[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
AVERTING THE STORM: HOW INVESTMENTS IN
SCIENCE WILL SECURE THE COMPETITIVENESS
AND ECONOMIC FUTURE OF THE U.S.
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 29, 2010
__________
Serial No. 111-111
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
______
U.S. GOVERNMENT PRINTING OFFICE
58-488 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
STEVEN R. ROTHMAN, New Jersey MICHAEL T. McCAUL, Texas
JIM MATHESON, Utah MARIO DIAZ-BALART, Florida
LINCOLN DAVIS, Tennessee BRIAN P. BILBRAY, California
BEN CHANDLER, Kentucky ADRIAN SMITH, Nebraska
RUSS CARNAHAN, Missouri PAUL C. BROUN, Georgia
BARON P. HILL, Indiana PETE OLSON, Texas
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
JOHN GARAMENDI, California
VACANCY
C O N T E N T S
September 29, 2010
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
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................................................ 9
Written Statement............................................ 10
Prepared Statement by Representative Jerry F. Costello, Member,
Committee on Science and Technology, U.S. House of
Representatives................................................ 12
Witnesses:
Mr. Norman R. Augustine, Retired Chairman and CEO of the Lockheed
Martin Corporation and Former Undersecretary of the Army
Oral Statement............................................... 13
Written Statement............................................ 15
Biography.................................................... 17
Dr. Craig Barrett, Retired Chairman and CEO of Intel Corporation
Oral Statement............................................... 18
Written Statement............................................ 19
Biography.................................................... 21
Mr. Charles Holliday, Jr., Chairman of the Board of Bank of
America and Retired Chairman of the Board and CEO of DuPont
Oral Statement............................................... 22
Written Statement............................................ 23
Biography.................................................... 28
Dr. C.D. (Dan) Mote, Jr., President Emeritus of the University of
Maryland and Glenn L. Martin Institute Professor of Engineering
Oral Statement............................................... 29
Written Statement............................................ 30
Biography.................................................... 31
Discussion....................................................... 32
Appendix 1: Answers to Post-Hearing Questions
Mr. Norman R. Augustine, Retired Chairman and CEO of the Lockheed
Martin Corporation and Former Undersecretary of the Army....... 52
Dr. Craig Barrett, Retired Chairman and CEO of Intel Corporation. 55
Mr. Charles Holliday, Jr., Chairman of the Board of Bank of
America and Retired Chairman of the Board and CEO of DuPont.... 57
Dr. C.D. (Dan) Mote, Jr., President Emeritus of the University of
Maryland and Glenn L. Martin Institute Professor of Engineering 58
AVERTING THE STORM: HOW INVESTMENTS IN SCIENCE WILL SECURE THE
COMPETITIVENESS AND ECONOMIC FUTURE OF THE U.S.
----------
WEDNESDAY, SEPTEMBER 29, 2010
House of Representatives,
Committee on Science and Technology,
Washington, DC.
The Committee met, pursuant to call, at 10:18 a.m., in Room
2318 of the Rayburn House Office Building, Hon. Bart Gordon
[Chairman of the Committee] presiding.
hearing charter
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
Averting the Storm: How Investments
in Science Will Secure the Competitiveness
and Economic Future of the U.S.
wednesday, september 29, 2010
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
1. Purpose
On Wednesday, September 29, 2010, the Committee on Science and
Technology will hold a hearing to receive testimony from distinguished
members of the 2005 ``Rising Above the Gathering Storm'' Committee who
participated in a recent review of the 2005 report and produced an
updated report entitled, Rising Above the Gathering Storm, Revisited:
Rapidly Approaching Category 5. Witnesses will comment on the findings
included in the new report, and offer recommendations to the Committee
and to Congress on how to maintain U.S. competitiveness and economic
security for the long-term.
2. Witnesses
Mr. Norman R. Augustine, retired Chairman and CEO of
the Lockheed Martin Corporation and former Undersecretary of
the Army
Dr. Craig Barrett, retired Chairman and CEO of Intel
Corporation
Mr. Charles Holliday, Jr., Chairman of the Board of
Bank of America and retired Chairman of the Board and CEO of
DuPont
Dr. C.D. (Dan) Mote, Jr., President Emeritus of the
University of Maryland and Glenn L. Martin Institute Professor
of Engineering
3. Overarching Questions
Why is the promotion of science, technology and STEM
education so critical to America's prosperity? What are the
principal challenges the United States faces in these areas as
it competes in the global economy?
What specific steps should the federal government
take to ensure that the United States remains the world leader
in innovation and job creation? What role can reauthorization
of the America COMPETES Act play in securing U.S.
competitiveness and economic security?
4. Brief Overview
In May 2005, at the request of Congress, the National
Academy of Sciences (NAS) began a study of ``the most urgent
challenges the United States faces in maintaining leadership in
key areas of science and technology.'' NAS assembled a high-
level panel of senior scientists and business and university
leaders and produced a report entitled, Rising Above the
Gathering Storm: Energizing and Employing America for a
Brighter Economic Future.
The NAS report offered four broad recommendations:
(A) increase America's talent pool by vastly improving K-12
science and mathematics education; (B) sustain and strengthen
the nation's traditional commitment to long-term basic
research; (C) make the United States the most attractive
setting in which to study and perform research; and (D) ensure
that the United States is the premier place in the world to
innovate. The NAS report also described 20 explicit steps that
the federal government could take to implement its
recommendations.
In August 2007, in response to the recommendations in
the Gathering Storm report, Congress enacted and the President
signed the America COMPETES Act, an Act to invest in innovation
through research and development, and to improve the
competitiveness of the United States. The COMPETES conference
report received overwhelming bipartisan support in both
chambers of Congress, with a vote of 367 to 57 in the House,
and by unanimous consent in the Senate.
The 2007 COMPETES Act implemented the majority of the
Gathering Storm recommendations that fell within the
jurisdiction of the Science and Technology Committee and the
Education and Labor Committee, and their respective
counterparts in the Senate. Specifically, COMPETES placed the
National Science Foundation (NSF), the National Institute of
Standards and Technology's (NIST) research labs, and the
Department of Energy's (DOE) Office of Science on a 7-year
doubling path. In addition, the Act created ARPA-E at DOE, and
addressed many specific policies to strengthen the research
programs across all three of the agencies. Finally, the Act
authorized a number of programs to strengthen K-12 STEM
education, in particular by ensuring that current and future
teachers are well prepared to teach STEM subjects. The COMPETES
Act expires at the end of this month.
It took two years to realize appropriations for the
COMPETES Act. Most of this funding was provided through the
American Recovery and Reinvestment Act (ARRA), a one-time, two-
year infusion of funding into science and technology that
helped research agencies provide support for a long backlog of
world class R&D facilities and top-rated research proposals.
The current budget and economic environment has challenged
Administration, Congressional and stakeholder efforts to ensure
sustainable increases in funding for agencies and programs
authorized in COMPETES.
In May 2010, the House passed a 5-year
reauthorization of the America COMPETES Act, by a bipartisan
vote of 262-150. The House bill reauthorized all of the
programs in the 2007 Act that had been funded, repealed most
programs that had never been funded, and in response to various
reports since Gathering Storm, created a few new programs
focused primarily on innovation. The Senate Committee on
Commerce, Science and Transportation reported out its own
reauthorization bill in July. The Senate Energy and Natural
Resources released a draft of its piece of the reauthorization
last week. To date, the Senate has not taken any further action
on COMPETES reauthorization.
The Rising Above the Gathering Storm, Revisited
report \1\ opens as follows: ``In the five years that have
passed since Rising Above the Gathering Storm was issued, much
has changed in our nation and world. Despite the many positive
responses to the initial report, including congressional
hearings and legislative proposals, America's competitive
position in the world now faces even greater challenges,
exacerbated by the economic turmoil of the last few years and
by the rapid and persistent worldwide advance of education,
knowledge, innovation, investment, and industrial
infrastructure. Indeed the governments of many other countries
in Europe and Asia have themselves acknowledged and
aggressively pursued many of the key recommendations of Rising
Above the Gathering Storm, often more vigorously than has the
U.S. We also sense that in the face of so many other daunting
near-term challenges, U.S. government and industry are letting
the crucial strategic issues of U.S. competitiveness slip below
the surface.''
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\1\ http://www.nap.edu/catalog.php?record-id=12999
The report goes further to state, ``Although
significant progress has been made as a result of the above
legislation \2\, the Gathering Storm effort once again finds
itself at a tipping point. It is widely agreed that addressing
America's competitiveness challenge is an undertaking that will
require many years if not decades; however, the requisite
federal funding of much of that effort is about to terminate.
In order to sustain the progress that has begun it will be
necessary to (1) reauthorize the America COMPETES Act, and (2)
``institutionalize'' funding and oversight of the Gathering
Storm recommendations--or others that accomplish the same
purpose--such that funding and policy changes will routinely be
considered in future years' legislative processes.
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\2\ America COMPETES Act and the American Recovery and Reinvestment
Act
5. Indicators of U.S. Competitiveness
The 2010 ``Gathering Storm'' Committee assembled 64 factoids in
support of their finding that the ``nation's outlook has worsened''
since 2005. A few of them are listed here. Citations for these data, in
addition to a fuller analysis of the current state of U.S.
competitiveness, can be found in the Gathering Storm, Revisited report.
In 2009, 51 percent of United States patents were
awarded to non-United States companies.
In less than 15 years, China has moved from 14th
place to second place in published research articles (behind
the United States).
GE has now located the majority of its R&D personnel
outside the United States.
In the 2009 rankings of the Information Technology
and Innovation Foundation the U.S. was in sixth place in global
innovation-based competitiveness, but ranked 40th in the rate
of change over the past decade.
The World Economic Forum ranks the United States 48th
in quality of mathematics and science education.
Ninety-three percent of United States public school
students in fifth through eighth grade are taught the physical
sciences by a teacher without a degree or certificate in the
physical sciences.
According to the 2008 ACT College Readiness report,
78 percent of high school graduates did not meet the readiness
benchmark levels for one or more entry-level college courses in
mathematics, science, reading and English.
The United States graduates more visual arts and
performing arts majors than engineers.
Almost one-third of U.S. manufacturing companies
responding to a recent survey say they are suffering from some
level of skills shortages.
6. Summary of 2005 Gathering Storm report recommendations
The 2005 NAS report made four recommendations, each of which was
supported by explicit steps that the federal government could take to
implement the recommendations. These recommendations and steps are
provided verbatim below.
10,000 Teachers, 10 Million Minds and K-12 Science and Mathematics
Education
Recommendation A: Increase America's talent pool by vastly
improving K-12 science and mathematics education.
Implementation Steps:
A-1: Annually recruit 10,000 science and mathematics
teachers by awarding four-year scholarships and thereby
educating 10 million minds.
A-2: Strengthen the skills of 250,000 teachers
through training and education programs at summer institutes,
in master's programs, and Advanced Placement and International
Baccalaureate (AP and IB) training programs and thus inspire
students every day.
A-3: Enlarge the pipeline by increasing the number of
students who take AP and IB science and mathematics courses.
Sowing the Seeds through Science and Engineering Research
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.
Implementation Steps:
B-1: Increase the federal investment in long-term
basic research by 10 percent a year over the next seven years.
B-2: Provide new research grants of $500,000 each
annually, payable over five years, to 200 of our most
outstanding early-career researchers.
B-3: Institute a National Coordination Office for
Research Infrastructure to manage a centralized research
infrastructure fund of $500 million per year over the next five
years.
B-4: Allocate at least eight percent of the budgets
of federal research agencies to discretionary funding.
B-5: Create in the Department of Energy an
organization like the Defense Advanced Research Projects Agency
called the Advanced Research Projects Agency-Energy (ARPA-E).
B-6: Institute a Presidential Innovation Award to
stimulate scientific and engineering advances in the national
interest.
Best and Brightest in Science and Engineering Higher Education
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.
Implementation Steps:
C-1: Increase the number and proportion of U.S.
citizens who earn physical-sciences, life-sciences,
engineering, and mathematics bachelor's degrees by providing
25,000 new four-year competitive undergraduate scholarships
each year to U.S. citizens attending U.S. institutions.
C-2: Increase the number of U.S. citizens pursuing
graduate study in ``areas of national need'' by funding 5,000
new graduate fellowships each year.
C-3: Provide a federal tax credit to encourage
employers to make continuing education available (either
internally or through colleges and universities) to practicing
scientists and engineers.
C-4: Continue to improve visa processing for
international students and scholars.
C-5: Provide a one-year automatic visa extension to
international students who receive doctorates or the equivalent
in science, technology, engineering, mathematics, or other
fields of national need at qualified U.S. institutions to
remain in the United States to seek employment. If these
students are offered jobs by U.S.-based employers and pass a
security screening test, they should be provided automatic work
permits and expedited residence status.
C-6: Institute a new skills-based, preferential
immigration option.
C-7: Reform the current system of ``deemed exports.''
Incentives for Innovation and the Investment Environment
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 that are based
on innovation by modernizing the patent system, realigning tax policies
to encourage innovation, and ensuring affordable broadband access.
Implementation Steps:
D-1: Enhance intellectual property protection for the
21st century global economy.
D-2: Enact a stronger research and development tax
credit to encourage private investment in innovation.
D-3: Provide tax incentives for U.S.-based
innovation.
D-4: Ensure ubiquitous broadband Internet access.
Chairman Gordon. This hearing will come to order. Good
morning. I want to thank our witnesses for being here on this
very busy morning. Ralph Hall looked over at me, when he looked
at you, and said, we got a good group of folks here today, and
I agree with him.
This is a very important hearing on securing the
competitiveness of our economic future here in the United
States. Just to remind everyone, in 2005, I joined then-
Chairman Sherry Boehlert and Senators Lamar Alexander and Jeff
Bingaman in requesting the National Academies to conduct a
study assessing the state of our Nation's competitiveness. The
resulting report was entitled ``Rising Above the Gathering
Storm'' and foreshadowed a troubling future for our Nation--one
in which our scientific leadership, technological edge, and
ability to compete effectively in the global economy is
uncertain.
The report maintained that, without decisive action, our
children and grandchildren may very well be the first
generation of Americans to inherit a standard of living lower
than their parents. The report outlined specific actions to be
taken to ensure the future competitiveness and prosperity of
the U.S., including increasing the federal investment in long-
term basic research and improving K-12 science and mathematics
education.
Congress responded. In 2007, this committee took the lead
in drafting legislation to implement the recommendations
included in the ``Rising Above the Gathering Storm'' report.
This landmark legislation, which became known as the America
COMPETES Act, received overwhelming bipartisan support in both
chambers of Congress, passed by a vote of 367 to 57 in the
House, and it passed by unanimous consent in the Senate. Norm
was at an event the other day where I told Senator Alexander
and Senator Bingaman if they can get unanimous consent in the
Senate again, then we are going to recommend them to be special
envoys in the Middle East. That should be a piece of cake after
working with the Senate.
Unfortunately, despite our best-laid plans, the America
COMPETES Act is set to expire tomorrow. A little more than nine
months ago, in this very room, we held a hearing with the U.S.
Chamber of Commerce, the National Association of Manufacturers,
the Business Roundtable, and the Council of Competitiveness on
the reauthorization of the America COMPETES Act. That hearing
was one of more than 30 hearings that we have held to inform
our reauthorization process, all of which have been very
supportive of reauthorization.
The Committee reported out the America COMPETES
Reauthorization Act of 2010 in April. The bill, which continued
critical investments in our science and technology and renewed
our commitment to future competitiveness and economic security
of the United States, passed the House on a bipartisan basis at
the end of May. The Senate version of the bill was reported out
of the Senate Commerce Committee in July and is currently
awaiting floor action.
Last week, we received a stark reminder about why the
reauthorization and full funding of America COMPETES is so
critical. The original ``Rising Above the Gathering Storm''
report Committee released an update of its 2005 report entitled
``Rising Above the Gathering Storm, Revisited, Rapidly
Approaching Category Five.'' According to the update, the
Nation's outlook has worsened substantially over the last five
years. We now face even greater challenges in sustaining our
competitive position in the world.
Our marching orders are clear. We must continue what we
started and recommit ourselves to the ideas we laid out in the
original COMPETES Act. If this report tells us nothing else, it
tells us that the worst thing we can do is to let our efforts
of reauthorization languish.
So with that I recognize the distinguished Chairman or
Ranking Member from Texas, Mr. Hall.
[The prepared statement of Chairman Gordon follows:]
Prepared Statement of Chairman Bart Gordon
Good Morning. I want to thank you for being here for this important
hearing on securing the competitiveness and economic future of the U.S.
In 2005, I joined then-Chairman Sherry Boehlert and Senators Lamar
Alexander and Jeff Bingaman in requesting the National Academies to
conduct a study assessing the state of our nation's competitiveness.
The resulting report was entitled Rising Above the Gathering Storm and
foreshadowed a troubling future for this nation--one in which our
scientific leadership, technological edge, and ability to compete
effectively in the global economy is uncertain. The report maintained
that--without decisive action--our children and grandchildren may very
well be the first generation of Americans to inherit a standard of
living lower than their parents. The report outlined specific actions
to be taken to ensure the future competitiveness and prosperity of the
U.S., including increasing the federal investment in long-term basic
research and improving K-12 science and mathematics education.
Congress responded. In 2007, this Committee took the lead in
drafting legislation to implement the recommendations included in the
Rising Above the Gathering Storm report. This landmark legislation,
which became known as the America COMPETES Act, received overwhelming
bipartisan support in both chambers of Congress. It passed by a vote of
367-57 in the House and by unanimous consent in the Senate.
The America COMPETES Act was more than just a rallying cry for U.S.
scientific and technological leadership and competitiveness. It
authorized a doubling of basic research budgets at the National Science
Foundation, the National Institute of Standards and Technology, and the
Department of Energy's Office of Science. It also established inventive
programs to train the next generation of math and science teachers and
to fund the transformational research that will lead to new industries,
new businesses, and new jobs. These programs are now up and running,
laying the foundation for sustained U.S. leadership in science,
technology and innovation and reversing the trend we were warned about
in Rising Above the Gathering Storm.
Unfortunately, despite our best laid plans, the America COMPETES
Act is set to expire tomorrow.
A little more than 9 months ago, in this very room, we held a
hearing with the U.S. Chamber of Commerce, the National Association of
Manufacturers, the Business Roundtable, and the Council on
Competitiveness on the reauthorization of the America COMPETES Act.
That hearing was just one of more than 30 hearings we held to inform
our reauthorization efforts.
This Committee reported out the America COMPETES Reauthorization
Act of 2010 in April. The bill, which continued critical investments in
science and technology, and renewed our commitment to the future
competitiveness and economic security of the U.S., passed the House on
a bipartisan basis at the end of May. The Senate version of the bill
was reported out of the Senate Commerce Committee in July and is
currently awaiting floor action.
Late last week, we received a stark reminder about why a
reauthorization of the America COMPETES Act is so critical. The
original Rising Above the Gathering Storm Committee released an update
to its 2005 report entitled Rising Above the Gathering Storm,
Revisited: Rapidly Approaching Category 5. According to the update, the
nation's outlook has worsened substantially over the last 5 years and
we now face even greater challenges in sustaining our competitive
position in the world.
