficult. The bottom line is simple: both groups of
industries can agree on a series of common interests and then
they have some specific interests, and we have got to get
together and put together in this Congress and in this Senate
and with this White House a system that works because we are
being disadvantaged around the world and we need to do it, and
I don't have anything to say about the triple damages because
then I would put myself in the deal about sooner or later the
three of us are going to end up in that deal.
Mr. Rohrabacher. Okay. Well, let us just note again it has
been applauded, what we passed in favor so that whatever
interest the electronics industry has had here to win favor by
them has won applause in China and India while they are just
waiting to be able to have a great chance to infringe upon our
innovators. That is not a way to build trust and to build an
economy.
Mr. Donohue. That I agree with?
Mr. Rohrabacher. Triple damages?
Mr. Donohue. No. I agree that it is not the way to build
trust and to build our economy. We need a piece of legislation.
We need to put the common interests and then the individual
interests into one bill and we need to get it done because we
are losing without it.
Governor Engler. And we need to support a Customs and
Border Patrol that thinks this is part of their job too, which
they at present do not.
Chairman Gordon. Thank you, Mr. Rohrabacher. I think you
got lost on your way to the Judiciary Committee this morning.
Mr. Rohrabacher. Well, I should note, Mr. Chairman, that
when we are talking about innovation, it is a lot wider than
just we need more money here on various bureaucratic research
projects.
Chairman Gordon. Mr. Costello is recognized for five
minutes.
Mr. Costello. Mr. Chairman, thank you, and thank you and
Mr. Hall for your leadership on this issue and for calling this
hearing today.
A question for each one of our witnesses. We often hear
that there is a shortage of highly trained American scientists
and engineers. I wonder what the track record has been from
your member companies in hiring scientists and engineers over
the past few years or let us say the past five years.
Mr. Castellani. We have to divide it between the current
economic situation and, shall we say, normal times. But indeed,
there has been a shortage, lack of critical skills.
Particularly, engineering and scientific skills have been a
problem that our companies have pointed to regularly. Even now
at the height of the recession, unemployment among engineers is
3.9 percent, which would be the envy of any other skill set. So
it remains a problem, particularly in the future as the
workforce that has those skills ages and retires.
Mr. Donohue. Congressman, we will continue to have serious
shortage of skills because the demand curve is going up faster
than the supply curve. The suggestions that have been put in
and implemented in this legislation have started at the bottom,
bringing people along who will eventually get into that curve.
We must continue H-1B and related visas, and we have a new
problem. For years we have brought people to the United States
to train at our universities from countries around the world
and then after they became very skilled we were able to talk
them into staying. We would get them a different visa, they
would go to work in important companies or universities, and
now they want to go home because the extraordinary--for
example, in India, to go home, work for three years for one of
the big companies over there, maybe even one of our companies,
and then they all want to start their own business. It is very,
very hard to keep the people that just a few years ago we were
able to encourage to stay.
Governor Engler. I agree with everything Tom said and would
add to it that the other complicating factor is, it is the
competition for the best talent. It is like the NBA. It is our
basketball league but they will take the best players wherever
they can find them in the world. That is true in science and
engineering, and if we can't find them here or we can't bring
them here or we can't keep them here, then they are going to go
elsewhere, and as Tom testified earlier, 95 percent of the
markets in other places in the world, it is a rare company
today that isn't getting 50, 60, 65 percent of their sales from
foreign sales and so the idea that we will make it all here, we
will invent it all here and sell it all there is not going to
hold up and so we are going to have to, I think, recognize what
are the competitive factors that allow us to make sure we can
develop our own but then keep the best of theirs if we can.
Ms. Wince-Smith. I would just add to that, that in addition
to the science and technology skills, this concept of having an
engineer that is not a commodity engineer is very important for
our competitiveness. While we haven't talked about it here,
ensuring our STEM initiatives should also be coupled in our
education to make sure that our young people have languages,
they understand history, the humanities and the arts because
bringing those things together creates a future worker that is
going to have the creative capacity in the next stage of
innovation. And one place that does this, and I am prejudiced
but I want to share it, is at the U.S. Naval Academy. I think
it is the only place in the country where no matter what your
major is, history, Arabic, whatever, you also end up with a
full engineering degree and that is an incredible set of skills
for going forward in the 21st century economy.
Mr. Costello. I thank you.
Thank you, Mr. Chairman.
Chairman Gordon. Dr. Ehlers is recognized.
Mr. Ehlers. Thank you, Mr. Chairman, and thank you so much
for holding this hearing and I hope we have many more that are
this good. I thank the panel too for their expertise. But I was
reflecting here while I was waiting for my turn to speak. Next
Sunday will mark the 16th year that I have been in this body. I
am the son of a preacher and I inherited his characteristics so
I have been preaching to my colleagues, to the country, to the
world for 16 years precisely the things that you are saying.
Frankly, having you here and saying these things, I feel as
Billy Graham did when he had a successful altar call. You are
really right on target. What is discouraging is that has taken
16 years to reach this point, and even with the America
COMPETES Act. I worked on that issue for a number of years.
Fortunately, it all came together when I managed to convince
the Bush Administration over with Sherry Boehlert and Frank
Wolf at a breakfast meeting in the White House that they take
this on, and the President fortunately was eager to do it and
the America COMPETES Act resulted with a lot of collaboration.
But so much of what you said indicates the problem. Governor
Engler, for example, you mentioned STEM issues, the MEP and so
forth, and your example of agriculture versus manufacturing is
a very important one because I have used an example from that
in all my years of arguing to get more money for MEP, and
strenuous arguing and lots of time and we just managed to keep
it stable, and that is absurd. We have had a cooperative
extensive service in agriculture since about 1860, somewhere in
there. At that time, 80 percent of the workforce was on the
farms and so it made sense to have a very strong activity
there. Today, less than 2 percent is on the farm and we spent
roughly $400 million a year on the Agriculture Cooperative
Extension Service. I don't regret that. I think it is valuable.
But we are spending less than that on the Manufacturing
Extension Partnership, which is the manufacturing cooperative
extension service, and I have been unable to bring that up,
even though I point out less than 2 percent of the workforce is
in agriculture and 14 to 15 percent of the workforce is in
manufacturing. Why haven't we changed that ratio yet in terms
of MEP? And hours and hours of discussion, I convince people
one by one, but it shouldn't be that hard. And if we have as
much support from all the manufacturers and their sector and as
much support from the schools, school boards and faculty as we
have from the four of you, we would be far, far further ahead
in solving this problem.
In the meantime, our country, I am afraid, continues to go
downhill in manufacturing as evidenced during the time I have
been here, particularly the last 10 years. You are right on in
your responses. The chairman and ranking member were right on
in saying what has to be done. The problem is not in this
Committee. At one time it was in the Education and Labor
Committee, and Newt Gingrich, who is one of the most farsighted
individuals I have worked with in the Congress, deliberately
stuck me on the Education Committee to try to resolve that
problem. Again, we made a lot of progress. But somehow you have
to be engaged and your colleagues, and by that, I mean all of
manufacturing have to be engaged with the other Members of
Congress to let them know what is really going on in the world
and what we have to do if we as a Nation are going to survive
and continue to be leaders of the world in research, in
education, in manufacturing, and most people simply don't
realize that. I come from a manufacturing state. A lot of
people in Michigan recognize that. But in many parts of the
country, that is simply not true and so thank you so much for
being here.
I don't really have any questions except one extremely
trivial one for Mr. Castellani, and that is, do you really own
a roundtable?
Mr. Castellani. Indeed we do.
Mr. Ehlers. And is it circular or spherical?
Mr. Castellani. It is circular.
Mr. Ehlers. Then it should work. But thank you very much
for being here and thank you for your testimony.
Chairman Gordon. Thank you, Dr. Ehlers.
Mr. Smith, you will have an opportunity to rebut the
agriculture issues a little bit later, but right now Mr. Wu is
recognized.
Mr. Wu. Thank you very much, Mr. Chairman.
Ms. Wince-Smith, you might be the lead person to address
this inquiry but perhaps the rest of the panel would be
interested also. A couple of organizations, I believe the
Information Technology and Innovation Foundation and Brookings,
have surfaced the idea of taking a systematic look and work in
innovation, perhaps setting up a national innovation foundation
or such organization, not so much to engage in the individual
innovative ideas process but to look at the process overall, to
understand it better and then to advocate for it at local
government, national government and to work with the private
sector on setting up better conditions for innovation where
apparently other nations have been focusing on this process,
and while we have been great innovators in individual ideas, we
are in the process of developing an overall approach which I
believe your organization has been working on for some time
now. Could the panel address whether we can make some gains in
our capacity to innovate by setting up basically an
organization to do for innovation what perhaps NIH [National
institutes of Health] does for the life science enterprise and
other organizations do for other parts of our technology and
science enterprises?
Ms. Wince-Smith. Thank you, Congressman. Well, let me just
start by saying that as we are hearing today, innovation is an
ecosystem that involves everything from the R&D, tax,
regulatory, workforce issues, to manufacturing and national
security. I think the biggest challenge for the United States
both in the government and also in the private sector is that
we don't look at it in the systemic way and we still operate in
stovepipes. Even in the Federal Government--and I served in the
Federal Government myself and it is still going--while we have
committees, we don't really pull together the pieces, so if it
is an antitrust, a product liability issue, just as one
example, that stays in the Justice Department, it is not
brought in at a systemic level, and similarly on trade and
other matters. And so I think one of the first things, which
was a recommendation of the Council's and is in America
COMPETES, in the Federal Government, let us get the White House
to pull together the Cabinet officers to focus on a systemic
innovation policy. In the private sector, the council and our
colleagues around the table, we can all do that together but we
need to connect the dots, and Brookings and other groups are
very wise in talking about this. Whether the foundation is the
optimal mechanism or not. I wouldn't perhaps want to comment as
much, but we need to do this in the Federal Government and we
need to have private-sector groups that also come together to
look at the system of innovation, and that is what our
competitors are doing.
Mr. Wu. Thank you very much. Would anyone else like to
comment?
Governor Engler. I would add this, that what Deborah Wince-
Smith said about an ecosystem is really important, and I think
markets are beautiful things. I think they drive the dollars
where they need to be, but I worry that--take nuclear power,
for example. That is all our technology and it is being
implemented around the world. There is a great need for
reprocessing, waste minimization there. Other countries have
stepped way ahead because we backed way off. Clearly, I think
envisioning a low-carbon future, nuclear power has got a big
role to play but we haven't let that go forward. Medical tools
and devices, we were talking earlier. I look at that. We are
clearly the world leaders. In every other nation where there
might be a department of innovation, they would probably be
really promoting that, how can we grow that industry? We are
debating whether or not there should be several hundred million
dollars in new taxes applied to that as opposed to what the
export strategy might be to grow our dominance. So I am not
sure centralizing it is the answer but I do think that the
right incentives where we want to be, and I think one thing
that has been done well here is battery technology. Congressman
Peters knows. Right in his own district there has been
significant investments there to try to catch up. There are
some really big things where I think the Federal Government
through the old DARPA [Defense Advanced Research Projects
Agency] programs, you know, under defense or much of, you know,
science programs through universities, those are great, but
whether we centralize it or not, I would be a skeptic
preferring maybe the markets to work.
Mr. Wu. Well, I don't think the concept is a centralizing
one so much as to try to understand it and promote it
elsewhere.
Chairman Gordon. Thank you, Mr. Wu.
Ms. Biggert is recognized for five minutes.
Ms. Biggert. Thank you, Mr. Chairman.
There is so much I want to ask but I don't have time so I
am going to try get as much in, but thank you all. I have a
great district and I have a district that really has a lot of
development, a lot of innovation and creativity and companies
and a lot of these are startup companies and they will come in
and say they have this great concept. They maybe have a
demonstration program but they need help and they need help in
funding, and particularly in this economy where there isn't the
venture capital available and so they come in and say what can
you do. Well, they are in what we call the valley of death.
They are in between demonstration and commercialization so
investors don't want to take a chance, that is this really
going to go or not. Is there anything--you know, we talk about
the America COMPETES, ARPA-E is a possibility. We have got a
couple of them we have sent to DOE and actually DARPA has been
available for them. Is there anything that you could recommend
that should go into the America COMPETES Act that would help as
far as that investment or what to do within the private sector?