Our marching orders are clear. We must continue what we started and
recommit ourselves to the ideals we laid out in the original COMPETES
Act. If this report tells us anything, it tells us that the worst thing
we can do is let our efforts at reauthorization languish.
Today's hearing may very well be the last hearing I chair in
Congress. While I am honored to have such a distinguished group of
witnesses with us today to mark this occasion, I wish we were here to
discuss a less sobering topic. At the same time, I am confident that,
in the America COMPETES Act and the pending reauthorization bill, we
have laid the groundwork to reverse the troubling trajectory laid out
in this latest report and to ensure our competitiveness and long-term
prosperity. I fully expect that the COMPETES reauthorization bill will
be enacted by the end of the year, and that Congress will have once
again answered this call to action.
Mr. Hall. Thank you, Mr. Chairman, and I do, I really do
thank you, and I am beginning to feel like these hearings with
you and my friends and all of our friends, Mr. Augustine, are
just episodes of deja vu. We all agree that a strong, skilled,
and STEM-educated workforce is critical to our Nation's ability
to compete and our ability to remain the leader in innovation,
and is our key to economic success.
And you almost described the Senate properly, but my
predecessor, Mr. Rayburn, had a new, young Democrat come in and
went to see the Speaker. He said, show me which Republican you
want me to take care of, and I will just leave the chimney
burning. He said, no, no, son. The Republican in the House is
not the enemy of the Democrat. The Democrat in the House is not
the enemy to the Republican. The enemy is the Senate. I think
you had it figured out.
Almost four years ago we sat in this room with almost the
same panel and officially kicked off what was to become the
America COMPETES Act as the Chairman has set out. As everyone
here is aware, America COMPETES was a culmination of
recommendations from the often-quoted ``Rising Above the
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 on this endeavor, and I
am proud of our accomplishments.
My message is exactly the same today as it was then and has
been throughout our current reauthorization of COMPETES. 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.
And I need to get a speech that doesn't have so many big
words in it.
While my message hasn't changed, and seemingly neither has
the message of Gathering Storm Committee members before today,
unfortunately, our economy has changed, and I am pleased to see
that the Gathering Storm revisited report acknowledges ``the
great difficulty of carrying out the Gathering Storm
recommendations such as doubling the research budget in today's
fiscal environment . . . with worthy demand after worthy demand
confronting budgetary realities.''
However, I take some issue with not doubling the budget
then and now just making an overweight aircraft flight worthy
by removing an engine. That is a pretty good line. That is
Norm. Rather, I would suggest that the prudent approach would
be to ensure that our current investments are creating a
successful return on investment and are being more efficiently
utilized.
Perhaps a better analogy would be that in order to make an
overweight aircraft flight worthy, one needs to offload excess
baggage, particularly in today's economic uncertainties. We
need to make sure that we are reaping the benefits of the
numerous initiatives called for in the initial Gathering Storm
report and set forth in America COMPETES before creating
others.
I am sure it troubles all of us on this committee to hear
that we continue to be on a decline in a variety of science and
technology areas, particularly when we have already legislated
numerous recommendations, set forth in the 2005 report. This
reinforces my belief, however, that other issues beyond funding
levels are holding us back. I believe much more needs to be
done to all of us, not just the Federal Government, to keep and
in some cases restore the United States to science and
technology innovation prominence across the board. Everyone has
a role. The private sector needs to step up, our schools and
teachers need to step up, parents need to step up, and our
children need to step up.
I look forward to the testimony of our distinguished panel
today because there is no doubt that we still have much to
accomplish. Everyone here knows of my deep admiration and
respect for Mr. Augustine and the other four here. Some six
years ago I suggested that he might make a good candidate for
President, and he hasn't spoken to me since, but I am serious
about that, and I see four there that would make good
candidates.
I sincerely expect we will hear that it takes a lot more
than just throwing money at R&D to help us achieve our goals,
and that America COMPETES is just one aspect of improving
American's competitiveness. I hope to hear them speak at length
on the other areas raised in their revised report, a majority
of which are not within this committee's jurisdiction, but are
major contributing factors to our competitiveness, and
encouraging private sector innovation through tax credits, a
positive regulatory environment, tort reforms, protection of
intellectual capital, and other such programs will catapult the
American economy and make us more competitive globally and
bring new products and jobs to the American people.
And, Mr. Chairman, I thank you, and I yield back my time if
I have any left.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Representative Ralph M. Hall
Thank you, Mr. Chairman. I'm beginning to feel like these hearings
with you and my good friend, Norm Augustine, are just episodes of deja
vu. We all agree that a strong, skilled and STEM-educated workforce is
critical to our Nation's ability to compete, and our ability to remain
the leader in innovation our key to economic success.
Almost four years ago we sat in this room with almost this same
panel 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 Rising Above the
Gathering Storm (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 on this endeavor, and I
am proud of our accomplishments.
My message is the exact same today as it was then and has been
throughout our current reauthorization of COMPETES: 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, and seemingly neither has the
message of the Gathering Storm Committee members before us today,
unfortunately, our economy has.
I am pleased to see that the Gathering Storm Revisited Report
acknowledges ``the great difficulty of carrying out the Gathering Storm
recommendations, such as doubling the research budget, in today's
fiscal environment . . . with worthy demand after worthy demand
confronting budgetary realities.'' However, I take some issue with not
doubling the budget being analogous to ``making an over-weight aircraft
flight-worthy [by removing] an engine.'' Rather, I would suggest that
the prudent approach would be to ensure that our current investments
are creating a successful return on investment and are being more
efficiently utilized. Perhaps the better analogy would be that in order
to make an over-weight aircraft flight-worthy, one needs to offload
excess baggage. Particularly in today's economic uncertainties, we need
to make sure that we are reaping the benefits of the numerous
initiatives called for in the initial Gathering Storm report and set
forth in America COMPETES before creating others.
I am sure it troubles all of us on this Committee to hear that we
continue to be on a decline in a variety of science and technology
areas, particularly when we have already legislated numerous
recommendations set forth in the 2005 report. This reinforces my
belief, however, that other issues beyond funding levels are holding us
back. I believe much more needs to be done by all of us, not just the
federal government, to keep, and in some cases restore, the United
States to science and technology innovation prominence across the
board. Everyone has a role. The private sector needs to step up, our
schools and teachers need to step up, parents need to step up, and our
children need to step up.
I look forward to the testimony of our distinguished panel today,
because there is no doubt that we still have much to accomplish.
Everyone here knows of my deep admiration and respect of Norm
Augustine, and I am eager to hear what he has to say, as well the rest
of our witnesses. I sincerely expect we will hear that it takes a lot
more than just throwing money at R&D to help us achieve our goals and
that America COMPETES is just one aspect of improving America's
competitiveness. I hope to hear them speak at length on the other areas
raised in their revised report, a majority of which are not within this
Committee's jurisdiction, that are major contributing factors to our
competiveness. Encouraging private sector innovation through tax
credits, a positive regulatory environment, tort reform, protection of
intellectual capital, and other such programs will catapult the
American economy, make us more competitive globally, and bring new
products and jobs to the American people.
Thank you, Mr. Chairman.
Chairman Gordon. Thank you, Mr. Hall.
Ms. Edwards. Mr. Chairman.
Chairman Gordon. Yes. The gentlelady from Maryland is
recognized.
Ms. Edwards. Thank you, Mr. Chairman, and I know it is not
our custom, but I wanted to take this moment, and I know that
the Ranking Member would do it as well, to acknowledge that
this is probably your last sitting in the Chair in this
committee, and I just want you to know how much I really
appreciate--I know that we all do--your leadership and your
guidance of our Committee. It is one of the committees in the
Congress that operates in the most unified way on so many
issues, this one included, and so I just want to thank you for
your leadership and your guidance and your service in the
United States Congress.
Chairman Gordon. Well, thank you. Let us not bury the
corpse quite yet. Let us let it get cold. We have got a lame
duck session, we have got more work to do, we have got to get
this COMPETES passed, but thank you for your very nice words.
Mr. Hall. I thought she was talking about me there for a
while.
Chairman Gordon. Well, Mr. Hall, I wish that we had an
expanded jurisdiction, because if we did, we would take care of
those other issues that you mentioned. It is a shame that the
United States has the second highest corporate tax rate in the
world, and we certainly have to have other changes.
But y'all, what we have is what is on our plate, so we want
to deal with that and deal with it well, and we--if there are
Members who wish to submit additional opening statements, your
statements will be added to the report at this point.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Good Morning. Thank you, Mr. Chairman, for holding today's hearing
to receive testimony on the report, Rising Above the Gathering Storm,
Revisited: Rapidly Approaching Category 5, a five-year review of the
state of science education and innovation in the U.S.
In 2005, the National Academy of Sciences (NAS) released its
landmark report, Rising Above the Gathering Storm, which recommended
Congress and the administration immediately invest in science
education, research, and technology to preserve the U.S. role as the
world leader in innovation. In response to this report, Congress passed
the America COMPETES Act with bipartisan support in 2007. However, the
important programs established by this act, particularly for science,
engineering, technology, and mathematics (STEM) education, were
underfunded or unfunded for two years until the passage of the American
Recovery and Reinvestment Act in 2009. Without sufficient funding,
COMPETES did not have the impact Congress intended.
Gathering Storm, Revisited makes clear these efforts unless the
government makes innovation a priority and provides adequate funding,
the U.S. remains at risk of falling behind in developing and patenting
new technology; publishing cutting edge research; training the next
generation of scientists and engineers; and maintaining the most
competitive workforce in the world. As this report demonstrates, it
remains imperative that U.S. students, teachers, businesses and workers
are prepared to continue leading the world in innovation, research and
technology.
I am interested in hearing from our witnesses what steps Congress
and the administration must take to achieve the original goals of
Gathering Storm, and what new challenges were identified in reviewing
this report five years later. In particular, I would like to hear how
the reauthorization of America COMPETES, which expires at the end of
this month, may achieve these goals and overcome the roadblocks to
innovation, especially with shrinking budgets and lower private sector
investment in research and development.
Further, I share the concerns of our witnesses regarding the steady
decline of STEM education in the U.S., particularly in grades K-12,
particularly with the elimination of several K-12 STEM programs in the
House reauthorization of COMPETES. Since coming to Congress, I have
recognized investment in STEM education as key to keeping our economy
strong and growing. I am interested to hear from our witnesses what
steps they recommend to strengthen our support for STEM education at
every grade level.
Finally, for many students, pursuing a college or advanced degree
in STEM fields is not feasible, particularly in this economy. These
students will enter the workforce after completing vocational education
or receiving an associate degree from a community college. Providing
these students a strong STEM background is no less important, however,
than training engineers and researchers, particularly if they enter
medical or manufacturing careers. As you demonstrate in Gathering the
Storm, Revisited, one-third of manufacturing companies cannot find
employees with the appropriate skill sets for innovative manufacturing.
I am interested in how improvements to STEM programs at community
colleges, such as the partnership between community colleges and
Manufacturing Extension Partnerships (MEPS) included in the House
COMPETES reauthorization, may address this gap.
I welcome our panel of witnesses, and I look forward to their
testimony. Thank you again, Mr. Chairman.
At this time I would like to introduce our witnesses.
First, Mr. Norm Augustine is the Retired Chairman and CEO of
Lockheed Martin Corporation and former Undersecretary of Army.
I think ``retired'' is an odd term to be using for him and for
Dr. Craig Barrett, the also so-called retired Chairman and CEO
of Intel. I think that they probably would like to go back and
get a rest running companies rather than all of the volunteer
efforts they are doing, and Dr. Barrett, we know that when you
leave your beloved Montana to come here, it is on a mission
that you feel strongly about, and we also thank you for taking
the Chairmanship of Change the Equation, rounding up 100 major
CEOs that recognize the importance of our STEM education, and
trying to move that ball forward.
And Mr. Charles Holliday is the Chairman of the Board of
Bank of America and the retired Chairman of the Board and CEO
of DuPont, and once again, we know there are other demands, but
you have made really service, your patriotic service to the
country important. Thank you for that. Dr. Dan Mote is the
President Emeritus of the University of Maryland as well as the
Glenn L. Martin Institute Professor of Engineering, and I am
sure they would like to see you more at the University of
Maryland, but you, too, have been giving of your time.
So, Mr. Augustine, please begin your testimony.
STATEMENT OF NORMAN R. AUGUSTINE, RETIRED CHAIRMAN AND CEO OF
THE LOCKHEED MARTIN CORPORATION AND FORMER UNDERSECRETARY OF
THE ARMY
Mr. Augustine. Mr. Chairman, Congressman Hall, and Members
of the Committee, thank you for this opportunity to appear on
behalf of my colleagues on the Gathering Storm Committee,
including my three colleagues here at this table. I would like
to submit a formal statement for the record with the
Committee's permission.
Chairman Gordon. That is without objection.
Mr. Augustine. Thank you. Five years ago, as you pointed
out, Mr. Chairman, this committee together with its counterpart
in the Senate asked the National Academies to examine America's
future competitiveness outlook. The members of the Academies
Committee quickly interpreted that to mean the ability of all
Americans to have the opportunity to compete for quality jobs
in the new global economy.
Our conclusion, I am sorry to say, was that we were on a
path at the time whereby we were likely to suffer sustained
unemployment at very high levels because Americans simply won't
be able to compete successfully for jobs. The only solution we
could see to that was to be among the world's leaders at
innovation, and to do that we pointed to 20 actions that would
be required, at least as a starting point. The two highest
priorities of those were to vastly improve the Nation's K-12
education system and to double the funding for basic research,
primarily at our Nation's research universities.
We emphasized the importance of science and engineering
because numerous studies have shown that over half the growth
of the GDP for many years has been attributable directly to
advancements in science and in engineering.
We have made progress, thanks to the work of this committee
to a very large degree. The America COMPETES Act made possible
a number of important actions that have taken place. The
research budget, at least, has begun on the new trajectory we
proposed; ARPA-E [Advanced Research Projects Agency-Energy] is,
I think, successfully launched and under way; the R&D tax
credit was continued; the State Department reassessed the
requirements that were being imposed for visa applicants who
want to be students in this country. But there is a problem,
and the problem is that almost all the good things that have
been done have been dependent upon funding from the stimulus
package and from authorization from the America COMPETES Act.
And as you know, both of these are due to expire momentarily.
So we stand on a precipice in terms of the accomplishments that
have been made.
There are a number of things that have gone against us
during the past five years since the study was first done.
Others are getting better quickly. They are building new
universities. This year there will be 98,000 Chinese students
going to school in America, and 103,000 Indian students going
to school in America, many of them studying engineering and
science.
Secondly, the stress on the federal budget, as the people
in this room would know so well, is making it even more
difficult to implement many of the things we need to do to be
more competitive as a nation.
Thirdly, our universities, something that was unthought of
five years ago, today are being very much stressed in the sense
of reduced financial support from states, reduced endowments.
And this is resulting in other countries' universities
targeting and picking off some of the finest researchers and
professors at our universities.
And finally, at the time we met five years ago, the
biosciences had been well funded--more accurately, the health
sciences--whereas since that time they, too, have suffered the
impact of inflation and some reductions.
I would share just a few statistics with you. We are used
to thinking of America as being number one. Today, some facts
based on data from respected sources: in terms of innovation-
based competitiveness, we have now been ranked number six; our
fraction of the young workforce with a high school diploma, we
rank 11th in the world. Our college completion rate, we are
16th; our high school completion ranked 20th. In achievement
among 17 year olds in science, we rank 21st. Broadband internet
access, we rank 22nd; life expectancy at birth, 24th;
achievement of 17 year olds in mathematics, 25th; the fraction
of college graduates who study science and engineering, 27th.
In rate of improvement in competitiveness, 40th; the quality of
math and science K-12 education, 48th; and the density of
mobile telephone subscribers, 72nd.
Now, that is not the America that I like to think of us as
being. And can you imagine if our--when our Olympic team
finished fourth in basketball, you recall the impact it had and
what we did about it. My hope is that we can have an even more
energetic impact to these circumstances.
This isn't the America that I would want to see for my
grandchildren, and I suspect many in this room will share that
view for their children and grandchildren.
Thank you very much.
[The prepared statement of Mr. Augustine follows:]
Prepared Statement of Norman R. Augustine
Chairman Gordon and Members of the Committee, thank you for this
opportunity to discuss the results of the report prepared for the
National Academies that was released this past week and is titled,
``Rising Above the Gathering Storm, Revisited: Rapidly Approaching
Category 5.'' I would also like to take this opportunity to thank the
Committee for its key role in supporting science and engineering in
America and, through those disciplines, improving the quality of life
of all our nation's citizens.
The most recent report, ``Rising Above the Gathering Storm,
Revisited'' traces its origin to a request by this Committee and its
counterpart in the Senate. That request was made on a bipartisan basis
some five years ago and resulted in a National Academies study that
came to be known as the ``Gathering Storm study'' after the first line
in the title of the report that presented its findings. The request
from the Congress asked that the Academies address America's future
competitiveness outlook . . . which the Academies committee quickly
came to define as the ability for all Americans to compete for quality
jobs in the new global marketplace. It is those jobs that will largely
define the quality of life that will be enjoyed by working individuals
and their families, and it is the income from those jobs that will
provide the tax resources needed by our government to provide the
benefits that we all have come to expect, such as homeland security,
healthcare, social security and much, much more. I believe it is fair
to state that the report enjoyed strong bipartisan support of the
members of this body.
The original National Academies committee was composed of 20
members having rather diverse professional backgrounds, including then
present and former CEO's of large firms, presidents of major public and
private universities, the head of a state public K-12 school system,
and three Nobel Laureates. The principal result of their deliberations
was a series of 20 specific, interdependent actions that could be taken
by the federal government to enhance the ability of Americans to
compete for jobs in the increasingly competitive world employment
market. This prioritized list was headed by the imperative to improve
the nation's K-12 education system and was immediately followed by the
need to double within seven years the nation's real investment in basic
research.
The report placed particular emphasis on science and engineering
because numerous studies have indicated that at least half the growth
in the nation's GDP during the past half-century can be attributed to
advancements in these fields. With the accelerating pace of science and
engineering one can reasonably expect the creation of jobs in the next
50 years to exhibit an even greater dependency on developments in such
disciplines. It should be noted in this regard that the Gathering Storm
committee considers jobs in science and engineering to be means to an
end and not an end in themselves . . . that is, only four percent of
America's workforce is employed in science and engineering--the
disproportionate importance of these professions stems from the fact
that they create jobs for a very large number of other citizens.
In its original report, released exactly five years ago, the
Gathering Storm committee concluded that America was on a path whereby
large numbers of its citizens would not be competitive for quality
jobs--and that chronic built-in unemployment would be a likely
consequence of structural weaknesses . . . again, most prominently,
under-investment in education and under-investment in the creation of
knowledge through research--the underpinnings of innovation.
A number of important initiatives were undertaken following the
completion of the work of the Gathering Storm committee as well as that
of numerous other groups, including the establishment of ARPA-E,
increasing research funding approximately on the profile the Gathering
Storm committee recommended, implementing steps to improve K-12
education, strengthening policies affecting student visa applicants and
funding for research and development tax credits.
However, most of the above actions were authorized under the
America Competes Act and were funded as part of the economic recovery
package. As you know, the Competes Act requires reauthorization this
year and the recovery package is approaching its sunset insofar as it
serves as a source of funding. Thus, the efforts that are now underway
find themselves on a budgetary precipice.
Underlying the Gathering Storm committee's findings was such
evidence as that cited by Frances Cairncross writing in The Economist
who noted that ``distance is dead'' . . . a victim of the advent of
modern aircraft and information systems. Distance no longer matters to
those seeking employees for a large variety of quality jobs. In the
words of Tom Friedman, in his book, The World is Flat, ``Globalization
has accidentally made Beijing, Bangalore and Bethesda next door
neighbors.'' This is particularly true when Americans must compete for
jobs.
The report released this past week, ``Rising Above the Gathering
Storm, Revisited: Rapidly Approaching Category 5,'' was prepared at the
request of the presidents of the National Academy of Sciences, the
National Academy of Engineering, and the Institute of Medicine. The
same Committee that prepared the original Gathering Storm study
conducted the more recent examination--with the exception of three
members who were unable to participate. One of these members is our
much admired colleague and Nobel Laureate, Josh Lederberg, who passed
away. The other two are currently serving in key roles in the federal
government. The findings of the remaining 17 Committee members were
unanimous.
The Committee focused on events occurring during the past five
years that have impacted the initial conclusions and recommendations
and their continued appropriateness. The members found the need to
continue to support the original proposed actions even more compelling
and urgent today than at the time they were initially proposed. Both
specific events as well as overarching matters that occurred during the
five years since the initial report was prepared led to this
conclusion. Examples of the former include:
Six million more American youth have dropped out of
high school since the original Gathering Storm report was
produced and each of these individuals now faces an
extraordinarily high prospect of prolonged unemployment.
The World Economic Forum has ranked the U.S. 48th in
quality of mathematics and science education.
In 2009, 51 percent of U.S. patents were awarded to
non-U.S. companies.
Federal funding of research in the physical sciences
as a fraction of GDP fell by 54 percent in the 25 years after
1970. The corresponding decline in engineering funding was 51
percent.
The Information Technology and Innovation Foundation
ranked the U.S. in sixth place in global innovation based
competitiveness and ranked the U.S. 40th in the rate of
improvement over the past decade.
China has now replaced the United States as the
world's number one technology exporter.
Eight of the 10 global companies with the largest R&D
budgets have established R&D facilities in China, India, or
both.
General Electric, like a growing number of other
firms, has relocated the majority of its R&D personnel outside
the United States.
Ninety-three percent of U.S. public schools in fifth
through eighth grade are taught the physical sciences by a
teacher without a degree or certificate in the physical
sciences.
The United States ranks 27th among developed nations
in the proportion of college students receiving undergraduate
degrees in science or engineering.
The United States ranks 20th in high school
completion rate among industrialized nations and 16th in
college completion rate.
An American company recently opened the world's
largest private solar R&D facility . . . in Xian, China.
Between 1996 and 1999, 157 new drug formulations were
approved by the United States. In a corresponding period 10
years later, the number dropped to 74.
Two-thirds of those receiving PhD's in engineering
from U.S. universities are foreign-born. These individuals
increasingly indicate their intention eventually to return to
their home countries.
All of the National Academies ``Gathering Storm''
Committee's recommendations could have been fully implemented
with the sum Americans spent on cigarettes--with $60B a year
left over.
Turning to macroscopic developments, four circumstances warrant
particular mention. The first of these is that other nations are
rapidly improving their competitive ability due to a major emphasis on
education, including the creation of new science- and engineering-
focused universities and very progressive tax policies that favor
innovation-driven firms.
Second, the ability of the U.S. to respond to the competitiveness
challenges it faces has been increasingly hindered by the extraordinary
budget pressures faced by the federal government as well as state and
local governments.
Third, altogether unforeseen at the time of the Gathering Storm
study five years ago, America's higher education system, long the gold
standard of the world, is now being severely threatened. The source of
this challenge is the serious financial condition of many states plus
the loss of endowments suffered during the recent financial downturn.
As a result, universities are taking heretofore largely unprecedented
actions, including mandatory furloughs for faculty, faculty layoffs and
large increases in tuition. Concurrently, universities in other nations
are seeing this as an opportunity to attract many of the finest
researchers and educators from America's educational institutions,
particularly its research universities.
Fourth, at the time the original Gathering Storm study was
conducted, the biosciences, or more precisely the health sciences, had
just benefitted from a doubling of federal research funding and
therefore were not given primary consideration in the Academies' work.
Since that time, however, this upward trend has been reversed and the
effects of inflation have further taken their toll.
The underlying dilemma faced by a firm seeking to determine where
to build a new R&D facility or factory is illustrated by the following
set of choices comparing two nations from a competitiveness standpoint:
In Country A, the average non-professional worker ranks in the
lower quartile of the global high school class and expects to be paid a
wage of $17 per hour plus an additional third of that amount in
benefits; the nation's economy is mature in terms of growth potential;
it has the second highest corporate tax rate in the world; and the
average firm spends almost three times as much on litigation as on
research. In Country B, the average non-professional worker ranks in
the top 10 percent of the global high school class and is eager to work
for $1.50 per hour with no additional benefits; five-year tax holidays
are commonly granted to startup high tech firms; five to eight
professional employees can be hired for the cost of one in Country A;
and the domestic market for products is growing exponentially.
Country A is, of course, the United States, and even the most loyal
CEO's and boards of directors of American firms will, given their
fiduciary responsibilities, generally elect to move to Country B.
In summary, the Gathering Storm committee unanimously concluded
that America's competitive situation is even more perilous today than
it found it to be five years ago. The recommendations in the initial
report are deemed still to be entirely appropriate--the task being to
implement those recommendations on a continuing basis. Doing so will
require reauthorizing the America Competes Act and providing the
funding needed to carry out the above-mentioned recommendations.
It is noted that meeting the competitiveness challenge is a
marathon, not a sprint, and will thus require our enduring efforts. It
is the Gathering Storm committee's conviction that this is an endeavor
in which all Americans can unite since the fundamental issue is the
quality of life we will leave to our children and our grandchildren.
Thank you for affording me this opportunity to share with you the
findings of my colleagues on the Gathering Storm committee. I would be
pleased to address any questions you might wish to raise.
Biography for Norman R. Augustine
NORMAN R. AUGUSTINE was raised in Colorado and attended Princeton
University where he graduated with a BSE in Aeronautical Engineering,
magna cum laude, and an MSE. He was elected to Phi Beta Kappa, Tau Beta
Pi and Sigma Xi.
In 1958 he joined the Douglas Aircraft Company in California where
he worked as a Research Engineer, Program Manager and Chief Engineer.
Beginning in 1965, he served in the Office of the Secretary of Defense
as Assistant Director of Defense Research and Engineering. He joined
LTV Missiles and Space Company in 1970, serving as Vice President,
Advanced Programs and Marketing. In 1973 he returned to the government
as Assistant Secretary of the Army and in 1975 became Under Secretary
of the Army, and later Acting Secretary of the Army. Joining Martin
Marietta Corporation in 1977 as Vice President of Technical Operations,
he was elected as CEO in 1987 and chairman in 1988, having previously
been President and COO. He served as president of Lockheed Martin
Corporation upon the formation of that company in 1995, and became CEO
later that year. He retired as chairman and CEO of Lockheed Martin in
August 1997, at which time he became a Lecturer with the Rank of
Professor on the faculty of Princeton University where he served until
July 1999.
Mr. Augustine was Chairman and Principal Officer of the American
Red Cross for nine years, Chairman of the Council of the National
Academy of Engineering, President and Chairman of the Association of
the United States Army, Chairman of the Aerospace Industries
Association, and Chairman of the Defense Science Board. He is a former
President of the American Institute of Aeronautics and Astronautics and
the Boy Scouts of America. He is a current or former member of the
Board of Directors of ConocoPhillips, Black & Decker, Proctor & Gamble
and Lockheed Martin, and was a member of the Board of Trustees of
Colonial Williamsburg. He is a Regent of the University System of
Maryland, Trustee Emeritus of Johns Hopkins and a former member of the
Board of Trustees of Princeton and MIT. He is a member of the Advisory
Board to the Department of Homeland Security, was a member of the Hart/
Rudman Commission on National Security, and served for 16 years on the
President's Council of Advisors on Science and Technology. He is a
member of the American Philosophical Society, the National Academy of
Sciences and the Council on Foreign Affairs, and is a Fellow of the
National Academy of Arts and Sciences and the Explorers Club.
Mr. Augustine has been presented the National Medal of Technology
by the President of the United States and received the Joint Chiefs of
Staff Distinguished Public Service Award. He has five times received
the Department of Defense's highest civilian decoration, the
Distinguished Service Medal. He is co-author of The Defense Revolution
and Shakespeare in Charge and author of Augustine's Laws and
Augustine's Travels. He holds 24 honorary degrees and was selected by
Who's Who in America and the Library of Congress as one of ``Fifty
Great Americans'' on the occasion of Who's Who's fiftieth anniversary.
He has traveled in over 100 countries and stood on both the North and
South Poles of the earth.
Chairman Gordon. Thank you, Mr. Augustine.
Dr. Barrett is recognized.
STATEMENT OF CRAIG BARRETT, RETIRED CHAIRMAN AND CEO OF INTEL
CORPORATION
Dr. Barrett. Thank you, Mr. Chairman. It is a pleasure to
be invited here to testify today. I have also submitted a
written testimony. I would like to supplement that kind of
`freelance,' if you will.
I do not represent Intel, although I worked there for 35
years, and I am still very proud of that company. It employs
nearly 50,000 U.S. citizens, does 75 percent of its
manufacturing still here in the United States, and 85 to 90
percent of its R&D budget is spent here in the United States,
and the R&D budget is substantially greater than that of the
National Science Foundation. So it is an appreciable investor
in R&D here in the U.S.
While CEO and then Chairman of Intel, I had the privilege
to travel quite a bit. I probably visited over 100 countries
for Intel, had the opportunity to speak to business leaders,
academic leaders in those countries, and government leaders.
And during those conversations I always heard exactly the same
thing, and I think it is very true here in the United States:
every one of those countries was interested in increasing its
competitiveness.
The `competitiveness quotient,' so to speak, was derived by
three factors. One was the education level of the workforce.
You can't be number one unless you have the number one
education system. The investment in new ideas, the investment
in R&D. It is new ideas that create the next generation of
products, services, and create wealth. And the third feature
they were interested in was the environment, the environment
simply to let smart people get together with smart ideas, and
do something wonderful. And the environment is partially set by
society, partially set by government rules and regulations, tax
rates, intellectual property protection, ability to start a
company, bankruptcy laws, a whole series of issues.
``Rising Above the Gathering Storm'' and the America
COMPETES Act focus on those three issues; smart people, smart
ideas, and the right environment, and five years after the
fact--that the initial report was introduced--the follow-up
report that Norm Augustine mentioned. I think we are not
batting particularly well on either of those or any of those
three topics.
I would fully support the reauthorization of the America
COMPETES Act. I do not think it is solely an issue of
government, though, as the Chairman mentioned. It is an issue
for society and private sector to become involved, and you
mentioned the private sector in the Change the Equation group,
which was just announced a week or so ago here in Washington,
DC. About 110 CEOs of major U.S. corporations involved in
science and technology, but also involved in consumer goods and
many other industries, have banded together to do their part to
promote science, technology, engineering, and mathematics
education and interest in the youth of America. I think one of
our biggest challenges is getting the younger generation
interested in what is going forward.
The Change the Equation group is committed to really three
major efforts. One is improve the teaching of science and math
in K-12, better science and math teachers. Secondly, it is
involved in getting kids interested in science and math out of
school. That is such things as robotics competitions, science
fairs, a number of activities that the private sector is
already involved with. We want to amplify those and spread them
geographically across the United States. In fact, the first-
year goal is to have programs of that type in 100 new
geographic areas where the programs do not exist today over the
next year.
The third thing we are interested in doing is, in fact,
using the CEOs in the private sector as the voice of advocacy
for the basic tenets of the America COMPETES Act and the
``Rising Above the Gathering Storm'' recommendations--dealing
with state, local legislators to, in fact, mobilize them to
focus on STEM issues, on K-12 issues, on research, university
issues, and job creation in their local areas.
I think we are off to a good start in that respect. By
golly, if I look at what is going on around the world, we have
a heck of a lot of work in front of us, and unless the America
COMPETES Act is reauthorized going forward, and coupling that
public sector set of programs with the private sector, I think
we are going to continue to struggle.
Thank you.
[The prepared statement of Dr. Barrett follows:]
Prepared Statement of Craig Barrett
Thank you, Mr. Chairman, for the opportunity to testify before you
today. I also want to thank Ranking Member Hall and all the members of
the Committee on Science and Technology for your support for basic
research and development and your commitment to improving education
standards for our children.
My name is Craig Barrett and I am the former Chairman and CEO of
Intel Corporation. Intel is the world's largest manufacturer of
semiconductors, three-quarters of which are manufactured here in the
United States. Intel employs more than 40,000 people in the United
States and spends billions of dollars each year on research and
development, most of which is done in the U.S.
As a leading information technology company, Intel is dependent on
highly-skilled engineers, mathematicians and scientists to maintain its
competitive position in the marketplace. Increasingly, however, it is
difficult for companies like Intel to find the qualified American
workers they need to develop new and innovative products. Our
competitors around the world are investing more in their education
systems and producing workers who are better prepared for the high-
skilled jobs of the future.
As a country, we need to re-double our commitment to educating our
children and investing in basic research that will lead to breakthrough
technological developments. That is why I support and encourage your
efforts to reauthorize the America Competes Act.
I am pleased to be here with you today to examine where we stand on
the challenge of U.S. Competitiveness five years after the National
Academy of Engineering issued its Gathering Storm report, which I had
the honor to contribute to under the direction of our chair Norm
Augustine.
As you know, the Gathering Storm report found that as a country we
need to create high-quality jobs for Americans and develop clean,
affordable and reliable energy. We made four recommendations designed
to help us achieve those goals:
1. Increase America's talent pool by vastly improving K-12
science and mathematics education.
2. Sustain and strengthen the nation's traditional commitment
to long-term basic research that has the potential to be
transformational and to maintain the flow of new ideas that
fuel the economy, provide security, and enhance the quality of
life.
3. 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.
4. 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.
Following the issuance of this report, Congress took steps to
address many of these recommendations by adopting the America Competes
Act of 2007. That legislation called for a doubling of the research
budgets for key agencies like the National Aeronautics and Space
Administration (NASA), the National Institute of Standards and
Technology (NIST), the National Oceanic and Atmospheric Administration
(NOAA), The National Science Foundation (NSF) and the Department of
Energy (DOE). The Act also directed significant resources to educating
students in the key areas of science, technology, education and
mathematics.
But despite the important first steps taken in 2007, the job is not
finished. That is why I commend this Committee, and the House of
Representatives, for this year adopting a reauthorization of the
Competes Act that builds on the initial legislation. The bill you
passed would not only improve STEM education efforts to help prepare
students for the highly technical jobs of the future, but would keep us
on the path towards efforts to develop transformational new energy
technologies. These goals are too important to be abandoned and I
encourage the Senate to follow in your footsteps and pass the America
Competes reauthorization before this Congress comes to an end.
The responsibility to better prepare our students for careers in
the STEM fields falls not just to the government, of course, but to the
private sector as well. As you may be aware, I recently accepted the
challenge of serving as Chair of an important initiative called
``Change the Equation.'' Change the Equation is a private sector effort
comprised of over 100 companies from all different industry sectors and
from all across the country. We aim to improve STEM education by:
1. Improving STEM teaching at all grade levels.
2. Inspiring student appreciation and excitement for STEM
programs and careers.
3. Achieving a sustained commitment to improving STEM
education from business leaders, government officials, STEM
educators and other stakeholders through innovation,
communication, collaboration and data-based decision making.
Change the Equation will work with our member companies to identify
education programs that are successful and spread them to more than 100
sites across the country. We are also going to assess STEM education
efforts in the 50 States by building a scorecard to measure their
performance. And we are going to disseminate principles for how
businesses can help to improve STEM education.
We know that STEM literacy is a business imperative for our
nation's economic excellence, success and citizenship. Our
collaboration will not only help students, but will revive our economy,
fuel our industries, strengthen our democracy and ultimately empower
our nation.
Every year reports are produced that say the same thing. We need
action. A recent report projected that by 2018 there will be eight
million jobs in STEM-related fields. However, the report also indicates
that the next generation of employees in America will be unprepared and
unqualified to take advantage of these positions.
A follow up report to Gathering Storm highlights the many
challenges we still face. It found that:
Sixty-nine percent of United States public school
students in fifth through eighth grade are taught mathematics
by a teacher without a degree or certificate in mathematics.
Only four of the top ten companies receiving United
States patents last year were United States companies.
United States consumers spend significantly more on
potato chips than the government devotes to energy R&D.
America has an innovation problem. And we need to solve it. The
America Competes Act of 2007 took steps towards tackling this problem
and the reauthorization of the Act this year would signal continued
Congressional support for making the investments we must make.
But to truly benefit from America's renewed commitment to basic
research, and to provide American students the STEM skills they need to
keep America competitive, we need both the government and the private
sector to further increase their efforts and make the hard choices
required--investing in our students, in our schools, and in the
creation of new job opportunities by removing barriers to innovation.
The commitment of the private sector and the support of government
are both essential to ensure that American remains competitive in the
global marketplace. While it is incumbent upon U.S. businesses to make
smart investments in the technologies they pursue and the people they
hire, it is equally important that the government adopt policies that
give American industry a competitive advantage.
Finally, Mr. Chairman, as you will be retiring at the end of this
Congress, I want to express my appreciation to you for your 26 years of
service to our nation. You have always been one of the most passionate
advocates for investment in science, basic research, STEM education and
all of the keystones of innovation that are so critical to our future.
Thank you again, Mr. Chairman, for the opportunity to testify
before you today. I look forward to answering any questions you may
have.
Biography for Craig Barrett
Dr. Craig Barrett is a leading advocate for improving education in
the U.S. and around the world. He is also a vocal spokesman for the
value technology can provide in raising social and economic standards
globally. In 2009, he stepped down as Chairman of the Board of Intel
Corporation, a post he held from May 2005 to May 2009.
Craig Barrett was born in San Francisco, California. He attended
Stanford University in Palo Alto, California from 1957 to 1964,
receiving Bachelor of Science, Master of Science and Ph.D. degrees in
Materials Science. After graduation, he joined the faculty of Stanford
University in the Department of Materials Science and Engineering, and
remained through 1974, rising to the rank of Associate Professor. Dr.