We are missing so many, you know, really great concepts that
take so long to develop that we could be using right now.
Ms. Wince-Smith. I would just add one that is very
important, and some states are doing this, and I don't know if
it is across the board yet in the Federal Government, but that
is, extending the Small Business Innovation Research [SBIR]
provisions beyond stage two into stage three that takes a
company farther in to the commercial prototype demonstration
phase. I remember years ago when the Japanese were investing in
our startups. They used to say let us look for those companies
that have SBIR phase one and two because they don't have the
capital to go to the next phase, we will come in and swoop up
that innovation. Let us invest farther along on SBIR, and that
is something that the federal agencies could contribute to.
Mr. Donohue. You know, that is exactly how private equity
people look at sound investments. You are exactly right. This
is a valley where it is hard to get capital and funding and
there are all sorts of people with great ideas. One caution I
would make to the Members of Congress, while it looks like a
wonderful idea to go out in need of money and drive up the
taxes on individuals, that is where the greatest amount of
investment capital comes for startups. You know, if you go talk
to people that are entrepreneurs and say ``how did you get
started?'' they didn't do it in a bank. The banks lend money to
people that have money. That is the way the structure is. So we
have got to be very careful that we keep individuals in a
position to support innovation and to support folks they know,
and then of course, the second place for money is from larger
companies who find this as a great place for their own research
and development and it is often cheaper for them to buy it than
it is for them to develop it.
Mr. Castellani. One of the things the Chairman mentioned
before the hearing began is something that I think this
Committee can look at and certainly is within the purview of
this Committee, other things are outside, obviously the tax
code and some other support programs, but one of the
difficulties that we see in this area is making the connection
between those who develop the technologies and those who could
see an application for those technologies, and finding a way to
protect the intellectual property but get more information out
more broadly to both potential users and investors about what
technologies and their attributes might be available, what
their time horizons are, what it would cost, what their
advantages are, is something more of a national exchange
opportunity and something that would benefit those companies.
Governor Engler. I would just add a couple quick things. I
mean, that is what the R&D credit in part was for, and probably
this is where your capital gains treatment and some type of
accelerated write-offs so you can encourage investor pools.
There is private capital out there. I think we need to try to
make this more attractive. Again, I am not sure that I would
trust an agency to do the selecting there. States will do it if
they view it as critical sometimes to existing but those are
very limited funds and so I--it is 11:30, Mr. Chairman. I need
to step out and make a quick call. I will come back and rejoin
if you are still in session. I don't know long it will be.
Chairman Gordon. Thank you, Ms. Biggert. I will point out
that the old ATP [Advanced Technology Program] program was a
vehicle for that and that has been changed now and it is called
the TIP [Technology Innovation Program] program, and it will be
a part of this authorization.
Another thing that we mentioned earlier about how there
will be a fair around the ARPA-E-type proposals. The problem
with bringing private-sector dollars in, and we are really
looking at that, is obviously they want to come at different
levels, venture capital at one place, private equity another
place, but that is--we will have some hearings on that, how we
bring more private-sector dollars in.
Mr. Peters, you are recognized for five minutes.
Mr. Peters. Thank you, Mr. Chairman. It is too bad Governor
Engler had to step out because I actually had a couple of
questions related to MEP. Bad timing there, but we will have an
opportunity to follow up.
I just want to concur with my colleague, Congressman
Ehlers, on the Manufacturing Extension Partnership and how
important that is, and for the panelists, we have actually
introduced some legislation together, both Congressman Ehlers
and myself, dealing with the funding issues related to MEP. As
you know, the states have been stressed, particularly our State
of Michigan. It is a critical program for us in that State to
help our small manufacturers as we continue to hemorrhage
manufacturing jobs, and the bill changes some of the
contributions. Right now two-thirds of the contribution for MEP
comes from states and yet those states that are hit the very
hardest and need the services of the MEP are having difficulty
coming up with those matching funds. It would change that to a
50/50 match, which would allow these critical programs to
continue and certainly hope that your organizations would be
supportive of that effort and are supportive of MEP. I assume
in addition to Governor Engler, all three of you are also very
supportive of MEP? All are nodding, so for the record, please
reflect that all three are nodding in strong support for the
program and will continue to move.
Chairman Gordon. And Mr. Peters, we will be reauthorizing
MEP in the COMPETES bill.
Mr. Peters. Right.
Chairman Gordon. And we will be having hearings to see how
it can be fine-tuned for what we might call the 21st century in
contrast to when it was originally authorized.
Mr. Peters. Great. Thank you, Mr. Chairman.
I want to ask a little broader question of all three there,
and we have had some discussions, and Ms. Wince-Smith has
addressed this as well, but kind of get your reaction to R&D
investments generally and whether or not government investments
in research and development are going to have the same kind of
impact that we have seen in the past. Certainly as we are
talking about globalization, technology transfer is extremely
rapid, and as soon as technology is developed in one place in
innovation, it is quickly picked up somewhere else in the world
due to other cost structures that exist--labor, technology,
regulations, things that you have brought up. How should we be
thinking as COMPETES Act, how effective will this be given that
kind of rapid transfer and do we need to be really talking
about manufacturing policy in total in addition to COMPETES
because we are simply not going to get the same kind of bang
for our dollar as we have done in the past. What should we be
thinking about?
Ms. Wince-Smith. I think, Congressman, you just stated in
your last comment very much we have to think of a national
manufacturing strategy that encompasses all the things in
COMPETES but also takes us into some of these other spheres
that relate to capital cost structures, regulatory environment,
exports and trade and look at that as something that is
systemic. But in terms of R&D, we must invest in R&D, we must
invest in the frontiers and we must link the private sector to
these tremendous investments in the frontiers of knowledge.
Mr. Donohue. I believe that government gets a significant
return on the frontier investments. I mean, going to the moon,
running the space shuttle, very forward-thinking activities at
NIH, those kinds of investments are fundamental.
The second thing that I would comment briefly on, you are
exactly right that as soon as we come up with an innovation,
everybody all over the world is trying to figure out a way if
not to borrow it, to use it as a leader for their own
innovation. But Americans are beginning to be able to look
around the world now and find things as well that they are able
to inculcate into their businesses and their processes.
The third point I would make while we are talking about
manufacturing, the often overlooked competitive issues here are
supply chain, are transportation, are all of the technology and
software around that. The greatest increase--one of the great
increases in productivity in this country came during the
Clinton Administration when we put together information
technology and supply chain management, and it is one of the
things that keeps us somewhat competitive in the manufacturing
area, even though as the governor indicated, we have serious
disadvantages in tax policy and regulatory policy. You know,
competition drives innovation. Regulation stifles innovation.
Now, we need regulation for safety and all of that but we have
to be very, very careful when we are looking at competing
around the world that, you know, it is always a great idea to
start a new group, but let us go back and look at what we do to
help the process or to hurt the process, and you can change a
lot of things by simply getting rid of the hurt and maximizing
the help.
Mr. Castellani. Two quick comments. One, focusing on those
technologies that are broadly applicable within the economy is
key. That way you don't have to pick winners and losers,
although the normal process of development will produce more
losers than winners. Secondly, as important as the
manufacturing sector is, and it is very important as high-
value-added activity, these technologies and these activities
also have beneficial impact within the services sector, within
the transportation sector, within the hospitality sector. Tom
mentioned one that has been the single biggest driver of
productivity improvement in this country over the last 10
years, and that has been information technology.
Chairman Gordon. Thank you, and Mr. McCaul is recognized
for five minutes.
Mr. McCaul. Thank you, Mr. Chairman. I, as you know,
supported this, the COMPETES Act. It was really a response to
the ``Rising Above the Gathering Storm'' report, which was a
bit of an eye opener, and I support the idea of federal
investments in R&D and public-private partnerships with
universities. Certainly NASA, close to my district, has been a
beneficiary of this. NIH has done a fantastic job. But I want
to follow up on Mr. Donohue's comments.
You know, the President signed a stimulus bill into law. It
is about 5.4 percent of our GDP. Unemployment has gone up over
10 percent. The federal debt is above $12 trillion. And there
comes a point where we get overleveraged in the Federal
Government. Any private-sector business that overleveraged
wouldn't be able to stay in business. And I think there is a
healthy balance between the federal investment of dollars and
public-private partnerships versus what we can do at the
federal level to incentivize the private sector, and I think
that is the philosophical debate we are having in the Congress
right now. And so in terms of job creation, because both sides,
we want the same thing, both Democratic and Republican. We want
the economy to rebound. We want to create more jobs and good
jobs in the United States and so with all of your experience in
the private sector in the business world and for the panel as
well, I would be interested in your take on this balance, if
you will, that we have to provide up here in the Congress.
Mr. Donohue. Congressman, if I might just comment a minute
about this. There is no question that the federal deficit is a
serious matter, growing and compounded in a significant way, a
lot of it being driven by programs that are entitlements that
just grow themselves and these are serious matters. It is not a
Democrat or Republican issue. So everybody says we ought to
deal with that but trying to deal with that issue without first
dealing with the questions of employment, as you indicated, is
counterproductive because you are just going to keep driving up
federal support programs. So our issue here is to say here is a
plan to create jobs. Hopefully as we go forward, we will be
careful not to be adding unnecessary federal spending, and as
the economy grows we are going to be in a much better shape to
attack this deficit. You ask a fundamental question: when can
the government--when should the government stop investing in
significant ways and hope the private sector will take a larger
role. And I think if you look at the suggestions of expanding
trade, expanding infrastructure, being very, very careful on
our re-regulation of the capital markets that we could move
efficiently in that direction. There is one crippling issue
keeping us from creating more private-sector jobs: it is
uncertainty, uncertainty about what tax policy is what going to
be, uncertainty about health care policy, uncertainty about
climate policy, and if I walked into John's office when he was
back in the private sector and said let us create 500 new jobs,
he would throw me out because he would say I am uncertain about
this, I am uncertain about that; until I get some amount of
certainty, I am going to keep my cash in my jeans and I am
going to hold off.
Mr. McCaul. I couldn't agree with you more. I think the
uncertainty here in Washington with a lot of the policies
coming out is that uncertainly is keeping a lot of capital on
the sidelines and not investing in the private sector. Any of
the other two witnesses like to comment?
Mr. Castellani. One of the things--I mean, certainly I
agree with what Tom said, although I never wore jeans to the
office. The uncertainty is certainly a big part of it.
Obviously there is a role for the government. The government
needs to do those things that the private sector cannot do, and
a lot of what is in the America COMPETES Act are things that
the private sector cannot do without government help. But one
of the things that we face day in and day out in terms of
making decisions on where to invest and in what to invest is
the needs of our shareholders, and that is, getting them a fair
return for the money that they have given us to be stewards of.
The United States is suffering from what we all recognize, and
that is that we have the second highest corporate tax rate in
the industrialized world. That has an effect. We have a tax
structure that disincentivizes exports and participation in an
international marketplace where 95 percent of the world lives.
That has an effect. We have a start and stop incentive system
for research and development where other countries in the world
do not have it. That has an effect. All of those things have an
effect on where the capital goes. Our shareholders are not
nationalistic. They want a return for their investment. Our
obligation is to give them that return and so addressing those
fundamental issues is as fundamental to being able to be
competitive as what you are talking about in the America
COMPETES Act.
Chairman Gordon. Thank you, Mr. McCaul.
Mr. Donohue. And John, you would say you have global
shareholders.
Mr. Castellani. Absolutely.
Chairman Gordon. And thank you, Mr. McCaul.
With no objection, we are going to move forward with those
Members that haven't had a first question. If there is a
request for a second question, later we will do that. I am also
going to request that Members try to hold their questions to
about three minutes so that we can try to get through everyone,
and that will encourage you to get here earlier next time.
Mr. Matheson, you are recognized.
Mr. Matheson. Thank you, Mr. Chairman.
You know, one of the issues that is interesting is, we look
at the government role in promoting research and development of
new technologies, and after that we want to figure out a way to
transfer those technologies so the private sector runs with it.
And there has been a lot of talk about technology transfer for
decades in this town, and over 30 years ago we had Bayh-Dole
and Stevenson-Wilder, for example, that tried to pursue this
goal. I am curious what your assessment is of how our
technology transfer regimen that we have got today works in
terms of getting these technologies out to the private sector
and how it actually manifests itself and what the ultimate goal
is we are trying to achieve, which is not just doing research
here but actually creating jobs in America.