Barrett was a Fulbright Fellow at Danish Technical University in
Denmark in 1972 and a NATO Postdoctoral Fellow at the National Physical
Laboratory in England from 1964 to 1965. He is the author of over 40
technical papers dealing with the influence of microstructure on the
properties of materials, and a textbook on materials science,
Principles of Engineering Materials.
Dr. Barrett joined Intel Corporation in 1974 and held positions of
vice president, senior vice president and executive vice president from
1984 to 1990. In 1992, he was elected to Intel Corporation's Board of
Directors and was promoted to chief operating officer in 1993. Dr.
Barrett became Intel's fourth president in 1997, chief executive
officer in 1998 and chairman of the Board in 2005.
Dr. Barrett served until June 2009 as Chairman of the United
Nations Global Alliance for Information and Communication Technologies
and Development, which works to bring computers and other technology to
developing parts of the world. He co-chairs Achieve, Inc., is vice
chairman of the National Forest Foundation, president and chairman of
the BASIS School, Inc. Board of Directors, and a member of the Board of
Directors of Society for Science and the Public, Science Foundation
Arizona, and Dossia. Dr. Barrett serves on the advisory board of the
Peter G. Peterson Foundation, the Arizona Commerce Authority Board, the
faculty of Thunderbird School of Global Management, and is Honorary
Chairman of the Irish Technology Leadership Group. Recently, Dr.
Barrett has been appointed by the President of the U.S. as one of the
private sector leaders for a national education science, technology,
engineering and math (STEM) initiative now known as Change The
Equation, and he has been appointed by the President of the Russian
Federation as the International co-chairman to lead the Board of the
Fund for Development of the Center for Elaboration and
Commercialization of New Technologies. Dr. Barrett has served on
numerous boards, policy and government panels, and has been an
appointee of the President's Advisory Committee for Trade Policy and
Negotiations and the American Health Information Community. He has co-
chaired the Business Coalition for Student Achievement and the National
Innovation Initiative Leadership Council, and has served as a member of
the Board of Trustees for the U.S. Council for International Business
and the Clinton Global Initiative Education Advisory Board. Dr. Barrett
has been a member of the National Governors' Association Task Force on
Innovation America, the National Infrastructure Advisory Council, the
Committee on Scientific Communication and National Security, the U.S.-
Brazil CEO Forum, past chair of the National Academy of Engineering,
and formerly served on the Board of Directors of the U.S. Semiconductor
Industry Association, the National Action Council for Minorities in
Engineering, and TechNet.
Chairman Gordon. Thank you. Mr. Holliday.
STATEMENT OF CHARLES HOLLIDAY, JR., CHAIRMAN OF THE BOARD OF
BANK OF AMERICA AND RETIRED CHAIRMAN OF THE BOARD AND CEO OF
DUPONT
Mr. Holliday. Thank you, Mr. Chairman, and we appreciate
your strong leadership in this regard.
I have a very specific idea to leave with you today that
takes the work of this committee to the next step, an idea
around low-cost, clean energy. We believe if we could create
that in this country, we could do a lot to move those
statistics that Norm described in a very different way.
And Norm Augustine and myself gathered with other people
from companies that have a track record of making a step change
in technology. Ursula Burns from Xerox. We don't call it the
Xerox machine for nothing. John Doerr, who is critical in
funding so many of the iconic companies now on the west coast;
a guy named Gates who has done some things around software;
Jeff Immelt from General Electric; and Tim Solso from Cummins--
and they have done amazing things to take the diesel engine to
a different area.
We said if we were in charge of creating that low-cost,
clean energy, how would we do it, and we wrote a business plan,
which I would be glad to give you a copy of. And I will just
share with you the five very simple recommendations.
We said we think this is possible, but it is going to take
some time. It may take a decade, it may take more, and we need
continuity over that period of time, and we need a board, a
strategy board responsible to you that is consistent over a
period of time and doesn't change every two to four years. And
we believe that is possible. That is how we would do it inside
our company.
Second, we must fund it to win. The amount of money being
spent today is important. It is not enough in our estimation.
To get there we think we need $11 billion more dollars. We
think it is one of the best investments our country could ever
make to create the kind of jobs we need over time.
Then we looked at what we have been very successful at in
this country, and that is creating clusters of technology and
business together; that is where our big breakthroughs have
come. We recommended doing that again. We did not say which
technologies. We want the market to pick those. We did not say
in which cities or what universities they should be tied with,
but we think that is a model that is uniquely American and
should be taken forward.
Something in America COMPETES that has worked very, very
well is ARPA-E. It is this concept of funding entrepreneurs
early on with big-step change projects. I was out meeting with
the Department of Energy people on this very subject just three
weeks ago, went project by project, and you would be very proud
of what they are doing. The quality of people that Steve Chu
and his team have attracted, but also the projects. They meet
that requirement. When they are successful, they will be really
low cost and really clean energy. They have 37 of them. They
all won't be a success. If we could just get three or four of
them to be a success, that would be a breakthrough.
Our last recommendation is absolutely critical. We found
that in all of our work with the National Academies, you can't
have a great technology but let it sit on the shelf, let it sit
on the lab bench, and from all of our experience in the seven
companies that we're involved in, we all have prototype
facilities. We knew we could not go from the lab to scale
subtly. So we had to have a prototype facility necessary.
Because of the very high cost of this kind of investment,
individual companies will not make that. So we think assistance
from the Federal Government in those prototype facilities is
critical, and this strategy board I described in recommendation
number one is the mechanism for handling that.
So we left this work extremely encouraged. We think we
could put a significant amount of money--we are not minimizing
what $11 billion is, but we believe $11 billion per year over a
decade can step change our position, and we hope you will
consider it.
Thank you very much.
[The prepared statement of Mr. Holliday follows:]
Prepared Statement of Charles Holliday, Jr.
Good morning Chairman Gordon and Members of the Committee. As you
well know, I was involved in the original Gathering Storm report. That
report made specific policy recommendations on four areas critical to
American competitiveness:
Vastly improve K-12 science and mathematics
education.
Sustain and strengthen the nation's commitment to
long-term basic research that has the potential to be
transformational.
Make the United States the most attractive setting in
which to study and perform research. Attach a green card to the
diploma for international students who pursue higher education
in science, technology, engineering or math here in the United
States.
Ensure that America is the premier place in the world
to innovate; invest in manufacturing and marketing; and create
high-paying jobs based on innovation.
I will let my esteemed colleague, Norm Augustine, describe the
details of that report and the related progress we've made on those
issues in more detail. Instead, I will focus my remarks on a subsequent
effort that Mr. Augustine and I were involved with focusing on energy
innovation. So, I speak to you today on behalf of the American Energy
Innovation Council (AEIC), which is comprised of a group of America's
top business executives who came together earlier this year to
recommend ways to promote American innovation in clean energy
technology. Today, I will discuss why America must invest in clean
energy innovation and how we can achieve a more productive national
energy innovation system that will improve our prosperity, our security
and our environment. In particular I will describe the five
recommendations from our recent report, ``A Business Plan for American
Energy Innovation.''
Indeed, technology innovation--especially in energy-- is at the
heart of many of the central economic, national security,
competitiveness and environmental challenges facing our nation and I
commend the Committee on Science and Technology, and especially
Chairman Gordon, for the thoughtful consideration they are giving these
issues.
Before discussing the specific recommendations of our report, I'd
like to say a little more about the American Energy Innovation Council
and how we came together. The AEIC was launched in January 2010 and, in
addition to myself, its members include: Norm Augustine, former
Chairman and Chief Executive Officer of Lockheed Martin; Ursula Burns,
Chief Executive Officer of Xerox; John Doerr, Partner at Kleiner
Perkins Caufield & Byers; Bill Gates, Chairman and former Chief
Executive Officer of Microsoft; Jeff Immelt, Chairman and Chief
Executive Officer of General Electric; and Tim Solso, Chairman and
Chief Executive Officer of Cummins Inc. During our report
deliberations, the AEIC was advised by a Technical Review panel
consisting of preeminent energy, science and innovation experts.\1\ The
AEIC is supported, funded and staffed by the Bipartisan Policy Center
and the ClimateWorks Foundation.\2\ This group coalesced around the
mission to foster strong economic growth, create jobs in new
industries, and reestablish America's energy technology leadership in
the development of clean energy technologies.
---------------------------------------------------------------------------
\1\ A list of the Technical Review Panel can be found at the end of
the document.
\2\ More information about the Bipartisan Policy Center and the
ClimateWorks Foundation can also be found at the end of this document.
---------------------------------------------------------------------------
As business leaders, my AEIC colleagues and I have had the great
privilege of building companies that lead our respective fields and
employ hundreds of thousands of American workers. Our experience has
given each one of us an unshakable belief in the power of innovation.
Each of our companies achieved prominence because we invested heavily
and steadily in new ideas, new technologies, new processes and new
products. Indeed, innovation is the essence of America's economic
strength, and it has been our nation's economic engine for centuries.
Our leadership in information technology, medicine, aviation,
agriculture, biotech and dozens of other fields is the result of our
enduring commitment to innovation.
The AEIC, however, came together around the belief that in energy
investment-- a realm central to America's economic, national security,
and environmental future-- our commitment to innovation is sorely
lacking. Investment in energy innovation, from both the public and
private sectors, is paltry-- less than one-half of one percent of the
national energy bill-- and this neglect carries serious consequences.
Due to our constrained energy technology options, our economy is
vulnerable to price shocks-- in oil, natural gas, and even electricity.
The United States sends about $1 billion overseas every day for
imported oil, expenditure that represents the biggest part of the trade
deficit and often causes economic hardship for American consumers and
businesses. Our foreign oil reliance undermines national security by
enriching hostile regimes while our military forces are often deployed
to protect access to oil. And the environmental costs of limited clean
energy options are steep and growing, with both conventional pollution
and climate change harming human health, threatening lives and
livelihoods, and imperiling the natural systems upon which we rely for
food, water, and clean air. The scale of these threats, and the wealth
of opportunities to do better, make the message clear: it is time to
invent our future.
We must make a serious commitment to the goal of modernizing our
energy system with cleaner, more efficient technologies. Such a
commitment should include both robust, public investments in innovative
energy technologies as well as policy reforms to deploy these
technologies on a large scale. I joined with my AEIC colleagues to
address ways we believe the United States can better meet this
commitment.
Although the private sector will be paramount in commercializing
and deploying clean energy on a national scale, it cannot achieve this
goal alone. The fundamental differences between energy and most other
economic sectors limit the ability of the private sector to solve
large-scale energy problems on its own. For instance, national
security, national economic strength, and the environment are not
primary drivers for private sector investments, but they are critical
to the health of our country. Large scale deployment of many new energy
technologies requires massive capital expenditures that are often too
risky for private investors, and the product-- electricity-- is sold
into a generic market that does not differentiate between clean and
dirty sources. Additionally, America's long-term corporate R&D budgets,
especially those run by utilities, have been in decline for several
decades. Finally, the turnover of our energy infrastructure--
particularly in the electrical generation system-- is very slow.
Add these elements together, and it becomes clear why private
sector investments in clean energy technology development have been so
small. In fact, of all major technology-dependent sectors, the energy
sector spends the smallest portion of its sales on research and
development.\3\
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\3\ (1) National Science Foundation Data table 36. Federal research
and development obligations, budget authority, and budget authority for
basic research, by budget function: FY 1955-2009. http://www.nsf.gov/
statistics/nsf08315/content.cfm?pub-id=3880&id=2
---------------------------------------------------------------------------
(2) G.F. Nemet, D.M. Kammen, U.S. energy research and development:
Declining investment, increasing need, and the feasibility of
expansion, Energy Policy 35 (2007) 746-755.
(3) Pharmaceutical Research and Manufacturers of America (PhRMA),
Pharmaceutical Industry Profile 2008. Washington DC. http://
www.phrma.org/files/attachments/2008%20Profile.pdf
(4) Science and Engineering Indicators 2010, National Science
Foundation, www.nsf.gov/statistics/seind10/pdf/c04.pdf
The government must therefore act to spur investments in energy
innovation and mitigate risk for large scale energy projects. After
drawing on the large body of work and experts in the field of
innovation, taking a hard look at what has worked to promote innovation
in defense, medicine, information technology and other fields, and
calling upon our experience managing large innovation programs in our
companies, we developed five recommendations to spark a similar federal
commitment to energy innovation. By heeding these recommendations, we
believe the United States can unleash our energy technology potential
and mobilize the private sector to join in the effort.
Recommendation 1: Create a national Energy Strategy Board
Mr. Chairman, the United States does not have a realistic,
technically robust, long-term national energy strategy. Without such a
strategy, there is no way to assess the effectiveness of energy
policies, nor is there a coherent framework for the development of new
energy technologies. The result of this neglect is reflected in our
nation's history-- with oil-driven recessions, environmental
degradation, trade deficits, national security problems, increasing
CO2 emissions, and a deficit in energy innovation.
We recommend the creation of a congressionally mandated Energy
Strategy Board charged with (1) developing and monitoring a National
Energy Plan for Congress and the executive branch, and (2) oversight of
a New Energy Challenge Program (see Recommendation 5). The Board should
be external to the U.S. government, should include experts in energy
technologies and associated markets, and should be politically neutral.
Recommendation 2: Invest $16 billion per year in clean energy
innovation
In order to maintain America's competitive edge and keep our
economy strong, the United States needs sizable, sustained investments
in clean energy innovation. The challenge must be met head on, and we
believe that $16 billion per year-- an increase of $11 billion over
current annual investments of $5 billion-- is the minimum level
required. This funding should be set with multi-year commitments,
managed according to well-defined performance goals, focused on
technologies that can achieve significant scale, and be free from
political interference and earmarking.
I must note that this second recommendation is critical to the
success of any real effort to jump start any energy innovation efforts.
Even in a time of constrained budgets, bold action is required. Our
other recommendations will not matter much if sufficient funding is not
realized. Reliance on incrementalism will not do the job.
Recommendation 3: Create Centers of Excellence in energy innovation
In other high-tech fields, critical technologies have achieved
large-scale market success through multi-disciplinary collaboration
between the private and public sectors. Technology innovation requires
expensive equipment, well-trained scientists, multi-year time horizons
and flexibility in allocating funds. This can be done most efficiently
and effectively if the institutions engaged in innovation are located
in close proximity to each other, share operational objectives and are
accountable to each other for results.
To provide the above attributes to the energy industry, we
recommend the creation of national Centers of Excellence in energy
innovation. The Department of Energy's newly created Energy Innovation
Hubs are a good start at such centers, but are not sufficiently funded
to achieve the desired results. Additional Centers of Excellence need
to be supported, with recommended annual budgets of $150 to $250
million each. To function effectively and deliver results, each of
these Centers will need the flexibility to pursue promising
developments and eliminate dead-end efforts.
Recommendation 4: Fund ARPA-E at $1 billion per year
The creation of the Advanced Research Projects Agency-Energy (ARPA-
E) has provided a significant boost to energy innovation. ARPA-E
focuses exclusively on high-risk, high-payoff technologies that can
change the way energy is generated, stored, and used; it has challenged
innovators to come up with truly novel ideas and ``game changers.'' The
program has high potential for long-term success, but only if it is
given the autonomy, budget, and clear signals of support to implement
needed projects. It will need long-horizon funds on a scale
commensurate with its goals, and a life extension beyond the current
federal stimulus. We recommend a $1 billion annual commitment to ARPA-
E.
Recommendation 5: Establish and fund a New Energy Challenge Program to
build large-scale pilot projects
America's energy innovation system lacks a mechanism to turn large-
scale ideas or prototypes into commercial-scale facilities. We
recommend the creation of a New Energy Challenge Program to fund, build
and accelerate the commercialization of advanced energy technologies--
such as 4th generation nuclear power or carbon capture and storage coal
plants.
This program should be structured as a partnership between the
federal government and the energy industry, and should operate as an
independent corporation outside of the federal government. It should
report to the Energy Strategy Board (see Recommendation 1) and focus on
the transition from pre-commercial, large-scale energy systems to
integrated, full-size system tests. The public sector should initially
commit $20 billion to the Program over 10 years through a single
federal appropriation, which would unleash significant private sector
resources as particular projects are developed.
Conclusion
In addition to our specific recommendations, I'd also like to note
that successful energy innovation programs have three prerequisites:
the first is a pipeline of new inventions; the second is a suite of
policy reforms that will stimulate market demand for these new
inventions; and the third is a highly skilled workforce with the
ability to create and deploy these inventions. The plan put forth above
addresses the first and provides a strategy to fill the American energy
innovation pipeline with new technologies designed to deliver a more
secure, sustainable future.
However, we recognize that research, development, and deployment
all need complementary energy policies to advance innovation and drive
market adoption of new technologies. Innovation without implementation
has no value. A strong market signal will increase the intensity of
energy research, add large private-sector commitments, reduce barriers
between the lab and market, and ensure technologies perform better and
cost less over time. Those policies may include some combination of a
price or cap on CO2, a clean energy or renewable energy
portfolio requirement, or technology performance standards.
In sum, I come before the Committee today with a challenge, but
also with a sense of optimism. In the defense, health, agriculture, and
information technology industries, this country has made a deliberate
choice to use intelligent federal investments to unleash profound
innovation. As a result, our country leads in all those realms. In
energy, however, the country has failed the grade, and is paying a
heavy price for that failure. We must change this course.
The good news is that if the United States invests in its clean
energy future now, our nation can reap immense benefits. The members of
the AEIC are optimistic about the potential for dramatic change in the
energy realm. As business leaders, we know how the private sector can
be mobilized to attack these problems, but we also know that the
government must step up to protect the public interest. We have seen
this work in other sectors, and know it can work in the energy sector,
as well. Public- and private-sector innovators have made miracles
happen right here on home soil-- Americans developed the computer and
the internet, delivered air and space travel, and decoded the human
genome. The same transformations can happen in energy.
In closing, we are convinced that America has a great deal to gain
from smart, ambitious investments in clean energy innovation. The
recommendations laid out above are specific and affordable. They set
forth the necessary actions that the public sector must take to unlock
the ingenuity and capital of the American marketplace in pursuit of the
nation's clean energy goals. To seize this opportunity, America must
put aside partisan interests and make a strong, bold commitment. We
challenge Congress, and indeed the country, to make this commitment. By
tapping America's entrepreneurial spirit and long-standing leadership
in technology innovation, we believe our country can set a course for a
prosperous, sustainable economy-- and take control of our energy
future.
Thank you for the opportunity to testify before the Committee
today.
The American Energy Innovation Council (AEIC) Technical Review
Committee:
Chair--Maxine Savitz, former General Manager of
Technology Partnerships at Honeywell; member of the President's
Council of Advisors on Science and Technology; Vice President,
National Academy of Engineering
Ken Caldeira--Department of Global Ecology, Carnegie
Institution of Washington
David Garman--Former Under Secretary of Energy and
Assistant Secretary of EERE at DOE
Rebecca Henderson--Senator John Heinz Professor of
Environmental Management, Harvard Business School
David Keith--Professor and Director of ISEEE Energy
and Environmental Systems Group at the University of Calgary
Richard Lester--Director of the Industrial
Performance Center and Professor and Head of the Department of
Nuclear Science and Engineering at MIT
Nate Lewis--George L. Argyros Professor of Chemistry
at the California Institute of Technology
Ernie Moniz--Cecil and Ida Green Professor of Physics
and Engineering Systems and Director of the MIT Lab for Energy
and Environment and of the MIT Energy Initiative, MIT; member
of the President's Council of Advisors on Science and
Technology
Franklin Orr--Professor, Stanford University
Allen Pfeffer--Vice President of Technology, Alstom
Power
Dan Sarewitz--Director, Consortium for Science,
Policy, and Outcomes, Arizona State University
Chuck Shank--former Director of Lawrence Berkeley
National Laboratory
About the Bipartisan Policy Center
In 2007, former U.S. Senate Majority Leaders Howard Baker, Tom
Daschle, Bob Dole and George Mitchell formed the Bipartisan Policy
Center (BPC) to develop and promote solutions that can attract the
public support and political momentum to achieve real progress.
Currently, the BPC focuses on issues including health care, energy,
national and homeland security, transportation, science and economic
policy. For more information, please visit www.bipartisanpolicy.org
About the ClimateWorks Foundation
The ClimateWorks Foundation supports public policies that prevent
dangerous climate change and catalyze sustainable global prosperity.
The ClimateWorks network includes partner organizations across the
world, aligned to support smart policies in the regions and sectors
that have the greatest potential for reducing greenhouse gas emissions.
For more information, please visit www.climateworks.org
Biography for Charles Holliday, Jr.
Charles O. Holliday, Jr. is chairman of the board of directors of
Bank of America. He has served as a director since September 2009. He
is the former chairman of the board of directors of E.I. du Pont de
Nemours and Co., a position he had held for approximately 10 years. He
served as chief executive officer of DuPont from 1998 until 2008. He
joined DuPont in 1970 as an engineer and held various positions
throughout his tenure.
Since 2007, Holliday has served as a member of the board of
directors of Deere & Co. and as a member of the board's audit and
corporate governance committees. He is chairman emeritus of Catalyst, a
leading nonprofit organization dedicated to expanding opportunities for
women and business, and chairman emeritus of the board of the U.S.
Council on Competitiveness, a nonpartisan, nongovernmental organization
working to ensure U.S. prosperity.
Holliday is a founding member of the International Business Council
and a member of the National Academy of Engineering. He also previously
served as chairman of the following organizations: the Business
Roundtable's Task Force for Environment, Technology and Economy, the
World Business Council for Sustainable Development, The Business
Council, and the Society of Chemical Industry--American Section.
He received a bachelor's degree in industrial engineering from the
University of Tennessee and received honorary doctorates from
Polytechnic University in Brooklyn, New York and from Washington
College in Chestertown, Maryland.
Chairman Gordon. Thank you, Mr. Holliday.
I will point out in the America COMPETES Act we do have a
cluster program where we can bring those folks together. I
think it is understood now that there is not that single--or
rarely it is that single inventor `eureka' moment, but rather
it is the collaboration of those folks working together on a
topic.
And Dr. Dan Mote is now recognized. Dr. Mote, you need to
hit your mic there, please.
STATEMENT OF C.D. (DAN) MOTE, JR., PRESIDENT EMERITUS OF THE
UNIVERSITY OF MARYLAND AND GLENN L. MARTIN INSTITUTE PROFESSOR
OF ENGINEERING
Dr. Mote. Thank you very much. I apologize. I thank you for
this opportunity to make a few remarks.
Well, first I would just comment that there is no question
that the country has made progress on its support for science
and technology since 2005, through the America COMPETES Act and
other initiatives, ARRA funds and STEM education initiatives
and the like. National awareness is higher now than it was
then, and ``Rising Above the Gathering Storm'' has become a
household phrase in many places. And remarkably it has legs
five years later, which is, in and of itself, critical.
But as in the revisited report, the category five report
that has come out, the United State is relatively less
competitive globally today than it was in 2005, probably for
three reasons.
One is the report was not fully implemented in an ongoing
manner when it started. Second is other countries have engaged
rather aggressively, both those that weren't engaged then and
those that were then, in a very determined and purposeful
manner. And thirdly and possibly most importantly, our country
has many national priorities today; wars, national debt,
sluggish economy, unemployment, housing, healthcare, terrorism,
and so on, and global competitiveness in S&T and innovation is
really not near the top in priority among them. That is a very
principal problem for us.
If we believe delivering high-quality, high-paying jobs for
Americans depends on competitiveness and innovation in science
and technology, then it should be a high priority today.
I recently chaired a National Research Council committee
that studied the science and technology strategies of six
countries and their implications for the United States. Those--
and that has now been printed, as a matter of fact--the six
countries are Japan, Brazil, India, Russia, China, and
Singapore. Now, the countries individually were studied in
great detail in terms of why they are succeeding and what their
priorities are and how they are progressing, and there are a
couple of findings on the countries themselves and then overall
findings as a group.
The study concluded--I think surprisingly for the Members
of the Committee, but very importantly--that the best predictor
of future science and technology competitiveness was the
national culture. While we commonly use economic and capacity
measures to rate S&T innovation capabilities, things like
percentage of GDP going for research or number of engineering
graduates, it turns out that the countries that shape their
cultures to facilitate their goals receive--achieve them
predictably and will likely do so in the future.
Of the six countries studied, Singapore and China stood out
in this regard. While these two countries have remarkably
different goals, different drivers of science and technology
innovation, different population scales to say the least,
different markets, they use similar strategies in shaping their
cultures to focus on S&T priorities. Essentially culture and
S&T priorities went hand in hand. And they also experienced
similar achievements. And we could go into some detail about
how that was done if we had some time.
However, the other four countries, that is, Japan, Brazil,
India, and Russia, have been actually held back strikingly in
their S&T achievements because of cultural issues that have
limited the priority they would afford their S&T goals.
Japan is a good example, just very quickly. How is Japan
held back? No women in the workforce; it is a country that is
reluctant to welcome international people to work in its labs;
no immigration; universities don't work with industry. You can
go down through Japan, and there are a number of cultural
issues which have essentially inhibited its advancement. And of
course, it has been in the doldrums for two decades, as we all
know.
So when the national security of the United States is
threatened, such as after 9/11 or Sputnik and so forth, our
Nation has abruptly changed its culture to support a national
security priority. However, these occasions are, fortunately,
rare, but they are also widely recognized as requiring national
security priority.
But if we do not recognize the significance of the
declining course of U.S. competitiveness in science and
technology and innovation, our future prosperity and national
security basically will not--we will not change our S&T
priority [as] needed to fix this problem. Actually, I believe
that is where we are today. We do not see, as a Nation, that
this is a critical problem.
I also believe it would be instructive for those in policy-
making positions to visit China and Singapore to gain a first-
hand understanding of why they are succeeding and what changes
in culture they have actually instituted, at some cost to
themselves, to achieve this success. I am confident this would
be a stunning experience for all who went there. I think only
then would we fully understand the seriousness of our national
competitiveness problem and the priority attention that we
really need to apply to this to fix it.
Thank you.
[The prepared statement of Dr. Mote follows:]
Prepared Statement of C.D. Mote, Jr.
Chairman Gordon and members of the House Committee on Science and
Technology. I appreciate the opportunity to comment on ``Rising Above
the Gathering Storm, Revisited'' and its implications. I will be
mindful of your time in making a few take-away points.
First, there is no question that the country has made progress in
supporting Science and Technology (S&T) since the ``Rising Above . . .
'' report in 2005 through the America Competes Act, ARRA, STEM
education initiatives and the like. National awareness of our
competitiveness in innovation has increased, Rising Above the Gathering
Storm has become a household phrase, and remarkably, it has ``legs''
today, five years hence. But, regrettably, as this ``Rising Above . . .
Revisited'' report vividly verifies, the United States is relatively
less competitive globally today than it was in 2005 for two principal
reasons: (1) we did not implement sufficiently and in an on-going
manner the recommendations in the earlier report, and (2) other
countries have continued their advances in S&T competitiveness with
determination and purpose. Also our national priorities today are many
(e.g., wars, debt, economy, jobs, housing, healthcare, terrorism) and
global competitiveness in S&T and innovation is not near the top among
them. This is our principal and fundamental problem.
If we believed that delivering high quality, high paying jobs for
Americans depends on our competitiveness in innovation, science and
technology, S&T competitiveness would have very high priority today.
I recently chaired the ad-hoc National Research Council ``Committee
on Global Science and Technology Strategies and Their Effect on U.S.
National Security.'' This committee issued a 2010 report titled the
``S&T Strategies of Six Countries: Implications for the U.S.'' [http://
www.nap.edu/catalog/12920.html]. The six countries are Japan, Brazil,
Russia, India, China, and Singapore--JBRICS. This study concluded that
national culture was the ``best predictor'' of future S&T
competitiveness. Most countries, including the U.S., use economic and
capacity measures to rate S&T innovation capability, for example, %GDP
invested in research or number of engineers graduating from
universities. However, those countries that shape their cultures to
facilitate the achievement of their priority S&T goals have predictably
succeeded in reaching those goals, and will likely do so in the future.
Of the six countries studied, Singapore and China stood out in this
regard. While these two countries have remarkably different goals,
different drivers of S&T and innovation, different population scales,
and different markets, they used similar strategies in shaping their
cultures to focus on S&T priorities. And they experienced similar
achievements against their goals. However, the other four JBRIC
countries (Japan, Brazil, Russia and India) have been held back
strikingly in their S&T achievements because cultural issues have
limited the priority they afforded their S&T goals. The committee
concluded that their future achievements will likely be similarly
limited unless changes in cultural priorities are forthcoming. Culture
has been largely overlooked when predicting national innovation
capacity.
When the national security of the U.S. was acutely threatened by
the attacks of September 11, the nation abruptly changed its culture to
support the national security priority. However, such occasions are
rare and widely recognized as national emergencies requiring unusual
actions. If we do not recognize the significance of the declining
course of U.S. competitiveness in S&T and innovation to our future
prosperity and national security, we will not change the culture
necessary to make S&T a higher priority. I believe this is where we are
today.
I strongly encourage leaders in U.S. policy-making positions to
visit China and Singapore to gain a firsthand understanding of why they
are succeeding and what changes in culture they have instituted to
achieve their goals. I am confident that this would literally be a
``stunning experience'' for all those participating. Only then will we
fully understand the seriousness of our national competitiveness
problem and the priority attention required today to fix it.
Biography for C.D. Mote, Jr.
C. D. (Dan) Mote, Jr. began his tenure as president of the
University of Maryland and Glenn L. Martin Institute Professor of
Engineering in September 1998. As President from 1998-2010, he
encouraged an environment of excellence across the University, and
provided leadership in implementing its 10-year strategic plan to
elevate Maryland into the top tier of research universities worldwide.
Academic programs flourished under Dr. Mote with the University
ranking 18th among U.S. public universities according to U.S. News &
World Report and 37th in the world according to the Academic Ranking of
World Universities by Shanghai's Jiao Tong University.
Dr. Mote sought to draw more of the State's highest-achieving
students by expanding honors programming, living and learning
communities and establishing the President's Promise, which offers
every undergraduate the opportunity for a unique experience outside the
classroom. He also launched the Maryland Incentive Awards Program in
2001 to recruit and provide full support to Baltimore and Prince
George's County high school students of outstanding potential who have
overcome extraordinary adversity.
Dr. Mote also spurred the University to become one of the State's
most valuable economic engines, with a $3.4 billion annual impact. The
University's research, outreach and education assist the State by
bringing major federal and private partners to the area's largest
research park, M Square, growing small businesses, and graduating the
State's largest number of scientific, business, life science,
engineering and technology students. He worked to strengthen the
University's position as a global institution, overseeing substantial
growth in international partnerships, creating an international
incubator, study abroad programs, recruitment of international
undergraduates, and programs for training international government and
business leaders. Under Dr. Mote's leadership, the University addressed
today's most pressing scientific and societal challenges, such as
climate change, the economy, energy, homeland security and public
health. Its research enterprise raised $550 million in external grants
and contracts in fiscal year 2010.
Dr. Mote serves on National Academy of Sciences (NAS) committees
that address challenges to U.S. leadership in science and technology,
including the committee that authored the Rising Above the Gathering
Storm report. He co-chairs The Academies Government-University-
Industry-Research Roundtable and is a member of its Committee on
Science, Engineering and Public Policy. He is a member and Treasurer of
the National Academy of Engineering, where he serves on its Council and
is a Steering Committee member of the Energy Security, Innovation and
Sustainability Initiative of the Council on Competitiveness.
Dr. Mote previously served for 31 years on the faculty of the
University of California, Berkeley, where he earned his three
engineering degrees, served as vice chancellor, held an endowed chair
in mechanical systems and was president of the UC Berkeley Foundation.
He conceived and led a comprehensive capital campaign for Berkeley that
raised $1.4 billion. He earlier served as chair of Berkeley's
Department of Mechanical Engineering.
Chairman Gordon. Thank you, Dr. Mote.
We will now begin our first round of questions, and I
recognize myself for that first five minutes.
To the three former CEOs: you each ran major corporations.
Dr. Barrett pointed out that you had a research budget bigger
than NSF. Now that you are retired, have your Social Security,
and paying taxes like the rest of us, you know, why should we
taxpayers subsidize public research for major corporations?
Dr. Barrett.
Dr. Barrett. I frankly don't think the U.S. government and
the taxpayers should subsidize research within the private
corporations unless the government has a specific project or
objective, such as if you would want to create an X-scale
computer for government activity and future research. The
request is really to fund research in the virtual `National
Laboratory' of the United States--which is, in fact, the tier
one research institutions--is to fund basic research, pre-
competitiveness research, research which is probably at least
eight to ten years from any competitiveness introduction. That
research is not funded by corporations to any great degree for
a variety of reasons. It is carried out in universities and the
public environment that the public has great access to.
So the demand or the request is not to fund research within
corporations. It is really to fund research within the U.S.
research universities, pre-competitiveness research, research
that might create products, services, new companies, but far in
advance, not the sort of research that an Intel and IBM,
DuPont, Lockheed Martin would do, which is directed towards
products of tomorrow or within a few years.
Chairman Gordon. Anyone else want to--Mr. Holliday?
Mr. Holliday. I agree totally. I would just add a short
vignette. I was at the DuPont annual patent dinner sitting next
to an individual who was winning his 100th patent that night,
and he was talking about how we had moved our research effort
toward more applied, more applications and less basic. And he
was cautioning me about the problem of that. My answer was, we
must depend on the universities to provide that basic research
for us and our competitors. And he said, but what if those
universities aren't there to do it?
And so that is really what we are talking about today, is
that basic research that must be at the university level. It is
better done at the university level, or the National Labs, so
all competitors can have access to it and compete to make it a
success.
Chairman Gordon. Mr. Augustine.
Mr. Augustine. Yes. I would be opposed to the government
subsidizing work or activities at a company that could lead to
a predicable impact on the individual company's profitability.
I would also note that a few decades ago 2/3rds of the R&D in
this country was funded by the government and only 1/3 by
industry. Today industry funds 2/3rds and the government 1/3.
The problem is that industry largely funds the ``D,'' and the
problem that we are, of course, discussing in the hearing is
``R'': research, basic research.
Basic research has a couple problems that make it not very
amenable for work by industry. One of these is that the
benefits of basic research often don't accrue to the performer
or the underwriter of the research being performed because of
the unpredictability of the applicability of research.
That, sort of, is the basic category of things where the
government generally steps in and provides that service--of
running an education system, providing national security, and
so on.
The second feature of basic research is it is very long-
term, very high--risk, and in many cases very expensive. And
those factors just don't lend themselves to the sort of things
that the marketplace today will allow companies to invest in.
With the great short-term emphasis of the markets, companies by
and large are going to have to invest in shorter-term things,
like development.
So it would seem to me that research is the province of
government, [funding] development is a province of industry.
Chairman Gordon. And finally, Mr. Holliday, in your
presentation you mentioned this business plan for America's
energy future. You know, we have got healthcare problems,
transportation problems, you know, feeding our public. There
are lots of different areas. Why did you pick out energy?
Mr. Holliday. We saw that energy at a low cost could
transform across the entire economy to make a difference. That
was the one thing that we thought was about our national
security, so we control it ourselves and really have a cost
advantage to reinvigorate our manufacturing and the overall
productive capacity of the country.
Chairman Gordon. Thank you, sir.
Mr. Hall is recognized for five minutes.
Mr. Hall. Mr. Holliday, I sure agree with you on the energy
situation. For a youngster that is graduating from high school
or college or beginning their life in the business world,
probably the most important word in the dictionary other than
`prayer' for that set of young people is probably `energy,'
because energy is the cause of most wars or lack of energy is
the cause of most wars, and Japan didn't hate us. They didn't
bomb Pearl Harbor because they hated us. They bombed us because
we cut them off of absolutely all of their oil. We were their
sole supplier, and they had about maybe a year of national
existence, so you could expect that to happen.
But I thank you for suggesting that because it reminded me
again of yesterday.
Dr. Barrett, you alluded to keeping our jobs here and the
good record that your company has of keeping the successes you
have here on shore rather than send them offshore, and I think
all of us appreciate that.
In your testimony, and along that line, I think of a
parallel there that we all go through up here, because all of
us appoint youngsters to the Academies, to West Point, to Navy,
Air Force, and all that, and usually my board asks them if they
are going to make it a lifetime work, you know. They have the
right to, I think, at the end of four years, maybe five years,
to come back into the business world, and I don't think that is
altogether bad because they bring the disciplines they learn
there into the business world where discipline is really
needed.
But it is similar to that, in your testimony--you discussed
the importance of investing in research and development to
promote new technologies, and you say once investments have
been made in the new technologies and they are ready for the
marketplace, what incentives are in place to ensure that the
companies that reap the benefits of federal tax dollars for
research and development will stay in the United States?
Well, how did you do it?
Dr. Barrett. Well, I would--point of fact, I said that 75
percent of our manufacturing is still in the U.S., and that
means 25 percent of it is outside. One of the reasons for that
to date, if I could just digress for a moment: the net present
value [NPV] of one of our multi-billion-dollar manufacturing
facilities--there is a $1 billion difference in its NPV if you
put it in the United States or if you put it in a low-tax
country. And the billion dollar NPV difference is really not
related to wage rates. It is related to government incentives
and tax rates.
The reason we have maintained our manufacturing facilities
in the U.S. is we have a well-trained workforce in the United
States. Time is of the essence. If you have to retrain a
workforce to do a green field manufacturing plant some place
else, you can lose valuable time.
There is no financial incentive to put those plants in the
United States today. The financial disincentive is the U.S. tax
rate. So what you are seeing is perhaps a lasting legacy of the
fact that we started in the U.S., we have built up our major
facilities in the U.S., we have a well-trained workforce in the
U.S., we have continuity in the U.S., but if you start from
scratch today, there is no incentive to put those plants in the
United States.
Mr. Hall. Maybe you are before the wrong committee. Maybe
you ought to go before Ways and Means.