Ms. Wince-Smith. I will comment on that. Certainly, you
know, with the creation of Bayh-Dole and the whole legislative
framework, we again led the world in these new public-private
partnerships to capitalize on the R&D invested by the taxpayer.
Intellectual property issues have become a challenge in that
rather than making the intellectual property a baseline for
establishing these partnerships, they often become the hurdle
and slows up the process, and that is something that across the
board I think the community would say is an issue.
The other challenge we are seeing in different parts of the
country with our national labs and universities is how they
bring companies and partners in from the beginning to work with
them, as opposed to waiting until you throw something over the
fence which has emerged as the best practice to create the
strategic R&D partnerships such as ARPA-E is going to do as
opposed to treating this as a linear sequential process.
Certainly, U.S. companies and chief technology officers in the
Council on Competitiveness are very committed to working on
this very topic, and we have formed a working group under our
Technology Leadership and Strategy Initiative to address that,
and would like to report back to this Committee on our
findings.
Mr. Donohue. I just have one very quick comment. There
isn't a bright line between the government and the private
sector. When a government agency whether it is NASA or it is
the military or whoever it happens to be, NIH, standards,
bureaus, others, when they are doing the work that is being
pushed by the money that is used in the government, they are
doing it in partnership with the private sector. They are
already transferring technology and know-how by the people they
contract with to get this work. The perfect world wouldn't have
the obstructions we have but in the perfect would we wouldn't
have so many lawyers, except in the Congress.
Chairman Gordon. Thank you, Mr. Matheson.
Now we have a real live small-business owner, Ms.
Dahlkemper.
Ms. Dahlkemper. Thank you very much, Mr. Chairman. I was
hoping to have Governor Engler here. I appreciate his
mentioning my cosponsorship of the AMERICA Works bill, which I
think is a great piece of legislation. In his testimony, he
mentioned the need to ensure that STEM education spurs the
interest of students in manufacturing careers, so I guess I
just want to ask the three of you, because I agree with this,
but how do we build that bridge between the STEM classroom to a
career choice in manufacturing and innovation, some concrete
ways if you could give us some suggestions how we can make that
environment.
Mr. Castellani. One of the things that we have found that
has worked very well is where there is real-world examples on
how those disciplines can be applied to something that is
exciting. You want to capture the imagination of a young person
in college. That is how I ended up going into the sciences. I
got psyched by looking at some of the research that was being
done down the road in Schenectady, New York, and that got me
very excited about it. It is role models. I mean, clearly young
people want to see people who are successful in those fields.
They want to see things that are exciting in those fields. Some
of the best programs that have worked is where promising
students at the high school level are mentored, are given
internships in research labs, in manufacturing facilities, in
businesses so they get excited about it and they see people
like them, which is one of the most difficult things that we
face in what has been unfortunately male-dominated disciplines.
We need young ladies to see women who are successful in the
STEM disciplines. We need minorities to see minorities that are
successful in the STEM disciplines and are excited about it.
Those programs tend to work best where they have a real-life
example of something that is cool, quite frankly.
Ms. Dahlkemper. Do you think we need to do more on the high
school level? Because I wonder, you know, how many of our------
------
Mr. Castellani. Absolutely. If you don't capture them at
the high school level--you know, there is an institute, the
Committee for Excellence in Education, that looks at the other
end of the spectrum, which takes the brightest high school
students and does everything you can to encourage them to be in
the STEM disciplines, and what they found that worked best is
getting them associated with a lab, with a research facility,
with a manufacturer, with a business, with scientists, with
engineers in high school so that they are excited about that as
something to pursue.
Ms. Dahlkemper. Mr. Donohue?
Mr. Donohue. You know, this is also a cultural issue. After
the second World War and the Korean War, there was this
tremendous, you know, Sputnik and then go to the moon and there
was this massive effort for people to go into engineering. It
was the way to a better life and to a great job. Well, we have
matured. I will use that world. And now it is hard in high
schools, in many high schools to convince people they ought to
put all their time and energy into the most complicated
subjects. It has--for a while it was hard to have people see a
great career there but there is a resurgence of demand and of
need. The computer, the tech revolution got that started.
People saw that as a way. I think demand and need have a great
deal to do to show people where they can do well and where they
can do things that they can achieve, not only on a personal
basis but a financial basis and there needs to be some of that
cultural goings-on. That is what John was talking about. What
happened to him, he was in college. He went down the street----
--------
Mr. Castellani. Actually high school.
Mr. Donohue. Well, in high school. Good. He went down the
street and he got motivated, and he wasn't only motivated
because of what he saw, he was motivated because of what people
convinced him he could do. I think there is a soft-goods part
of this that is as essential as the actual teaching--------
Ms. Dahlkemper. My time is almost up. Is there a connection
with business in this?
Mr. Castellani. Absolutely.
Mr. Donohue. Of course.
Ms. Dahlkemper. And Ms. Wince-Smith, I will give you my
last two seconds here.
Ms. Wince-Smith. Well, just building on my colleagues, the
Japanese used to say manufacturing is not dirty, dumb,
dangerous and disappearing, but that is what we think in our
country in many cases, and I like your idea of bringing this to
high schools and providing opportunities for young people to
actually go into manufacturing operations because the modern
ones are extremely high-tech and exciting. I mean, how many
have been in a clean room, for instance? And that is something
we could all do in our communities and it is something that
would have a big cultural shift.
Ms. Dahlkemper. Thank you very much.
Chairman Gordon. Thank you, Ms. Dahlkemper.
Governor Garamendi, you are recognized for three minutes.
Mr. Garamendi. I thank you very much, Mr. Chairman, and to
this Committee, it is a great pleasure to be here and
particularly to be listening to this particular discussion, the
COMPETES Act and the work that it has done and the good that it
has done.
My question really goes to the preparation of these skills,
and I am going to go back to California issues and ask the
witnesses a specific question, but first let me set the stage
here. California universities, the state universities of
California, are in serious financial trouble as are many of the
universities across the Nation, particularly the public
universities. In California last year and this year, 40,000
students are not able to enter for lack of money to fund the
universities. So my question to you is, what can be done about
that? All of the talk is good but if there is no money, there
is no action, and are your organizations willing to have the
tax increases necessarily? Specifically, University of
California is short $1 billion. The state university is short
$1 billion. That is two-tenths, together two-tenths of one
percent of the state's economy to find that $2 billion. What is
your view on raising taxes to fund higher education?
Mr. Donohue. I got the short straw. Just three quick
things. Number one, yes, there are those serious problems in
California as well as in other states, and what we are seeing,
and I was going to make the point before when we were talking
about the community colleges, more and more people--and this is
another pressure on the community colleges--are going to the
community colleges for the first two years and families find
that they can afford that and then might be able along with
some federal and state help to get into the universities for
the last two years. Now, this creates a problem for the
universities because, you know, they sort of make money on the
first couple of years where they don't make it on the back
years. To the question, would we increase taxes, my view is,
first of all, California has a hell of a lot of problems that
haven't got anything to do with the education system.
Mr. Garamendi. No, in fact, they do because more than half
the budget is education.
Mr. Donohue. Well, that is--I am thinking about the college
education system. I would agree with you because when you teach
in the California system and you can retire at 51 years of age
at half pay and full medical, whatever the exact numerics are,
you have got real serious issues. My deal is, you know, I
always thought the issue by saying what don't we have to spend
and then how do we get additional revenue and how does that
come, some of it should be from the students, some of it should
be from the community, some of it from contributions because
there are major efforts there, and then if you are down to
taxes, that is up to the community. Would I support them? Wait
until they are proposed. Now, I mean, look, our deal is
everybody, everybody has got a new tax. The President has a
whole set of new taxes. All the states have new taxes. All the
states, particularly the big states are coming to the Federal
Government for money. If you buy everybody's proposal on a tax,
we are going to be in serious problems. We need to look at it
in totality. We need to do what we need to make this country
work. But by the way, we can spend money like nobody you ever
saw.
Chairman Gordon. Does any other witness want to address
that quickly?
Mr. Castellani. Just very quickly. I mean, business has
always been willing to invest in things that pay off but before
that investment comes, we have to make sure that we are
operating efficiently, and even in the higher education system
there are opportunities to overhaul the delivery system through
greater use of technology. You know, I have the honor of
serving on the board of trustees in my alma mater in
Schenectady, Mr. Tonko, and the inefficiencies that we apply in
the higher education structure, to be very blunt about it,
would be unsustainable in the private sector. So we need to do
a better job of doing that. Then if that is done and we need to
invest more, then, yes, we always support those investments if
they will pay off.
Chairman Gordon. I think it is appropriate now that we go
to a professor, a university professor, Dr. Lipinski.
Mr. Lipinski. Thank you, Chairman Gordon. Yes, I was a
professor of political science but before that I was an
engineer, so Mr. Donohue, I would say yes, we do need to have
fewer lawyers in Congress and probably some more scientists and
engineers. One thing I agree with you, Mr. Donohue, is on the
multi-year highway funding bill. Definitely, we need to do
that.
So I think the one thing, since we have limited time here,
I want to focus on is sort of playing off of what Mrs.
Dahlkemper had said earlier talking about what business can do
in partnering, in helping out with STEM education. In my
subcommittee, Research and Science Education, we have had a
couple of hearings on informal science education, and I think
this is an area where it is important also for businesses to
get involved. We saw some of the best informal education taking
place where business would get together, say, with a science
museum or many other ways that they can get together with other
organizations to promote informal science education. As you
probably know, a couple weeks ago President Obama announced the
Educate to Innovate campaign, which highlighted over $250
million in private-sector STEM education partnerships. These
involve universities, large corporations, foundations and
nonprofits and government agencies. Now, is there anything more
that you think the Federal Government should be doing to be an
effective collaborator in these partnerships or to better
support private-sector STEM education initiatives, especially
in informal education? Whoever wants to start out here.
Ms. Wince-Smith. One innovative model that is emerging is
that many companies are creating summer STEM camps in their
regions and cities to bring in 7th, 8th graders, women and
minorities across the board to be exposed to math and science
through project-based learning, and, you know, just as
companies often sponsor a school, doing these STEM summer camps
or something, that is a really exciting private-sector
initiative across the country.
Mr. Lipinski. And how can government in general--as we move
on here, how can government be involved in this? Mr.
Castellani, Mr. Donohue, do you have any--------
Mr. Castellani. Well, one of the things that I think
government ought to consider because it does a lot of this good
work also, whether it be at NASA or the national labs is doing
the kinds of things that are being pioneered in the private
sector. Deborah mentioned a STEM camp but also highlighting the
technology. I think Tom mentioned earlier and it was one of the
reasons I went into the sciences, I mean in the 1950s and the
1960s--I am giving away my age, 50s--the excitement of the
Space Race was what stimulated a lot of people. A lot of what
is done in government, particularly in the science areas, not
just within the Department of Defense but outside of it, NIH,
NASA, the national labs, is something that should be looked at
as being like what the private sector does, a stimulation,
excitement, a point of excitement to get young people
interested in, highlight it more, participate more in it.
Chairman Gordon. Thank you, Dr. Lipinski.
I don't want to take time now, but many of those things you
are advocating are in this bill, whether it be through the
national labs, in a variety of different ways, and so--but we
want to continue to do better.
Now Mr. Lujan, you are recognized for three minutes.
Mr. Lujan. Thank you, Mr. Chairman, and I really appreciate
you bringing this hearing, Mr. Chairman, because as we talk
about moving forward and spurring economic opportunity and
realizing where we have fallen further and further behind in
this country, the lack of our ability to get more students in
engineering fields and science fields, the creativity, the
innovation, the problem solvers that are going to be key to
moving us ahead and keeping us ahead are all important policy
decisions we have to make and I certainly hope that as we
embark upon education reform later on this year that we have an
emphasis in creativity, making sure that we are educating
problem solvers and that we have a structure that looks like
that.
Now, with that being said, with the commitment that it
sounds like we all have with creating a systemic innovation
policy and moving forward along those lines, and looking to
investments that we have made, national treasures in our
national laboratories--I come from a state and a district that
has one. We have two NNSA [National Nuclear Security
Administration] laboratories in New Mexico, Sandia National
Labs, Los Alamos National Labs. We have Whit Sands with NASA
down in southern New Mexico. And to truly see how we can bridge
those opportunities with tech transfer, making sure that we are
bringing our universities in and we are looking to our national
laboratories to create those public-private collaboratives and
partnerships, the investment that is required for the R&D to
allow for that modeling, to allow for the simulation to get
into the hands of the private sector all sound like things that
we agree upon. It sounds like we have support from all business
entities, from those of you that are responsible for making
sure that we are sometimes representing interests that
sometimes compete with one another. But this is certainly an
issue that we all can agree upon.
And just to hear quickly from you, from a tech transfer
perspective with the problems that you hear from companies that
are working with laboratories to get the modeling and
simulation in their hands, ideas that you may have on what we
can do eliminate some of those barriers, bring that forward and
build upon that, and Mr. Chairman, I know we are out of time so
I would like to also make these questions for the record, and
also to hear your thoughts--New Mexico with Los Alamos National
Laboratories, a program has been created where our scientists,
engineers and researchers are working with local school
districts and teachers, teaching teachers, if you will,
bringing them in and then getting those programs back into the
school districts. The school districts that have been
beneficiaries of these programs have seen their math scores
increase dramatically through the roof, again, teaching kids
how to be problem solvers, and I certainly hope, Mr. Chairman,
that as we build upon all that COMPETES has to offer, which it
is in there, that we look to see how we can incorporate these
other ideas and programs that are working and make the
investments necessary and truly see the partnership that can
come from the government, from the public sector and working
collaboratively with our private sector and with our education
system to get us moving ahead. Thank you, Mr. Chairman.
Chairman Gordon. Thank you, Mr. Lujan. You know, really the
basis of much of the COMPETES Act was not trying to create new
programs but rather it was to look at the National Science
Foundation and elsewhere, what are the programs that are
working and scale those out, so that really was the foundation
of this.
Mr. Tonko is recognized for three minutes.
Mr. Tonko. Thank you, Mr. Chair. First, let me thank John
Castellani for a couple of shout-outs for Schenectady, New
York. I know we appreciate that, and I appreciate the panel and
their input today.
Let me frame my question first with a couple of comments I
heard a couple times over from the panel: uncertainty. I
couldn't agree with you more. The certainty is a major factor,
but the certainty of an American clean energy opportunity here
in this House was passed and we are still fighting the science
of having to have a clean energy economy. I don't know how we
resolve that. And then also when you speak, Mr. Donohue, about
the global space race, we have a global race that we are
supposed to be entering now because if we don't, we are going
to be letting down generations of American workers. We are
still struggling with that issue here. I don't know what it
takes. Maybe more engineers in the process. My question is
about the role of the clean energy economy. Do you see that
bearing great relevance? Is it growing more important as a
sector of our economy? And will government funds be required,
at least in the short term, to advance that effort?
Mr. Donohue. Two points about the clean energy economy.
First of all, there are great opportunities there to create
jobs through advanced science and to engage people in the
process, a significant expansion of the clean coal efforts that
people are engaged in on a scientific basis and carbon capture,
the issues of nuclear power whereas Governor Engler indicated
we have let a lot of that capacity go elsewhere. We now have 26
potential sites there. We can get a lot of money for that. It
won't have to come from the government, a little backstop, but
you are going to have to assure that after I build it, I can
open it and not be stopped by 30 environmental lawsuits because
otherwise you are not going to get any money to do that. There
are all sorts of issues in a green economy that will create
jobs.
There is one other thing to understand, though. if I buy a
green refrigerator, I am not going to buy the other
refrigerator I was going to buy, so there is some activities
that are significant increases in economic activity, some that
are substitutes, and one also has to understand that much of
the green economy to date has depended on a good deal of
federal subsidies or incentives, particularly in alternate
fuels and so on. We are going to have to work our way through
this, and it is a long way from start to finish. There are
clear benefits if we can rally around it. At the same time, we
have to be careful. One of the major issues with the bill that
came out of the House, it starts a global trade war, you know,
by saying that all we have to do is decide we don't like this
country or that country's environmental position and we can put
taxes on the products they sell in the United States. We need
to take a broader look at these issues. We want a domestic bill
and we want a global bill but we want one that keeps people
working, that uses technology that we have a lot of engagement
in, and that is global in nature. We have got to get people
around the world involved. If we don't, we're not taking
advantage of it.
Chairman Gordon. Mr. Castellani, do you want to briefly
comment?
Mr. Castellani. Yes. In my written testimony, and I am
sorry I didn't have time to bring it in the oral testimony,
last year we convened a large number of our CEOs to address the
issue of what do we do about global climate change, and they
divided themselves up into technology sectors and pathways, and
our report, the Balancing Act: Climate Change, Energy Security
and the U.S. economy, highlights exactly what you are talking
about, and that is, irrespective of your position on the regime
that is going to be necessary, any regime is going to require
substantial investment in technologies, and if we do it smart
and we do the whole array of technologies, we can minimize the
impact on the economy. So it is absolutely vital to the United
States, to this country and to the world for two reasons, the
two very important reasons. One, is to have the energy to
continue to drive our economy. The other, is to be responsible
in alleviating global climate change and global warning.
Mr. Tonko. And perhaps even drive our own energy security.
Chairman Gordon. And if you have something compelling to
say, Ms. Smith?
Ms. Wince-Smith. I would just say that the clean energy
revolution, in addition to energy security and climate, is
going to drive how things are made, and that is a tremendous
opportunity that needs to be embedded in our manufacturing
initiative.
Chairman Gordon. Mr. Carnahan, thank you for your patience,
and you are recognized for three minutes.
Mr. Carnahan. Thank you, Mr. Chairman.
I thank the panel for being a part of this great national
conversation to move us forward. I am from St. Louis and we
have got a great science infrastructure there from great
companies, great institutions of higher education, and we have
seen kind of a tale of two different industries there in terms
of innovation. Aviation industry based there has been right on
the cutting edge of innovation. Not only do they produce great
products for our country but also opened up a lot of markets
overseas whereas the auto industry, we have seen the auto
industry to be slow to innovate. I think they are coming around
but they have been slow and lost a lot of markets overseas. So
we also have seen really a disconnect between those great
companies and institutions of higher education with some of our
K-12 education has not been producing, you know, that new
generation, hasn't been capturing them early enough and our
companies are beginning to see that connection, and many are
partnering. So really I am pleased to see some efforts there in
terms of partnering companies directly with our schools. But I
really think, you know, we have seen innovation, you know, the
estimates are about half the economic growth in our country
from World War II to present was from innovation in new
technology. I think we have got to get back to these basics of
making things again, and making things that matter, new
innovative products that attract people that want to be
involved, that can grow jobs here at home but also grow markets
around the world, and I think it is certainly key in the energy
sector, and also keeping that talent pool here and attracting
the best talent from all over the world. I appreciate what you
said earlier about that.
One of the ideas that has been put out by Craig Nassey with
NIST, he has advocated for establishment of a coordinated
national innovation policy infrastructure, that he has said the
United States is the only major industrialized nation without
an institutionalized science, technology, innovation and
diffusion policy development and management infrastructure and
that such concepts as a national innovation foundation that
have been jointly proposed by Brookings and the ITIF
[Information Technology and Innovation Foundation] have not
received enough attention in terms of our policy development. I
guess I wanted to ask the panel, how do you see that kind of a
coordinated national effort really going forward from here?
Ms. Wince-Smith. I would just reiterate, Congressman, that
the White House needs to take--------
Chairman Gordon. Your microphone.
Ms. Wince-Smith. Excuse me. The White House should take the
leadership to do this; take cross-agency coordination for a
national innovation strategy, and I think they are making
progress, and the private sector and the groups at the table
today; we all work very closely and look forward to working on
that issue.
Mr. Carnahan. Thank you.
Mr. Donohue. Coordination is essential to maximizing
investment and competition is absolutely essential to creating
the products that make us a leader around the world, and
coordination and competition occasionally bump into each other.
Mr. Carnahan. Very diplomatically said.
Mr. Castellani. Just like we had in this country for a long
time looked at the comprehensive environmental impact of
everything that we do from a policy standpoint, it is vitally
important to look at the impact on economic activity on the
different policy initiatives that we bring on the innovation
process and our ability to compete and to win, quite frankly,
so that is a very important concept.
Chairman Gordon. Thank you, Mr. Carnahan.
Mr. Carnahan. Thank you.
Chairman Gordon. Mr. Rohrabacher, do you have some
concluding wisdom for us?
Mr. Rohrabacher. Well, thank you very much, Mr. Chairman. I
want to thank you for your leadership in holding this hearing
and I want to thank the witnesses. This has been a very
valuable exchange of ideas. Just for the record, I am going to
throw out some things that weren't covered just so people can
know that that was part of the discussion, even though it is
right here at the end. My belief is that policies that lower
the compensation for those people, especially young people, who
go into the sciences, technology and engineering eventually
work against us by discouraging high-quality people from
getting into these areas, so I imagine you would all agree with
that.
Let me just throw out for the record, Mr. Chairman, H1B
visas bring down wages. H1B visas, I have had people in my
district come to me and give lots of examples where businessmen
are telling them to take a lower wage because they can get some
H1B visa person from India to do the job. This is not good for
encouraging more young people and other people to get into the
professions of engineering. We need to drive up the wages for
people who are engineers and scientists rather than bring them
down, and one of the most effective is, we talked about
education, but again, let us bring the wages up of people who
are involved in this. There is never a mention in education of
paying teachers who teach math and science more money than
people who teach poetry and physical education, and that would
have a tremendous impact on our students by bringing higher-
quality teachers because you are paying them more money. More
pay will get you higher quality and better people involved.
And last, when we are talking about graduate students in
our universities, let us just remember, when we see that 55
percent of our graduate students in these high-tech area are
foreigners, that this too is damaging to our country. The fact
is, we should be focusing on educating our own young people and
filling those slots rather than going to foreigners who by the
way subsidize their young people. They come over, they learn a
great deal about important scientific endeavors and then they
go back and they use that knowledge against us in their own
countries, and that is not good.
And one last issue, technology transfer. Any technology
transfer, any controls that we have, if loosen those and it
results in technology going overseas that will eventually be
used to helping their manufacturing to compete with ours is
working against our interest and especially it works against us
if it puts us in jeopardy and endangers our national security.
Those are just a few thoughts and I thought I would throw
them out here at the end of the hearing. My time is up. Thank
you.
Chairman Gordon. Thank you, Mr. Rohrabacher. This is a
great country, isn't it?
Dr. Ehlers, you can close us out.
Mr. Ehlers. Thank you very much, and thank you, Mr.
Chairman, for holding this hearing and especially for putting
together such a super panel. I really appreciate the testimony
that was offered and the wisdom that all four of you have
displayed.
I just want to make two points. Based on my educational
career, which was 22 years long, the most important thing is to
educate for the jobs of the future. Too often we tend to be
educating for the jobs of the past or perhaps the present but
we have to anticipate what the jobs of the future are going to
be and educate accordingly. That is not easy but it has to be
done.
Secondly, math and science education has to be done
properly in the early elementary grades. If you really want
someone to become an engineer, that means they have to do well
in math and science in elementary school. To the extent that
they like it when they get to high school, they will take the
advanced math and science courses there, and when they go to
the university they will slip right into the program. Too
often, and I learned this from my colleagues at the
universities, too often someone who would make a good scientist
or a good engineer was not excited by science in the early
years, in high school took the easiest courses possible, then
went to the university and said I would like to be an engineer
or a physicist or whatever. They say oh, sure, we would love to
have you do that but first of all you'll have to take two more
years at the university in order to get up to speed with the
math and science that you need. Well, obviously, very few of
them are going to say well, yes, I would love to spend two more
years here and spend another $80,000 of my parents' money. They
are just going to say well, okay, I will take something else.
And so we really have to be farsighted enough to recognize the
key role that the elementary schools will play in this as well.
Thank you very much. You were right on target and I really
appreciate your testimony and your time and your wisdom. Thank
you very much.
Chairman Gordon. Thank you, Dr. Ehlers.
Mr. Tonko, Mr. Carnahan, any final conclusions?
Mr. Hall is recognized.
Mr. Hall. Mr. Chairman, thank you. I had to go to Energy
and Commerce and I had some other questions, but we have a
reporter that is taking down everything and the rest of
Congress will get to hear your answers and I will review that.