Dr. Barrett. Congressman Hall, I have been through every
committee, every Administration, Democrat and Republican, every
economic advisor, to every President with the same story, and
we are still where we are.
Mr. Hall. I admire you for it, and I thank you.
I want to ask this additional question, though. Similarly,
how do we insure that students who are being trained in the
U.S. don't take their knowledge overseas? How can we keep those
people here?
Dr. Barrett. Well----
Mr. Hall. And those that come here seek to be citizens, to
get their education and leave in degrees, all the universities
all across the country, and then take their knowledge home.
Dr. Barrett. Well over a decade ago I think we were the
first to suggest that you should just simply staple a green
card to every advanced degree, engineering, technology,
mathematics, science degree obtainer, regardless of
nationality. If they graduate from a U.S. university with an
advanced degree, staple a green card to that diploma and let
them stay.
There is no way to absolutely ensure that that knowledge
base stays here. The way you ensure it is to, in fact, make the
United States the destination of choice for start-ups, the
destination of choice for people who want to get a great
education, but you have to have the visa issue, the immigration
issue, and then the tax and incentive issues here to create
start-ups and grow them.
Mr. Hall. I thank you, sir.
I yield back my time, Mr. Chairman. Thank you.
Chairman Gordon. Ms. Johnson is recognized.
I think over the last--or excuse me. I was wrong, Ms.
Johnson. Ms. Edwards was here first. Each of you wins the
attendance award for this session, and I thank you for that.
Ms. Edwards, you are recognized for five minutes.
Ms. Edwards. Thank you, Mr. Chairman.
I just have a question. First of all, I want to say on the,
you know, the one point regarding research and development, I
actually introduced last week H.R. 6201, the 21st Century
Investment Act of 2010, and part of the reason that I did that
was really because of my experience in visiting small
manufacturing facilities out in my Congressional district where
they co-located the research and development that they were
doing with the manufacturing they were doing. It was really
important to have that manufacturing line really close to where
the R&D was happening, and what we do in 6201--and I know
that's not before this committee, though--is to actually
incentivize and make permanent the research and development tax
credit. It is one of the lowest among developed nations, in
this country. Increase and make that permanent, and [H.R. 6201]
also created a substantial tax credit that is an incentive for
co-locating manufacturing.
When I talk to our manufacturers, what they say to me is
that it is really important for them, both in terms of building
and training their workforce but also then drawing on the local
community, our local educational institutions, our local K-12,
and establishing those relationships because they then know
that that is the feeder ground for their manufacturing and for
their research and development.
And so I'd urge you, Mr. Hall, take a look at that. But all
of you, because I think that if we are talking about where we
are going to go for the 21st century, we have to think not in
pockets, but across the line from how we are creating the
pipeline, obviously in K-12 and in our higher education
institutions but then, you know, what is the employee base, and
what do job creators need. I mean, they are going to do--if we
invest in their innovation, what do they need, and right now I
think there is not this sort of seamless line from our K-12
education and through our higher ed system into the workplace.
And so I appreciate your comments, Mr. Augustine, on this
question of trying to create a seamless line from K-12 through
the point when that young person goes into the workforce, and
what is it that we can do to knit those together so that they
are not in these individual strings?
And then if, Dr. Mote, I know that at the University of
Maryland, and thank you for your service there, that your
experience in working with our local scientific institutions in
Maryland with our education institutions so that they feed into
the workplace, and if you can do it in two minutes and 13
seconds, that would be great.
Mr. Augustine. Well, I think the business community has an
obligation which it, I think, doesn't fully carry out today: to
make very clear what are the skills it needs from a high school
graduate. You pointed to that.
If one looks at college graduates, there is a significant
problem of the gap between what skills and abilities and
knowledge is required to get a high school diploma and what it
takes to succeed as a freshman in college. And somehow we have
got to close that gap. I would give that very high priority.
Dr. Mote. Congresswoman Edwards, two things. One is in
terms of the K-12 students, bringing them to the university for
special programs, educational programs, research and
laboratories that is a part of the mission of the university.
And secondly, on the output end, we essentially guarantee
internships for every student at the university. We have an
office which basically creates internships, and in this area
since there are so many internships in the area, it is fairly
easy to accomplish this.
And so, therefore, we want to engage the students in the
business communities and at various levels, but it also could
be National Laboratories where these internships take place.
So, I think, thinking of the university as a link to both the
K-12 system and the jobs and post-graduate opportunities as
well, is essentially the way we see ourselves. We see ourselves
really as a most important asset that the state has in
developing its future.
Chairman Gordon. Thank you, Ms. Edwards.
Ms. Edwards. Thank you.
Chairman Gordon. And Dr. Ehlers is recognized for five
minutes.
Mr. Ehlers. Thank you, Mr. Chairman, and thank you very
much for the panel for being here. I can't--you know, now that
I am leaving here, I just want to commend you for--you have no
idea how often I was trying to sell an idea in the Congress and
not getting very far and then one or more of you would make a
comment that was--supported what I was trying to do, and I
could say, well, you know, so and so said this. ``Oh, okay.''
You know, Christ was right when he said a prophet is not
without honor in the same assembly, and I found that over and
over. I really appreciate what you have done for our country,
and now that I am joining the ranks of the retired and
unemployed, I hope I can contribute as much as you have.
I want to just get back to the question that was mentioned
about what the Federal Government should pay for research in
private corporations. I think a simple, straightforward answer
is a very good healthy research and development tax credit, so
the companies are still deciding what to study, what to do the
research on. It is entirely their project, but at least let the
Federal Government give them tax relief, because many of these
are high-risk ventures, and corporations simply can't afford to
do them if they don't get some assistance, preferably a tax
credit.
I appreciate Mr. Holliday's comment about low-cost, clean
energy. You are right on. That is totally correct, and that is
something we all have to be working on and not just say, well,
let the utilities take care of that. It is a much broader
problem than that.
And Dr. Mote, you commented about--other nations are trying
to catch up. We assume we are already there, and that is a
fallacious belief in this country. The public, and I have given
speeches all across the land, the public simply doesn't believe
that there is a problem. They simply believe that we are on
top, we are ahead of the pack, we have nothing to worry about,
and the only reason other countries are making progress is
because they have lower wage rates. They are totally wrong on
that, and we have to educate them, but I can assure you from my
many contacts with the public that this is the general
attitude.
I would be delighted to see some of you running for
Congress and taking my place. It is incredibly hard to persuade
scientists and engineers to run for public office, and I have
given, once again, given speeches to engineering and science
groups across this country constantly urging them to run for
office. It just doesn't happen.
Fortunately, since I arrived, the number of physicists have
tripled, but we could certainly use a few more engineers as
well to help in this task, and I really feel very guilty about
retiring and leaving because it is not that I am so wonderful,
it is just that the knowledge I have is badly needed here, and
I hope the other two physicists grab hold of it and can take
care of it.
But, really, we need much better representation here from
the scientific and technical community if we are really going
to accurately reflect and try to solve the Nation's problems in
this area, whether it is education, whether it is patent law,
so many different aspects of it. And it is a major part of our
country's future, but it is not a major part of the agenda of
either the House or the Senate.
Pardon me for giving you a sermon. I know you already
believe all these things, but as I said before, I am the son of
a preacher, and I can't get out without giving a sermon. But I
really think that is the crux of it. Dr. Mote's problem of the
people assuming everything is okay, that is because they are
not hearing anything else from the Congress, from the
Administration, and we really have to have the support of the
people if we are going to do it.
So thank you so very much for what you are doing. You have
been great leaders of this Nation on these issues, and I hope
you will continue to do that, and I hope I can assist you once
I am a private citizen again. Thank you very much.
Mr. Hall. Mr. Chairman, may I have just a minute?
I want to thank Dr. Ehlers, too, for his long service here,
and I hope he never forgets what I told him the first week we
were on the same committee together, that I admired him, but I
didn't like him because he is just the type, like you four,
that ruined the curve for guys like me.
But he has been a great benefit to this committee. He has
been a benefit to me personally, and we are losing a great
friend and a great Member of this conference, and we are going
to call on you like we are Bart when he is an ambassador over
in France or England, wherever he is. I want his telephone
number, and I want yours.
I yield back.
Mr. Ehlers. Thank you very much.
Chairman Gordon. Thank you, Mr. Hall. Dr. Ehlers has been
the conscience of the scientific community for us, and we thank
you.
Mr. Wilson is recognized for five minutes.
Mr. Wilson. Thank you, Mr. Chairman, and gentlemen, I would
like to echo the sentiments of Dr. Ehlers and others in saying
that it is wonderful the work that you are doing and putting
yourselves in a position to use the experience that you have
acquired throughout your life, and your education, and your
business experience, to help make our lives better and
certainly for our next generation. So thank you. Thank you very
much.
And I have a few questions I would like to ask, in no way
provocative but just to try to get to the point of how we can
maybe save some jobs for America and how we can do some of the
things here.
My first is for Mr. Augustine. In your written testimony
you mentioned that an American company, Applied Materials,
recently opened the world's largest private solar research
development company in China, and Dr. Barrett, also, my
understanding that Intel has opened research labs on
semiconductors and server networks in Beijing, China.
There are just two of the many instances of our U.S. jobs
going overseas. What policies are necessary, from the
government's standpoint, that we can use to incentivize
companies to keep their jobs on American soil and employ
American workers?
Mr. Augustine. Congressman Wilson, if I might answer that
with a little story. I, in a moment of boredom, figured out
that I have attended over 500 Fortune 100 board meetings, and
in many of those we were faced with the kind of decision about
which you ask. Should we build a plant in the United States, or
should we build it overseas? If you build it in the United
States, your average worker will come from the bottom quartile
of the world's high school graduates. You will be in the
country with the second highest tax rate, corporate tax rate,
in the world. You will be in a country with a stagnating
economy, or at best a stable economy. You will be in a country
where you pay an assembly worker between four and 20 times what
you would pay in many other countries. You will pay a chemist
eight times as much and an engineer five times as much as in
some highly qualified countries.
If you go to these other countries, you get, typically, a
five-year tax holiday for the new facility you set up. Your
average high school graduate employee will come from the top
tenth of the [global] class. Engineers will be abundant. You
will generally be given free land to build your plant. And if
you are the strongest American in the world, acting as the
fiduciary responsibility for your shareholders, you will build
the plant overseas.
Now, that is what I have seen over and over, and those are
the things we need to fix.
Mr. Wilson. Thank you.
Dr. Barrett. Norm mentioned a number of features which--
some of them are related to manufacturing, and some of them to
R&D. I will just focus on the R&D side. The company I used to
work for, Intel, is an international company, does about 80
percent of its business outside of the United States. That is,
80 percent of its revenue comes from foreign customers. To be
internationally competitive, the company has to hire the best
and brightest engineers for its R&D laboratories wherever they
reside.
If you look at where they reside today, some of them reside
in the U.S., but some of them reside in Russia, some in China,
some in Malaysia, some in India. We follow the best and
brightest. Not all of the best and brightest are U.S. citizens.
Therefore, to be competitive, we look around the world. As I
said, 85 percent or so of our R&D activities are U.S. domestic
located.
The things you can do would be to, in fact, follow the
programs to get more U.S. kids interested in R&D or science,
technology, engineering, and math, follow that through to get
more of our young people majoring in those topics at the
university level, have an immigration policy which allows
foreign nationals who come to our universities and comprise the
bulk of our STEM graduates to stay in the United States. Have a
permanent R&D tax credit. Lower the corporate tax rate.
There are a whole litany of these items, but these are the
things the government can do. You can't expect, I think, the
multi-nationals to hire all U.S. citizens, because we do the
great majority of our business outside of the U.S. We are
relatively proud that we still have the great majority of our
work going on in the U.S. to service our international
customers, but we can't be digital, 100 percent U.S., 0 percent
foreign nationals.
Mr. Wilson. Mr. Chairman, I realize I am out of time, but
if I could just thank them. Thank you both because really you
focused the issue and framed it, and that is what I have been
looking for in this hearing this morning.
And so thank you. I have other questions, Mr. Chairman, but
I realize my time is up. Thank you, gentlemen.
Chairman Gordon. Mr. McCaul is recognized for five minutes.
Mr. McCaul. Thank you, Mr. Chairman, and thank the
witnesses for being here today. I--as the Chairman knows, I
have been a strong advocate and supporter of the COMPETES Act.
My district has a research and development arm at the
University of Texas in Austin. The high tech, all the companies
you mentioned are in some form or fashion in my district, and
it is a federal investment that, while I am against a lot of
the current spending in the Congress, I think this is one of
those investments that we can't afford not to do. And the
return on the investment, like with the NASA Program, has been
extraordinary.
We talked about the Gathering Storm. I agree, Dr. Mote,
that this is a national security issue as well, but I see a
`gathering storm' occurring right now in the Congress as the
COMPETES Act stagnates in the Senate, the possibility that it
may not pass, in combination with the tax cuts expiring. And
then we have an extraordinarily large tax increase, and I know
the R&D tax credit is huge, I know the penalizing companies
that do business overseas, and I think we need to incentive
through the tax code businesses to locate here and create jobs
here in the United States. And I think that is something we can
do.
But the storm I see, though, is a combination of these two
events, COMPETES not passing and then the tax cuts expiring,
and I just--that is really the reality right now that we are
looking at in the Congress, and I just wanted to get the panel
to comment on those two events colliding at the same time.
Mr. Holliday. First, I agree that these are very important
issues. One thing I would like you to possibly consider is in
the way you give credits for companies to locate here. Think
about it project by project, not as an across-the-board issue.
And Dan's summary of the six countries that were doing a good
job, China and Singapore came to the top, and let me assure you
they will sit down with any major company in the U.S. and talk
about a project you want to put there and what do you need to
accomplish it.
Norm described some of those kind of concessions about land
and trading and so forth. We have that on the state level here.
We don't have it on the national level, and I would urge you to
think about some kind of an objective where it could not be
politically motivated, but in the interest of the country to
allow companies to come forward and make that case.
Mr. McCaul. That is a good point. Yes, sir.
Dr. Barrett. Briefly, I use the example of the net present
value of one of our manufacturing facilities. It is like a
Texas Instruments. When Texas Instruments did a lot of
manufacturing in the U.S., it was a multi-billion-dollar
facility, employed a couple of thousand people at
extraordinarily high manufacturing salaries. The disincentive
in the United States to locate those facilities is the
corporate tax rate and the lack of any incentives at the
national level. State by state can give some incentives, but
those are second-tier incentives relative to the federal tax
rate.
The biggest disincentive is--to locating those facilities,
ongoing, is in fact--essentially the highest corporate tax rate
in the world, in fact, drives people to make the logical
financial investment to locate those facilities outside of the
U.S. into a low or zero tax rate environment.
Mr. McCaul. If I could just--because the companies I talk
to in my district, they want to stay here in the United States,
but we are not providing the incentives, and bottom line it is
about making a profit. You have a duty to your shareholders,
and if we can't incentive them to stay here, they are not going
to, although they want to. They are patriotic, but . . . Dr.
Augustine.
Mr. Augustine. I just wanted to add to your comments that I
can't think of a stronger signal that this Congress could send,
in a negative fashion, than to not pass the America COMPETES
Act. The members of the science and engineering community and
the business community I suspect might conclude that it is
``over.'' I realize those are strong words, but they are
considered words.
Just as an example, the sort of framework, as Congressman
Wilson said--America has always been the leading country in
particle physics. This country has always had the most powerful
accelerator in the world. Now, for the first time, the most
powerful accelerator is in France and Switzerland. The
physicists from around the world are moving to France and
Switzerland. They are leaving America and going there because
that is where the work is, that is where the excitement is,
that is where the promise is.
And that is the challenge I think we face.
Mr. McCaul. Right, and that is compelling testimony, Mr.
Chairman, to say if it doesn't pass, it is over, and I think
that--I would love to see nothing more than this passing out of
the Senate and being really the legacy of the Chairman who has
tried to advance this and advance the ball, and I hope that
this will have some impact on deliberations in the Senate so we
can move forward in this Congress.
Thank you.
Chairman Gordon. Thank you, Mr. McCaul. You know, I think a
common denominator here is that Intel, Lockheed, whoever it
might be, DuPont, if they are looking to relocate, it is not
between Tennessee and Texas. It is between the United States
and somewhere else, and that we have to recognize that.
Ms. Johnson, the patient Ms. Johnson is recognized for five
minutes.
Ms. Johnson. Thank you very much, Mr. Chairman. I apologize
for being a little late. I was in the Senate testifying. There
are people in the Senate who are trying to move this
legislation. I don't know how successful they will be.
Let me say one of my questions was just answered. I was
going to ask Mr. Augustine about how the businesses would see
it if we did not pass the bill, and you answered very
appropriately.
I am really at a loss. I want to thank Dr. Ehlers for being
on this committee and offering his leadership. For 18 years I
have been talking about the same thing, and I don't know
whether we are gaining any ground or not, and listening to and
reading your testimony it seems to me that we are going
backwards. I really wish I knew what else I could do. I was
sitting here thinking that maybe we need to have a summit with
many of our business leaders and many of our leaders here in
Congress so they could come to understand what we are facing. I
am really pretty frustrated with where we are and getting our
K-12 education in order. We hear a lot of talk about it. I
haven't seen much of an improvement. As well as our basic
college. We have a lot of scholarships offered, and we are
trying to do all the things that could lend itself to making
these strides, but it does not seem that we are making them.
Just give me--if all of you could just give me an idea of
how you think we could go about educating our leadership here
in the right committees so that we can move a little faster. I
think Members of this committee understand that, but I am not
sure whether we have that understanding across the board where
we need it in our leadership here.
Dr. Barrett. If I might just touch on the issue of
education for one minute, I think all of us have been leading
advocates for improving K-12 education in the United States,
and all the statistics, as you correctly point out--17 year
olds' understanding of math and science has not budged in three
or four decades. It is absolutely flat while the rest of the
world has come up, and we have gone from number one to the
bottom quartile of the OECD countries.
As much of a pessimist as I am, I actually do see a couple
of optimistic things happening. One is, we now have 37 states
signed up for common core curriculum K-12 subject matter by
subject matter. Now, signing up for something and doing
something as you well know are two different things, but
getting 37 states to sign up for a common core curriculum is
the first step.
There is also a consortium of states that are providing a
state-driven internationally benchmark common assessment tool.
That is, do away with the 50 different state assessments and
have a common internationally benchmarked assessment tool for
K-12 education.
I frankly think those two things plus the private sector
getting involved in Change the Equation and some other areas
give a sense of hope. The Race to the Top Program of Secretary
Duncan has caused over 30 states to change their legislative
rules and regulations about charter schools, pay for
performance.
All of these things are building blocks. They have not
changed the bottom line yet. The results--the kids that get out
of school this year are probably going to have the same results
as the kids that got out of school last year, but at least we
are finally attacking the basic fundamental building blocks.
Mr. Holliday. If I could share an example, I served for
five years on China's Development Board where a group of
business leaders and academics came to three days in Beijing to
share with the highest levels of government what we thought
China should do differently. If you could make the mirror image
of that in the U.S. and invite business leaders and academic
leaders from these growing countries in the world to come here
and share their experiences of what the U.S. could do
differently, it might change things.