I was just thinking back as I listened to my friend from
California here back when I was on a church board, the word was
that the Lord kept the preacher humble and the board kept him
broke. Rohrabacher has the same effect on this committee. He is
the last word of the rest of the story and he is a very good
member of this committee.
I yield back my time and I thank this good panel.
Chairman Gordon. Thank you, Mr. Hall. I think Dr. Ehlers
said it very well. This was a superb panel. We appreciate you
altering your schedules. I know, Ms. Wince-Smith, you have to
get going out of the country. Both your testimony and your
presence was a very strong way to kick off this important
reauthorization. We thank you. One thing I took away from this
is that I need to talk to Mr. Rangel, Oberstar, Berman, Miller,
Obey and Waxman this afternoon and see if they will share some
of their jurisdiction, and we could really make some real
progress there. Thank you.
The record will remain open for two weeks for additional
statements from Members and answers to any follow-up questions
Members may ask the witnesses. The witnesses are excused.
[Whereupon, at 12:19 p.m., the Committee was adjourned.]
Appendix:
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Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by John Castellani, President, Business Roundtable
Questions submitted by Representative Ralph M. Hall
Q1. As recommended in Mr. Donohue's testimony, this Committee should
be ``vigilant about duplication of funding and efforts among the
Department of Education, the National Science Foundation, NASA, the
Department of Energy, and other Federal agencies.'' This was a major
concern of ours when this Committee considered ARPA-E. Likewise, we
felt that some of the STEM programs established within DOE are
repetitious of existing programs. Please share with us those programs
that you consider to be duplicative in the current version of COMPETES
or may have the potential for duplication in the reauthorization.
A1. Business Roundtable is concerned about Federal spending and
ballooning budget deficits. We believe Congress has a responsibility to
root out waste, inefficiency and duplication in Federal programs.
When it comes to STEM education, which represents a fundamental
investment in future U.S. innovation capacity, a diversified portfolio
of programs that address different STEM education needs and experiment
with different ways of motivating students probably makes sense.
Business Roundtable does not have the knowledge or expertise to render
a judgment on every single Federal STEM education program but our
impression is that the programs at different agencies operate in silos
and are not well aligned.
Q2. Taking into consideration the current economic environment and the
fact that we may need to make some tough funding decisions, are there
any provisions in the currentCOMPETES Act that could be scaled back or
that you feel are unnecessary? Are there programs that you feel are
vital and must be preserved?
A2. Although America COMPETES programs were authorized in August 2007,
they were not funded until early 2009. It is too soon for Business
Roundtable to judge which provisions are least effective. We can say
with confidence, however, that STEM education and funding for physical
sciences and engineering research are the most vital elements of the
Act. They are the building blocks of U.S. innovation and
competitiveness.
Question submitted by Representative Daniel Lipinski
Q1. In response to a question asked by Congressman Garamendi, you
referred to inefficiencies in the higher education system and stated
that these inefficiencies would be unsustainable in the business
sector. Could you elaborate on these comments or provide examples of
such inefficiencies? Are there any specific steps you would suggest to
eliminate them or to improve how our higher education system uses
Federal money?
A1. Over the past three decades, higher education costs skyrocketed and
tuition and fee increases dramatically exceeded the rate of inflation.
Two-year public college costs more than quadrupled, and four-year
public and private colleges saw costs increase 691 percent. Yet the
number of associate degrees conferred increased by 70 percent and
bachelor's degrees by 68 percent. Community colleges clearly are a
better bargain.
If we are to meet the growing demand for a better educated and
trained workforce, our institutions of higher education must find
creative ways to do more with less. On-line learning is a promising
approach that frees education from a physical plant. Some institutions
are using flexible scheduling and experimenting with classes 24/7,
offering options to earn course credits and degrees over shorter, more
concentrated periods of time. Perhaps most important for Federal
policy, incentives should be built into both institutional and student
aid that reward timely completion of degrees and other credentials
valued in the marketplace.
Question submitted by Representative Ben R. Lujan
Q1. Key components of Federal technology transfer policy are the Bayh-
Dole and Stevenson-Wydler Acts passed 30 years ago. What is your
assessment of these Acts on innovation and competitiveness of American
companies? Also, after 30 years, what recommendations, if any, on how
the implementation of these Acts could be improves given the current
focus on innovation policy?
A1. The Bayh-Dole and Stevenson-Wydler Acts were important policy
innovations that strengthened America's capacity to innovate. They
remain important contributors to U.S. economic competitiveness.
America's innovation systems could be further improved by speeding
processing of patent applications, enacting reforms that reduce patent
litigation and strengthening international intellectual property
protection.
Question submitted by Representative Kathleen A. Dahlkemper
Q1. What types of skills do you expect bachelor, masters and Ph.D.
level graduates to have when entering your workforce, beyond just
content knowledge in a particular STEM field? Are our colleges and
universities today providing students the training and opportunities
they need to develop those skills? How can industry work more closely
with colleges and universities to ensure that the students are being
educated appropriately for today's workforce needs?
A1. Last December, Business Roundtable released the final
recommendations from The Springboard Project--an independent commission
it convened--to ensure that American workers thrive after the economy
rebounds. While the commission found that the gap between worker skills
and the needs of employers is widening, the skills gap is primarily an
education gap as employers increasingly require postsecondary degrees
beyond a high school diploma. In addition to content knowledge at the
college and advanced degree levels, industry has worked closely with
engineering and science departments to influence the curriculum and
identify the need for written and oral communication skills, team
problem solving and collaboration.
In terms of college and post-graduate preparation, many Business
Roundtable companies also work directly with U.S. colleges and
universities to sponsor scholarships and fellowships and offer
workplace experience through internships and traineeships to help
ensure that U.S. higher education remains relevant to the workplace.
Question submitted by Representative Judy Biggert
Q1. How have your companies reacted to the economic downturn in terms
of investments in R&D and new technologies? How do your members balance
the recognized value of R&D in driving long-term success with the
pressures to improve short-term balance sheets by potentially cutting
back on such investments?
A1. According to a report released last December by the Battelle
Memorial Institute and R&D Magazine, private-sector R&D investments
fell by an estimated 5.5 percent in 2009, compared to 2008. The same
report, however, projects a robust recovery in industrial R&D spending
in 2010. Battelle estimates that industrial R&D will account for nearly
65 percent of all R&D investment in the United States this year.
Business Roundtable companies invested more than $110 billion in R&D
last year, nearly half the total private-sector investment in 2009.
Despite the enormous pressure to reduce costs, Business Roundtable CEOs
have maintained healthy R&D activities because they understand the
competitive advantage conferred by in-house innovation. As the economy
recovers and demand and revenues grow, R&D investments by Business
Roundtable companies also will grow.
Questions submitted by Representative Brian P. Bilbray
Q1. The American COMPETES Act focuses on the much needed problem of
underinvestment of basic science research. However, many of the small
biotech companies in my San Diego district are just as concerned with
commercialization of technology. As Venture Capital money dries up, how
can we best bridge this ``valley of death.'' Do you think ideas such as
proof of concept grants/programs would work? What about changes to the
SBIR/STTR programs. What other changes do you think the Federal
Government should consider in order to address this issue?
A1. The U.S. venture capital system remains the best in the world in
identifying and promoting promising commercial innovation. No other
country performs as well as the United States in terms of nurturing
nascent technology companies. The U.S. venture capital sector was hit
hard by last year's credit and liquidity crisis. For the better part of
year, venture capital all but disappeared. As capital markets have
recovered, so too has the venture capital market, but less rapidly than
other markets.
Government can play a useful role in venture capital markets by
reducing risk, which is what Small Business Innovation Research (SBIR)
and Small Business Technology Transfer (SBTT) programs are designed to
help with, but government cannot replace private venture capital. U.S.
venture capital's history of success rests, in part, on its ability to
cut its losses and move on to new investments in the face of failure.
Government has no such ability. The political pressure to continue
funding underperforming enterprises would be too great to resist in
many instances.
Q2. Overall Federal funding for basic research has been flat or
declining on a real-dollar basis since fiscal year 2005. What
implications does this trend have for the U.S. science enterprise?
A2. Flat or declining Federal research investments, particularly in
physical sciences and engineering research, have been a serious drag on
U.S. innovation for more than twenty years. Last year, however,
witnessed a dramatic turn around with significant new research
investments enacted in the American Recovery and Reinvestment Act
(ARRA), which Business Roundtable endorsed. If last year's trend is
maintained, it will have a significant, positive effect on the long-
term economic competitiveness of the United States.
Q3. The America COMPETES Act established specific funding
authorization levels for both NSF and the Dept. of Energy Office of
Science--although appropriations for both agencies have not yet reached
those recommended levels. Should the America COMPETES Act
reauthorization establish revised specific funding levels for NSF and
the DOE Office of Science? What are the advantages and disadvantages of
Congress setting targeted funding levels?
A3. The Science and Technology Committee of the U.S. House of
Representatives established important guidelines for Congress and the
Administration in the America COMPETES Act and its authorization levels
for Federal civilian science agencies. Those authorization levels led
directly to the generous funding levels for basic research in ARRA and
in the President's budget requests to Congress. The National Science
Foundation and the Office of Science in the Department of Energy are
two of the most important Federal agencies when it comes to investments
that foster U.S. innovation and competitiveness. The Science and
Technology Committee has knowledge and expertise related to how these
agencies function that Congress and the Administration rely on.
Specific authorization levels proved particularly valuable in the
America COMPETES Act and likely would be valuable in any
reauthorization.
Q4. NSF received a significant infusion of funds through the American
Recovery and Reinvestment Act (ARRA). Are you concerned about what will
happen to the NSF budget once the ARRA money has been spent? What
should Congress do to sustain the momentum created by ARRA?
A4. Business Roundtable has consistently advocated for stable, long-
term funding commitments for Federal investments in fundamental
physical science and engineering research. While the Roundtable
endorsed ARRA and was pleased to see Congress fund the research
investment priorities embodied in the America COMPETES Act, we remain
concerned about the long-term health of the U.S. science and technology
enterprise. We are encouraged, however, by the President's Fiscal Year
2011 budget request for the National Science Foundation and other
Federal civilian science agencies that sponsor physical science and
engineering research. Congress can sustain momentum by reauthorizing
the America COMPETES Act and appropriating funds for Federal science
agencies consistent with the authorization levels specified in the Act.
Q5. According to 2010 Science and Engineering Indicators released by
the National Science Board (NSB) last week, the Federal share of the
Nation's research and development (R&D) funding was an estimated 26
percent in 2008--down from 30 percent in 2004. Does the fact that the
Federal share of R&D funding is declining concern you? What is the
impact of this declining finding trend?
A5. Business Roundtable has been concerned about the long-term decline
in Federal R&D investments as a percentage of gross domestic product
(GDP) for many years. Federal R&D spending is an investment in future
economic growth and should track the overall size of the economy. ARRA
included a significant short-term boost to Federal R&D spending and, as
indicated in my answer to the previous question, Business Roundtable
believes this momentum must be sustained.
The declining Federal share of national R&D investment is only a
concern to the extent that it reflects stagnating Federal R&D budgets
and a decline in Federal R&D relative to the size of the economy.
Private-sector R&D investments have grown over the last decade, both in
absolute terms and relative to Federal investments. Increased private-
sector R&D investments are a good thing. As I mentioned earlier in
response to a question from another Committee member, Business
Roundtable companies invested more than $110 billion in R&D last year,
which represented nearly half of all private-sector R&D investments in
2009.
In short, Business Roundtable believes that Federal R&D investments
relative to GDP are a more meaningful indicator of U.S. innovation
performance than the Federal share of R&D spending.
Answers to Post-Hearing Questions
Responses by Thomas J. Donohue, President and CEO, U.S. Chamber of
Commerce
Questions submitted by Representative Ralph M. Hall
Q1. As recommended in Mr. Donohue's testimony, this Committee should
be ``vigilant about duplication of funding and efforts among the
Department of Education, the National Science Foundation, NASA, the
Department of Energy, and other Federal agencies.'' This was a major
concern of ours when this Committee considered ARPA-E. Likewise, we
felt that some of the STEM programs established within DOE are
repetitious of existing programs. Please share with us those programs
that you consider to be duplicative in the current version of COMPETES
or may have the potential for duplication in the reauthorization.
A1. The U.S. Chamber of Commerce believes that every effort should be
made to prevent Federal spending from resulting in massive budget
deficits. Congress must be particularly vigilant to avoid duplication
of effort or funding when it comes to Federal programs. The U.S.
Chamber has not undertaken a comprehensive evaluation of all Federal
STEM programs supported by the America COMPETES Act. Our concern is
that the Federal agencies operating and funding programs have not
optimized alignment thereby limiting the scale and lessons learned from
the programs as well as limiting the impact of the available funds.
In relation to ARPA-E reauthorization, we believe that while there
exists the very real potential . for duplicative efforts between ARPA-E
and the Department of Energy's (DOE) Office of Science, we believe such
duplications are not inherently automatic. As such, we support adequate
funding for ARPA-E as it provides a particular focus on deployable
technologies that has historically not been fully met by the Office of
Science, while at the same time we encourage diligent oversight by
Congress and DOE to ensure funding of the two offices does not become
duplicative.
Q2. Taking into consideration the current economic environment and the
fact that we may need to make some tough funding decisions, are there
any provisions in the current COMPETES Act that could be scaled back or
that you feel are unnecessary? Are there programs that you feel are
vital and must be preserved?
A2. As a result of the America COMPETES programs not receiving funding
until early 2009, we believe that an insufficient amount of time has
passed to ascertain program efficacy with any amount of certainty. With
that in mind, we urge the committee to support STEM education and
funding for physical sciences and engineering research. These are the
programs that fuel U.S. innovation and preserve our competitiveness.
Question submitted by Representative Ben R. Lujan
Q1. Key components of Federal technology transfer policy are the Bayh-
Dole and Stevenson-Wydler Acts passed 30 years ago. What is your
assessment of these Acts on innovation and competitiveness of American
companies? Also, after 30 years, what recommendations, if any, on how
the implementation of these Acts could be improves given the current
focus on innovation policy?
A1. The Bayh-Dole and Stevenson-Wydler Acts play a significant role in
creating incentives for government contractors, universities and other
beneficiaries of Federal agency support to commercialize their
innovations thereby driving competitiveness. There are some key areas
where improvements to the intellectual property environment could be
made both domestically and abroad. This committee can play a critical
role in bringing attention to these areas. The backlog of patents must
be reduced by speeding up the processing of patent applications. Work
must be done to enhance pro-IP positioning of the Organization for
Economic Co-operation and. Development (OECD) so that it advances
research, policy positions, and other products that promote IP as key
to innovation and creativity and calls for the protection of IP and the
enforcement of IP rights globally.
Question submitted by Representative Kathleen A. Dahlkemper
Q1. What types of skills do you expect bachelor, masters and Ph.D.
level graduates to have when entering your workforce, beyond just
content knowledge in a particular STEM field? Are our colleges and
universities today providing students the training and opportunities
they need to develop those skills? How can industry work more closely
with colleges and universities to ensure that the students are being
educated appropriately for today's workforce needs?
A1. The skills that are commonly referred to as 21st century skills are
now required for success in the workplace for STEM and all other
professionals. They can be summarized in four groups: critical thinking
and problem solving, communication, collaboration, and creativity and
innovation. These are the areas where U.S. secondary students begin to
fall short on the international exams. Students in the United States
fare less well when they are asked to apply knowledge that they possess
to solve a problem or to explain a problem. This is one factor that has
resulted in U.S. 15 year olds ranking 24th out of 29 participating OECD
countries on the Math Literacy portion of the PISA exam. The lack of
these skills persists through post-secondary education and into the
workforce. Many of the U.S. Chamber's members work closely with
colleges and universities from which they recruit employees to improve
the programs offered by those institutions and the success rates of the
students they prepare.
Question submitted by Representative Judy Biggert
Q1. How have your companies reacted to the economic downturn in terms
of investments in R&D and new technologies? How do your members balance
the recognized value of R&D in driving long-term success with the
pressures to improve short-term balance sheets by potentially cutting
back on such investments?
A1. There is insufficient data available to render a definitive
response to this questions at this time. Each company balances the
short term and long term demands differently. Research and Development
is essential and has beneficial effects over the long haul. Economic
theory supports this analysis.
Questions submitted by Representative Brian P. Bilbray
Q1. The American COMPETES Act focuses on the much needed problem of
underinvestment of basic science research. However, many of the small
biotech companies in my San Diego district are just as concerned with
commercialization of technology. As Venture Capital money dries up, how
can we best bridge this ``valley of death.'' Do you think ideas such as
proof of concept grants/programs would work? What about changes to the
SBIR/STTR programs. What other changes do you think the Federal
Government should consider in order to address this issue?
A1. The U.S. venture capital system is unparalleled. No other nation
has a system as successful at identifying and developing new technology
companies. The downturn in the economy had a negative effect on all
markets and particularly the venture capital markets. While recovery
has been slow, it is on the rise.
Small Business Innovation Research (SBIR) and Small Business
Technology Transfer (SBTT) programs can help to reduce risk which is an
appropriate role for the Government. Flexibility, efficiency, agility,
and resistance to political pressure when determining the length and
level of investments account for the success of the U.S. venture
capital system.
Within the energy sector we recognize that many nascent
technologies find it extremely difficult to secure adequate capital to
bridge the ``valley of death'' between development and deployment,
hindering our pursuit of a more secure energy future. We strongly
support the creation of an independent Federal entity empowered to
provide concessionary financial products such as loans, loan
guarantees, and risk insurance in support of new energy technology
deployment. This entity would operate in a manner similar to the
Export-Import bank, but focused on domestic deployment of new energy
technologies.
Q2. Overall Federal funding for basic research has been flat or
declining on a real-dollar basis since fiscal year 2005. What
implications does this trend have for the U.S. science enterprise?
A2. Federal research investments have decreased in real dollars for the
past 5 years. Many would argue that the trend started much earlier and
that the United States has coasted on investments made as long as 50
years ago. Last year, the Chamber endorsed the American Recovery and
Reinvestment Act (ARRA) which included significant new research
investments. The passage of ARRA signified the recommitment of America
to innovation through research and development. We believe that the R&D
investments in ARRA will help us regain our lead in innovation among
our global peers.
Q3. The America COMPETES Act established specific funding
authorization levels for both NSF and the Dept. of Energy Office of
Science--although appropriations for both agencies have not yet reached
those recommended levels. Should the America COMPETES Act
reauthorization establish revised specific funding levels for NSF and
the DOE Office of Science? What are the advantages and disadvantages of
Congress setting targeted funding levels?
A3. The funding recommendations set by the Science and Technology
Committee of the U.S. House of Representatives for the National Science
Foundation and the Office of Science in the Department of Energy
translated into significant investments in these two agencies through
ARRA and subsequent budget requests from the White House. With
increased demand for government transparency and efficiency, the
committee's funding recommendations will surely be valuable to the
general public, Members of Congress, and the Administration in during
the reauthorization process.
Q4. NSF received a significant infusion of funds through the American
Recovery and Reinvestment Act (ARRA). Are you concerned about what will
happen to the NSF budget once the ARRA money has been spent? What
should Congress do to sustain the momentum created by ARRA?
A4. The U.S. Chamber stated in our 2010 Policy Priorities that we will
work to ``promote ways to better value long-term investment,
entrepreneurial risk taking, revolutionary research and development,
and intangible assets.'' We believe that the America COMPETES Act
coupled with ARRA provided necessary investments and focus on the U.S.
science and technology enterprise. Greater effort must now be placed by
Congress on creating a sustainable the level of funds for the Federal
agencies that are responsible for the bulk of science and engineering
innovations. If America is serious about its competitiveness, we must
reauthorize the America COMPETES Act and appropriate the funds required
to accomplish the goals set forth in the Act.
Q5. According to 2010 Science and Engineering Indicators released by
the National Science Board (NSB) last week, the Federal share of the
nation's research and development (R&D) funding was an estimated 26
percent in 2008--down from 30 percent in 2004. Does the fact that the
Federal share of R&D funding is declining concern you? What is the
impact of this declining funding trend?
A5. The Chamber is concerned about the downward trend in Federal R&D
investments, however, over the same period, from 2004-08, private
sector investments increased as a share of GDP. While we are not fully
aware yet how much private sector investment in R&D may have declined
over the recent economic downturn, it is important to note that ARRA is
providing a significant boost in both Federal and private sector R&D
that may help put the country back on the right track. in the long
term, we believe that Federal R&D spending should be considered in the
context of the larger economy as a percentage of GDP. Our challenge
going forward will be to increase and stabilize the level of
investments needed to keep America's competitiveness strong.
Answers to Post-Hearing Questions
Responses by Governor John Engler, President and CEO, National
Association of Manufacturers
Questions submitted by Chairman Bart Gordon
Q1. Both of you touch on the importance of strong manufacturing
programs in the Federal Government. One area that we hope to include in
a COMPETES Act reauthorization is a comprehensive manufacturing
research and development program across agencies. We want to take a
look at what is currently being done and what we might be able to do
better. We'd be very interested in your specific thoughts on this
effort and any concrete suggestions you might have.
A1. Chairman Gordon, I want to thank you once again for the opportunity
to offer the National Association of Manufacturers' (NAM) thoughts on
the reauthorization of the America COMPETES Act.
A comprehensive cross-agency strategy to quantify, assess and
coordinate all federally-funded R&D is an excellent idea. Just as the
Comprehensive National Cybersecurity Initiative is working to unify
Federal agencies' approaches to protecting our national cybersecurity
interests, a similar effort should/be aimed at protecting the future of
our national economic security, which relies on the ability of American
manufacturing to innovate. Federally funded R&D is the seed corn that
will produce the next harvest of benefits for our economy, with much of
the bounty coming from the manufacturing sector. Such an effort will
enable policymakers to determine what Federal R&D efforts are
successful, which efforts are duplicative, and where our finite
resources can best be used.
As the Committee contemplates this strategy, it is our
recommendation that any efforts keep in mind and coordinate with
private sector efforts. U.S. manufacturers perform half (49 percent) of
all R&D in the nation--or roughly equal to the combined R&D activities
of the rest of the private sector, universities and colleges, Federal
Government non-profits and federally-funded R&D centers. Manufacturers,
however, who claim the bulk of all R&D credits (71 percent), saw the
cost of performing domestic R&D increase at the beginning of 2010 due
to the 14th expiration of the Federal R&D tax credit since it was
created in 1981. Any such Congressional effort to create a cross-agency
R&D program should make part of its focus supporting a permanent,
strengthened R&D tax credit, as R&D is the fuel for innovation that
drives new product development and increased productivity, two key
factors necessary for growth in manufacturing.
Questions submitted by Representative Ralph M. Hall
Q1. As recommended in Mr. Donohue's testimony, this Committee should
be ``vigilant about duplication of fielding and efforts among the
Department of Education, the National Science Foundation, NASA, the
Department of Energy, and other Federal agencies.'' This was a major
concern of ours when this Committee considered ARPA-E. Likewise, we
felt that some of the STEM programs established within DOE are
repetitious of existing programs. Please share with us those programs
that you consider to be duplicative in the current version of COMPETES
or may have the potential for duplication in the reauthorization.
A1. With regards to STEM education, there may be programs that should
be combined, but just as important, existing programs should be
streamlined and refined to better meet the needs of students. It is
possible to create better value within existing Departments of Labor
and Education programs without creating new programs. For example, by
looking at specific programs such as Trade Adjustment Assistance (TAA),
the Federal Perkins Loans Program and the Workforce Investment Act
(WIA), we can create priorities that improve education by linking it to
employer needs. Looking at these programs to make them more effective
before creating new programs will streamline government process.
Q2. Taking into consideration the current economic environment and the
fact that we may need to make some tough funding decisions, are there
any provisions in the current COMPETES Act that could be scaled back or
that you feel are unnecessary? Are there programs that you feel are
vital and must be preserved?
A2. The P-16 program outlined in the America COMPETES Act takes a step
toward integrating the skills needed by employers and education systems
by calling for education alignments with the private sector. Driving
students toward advanced degrees in STEM areas is critical for
competitive success; however, so is continuing education for those who
may not follow the traditional degree path.
Question submitted by Representative Ben R. Lujan
Q1. Key components of Federal technology transfer policy are the Bayh-
Dole and Stevenson-Wydler Acts passed 30 years ago. What is your
assessment of these Acts on innovation and competitiveness of American
companies? Also, after 30 years, what recommendations, if any, on how
the implementation of these Acts could be improves given the current
focus on innovation policy?