Ms. Johnson. Thank you.
Mr. Augustine. My footnote would be that if you could have
more hearings in committees other than this one where there is
a strong understanding, I think, of the issues--where you had
business people come in and explain why they put their plants
in other countries, and what it means to jobs, and the standard
of living, and national security in this country--I suspect
that the three companies that we worked for are probably
employing around a half million people, somewhere close to
that--and I think we just need to get more people to come in
and speak with Members to make clear what the consequences are.
Ms. Johnson. Thank you very much. Does anybody else have--
--
Dr. Mote. Well, I would just like to comment on this. I
think firsthand experience is really necessary to really
understand the depth of our problem, and I would say that if
the leadership could actually get first-hand experience in
China, for example, and really understand how it works and what
the competitive level actually is, it would be stunning for
them. And it would change their whole perspective on all the
issues that would come subsequently.
I don't think this can be learned out of books and out of
hearings. It is a sort of cultural issue, and Singapore--as
China has basically taken Singapore's play book--basically,
China has designed its plan for infrastructure development and
for market competitiveness following Singapore's model, and it
is really frightening to see. It is so effective.
Mr. Hall. Mr. Chairman.
Ms. Johnson. Thank you very much.
Mr. Hall. Mr. Chairman.
Chairman Gordon. Mr. Hall is recognized.
Mr. Hall. I really think at this point we ought to point
out our problems of the past and our mistakes of the past. I
may be the only one here that remembers the super collider.
Eddie Bernice probably remembers it. I remember when we got to
the crossroads there, I think they either needed--I am not very
good on math, but I think they either needed $600 million or $6
million, and we offered them either $2 million or $200 million.
I can't remember which it was. It doesn't make much difference
now because that is no money today, and I hope nobody ever
tells this President how much a gagillion is.
But we turned them down, and we lost that. We wound up with
a giant hole from Waxahachie, Texas, halfway to Dallas, and we
lost our chance to go ahead in the world of science.
And so we have a history of not being practical and not
salvaging a great--I went to Cern with others here, maybe some
here were with us there. I even talked a lot of those people
into coming to the United States to work and to help us get the
super collider kicked off, and it was hard to say goodbye to
them when they left to go back there to their old jobs.
But that is something we can look back on, a grave mistake
that was made, and it was made because we didn't have sense
enough to do what you men are suggesting to us to do at that
time.
I yield back.
Chairman Gordon. Thank you, Mr. Hall.
We try to follow regular order here, which means that a lot
of the work in this committee falls upon the subcommittees and
the subcommittee chairmen and ranking members have to put
really an exceptional amount of time into that, and Mr. Inglis
has been one of those excellent ranking members on one of the
most active subcommittees that we have, and I thank you for
that contribution and also recognize you for five minutes.
Mr. Inglis. Thank you, Mr. Chairman, and I want to join you
and Ranking Member Hall in thanking the panel for focusing on
energy as an opportunity for us, and so let me ask you whether
the challenge there is that we haven't yet unleashed the power
of free enterprise to fix the problem. I agree that some of the
things we can do in this committee are important, very
important to provide some research and that sort of thing.
If we could combine that effort with a way to make money
out of inventing and commercializing the new fuels, then we
would have something going. But our challenge is that the
incumbent fuels, particularly transportation fuels being
petroleum and coal in the case of electricity, the negative
externalities are not recognized, the government is failing in
its function to force the recognition of those negative
externalities, and as long as they get freebies, then how do
you compete? If you have got this better technology, how do you
compete?
Cap and trade has just died, so we can give it a death
certificate now. So how about an alternative which is a
revenant or neutral carbon tax? Basically reduce payroll taxes
and then an equal amount, shift the tax to carbon dioxide.
Start out at $15 a ton, end up at $100 a ton over a 30-year
period. Make it a border adjustable tax, WTO [World Trade
Organization] compliant so that if you would move it on export,
you impose it on import.
And then watch the free enterprise system say, oh, you
wanted an alternative to petroleum? We got it, and we can make
it and deliver it to the customer at a price point that can
beat petroleum. But until we do that, take that action, it
seems to me we are never going to get--we are going to continue
to do these research things, which are fabulous, but until you
get the lift of the free enterprise system saying, by golly, I
can make a buck doing that, I can deliver it to a desiring
customer, a useful product. When you get that, things start
happening. So that is my little commercial for a 15-page
alternative to the 1,200 page monstrosity of cap and trade.
And it is something that I think that conservatives
thinking straight and liberals thinking straight should come
together and say, that works, because, you know, this idea I
have just described, Al Gore and Art Laffer agree on it, and if
Al Gore and Art Laffer can agree, can't we get the country to
agree? What do you think? Can we get folks to say, yes, free
enterprise is going to deliver. The companies that you all have
so effectively led can deliver the solutions here. Right? I
mean, is that correct?
Mr. Holliday. I agree totally if we could have certainty
around the energy environment--and you have described one way,
there are other ways--it would unleash creativity in this
country we cannot imagine. And I think we are better positioned
than even China and Singapore to take advantage of that,
because we can respond quicker to a market force than they ever
can.
One simple example is playing out today. We didn't talk
about unconventional natural gas three or four years ago.
Nobody understood what it meant. Then natural gas spiked and
people had confidence the price was going to be higher, we
started raising all new questions we hadn't before, and now
there is an opportunity in energy that is going to be very
amazing. Not the answer, but amazing.
So I agree with you totally. We have got to let the market
system work, and you can play a role in that.
Mr. Inglis. Anybody else want to take a shot at that?
Unleashing the power of the free enterprise system to solve it.
Mr. Augustine. Well, I suspect all four of us are great
believers in the free enterprise system, but the market, of
course, is reacting to the incentives that it sees today. And
the study that Chad chaired, that I had the privilege of
serving on, pointed out that the pharmaceutical companies, I
believe, spent something like 15 percent of their revenues on
R&D, aerospace industries around 10, 11 percent. The energy
companies, the traditional companies, it is 3/10ths of a
percent. And that is the ``correct'' thing to do for their
shareholders in the model that we've built today. And so we
need a new model.
Mr. Inglis. Thank you, Mr. Chairman. Appreciate the
opportunity.
Chairman Gordon. Thank you, Mr. Inglis, and I think we can
probably expect a different view on something from Mr.
Rohrabacher, who is recognized for five minutes.
Mr. Rohrabacher. Not Comrade Rohrabacher? Well, thank you
very much. Yeah. I do have some different thoughts on this.
I would suggest that perhaps the fundamental problem that
we have is that we don't have anyone watching out for the
American people. Hear a lot of suggestions, in fact, a lot of
them are detached from what is good for the American people as
a people and what--you know, I don't think that we should have
as many foreigners coming here, getting those graduate student
slots, and then asking them to stay here. I don't think that is
a good idea. I think it is a good idea to have American
students, even if they are just the B+ students instead of the
A+ students from India and China, it is better to have them in
those positions.
This whole idea of--well, you could follow that right on
through. We have acquiesced---the United States has acquiesced
to a policy of a one-way free trade policy with China for 30
years.
Now, let me ask the panel. When a solar panel company sets
up manufacturing in China, is that not because they cannot sell
their panels in China unless they are manufactured there? So we
let them get away with policies like that rather than having
say, look, you have access to our market, we have got to have
access to yours. We are not watching out for the American
people. Our people are going to lose.
We have permitted the wholesale theft of our intellectual
property for the last 30 years, not only to China but
elsewhere, and I don't hear anything about that. The
pharmaceutical companies that we just heard mentioned, they
spent billions of dollars of research money, and what happens?
The Chinese steal it, they go over there, and they are selling
knockoffs. So what do they do? They have to pass on that price
to the American people. We end up having the American people
paying more for their medicine in order to subsidize the
Chinese people whose medicine is being paid for by us.
The Chairman or the Ranking Member mentioned the super
collider. All right. We didn't pay for it. Has China put any
money into the super collider? Have they, panel? They put money
into the super collider research? No, because they want us to
put our money in so that they can take the benefits. So they
can get the benefit of the research. Who is watching out for
the American people?
I mean, I am sorry. I hear, you know, what I am hearing
today is not something that gets to the point of how this
average Joe out there who is unemployed is going to find
himself in a job, or at least a well-paying job. What I am
hearing is, you know, for example, we have heard education,
education, education. I have sat through probably five of these
hearings, and each time we bring up the idea that one of the
major problems in education is that we have unions that are
basically protecting mediocre teachers, and we got unions that
are protecting people who teach courses that are not essential,
and they have to be paid the same amount of money as someone
who teaches engineering and science. Well, of course we are not
going to get any high-quality engineering and science teachers
if they have to get paid the same people who teach--as teach
basket weaving. Well, the bottom line is unless we are willing
to address these things and watch out for the American people,
the American people are going to suffer, and I think that this
is what is happening right now, especially in terms of China.
By the way, these graduate students that we want to keep
here, why do we want to have Chinese students swarming into
these graduate positions, teaching them information that costs
us billions of dollars of research to do, so they can go back
to China, and they can then utilize that information to out
compete us? They realize they are our adversary. We don't
realize they are our adversary, and we are treating them as if
it is okay to give them the edge on the American people.
And I am sorry if I sound a little bit wild here today,
because I always do, but the fact is I feel--but I feel
strongly, I feel totally strongly about this. Unless we start
protecting the intellectual property rights of our people, of
our companies from China and elsewhere--they got the biggest
cyber spy network in the world at play in China right now,
trying to glean anything they can from us--until we start
protecting our intellectual property rights from outright theft
and spying and having an equal trade relationship, our people
are going to continue to suffer, and I think that is the basis
of the problem, Mr. Chairman.
So with that said, please, you got four seconds to comment
on my comment.
Dr. Barrett. The best thing you can do for the--watching
out for the American people is give the next generation of the
American workforce the best education in the world. That is the
only way they are going to compete. There is not a person on
this panel who is not a parent and a grandparent who has
grandkids, who want to have the same opportunity they did, and
that means we want the United States to succeed.
Let me just offer a slight rebuttal to your comment about
who wants Chinese students here, the A+ students. We have got
plenty of B+ students. It is an A+ world. If you want to
compete internationally, you need A+ students. We hire the best
students we can. I wish they were American students. The matter
of the fact is we have failed at getting our younger generation
proficient and interested in the subject matter which is going
to be the basis for the 21st century economy. We have to do a
better job at that, and the private sector is stepping up.
I was just at the NBC Education Summit in New York City
yesterday, where this topic was addressed for two full days--
government reps, private reps. This is the challenge we have,
and it is a uniquely American challenge. We have to educate our
children to be successful in the international marketplace. You
cannot have a Microsoft, a Cisco, an Intel, a DuPont with just
B+ players. You cannot. You need the best talent from around
the world to have those companies successful in the
international marketplace.
Mr. Rohrabacher. Even if the trading rules are set up so
that their trading rules favor the Chinese?
Dr. Barrett. I am, and as I think everyone on this panel
would all be, for fair and legal trade, balance trade back and
forth, protection of intellectual property. All of us would be
proponents of those comments that you made, but the basic
challenge that you have for the United States is, in fact,
having a workforce which can be internationally competitive and
then setting the playing field level in the United States with
international companies.
That leveling of the playing field is, let's be legal with
intellectual property and trade policies, but at the same time
let us also recognize what the government's responsibility is:
to set the playing field level for companies to operate here,
to invest here. Why penalize U.S. companies to make investments
in the United States? That is exactly what we are doing today.
Chairman Gordon. The gentleman's time has expired. As you
can see, we are a committee of a big tent.
Mrs. Biggert is recognized, and will be our last questioner
in that we are going to be having votes here very shortly.
Mrs. Biggert. Thank you, Mr. Chairman, and I am sorry that
I missed all of your testimony. You are all my heroes. I think
what you are doing to really bring us back where we are--we
just have to have the education of our kids, and we have got to
move forward so much in the science and research.
And Mr. Augustine and Mr. Holliday, I know you both served
on the Gathering Storm, which I thought--and Dr. Barrett. I am
sorry. This was such an important thing, I think, for science
in this country, and for us moving forward in this committee.
And I also--then the American Energy Innovation Council, and I
had the opportunity to go to the dinner before the press
announcement of that, and this was really, I think, such an
important, you know, step forward, too, as well as the revised
Gathering Storm, but you just have to keep it up, because we
really have to move forward, and I think we have, you know, in
Congress, as far as our colleagues and knowing how much the
research and development is.
I just want--I wanted to ask you that, you know, we have
got still a limited amount of money. We are certainly not doing
so well right now where we--but, you know, the COMPETES Act to
me was really important, that we move forward with that.
But the Gathering Storm report says that we should double
the funding for basic research, and then the Energy Innovation
Council report I believe says that we should spend an
additional $11 billion on energy, technology, development,
demonstration, and commercialization. So I think now, in the
economic times that we are in, it is really hard to do
everything that we want to do, and so if you were in Congress
and you had to prioritize, which--how would you start with
these areas and which would go first, and which would you give
your first dollars to, the early-stage benefit, basic research,
or the late-stage development and commercialization activities?
Mr. Augustine.
Mr. Augustine. That is a terrific question that we have all
thought about a lot, of course. And it is a little bit like
asking, do I want to give up water, or food? I think that we
just can't afford not to do these things, and I think we can
afford to do them. And I say that, for example, if Americans
spent more on legal tobacco during these five years--we could
have done every--all of the 20 recommendations, every one of
them from the Gathering Storm study, for what the Americans
spent on legal tobacco during that period of time, and had $60
billion a year left over.
So we can afford it. And I realize that is a little
different from the Federal Government's budget, but I think the
things that Congressman Hall said--he had a little bit of fun
with my comment at another event that I am an aeronautical
engineer, and during my career I worked on many airplanes that
were overweight, and I pointed out that we never solved that
problem by taking off an engine. And what we are talking here
about are the engines, and I think we just have to do these
things.
Mr. Holliday. Just to add, totally supportive of what Norm
said, but as we met with the American Energy Innovation
Council, we basically asked ourselves the question, how would
we fund this? And if it was inside our companies, we would go
through and take the lowest priority things we are currently
doing and shift those funds to this. We would not create more
funds for it. We would make choices. All of our experiences at
a time like this forces you to make choices. You shouldn't miss
that opportunity.
Mrs. Biggert. I was just on the Floor speaking about You
Cut, and that is where we, you know, doing away with some of
these program that we--have been in existence for a long time,
and as Ronald Reagan said, the closest thing to eternal life is
a federal program.
So we really do need to reprioritize our--whatever we are
doing, but--and then just going back to the STEM education
things, how can we really ask, you know, the people really
realize that they are being shortchanged on the education, and
we really have to improve that. We hear, you know, like with
the Japanese that they are studying all the time or the
Chinese, and, you know, their focus is on that education. I
don't think that we want to have our students have to go to
school seven days a week and things, but we have to find a way
that we can really ramp that up.
Anybody like to address that?
Dr. Barrett. Well, the priority of items there is, first
and foremost, to get certified math and science teachers in our
public education system, K-12, and there are a number of
programs which have been started in that direction, and I
heartily endorse them and push them forward.
The private sector has recently gotten involved. We were
discussing before you were here something called Change the
Equation with 100 plus companies trying to get kids more
excited about studying STEM topics rather than, oh, wanting to
be a lawyer or a doctor, but to focus on math and engineering
as well.
But first and foremost, if you don't have good teachers in
our K-12 system, you are certainly not going to get children
enthused about studying math and science if they don't respect
and they don't learn from the teachers in the classroom, and
the teacher is not going to do a good job if he is afraid the
kids know more than they do.
Chairman Gordon. I am sorry to say, but the gentlelady's
time has expired.
As I mentioned earlier, we follow regular order here which
puts a lot of work on our subcommittees and those chairmen. The
subcommittees put in a great deal of time. Dr. Baird, working
with Mr. Inglis, they have been good partners in bringing us
good legislation, and I recognize you here for the--for now the
final word.
Mr. Baird. Well, I thank the Chairman and mostly wanted to
just thank you all. I believe that the work you did and that
the Chairman did and this committee did may be central to the
future of this country, without any exaggeration at all. This
is an institution that feeds on hyperbole, but I don't think it
is hyperbole here. I actually think ARPA-E and the various
things you have recommended that we have enacted, thanks to
this Chairman and this committee, are profound game changers,
and somewhere in this country there are some scientists who are
going to be successful at finding those solutions to our energy
problems that wouldn't be there without them.
And we put, you know--when in doubt, throw a commission at
a problem around here--but this is a commission that really did
something, and I just want to thank you for your years of
service to our country and for your service on this commission,
and since I have the privilege of the last word, I would like
to ask my colleagues to join me in thanking this fantastic
Chairman we have of this committee, who not only wrote that
bill but has stewarded this committee in a fair, bipartisan,
wise, and constructive manner and made a profound difference
not only on the Committee but on the House of Representatives
and his state and his country. And it has been a privilege to
serve, and I would like people to join me in thanking Chairman
Bart Gordon for his service.
Chairman Gordon. Thank you, Dr. Baird. I wish that I could
yield more time to you, but time is coming to a close. Before
we bring the hearing to a close I want to sincerely thank our
witnesses, not just for being here today but for your
continuing commitment to these issues that we are all very
committed to also.
The record will remain open for two weeks for additional
statements from the Members and for answers to any follow-up
questions the Committee may ask of the witnesses.
Now I would like to turn the gavel over to Mr. Hall.
Mr. Baird. That is a bit premature, Mr. Chairman.
Mr. Hall. Now I would like to yield myself one hour. I join
in thanking you, and I thank this fine Chairman here. I hope I
am the Chairman almost a year from now, but I couldn't ask for
a better Chairman than you have been, Republican, Democrat, or
third party. He has been totally, completely fair, and I never
knew a person from Tennessee that I didn't admire because but
for Tennessee it wouldn't be a Texas, and Bart always says,
well, there wouldn't have been a Texas anyway if there was a
backdoor in the Alamo.
So--but these men and women that are leaving us, I
appreciate them. Dr. Baird, we will really miss you and your
knowledge and background and genuine interest in what Jeremy
Bentham called ``the greatest good for the greatest number.''
We appreciate all of you.
With that do I hear a motion to adjourn.
Voice. Motion to adjourn.
Mr. Hall. We are adjourned.
[Whereupon, at 11:54 a.m., the Committee was adjourned.]
Appendix:
----------
Answers to Post-Hearing Questions
Responses by Mr. Norman R. Augustine, Retired Chairman and CEO of the
Lockheed Martin Corporation and Former Undersecretary of the
Army
Questions submitted by Chairman Bart Gordon
Q1. I began my questions by asking you and the other witnesses to
comment on the appropriate public and private sector roles in fostering
innovation. In response, the witnesses appeared to agree that the
federal government should sponsor activities primarily in the area of
basic research. However there was not a clear consensus among the
witnesses on what ``basic research'' might include, and therefore, what
the appropriate government role should be in supporting a wide array of
innovation mechanisms.