A1. The NAM recognizes the critical success the Bayh-Dole Act
represents: a major effort on behalf of the Federal Government to aid
the rapid commercialization of scientific discovery. At this time,
however, the NAM has not developed policy recommendations on how the
Bayh-Dole Act can be improved to strengthen our nation's innovation
policy.
Question submitted by Representative Kathleen A. Dahlkemper
Q1. What types of skills do you expect bachelor, masters and Ph.D.
level graduates to have when entering your workforce, beyond just
content knowledge in a particular STEM field? Are our colleges and
universities today providing students the training and opportunities
they need to develop those skills? How can industry work more closely
with colleges and universities to ensure that the students are being
educated appropriately for today's workforce needs?
A1. Nearly every day I hear from employers who have available positions
but cannot find qualified candidates to fill the slots. It is
imperative that students have the applicable knowledge necessary to
succeed in the workforce. Too many times students graduate, not just
from graduate school and college, but also from high school, with
skills that cannot be practically applied in the workforce. Basic and
advanced STEM education should be directly related to the skills and
competencies required by employers. For example, the NAM-Endorsed
Skills Certification system is an organized system of nationally
portable, industry-recognized credentials implemented in coordination
with community colleges to educate students in the skills relevant to
the demands of advanced manufacturing. By making programs such as these
a priority within Perkins, TAA and WIA, we can align the needs of
students with the needs of employers.
Question submitted by Representative Gary C. Peters
Q1. You mention in your written testimony that the MEP program,
despite receiving an increase in funding in FY10, still faces an
uncertain future. Can you expand on that? What do you hear from your
membership regarding the future of the program?
A1. The Manufacturing Extension Partnership (MEP) has for years been a
critical program for small- and medium-sized manufacturers, helping
them streamline plant operations and improve their bottom lines.
Despite the MEP's benefits to American manufacturing, its budget has
been relatively flat since its inception in 1999 and imperiled more
than once due to cost-cutting efforts. For instance, the proposed
budget for FY 2004 would have cut its funding from $106 million to
$12.6 million. Most recently in 2008, an attempt was made to cut its
funding even more--a full $87 million below the level needed to
maintain its existing services, to a proposed budget of only $4
million.
We are heartened to see that the Obama Administration has reversed
this trend, especially with the increased funding the MEP received
through the American Recovery and Reinvestment Act. The MEP is very
important to NAM members as it provides small- and medium-sized
manufacturers affordable access to technical expertise so that they can
create more high-paying manufacturing jobs--despite today's daunting
economic cost pressures. We will work with Congress and the
Administration to ensure that the MEP continues to get the attention--
and funding--it deserves.
Q2. I have introduced a bill with Rep. Ehlers to reduce the
participant matching requirement in the MEP program to 50%, and give
the Secretary of Commerce the authority to further reduce the match
where necessary. Would this change help manufacturers continue to
access the program in the face of state budge cuts and difficult
economic times?
A2. As you note, this is an increasingly difficult time not only for
manufacturers, but for state governments as well, especially as they
face deeper and deeper budget cuts. H.R. 4394, which authorizes the
Secretary of Commerce to reduce the matching requirement for MEP
participants, will go a long way to ensure that states continue to fund
MEP centers and that smaller manufacturers will be able to take
advantage of this critical program.
Under the current MEP cost-sharing ratio, the Federal Government
covers one-third of the cost, with the states taking up the remaining
two-thirds. This is the highest cost-sharing ratio in the Dept. of
Commerce, according to its staff. Because of the economic downturn, 23
state MEP centers reported a decrease or elimination of state funding.
Those that remain are now forced to shift the cost-share burden to
small manufacturers who are unlikely to be able to afford increased
contributions due to the current economic conditions. The end result is
that in many areas, the availability of MEP services is in jeopardy.
H.R. 4394 relieves the states of a large part of this burden, by
allowing the Federal Government and the states to share the costs
equally so that local MEP centers can focus on making mission-based
decisions, such as increasing program management capabilities. Reducing
the state matching requirement from 66 percent to 50 percent will
reduce the pressure on state budgets, allowing small manufacturers
continued access to critical MEP services and helping them decrease
costs, increase sales and create much-needed jobs.
Question submitted by Representative Judy Biggert
Q1. How have your companies reacted to the economic downturn in terms
of investments in R&D and new technologies? How do your members balance
the recognized value of R&D in driving long-term success with the
pressures to improve short-term balance sheets by potentially cutting
back on such investments?
A1. The economic downturn has hurt every sector across the board, not
the least of which are manufacturers. Many manufacturers have been
forced to hunker down to weather the economic uncertainty, trying to
make due with less. Manufacturers understand, however, that investment
in R&D and new technologies has to be made if they are to have new
products, services and processes in place for when the economy
rebounds. An important factor in deciding on how much to invest in R&D
is how that investment will be treated on their balance sheet. Key to
that decision is whether their investments will be protected by a
strengthened, permanent Federal R&D tax credit.
To that point, I'd like to take this opportunity to thank you for
your long-time, continued support of a strengthened, permanent Federal
R&D tax credit and your co-sponsorship of bipartisan legislation. H.R.
422, sponsored by Representatives Meeks and Brady. This bill will help
keep R&D jobs in the United States. For manufacturers, who claim 71
percent of all R&D tax credits, this tax incentive helps reduce the
cost of R&D done in the United States by lowering the cost of keeping
and hiring R&D employees. Only R&D performed in the United States
qualifies for the credit.
Also, R&D is inherently risky and, for manufacturers, R&D projects
typically span 5 to 10 years. A strengthened, permanent credit would
assure companies that the credit will be available during the life of
an R&D project. More than 500,000 jobs would be created within a decade
if the R&D credit were strengthened and made permanent according to the
Milken Institute report released January 2010.\1\
---------------------------------------------------------------------------
\1\ Jobs for America: Investments and Policies for Economic Growth
and Competitiveness, Milken Institute, January 2010.
www.milkeninstitute.org/jobsforamerica.
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Questions submitted by Representative Brian P. Bilbray
Q1. The American COMPETES Act focuses on the much needed problem of
underinvestment of basic science research. However, many of the small
biotech companies in my San Diego district are just as concerned with
commercialization of technology. As Venture Capital money dries up, how
can we best bridge this ``valley of death.'' Do you think ideas such as
proof of concept grants/programs would work? What about changes to the
SBIR/STTR programs. What other changes do you think the Federal
Government should consider in order to address this issue?
A1. The Small Business Innovation Research (SBIR) and Small Business
Technology Transfer (STTR) programs represent a critical effort on
behalf of the Federal Government in which to aid the rapid
commercialization of scientific discovery, especially in the
biotechnology field. At this time, however, the NAM has not developed
policy recommendations on how the SBIR/STTR programs can be improved to
strengthen our nation's innovation policy.
Q2. Overall Federal funding for basic research has been flat or
declining on a real-dollar basis since fiscal year 2005. What
implications does this trend have for the U.S. science enterprise?
A2. The fact that overall Federal funding for basic research has been
flat or declining for the past five years poses a significant issue for
the future of innovation in America. Even when one incorporates the
doubling of Federal R&D dollars in the America COMPETES Act into the
equation, Federal efforts are just keeping at a constant pace--not very
heartening news when China increased its R&D investment to $52.4
billion in 2008 (about 1.49 percent of GDP, up from $29.4 billion in
2005). In that same period, the U.S. spent $116.5 billion on federally
funded R&D, facilities and fixed equipment--or 2.62 percent of our
GDP.\2\ As I mentioned in my written testimony, this does not include
R&D expenses at labs owned by foreign companies. If China continues R&D
spending of about 1.5 percent of GDP for 2009, its research will total
about $72 billion.\3\ However, China has one of the fastest-growing
research budgets in the world, and by 2020 the government's goal is to
invest 2.5 percent of GDP annually in research, which will rank China
third in the world in terms of total annual investment.\4\ As the R&D
innovation gap between the U.S. and China shrinks, so does our global
competitive advantage.
---------------------------------------------------------------------------
\2\ ``Federal R&D Support Shows Little Change in 2008,'' National
Science Foundation, Info Brief September 2009.
\3\ ``Engineering & Research,'' Plunkett Research, website visited
January 14, 2010.
\4\ Ibid.
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The future of American innovation requires a commitment to
investing in R&D, from both the public and private sector. The fortunes
of the U.S. manufacturing and science sectors are closely entwined, as
successes in one area usually benefit the other, with the end
beneficiary being American workers and consumers. We commend Congress
for having the foresight in creating the America COMPETES Act to ensure
that successes in innovation continue to benefit our global
competitiveness. As I mentioned, the private sector has a role to play
as well, and the Federal R&D tax credit is a proven tool for spurring
R&D jobs in the United States; the credit's incentive value would be
enhanced if a permanent, strengthened credit were enacted into law.
Q3. The America COMPETES Act established specific funding
authorization levels for both NSF and the Dept. of Energy Office of
Science--although appropriations for both agencies have not yet reached
those recommended levels. Should the America COMPETES Act
reauthorization establish revised specific funding levels for NSF and
the DoE Office of Science? What are the advantages and disadvantages of
Congress setting targeted funding levels?
A3. As pointed out by your previous question, even when adjusted to a
real-dollar basis, Federal funding for basic R&D has largely been flat.
As noted in the recent Congressional Research Service (CRS) report,
Federal Funding and Development Funding: FY 2010,\5\ increasing the
amount spent on basic R&D will be dependent upon two large issues: how
much the Federal Government can afford in light of increasing pressure
on discretionary spending, and how those funds will be prioritized. As
our economic security and global competitiveness are dependent upon how
much we as a nation are willing to do to invest in our future success,
Congress may very well have to revise spending levels for the NSF and
the DOE Office of Science.
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\5\ U.S. Congressional Research Service. Federal Research and
Development Funding: FY 2010 (R40710; Jan. 12, 2010), by John F.
Sargent, Jr.
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That answer may also be impacted by how our emerging competitors--
China, India, Russia--ramp up investment in their future. Although we
may lead the world in funding basic R&D, we need to be cognizant of how
our competitors close the innovation gap. We are confident, however,
that the ultimate answer on how much we need to revise spending levels
will be revealed as the Committee continues its inquiry into the
reauthorization of the America COMPETES Act through the many hearings
scheduled through the remaining Congressional session.
Q4. NSF received a significant infusion of funds through the American
Recovery and Reinvestment Act (ARRA). Are you concerned about what will
happen to the NSF budget once the ARRA money has been spent? What
should Congress do to sustain the momentum created by ARRA?
A4. Increased funding for basic R&D at the NSF, along with the DOE's
Office of Science and the NIST, has been a key priority for
manufacturers because the work they do leads to advances in areas
critical to American manufacturers, such as energy efficiency, advanced
materials design, nanotechnology and more powerful computer chips. The
funds appropriated to the NSF through ARRA increased the NSF's FY 2009
funding by approximately $3 billion and were critical in ensuring that
the funding amounts promised by the America COMPETES Act were
fulfilled, While we applauded this outcome, the goal set out in America
COMPETES--to double Federal basic R&D funding for key research agencies
such as the NSF by 2012--may be put in jeopardy by the demands of the
appropriations process.
For instance, on June 18, 2009, the House Committee on
Appropriations passed H.R. 2847, the Commerce, Justice, Science, and
Related Agencies (CJS) Appropriations Bill, 2010.\6\ The bill would
have provided a total of $6.937 billion for the NSF in FY 2010, $108.5
million below the President's request. The Senate Appropriations
Committee reported the bill on June 25, 2009,\7\ and the Senate passed
the bill on November 5, 2009. The Senate measure would have provided
$6.917 billion for the NSF, $19.7 million below the House passed bill
and $128.2 million below the Administration's request. Finally, on
December 16, 2009, the President signed into law the Consolidated
Appropriations Act of 2010.\8\ The omnibus act includes funding for six
appropriations for FY 2010, including the CJS appropriation, providing
a total of $6.927 billion for the NSF, approximately $118.0 million
below the President's request.
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\6\ H.Rept. 111-149 (2009).
\7\ S.Rept. 111-34 (2009).
\8\ P.L. 111-117 (2009).
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While the appropriations process is never as fast or as
uncomplicated as many would hope, it is our concern that funding of
critical basic R&D programs such as those at the NSF will be lost in
the shuffle as Congressional appropriators wrestle with an uncertain
economy, attempt to heed cries for constrained spending, and work to
comply with the new pay-as-you-go rules. Perhaps the best way to
sustain the momentum created by ARRA is to highlight the direct
successes achieved by increased R&D funding to each agency, including
jobs and opportunities created. For example, the above-mentioned CRS
report highlights that on May 27, 2009, the NSF announced its first
major award made with funding from ARRA--for construction of the Alaska
Region Research Vessel ($148.0 million). This dual-purpose vessel has
been designed to operate as both an icebreaker and a research ship, has
the ability to carry as many as 500 people, stay at sea for as many as
300 days a year, and has an operational life span of 30 years. The NSF
states that, ``The three-year construction phase of the project will
support 4,350 total jobs, 750 directly at the shipyard and as many as
3,600 in the broader economy.'' \9\ The award announcement noted that
the NSF intends to ensure that the vessel will be built in a U.S.
shipyard. It is this very type of good news--jobs and opportunities for
American workers--that will bring continued support for the federally-
funded R&D envisioned in the America COMPETES Act.
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\9\ National Science Foundation, ``NSF Announces First Major Award
Under American Recovery and Reinvestment Act to the Alaska Region
Research Vessel (ARRV),'' press release, May 27, 2009.
Q5. According to 2010 Science and Engineering Indicators released by
the National Science Board (NSB) last week, the Federal share of the
nation's research and development (R&D) funding was an estimated 26
percent in 2008--down from 30 percent in 2004. Does the fact that the
Federal share of R&D funding is declining concern you? What is the
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impact of this declining funding trend?
A5. This concerns the NAM because its impact, as noted above, is to put
our nation at a competitive disadvantage with our global competition as
they increase their spending. Of course, it should also be noted that
the business community has greatly expanded its share of R&D spending
over the past five years, which would impact the numbers in the above
report. Further, only recently has the government picked up its pace in
funding federal R&D, as highlighted above with regards to fulfilling
the promise of the America COMPETES Act in doubling Federal funding for
key research agencies by 2012.
Additional Note:
During the hearing, Representative Rohrabacher asked me whether the
NAM had opposed the elimination of treble damages in H.R. 1908, the
Patent Reform Act of 2007. The NAM sent a letter to Judiciary Chairman
Conyers and Ranking Member Smith on May 18, 2007, commenting on a
number of aspects of H.R. 1908. In that letter, we raised concerns with
proposed changes to how damages for an infringement would be
calculated. However, with his reference to treble damages, I assume
Representative Rohrabacher was referring to the issue of willful
infringement, which provides extra-compensatory damages as a form of
punitive damages when a defendant knowingly infringed on a patent the
defendant knew was owned by the plaintiff. In our letter, we did
mention our support for the provision in H.R. 1908 that would reform
the standard by which a court would determine whether a defendant
willfully infringed on a plaintiffs patent rights. It is our
understanding that the treble damages would still be available as
compensation for a finding of willful patent infringement. I have
attached a copy of the letter for your files.
Answers to Post-Hearing Questions
Responses by Deborah L. Wince-Smith, President and CEO, Council on
Competitiveness
Questions submitted by Chairman Bart Gordon
Q1. Both of you touch on the importance of strong manufacturing
programs in the Federal Government. One area that we hope to include in
a COMPETES Act reauthorization is a comprehensive manufacturing
research and development program across agencies. We want to take a
look at what is, currently being done and what we might be able to do
better. We'd be very interested in your specific thoughts on this
effort and any concrete suggestions you might have.
A1. Greater focus on research and development of manufacturing
processes is a critical component to any overall manufacturing agenda.
Not only can innovation bring new ideas to market, but innovative
solution to how those ideas are brought to market are equally as
important. Further, in the Council on Competitiveness' report Innovate
America, we highlighted a collaborative program in upstate New York
where multiple companies, the state and the Federal Government
partnered to create an early stage manufacturing facility that enables
companies small and large to demonstrate a product's viability before
proceeding to full-scale manufacturing. This concept is worth further
consideration.
Questions submitted by Representative Ralph M. Hall
Q1. As recommended in Mr. Donohue's testimony, this Committee should
be ``vigilant about duplication of funding and efforts among the
Department of Education, the National Science Foundation, NASA, the
Department of Energy, and other Federal agencies.'' This was a major
concern of ours when this Committee considered ARPA-E. Likewise, we
felt that some of the STEM programs established within DOE are
repetitious of existing programs. Please share with us those programs
that you consider to be duplicative in the current version of COMPETES
or may have the potential for duplication in the reauthorization.
A1. The Council on Competitiveness shares the concerns expressed by
Congressman Hall regarding unnecessary duplication in STEM education
programs, but unfortunately I am not able to cite specific programs we
believe should be eliminated or strengthened. The Council has argued
strenuously for greater focus on STEM education, as it is the
foundation for job skills required by the growth sectors of our
economy.
Q2. Taking into consideration the current economic environment and the
fact that we may need to make some tough funding decisions, are there
any provisions in the current COMPETES Act that could be scaled back or
that you feel are unnecessary? Are there programs that you feel are
vital and must be preserved?
A2. As I detailed in my testimony, there are a number of critical
provisions in the America COMPETES Act that must be a part of any
reauthorization. These include:
1. The Council on Competitiveness strongly urged the creation
of a President's Council on Innovation and the legislation
included such a provision, yet the reality has not matched the
intent. What became clear as we sought the input and advice
from leaders within government and the private sector was that
the government's innovation policy was fragmented, poorly
coordinated and often running at cross purposes between
agencies and departments. We would urge a fresh look at this
provision.
2. Predictable and steady support for long-term research
across Federal agencies including the National Science
Foundation, DOE Office of Science, NIST and NASA is a vital
first step toward an innovation-based economy. America COMPETES
made great strides in this area. Any authorization should
continue this commitment.
3. Support for the National Institutes of Standards and
Technology's (NIST) work in the area of manufacturing is
critical to many small and medium sized manufacturers. These
companies are key job producers in America's economy. NIST has
made strides toward embracing innovation in manufacturing and
this trend is worthy of the Committee and Congress's support.
4. Strengthening STEM education through programs at the
Department of Education, the National Science Foundation and
other R&D agencies and departments is important. I realize
there are multiple programs that touch upon this issue across
the Federal Government and I will not try to analyze each one
separately here. I only urge the Committee to recognize that
almost every career today requires some grasp of or skill in
science, technology, engineering and mathematics and we must
ensure that all Americans have a solid grounding in these
fields.
As with any major piece of legislation, a number of provisions were
added to the bill as it moved through the Congress. Many of these were
valuable additions, but many also were never funded including, as I
understand it, several reports. I would urge the Committee to focus of
actions rather than reports and on solutions rather than meetings or
summits, which inevitably focus on the problems.
Question submitted by Representative Ben R. Lujan
Q1. Key components of Federal technology transfer policy are the Bayh-
Dole and Stevenson-Wydler Acts passed 30 years ago. What is your
assessment of these Acts on innovation and competitiveness of American
companies? Also, after 30 years, what recommendations, if any, on how
the implementation of these Acts could be improves given the current
focus on innovation policy?
A1. While far from the being the perfect solutions, these Acts have
helped move ideas from the laboratory to the marketplace. The greatest
ongoing challenge I hear about in conversations with CEOs and
university leaders is the widely disparate approach taken to
intellectual property. Every university, every company tackles this
challenge differently (often differently within departments and/or
divisions). I'm not sure this is a problem that can be solved by
Federal Government action.
Question submitted by Representative Kathleen A. Dahlkemper
Q1. What types of skills do you expect bachelor, masters and Ph.D.
level graduates to have when entering your workforce, beyond just
content knowledge in a particular STEM field? Are our colleges and
universities today providing students the training and opportunities
they need to develop those skills? How can industry work more closely
with colleges and universities to ensure that the students are being
educated appropriately for today's workforce needs?
A1. The best answer I can give is to reiterate an example I highlighted
during the question period at the hearing--the U.S. Naval Academy
graduates all its students with an engineering degree, but that is just
the baseline. They also have language skills, communications or
business degrees, history, government, and writing etc. . .. Success in
the job market for American students will not be determined by a single
discipline, but at the intersection of disciplines--with a strong
foundation in STEM.
Question submitted by Representative Judy Biggert
Q1. How have your companies reacted to the economic downturn in terms
of investments in R&D and new technologies? How do your members balance
the recognized value of R&D in driving long-term success with the
pressures to improve short-term balance sheets by potentially cutting
back on such investments?
A1. It's impossible to generalize across all companies as to their
reaction to the recession. However, I will say that the leading edge
companies are the ones that maintained their investment in R&D during
the downturn. They will be the ones that emerge stronger and better
positioned to capture market share in the months ahead.
Questions submitted by Representative Brian P. Bilbray
Q1. The American COMPETES Act focuses on the much needed problem of
underinvestment of basic science research. However, many of the small
biotech companies in my San Diego district are just as concerned with
commercialization of technology. As Venture Capital money dries up, how
can we best bridge this ``valley of death.'' Do you think ideas such as
proof of concept grants/programs would work? What about changes to the
SBIR/STTR programs. What other changes do you think the Federal
Government should consider in order to address this issue?
A1. Augmenting current project funding models is a key factor in
bridging the ``valley of death.'' Increasing access to funding for
later stages of product development is essential in getting products to
market. As I indicated in my testimony, many foreign investment groups
are stepping in to fund late-stage projects that have stalled in the
absence of domestic funding sources. In these cases, the foreign
investors are reaping the benefits of both the initial U.S. investment
as well as the revenues generated from a product in the market. Our
approach to supporting investors needs to be more comprehensive and
focus on all stages of development. Doing so will certainly help put
more American technologies in the market, and do it faster.
With regard to SBIR, I would strongly recommend expanding that
program to cover stage III funding, so we do not lose the potential job
creation on investments we have already made.
Q2. Overall Federal funding for basic research has been flat or
declining on a real-dollar basis since fiscal year 2005. What
implications does this trend have for the U.S. science enterprise?
A2. America's economic viability is inextricably linked with our
capacity as a nation to develop and commercialize innovative goods and
services for consumption at home and abroad. Federal dollars are a
catalyzing force in the development of the groundbreaking technologies
which allow America to remain competitive against foreign rivals.
Declining Federal funding means fewer high-risk, high-high reward,
long-term projects will receive funding at a time when it is needed the
most. Without Federal support, America's science enterprises can and
will be overtaken by foreign competitors whose governments are willing
to invest heavily in R&D. Investing Federal dollars in American science
enterprises is an investment in the nation's economy and will help our
nation remain the global leader in innovation and technology
development.
Q3. The America COMPETES Act established specific funding
authorization levels for both NSF and the Dept. of Energy Office of
Science--although appropriations. for both agencies have not yet
reached those recommended levels. Should the America COMPETES Act
reauthorization establish revised specific funding levels for NSF and
the DOE Office of Science? What are the advantages and disadvantages of
Congress setting targeted funding levels?
A3. I would strongly recommend that the levels be maintained and that
supporters inside and outside of Congress work to bring the
Appropriations funding up to those authorized levels. Long term
research requires stable predictable funding levels.
Q4. NSF received a significant infusion of funds through the American
Recovery and Reinvestment Act (ARRA). Are you concerned about what will
happen to the NSF budget once the ARRA money has been spent? What
should Congress do to sustain the momentum created by ARRA?
A4. The best thing Congress can do to maintain the momentum created by
ARRA, is to fund these agencies with steady predictable increases as
authorized in America COMPETES.
Q5. According to 2010 Science and Engineering Indicators released by
the National Science Board (NSB) last week, the Federal share of the
nation's research and development (R&D) funding was an estimated 26
percent in 2008--down from 30 percent in 2004. Does the fact that the
Federal share of R&D funding is declining concern you? What is the
impact of this declining funding trend?
A5. R&D is a key innovation pillar and encouraging the development of
technologies, supporting nascent industries and funding groundbreaking
research through R&D investment is integral to America's innovation
strategy. Trends showing a reduction in Federal R&D funding are indeed
alarming. Federal R&D dollars have historically supported high-risk,
far-horizon investments, the variety unlikely to see the same level of
support from the private sector. Diminishing Federal R&D investment
will directly impact America's ability to retain its competitive
advantage in the global arena, and adversely impact the development of
advanced marketable technologies and services.