I also asked why energy warrants a particular focus. The recent
report by the American Energy Innovation Council (AEIC), which includes
Mr. Augustine and Mr. Holliday, called for federal investment in clean
energy innovation (including research and development through finance
and deployment) to more than triple to $16 billion annually. Mr.
Holliday asserted that such an investment in energy innovation could
transform the entire economy, strengthen our national security, and
reinvigorate the manufacturing sector along with the overall productive
capacity of the country.
Using ARPA-E as an example, to date this new agency has selected a
total of 121 projects based in 30 states, with approximately 39% of
projects led by universities, 33% by small businesses, and 20% by large
businesses. Almost all projects also have multiple partners. Both the
Gathering Storm report and the AEIC report strongly recommend
additional funding for ARPA-E to build on its progress to date. Given
the shifting landscape of global competitiveness, is it appropriate and
important for innovative programs, such as ARPA-E, to support a wide
range of activities, including by continuing to leverage nascent
private sector efforts and investment in emerging technologies?
A1. It is my belief, having spent nearly a third of my career in
government and most of the remainder in the private sector, that
government in a free enterprise system should do only those things that
cannot be done well by the private sector. As it happens, there are a
number of examples of such circumstances, including undertakings the
results of which are beneficial to society as a whole but may not
return commensurate benefits to the pursuers of those undertakings.
Basic research is one such example. I would define basic research
as the effort to understand the fundamentals of nature; that is,
curiosity-driven scientific exploration. Basic research entails
substantial risk, produces often unexpected benefits, frequently takes
a long time to convert into financially rewarding products and
services, and often rewards individuals or organizations other than the
investors or performers themselves. This seems to be an example of the
category of effort that government should fund . . . but not
necessarily perform.
The need for government support of innovation goes well beyond the
funding of basic research itself. In addition to creating an
innovation-friendly environment (tax policy, intellectual property
protection, education . . .), there are hurdles in the knowledge-to-
the-marketplace progression wherein government assistance is also
needed if they are to be overcome. I like to think of this spectrum of
activities as including at least two segments . . . sometimes referred
to as the ``Valleys of Death'' . . . that are particularly unattractive
from the standpoint of commercial investors.
The first of these Valleys often follows the discovery of new
phenomena offering promising applications. Unfortunately, it is not
uncommon in this circumstance that there remains significant risk and
uncertainty that deters individual and corporate investors--even
though, if successful, the product sought would be of substantial
benefit to society as a whole or at least some large segment of
society.
The second Valley occurs after a prototype has been built that
seems to confirm the underlying feasibility of the product being sought
but does not provide convincing evidence that the prototype can be
``scaled-up'' to a degree useful for commercial application. In some
cases these barriers are not unduly high--in which case no government
involvement is needed. But, in other cases, particularly in the field
of energy-provision, this step can represent investments of hundreds of
millions of dollars--and take many years. This is thus the sort of
activity that I believe it is appropriate for the government to
underwrite.
ARPA-E is intended to aid in transiting the first of these
Valleys--and one of the recommendations offered by the American Energy
Innovation Council was intended to address the second.
Based on my own experience it is very appropriate for organizations
such as ARPA-E to take ideas and new knowledge that may have been
generated in the private sector or our research universities and
nurture them to the point that the private sector can, while also
carrying out its fiduciary responsibilities to its investors, pursue
them until they become marketable or at least potentially capable of
scalability. In doing this, it is important that to the degree possible
the government seek to assure that no individual firm receives
advantage beyond that which may result from investments the firm itself
may have made or competitively accrued.
Questions submitted by Representative Ben R. Lujan
Q1. The original report called for an expanded role for national
laboratories, that they can help fill the gap left behind now that
corporations have moved away from long term R&D and they can transition
new discoveries to commercially viable technologies. I believe the
national labs are a great resource, not only for fundamental science
and national security, but also for spurring innovation through
partnerships with businesses. I'd like to get your impression on
promoting the ability of national lab scientists and engineers to
provide technical assistance to small businesses. As an example, there
is a program in New Mexico, the New Mexico Small Business Assistance
Program, in which the state pays for personnel at either Los Alamos or
Sandia national labs to spend a small amount of time to assist New
Mexico businesses on some of their technical problems. It has become
very popular and I think proves the value of the skilled personnel at
national labs, not just the technology or user facilities, for helping
businesses to be more competitive and innovative. So I'd like to hear
of your opinion on this issue, on promoting ways for businesses to make
use of the technical expertise at the national laboratories.
A1. I believe that national laboratories play an important role in the
innovation cycle . . . but that one of their roles is to support
industry, not to compete with it. The dilemma faced, of course, is that
in pursuing the work of the laboratories it is important that, to the
extent possible, they not favor any particular firm. Yet it is
essential that the laboratories work cooperatively with the private
sector since it is only the latter that can reasonably be expected to
take products into the marketplace and create jobs . . . at least this
is the case in the free enterprise system upon which this nation is in
part built.
These considerations and others lead me to believe that the
national laboratories should focus on the creation of new knowledge
through basic research and assist industry in translating that
knowledge into products and service for the marketplace. This
necessitates a close working relationship between industry and the
government laboratories. It also indicates that the work pursued by the
national laboratories should offer major breakthroughs--an outcome
often accompanied by significant risks, high costs and long-term
endeavors--not just marginal improvements. The use of nuclear fusion as
an energy source would be an extreme example of such a circumstance.
Successful nuclear fusion could, in my opinion, be of extraordinary
importance to our citizenry--but it is extraordinarily expensive, still
entails significant technical risk in terms of viability, is extremely
costly to carry to the application phase, and is still distant in time.
In summary, I believe there is an important role for the
laboratories to support our nation through promoting ways by which
businesses can apply the results of the laboratories' work.
Q2. Your written testimony states that six million more American youth
have dropped out of high school since the original Gathering Storm
report was produced. I believe this highlights a very serious problem
facing America's youth and the future of our workforce. My home state
of New Mexico suffers from public school graduation rates that are
consistently below 70 percent. As you know, this is particularly
alarming because these students will be cut off from opportunities to
obtain a college education and become part of the robust high-tech
workforce America so desperately needs.
Can you discuss how Congress can make the necessary investments in
K-12 STEM education, tutoring or mentoring programs to combat dropout
rates and ensure that our students are successfully graduating from
high school?
A2. Thank you for that question. I might begin by noting that the high
school ``drop-out'' rate you cite for New Mexico, while altogether
unacceptable, is only slightly below that of the nation as a whole. The
problem you describe is, based on the various studies in which I have
participated, the most important single challenge currently facing our
country. As you know, education in America is principally the province
of states and localities . . . resulting in some 14,000 independent
school districts bearing responsibility for educating our children.
But there is much that Congress can, and in my opinion should, do
to facilitate better educating our nation's young people. One of these
is to offer competitive scholarships for U.S. high school graduates to
attend U.S. universities and pursue degrees in engineering, math or
science while simultaneously receiving training in pedagogy. In return,
the recipients would agree to teach in our nation's public schools for
a prescribed period of years.
It is also important that we create opportunities in the early
grades, and even before students enter the public school system, to
prepare them for the academic rigors they will soon face. This could be
done through funding of pre-school and after-school programs, and the
use of technology for learning at home.
The matter of assuring that students graduate from high school can
be assisted by providing formal mentoring and financial aid to students
who may be otherwise be highly qualified but are obliged to withdraw
from school for family financial reasons.
Further, we should create a system of rewards for extraordinary
teachers: we should pay physics teachers more than phys-ed teachers and
we should pay good physics teachers more than poor physics teachers--
and we should not tolerate inept physics teachers. The teaching
profession should be revered, given its importance to our nation's
future. We should have standards for our students to meet and we should
test against those standards. We should take special steps to assist
economically deprived young people.
Given that the black and Hispanic communities are badly under-
represented among graduates from, for example, engineering schools, and
the fact that these communities are the fastest growing segments of our
nation's population, portend a worsening competitiveness picture unless
we take decisive action. If we remain on the current path, in just 15
years the U.S. will be in last place among all the world's
industrialized nations in terms of the fraction of our graduates
receiving degrees in engineering. Given the importance of engineering
to growth in the Gross Domestic Product and the creation of jobs, this
is not a formula for an attractive quality of life for either our
children or our grandchildren.
Answers to Post-Hearing Questions
Responses by Dr. Craig Barrett, Retired Chairman and CEO of Intel
Corporation
Questions submitted by Chairman Bart Gordon
Q1. I began my questions by asking you and the other witnesses to
comment on the appropriate public and private sector roles in fostering
innovation. In response, the witnesses appeared to agree that the
federal government should sponsor activities primarily in the area of
basic research. However there was not a clear consensus among the
witnesses on what ``basic research'' might include, and therefore, what
the appropriate government role should be in supporting a wide array of
innovation mechanisms.
I also asked why energy warrants a particular focus. The recent
report by the American Energy Innovation Council (AEIC), which includes
Mr. Augustine and Mr. Holliday, called for federal investment in clean
energy innovation (including research and development through finance
and deployment) to more than triple to $16 billion annually. Mr.
Holliday asserted that such an investment in energy innovation could
transform the entire economy, strengthen our national security, and
reinvigorate the manufacturing sector along with the overall productive
capacity of the country.
Using ARPA-E as an example, to date this new agency has selected a
total of 121 projects based in 30 states, with approximately 39% of
projects led by universities, 33% by small businesses, and 20% by large
businesses. Almost all projects also have multiple partners. Both the
Gathering Storm report and the AEIC report strongly recommend
additional funding for ARPA-E to build on its progress to date. Given
the shifting landscape of global competitiveness, is it appropriate and
important for innovative programs, such as ARPA-E, to support a wide
range of activities, including by continuing to leverage nascent
private sector efforts and investment in emerging technologies?
A1. I believe the role of government financing of research should be
primarily limited to basic research--that is research in the pre-
competitive phase, many years from commercialization. This is the sort
of research that would be carried out in tier 1 research universities
with occasional partnership with industry. I am not in favor of massive
investment by the government designed to commercialize research
topics--when someone speaks of a $16B investment it strikes me that
this is asking the government to pick between winners and losers rather
than in developing the next generation of technology. So I am in favor
of expanding on the good work done by the NSF and equivalent agencies
(doubling the NSF budget would be my goal) but I would not favor the
massive investment of government funds to commercialize technology. Re:
the issue of `why energy research', I believe the answer is mere the
pragmatic realization that alternative energy is the Sputnik of the
21st Century. The need is obvious, everyone can associate with the
bottom line result, the geopolitical issues are profound, and the
opportunity for world leadership is apparent.
Questions submitted by Representative Ben R. Lujan
Q1. I am encouraged by the great strides Intel and other large tech
companies have taken to partner with educators to support STEM
education programs. In New Mexico, our local Intel has been a committed
partner in recent STEM initiatives that are designed to give students
hands-on experience with real-world technology projects.
a. As public-private STEM partnerships continue to grow, how
can we ensure that corporate investments in STEM are
benefitting our neediest students, especially low-income and
minority students? These students are too often
underrepresented in science and technology fields, and we must
make sure that they are included in emerging high-tech
industries.
b. My district in NM is largely rural. Oftentimes rural
classrooms face teacher shortages, or are not equipped with the
most up-to-date computer equipment or access to broadband. Can
you comment on how we can utilize public-private partnerships
to overcome challenges associated with STEM education in rural
communities?
A1. I believe the current private effort ``Change the Equation''
provides the appropriate response to both the issue of minority
involvement in STEM and the association of the private sector with
economically depressed regions. This effort of over 110 companies has
within its charter working with minorities and having companies work in
their local environments to help bring technology to all regions of the
US. The issue of New Mexico and Intel is a perfect example of how such
a partnership can work. The fact that 110 companies have committed to
this effort is an indication that they are serious in following up on
this important issue.
Answers to Post-Hearing Questions
Responses by Mr. Charles Holliday, Jr., Chairman of the Board of Bank
of America and Retired Chairman of the Board and CEO of DuPont
Questions submitted by Chairman Bart Gordon
Q1. I began my questions by asking you and the other witnesses to
comment on the appropriate public and private sector roles in fostering
innovation. In response, the witnesses appeared to agree that the
federal government should sponsor activities primarily in the area of
basic research. However there was not a clear consensus among the
witnesses on what ``basic research'' might include, and therefore, what
the appropriate government role should be in supporting a wide array of
innovation mechanisms.
I also asked why energy warrants a particular focus. The recent
report by the American Energy Innovation Council (AEIC), which includes
Mr. Augustine and Mr. Holliday, called for federal investment in clean
energy innovation (including research and development through finance
and deployment) to more than triple to $16 billion annually. Mr.
Holliday asserted that such an investment in energy innovation could
transform the entire economy, strengthen our national security, and
reinvigorate the manufacturing sector along with the overall productive
capacity of the country.
Using ARPA-E as an example, to date this new agency has selected a
total of 121 projects based in 30 states, with approximately 39% of
projects led by universities, 33% by small businesses, and 20% by large
businesses. Almost all projects also have multiple partners. Both the
Gathering Storm report and the AEIC report strongly recommend
additional funding for ARPA-E to build on its progress to date. Given
the shifting landscape of global competitiveness, is it appropriate and
important for innovative programs, such as ARPA-E, to support a wide
range of activities, including by continuing to leverage nascent
private sector efforts and investment in emerging technologies?
A1. It is of the utmost importance for the U.S. to support highly
innovative, highly subscribed, and high potential programs like ARPA-E
that are fostering game-changing energy technology developments and
will help the U.S. become a technologic leader in clean energy
technologies in the 21st century. Both the Gathering Storm report and
the American Energy Innovation Council recommendations make it quite
clear that ARPA-E represents a successful model framework that will
enable the nation's best innovators to pursue truly novel ideas.
Supporting ARPA-E--and other institutional frameworks like it--should
be a national priority.
Innovative programs such as ARPA-E are critically important
precisely because they focus on high-risk, high-payoff emerging
technologies. ARPA-E, for example, does not fund discovery science, nor
does it support incremental improvements to current technologies.
Rather, projects are selected and supported because they represent the
potential to fundamentally shift technology in a different direction.
By definition, then, these technologies are highly risky, which largely
means that private sector firms can't or won't support them alone. This
is where the role of ARPA-E is pivotal: the agency solicits innovative
proposals from companies, laboratories, and universities and supports
the best ideas through early product development and testing to the
point when private sector players are willing come in and make
additional investments to scale up and broadly commercialize successful
technologies. By supporting a diverse portfolio of the most innovative
proposals in clean energy, public investments made by ARPA-E will
ultimately leverage private sector investments many times over. Only
ideas that have strong potential to make rapid progress toward market
commercialization are supported, and funds are not extended without
demonstrable progress within two or three years. In short, there is no
other government agency or private sector entity that can support the
early stage development of such a wide range of promising energy
technologies.
As my AEIC colleagues and I noted in our report, A Business Plan
for America's Energy Future, ARPA-E has high potential for long-term
success, but only if it is given the autonomy and budget to support the
game changing technologies the U.S., and the world, critically needs.
In our global, ultra-competitive world, programs such as ARPA-E that
enable U.S. businesses to pursue the most innovative technologies
conceived are not just important; they are essential if the U.S. is to
maintain its place as home to the world's leading innovators.
Answers to Post-Hearing Questions
Responses by Dr. C.D. (Dan) Mote, Jr., President Emeritus of the
University of Maryland and Glenn L. Martin Institute Professor
of Engineering
Questions submitted by Chairman Bart Gordon
Q1. I began my questions by asking you and the other witnesses to
comment on the appropriate public and private sector roles in fostering
innovation.
A1. Regarding fostering innovation, a complete innovation system has
both a top-down (government driven) and a bottom-up (private sector
drive) component. No fully complete innovation system currently exists
in the world. Singapore and China have relatively strong top-down
components and are working to build their bottom-up components to
become the first complete system in the world. They have a way to go to
be certain, but they know where they are going and are on the road. The
U.S. has yet to recognize that a top-down component is necessary.
The current U.S. government role is to be indirectly supportive of
private sector developments by supporting pre-competitive, openly
available, basic research functions at national laboratories and
research universities. As important to U.S. competitiveness,
universities simultaneously prepare/educate the pipeline of the future
research leadership for industry, government and universities. Basic,
pre-competitive, publicly available research contributions no longer
come from industry. Industry develops proprietary products, which are
not basic research and no federal support is sought for these purposes.
Either government laboratories or universities undertake basic research
for the United States, or it is not done in this country at any large
scale. If the centers of basic research move elsewhere in the world,
U.S. dominance in science and engineering, a national hallmark for half
a century, will move with it.
Federal government support for research facilities is a critically
important part of government support for modern research. Support for
facilities in universities is not available through research grants,
and States and industry do not support facilities. It is Catch 22.
Without adequate facilities, universities cannot compete for grants to
undertake research and train/educate students. Without the grants for
research, funds to build facilities are not available because of
competing needs.
In response, the witnesses appeared to agree that the federal
government should sponsor activities primarily in the area of basic
research. However there was not a clear consensus among the witnesses
on what ``basic research'' might include, and therefore, what the
appropriate government role should be in supporting a wide array of
innovation mechanisms.
What is Basic Research here? Basic research is the systematic study
of fundamental questions in physical, engineering, mathematical,
computer, and life sciences that can lead to greater knowledge or
understanding and to potentially broad and/or path-breaking
applications in the future. History verifies that far-sighted, high-
payoff research has provided the bases for the technological progress
that has built this nation. Basic research may lead to applied research
for development of commercial products, security-center technologies
and other technologies, to development of new functional capabilities,
or to the discovery of additional new knowledge with its concomitant
values thereby renewing the process.
I also asked why energy warrants a particular focus. The recent
report by the American Energy Innovation Council (AEIC), which includes
Mr. Augustine and Mr. Holliday, called for federal investment in clean
energy innovation (including research and development through finance
and deployment) to more than triple to $16 billion annually. Mr.
Holliday asserted that such an investment in energy innovation could
transform the entire economy, strengthen our national security, and
reinvigorate the manufacturing sector along with the overall productive
capacity of the country.
Using ARPA-E as an example, to date this new agency has selected a
total of 121 projects based in 30 states, with approximately 39% of
projects led by universities, 33% by small businesses, and 20% by large
businesses. Almost all projects also have multiple partners. Both the
Gathering Storm report and the AEIC report strongly recommend
additional funding for ARPA-E to build on its progress to date. Given
the shifting landscape of global competitiveness, is it appropriate and
important for innovative programs, such as ARPA-E, to support a wide
range of activities, including by continuing to leverage nascent
private sector efforts and investment in emerging technologies?
A sufficient supply of clean and affordable energy is a ubiquitous
security and prosperity problem for the nation. The problem can only
worsen without the development of new technologies relying on basic
research. Because ``the energy problem'' spans all national interests,
it is an important one to address. ARPA-E, modeled after the Defense
Advance Research Projects Agency, is an element of a top-down
innovation environment, and an important one for that reason as well as
for its contributions to the energy problem. The decade old In-Q-Tel is
another top-down entity. So other targeted, top-down innovation centers
can also be effective if structured like ARPA-E.