[Economic Report of the President (2011)]
[Administration of Barack H. Obama]
[Online through the Government Printing Office, www.gpo.gov]

 
CHAPTER 3

The Foundations of Growth

As the United States economy shifts from crisis to recovery and growth,
policy must also be rebalanced to emphasize the foundations of growth
that promise Americans a stronger and more prosperous future. Policy
must move beyond the short-run demands of the business cycle to support
the broader economic environment that ensures rapid, broad-based, and
sustained economic growth, bringing Americans greater income,
higher-quality jobs, and longer and healthier lives.
At the core of the Nation's economic growth is our capacity to
innovate, educate, and build. Innovation, drawing on a long tradition
of American ingenuity, has made American workers and businesses world
leaders in productivity. With private sector investments in the lead,
U.S. marketplaces provide the test beds in which new ideas are proven
and the means by which successful ideas spread. At the same time, the
creation and diffusion of new ideas require essential public inputs in
education, infrastructure, and the national innovation system, which
all work together to sustain and accelerate U.S. economic growth. this
chapter considers the foundations of that economic growth and the
public policies that will ensure America's continuing economic success.

THE IMPORTANCE OF ECONOMIC GROWTH

Rapid and sustained economic growth is a defining feature of U.S.
history. Figure 3-1 shows the rise of real U.S. income per person from
the Industrial Revolution in the early 19th century to the present.
Adjusted for inflation, income per person in 2007 was double its level
in 1971. Income per person in 1971 was double its level in 1940, and
income per person in 1940--even after a decade of the Great Depression--
was double its level in 1896. All told, average income per person in
the United States today is 25 times what it was in 1820 (Maddison
2008). Income does not rise in every year, and it can fall sharply,
but over the longer run the upward trend clearly dominates short-run
cycles. the experience of the American economy in the past two years
has been especially difficult, but Figure 3-1 also makes clear that,
if America can capitalize on its long-run legacy of growth, then the
Nation can expect to grow beyond its current challenges and reach new
economic heights.







Beyond the summary measure of income per person, the progress in
American standards of living can be seen in how we live our lives--
and how long those lives are. Life expectancy in the United States in
the early to mid-1800s was approximately 40 years. Fifteen percent of
children did not survive their first year of life, and over 30 percent
did not reach their fifth birthday in many American cities (Haines
2001). today, life expectancy is 78, and infant mortality has fallen
by a factor of 20. In the early 1800s, primary school was the height
of most Americans' educational attainment. telegraphs and telephones
had not been invented, let alone e-mail and wireless communications.
There were no automobiles, no airplanes. there were no washing
machines, dishwashers, air conditioners, or electric refrigerators.
Indeed, there was no electrification--no light bulbs, radios,
televisions, computers, or Internet--and none of the associated
services that Americans now enjoy.

Overall, the economic growth imperative is clear. the improvements
in income, health, and the variety and quality of products Americans
consume all demonstrate the remarkable increase in prosperity the
United States has enjoyed throughout its history. If the United
States continues the same, sustained growth rate it has averaged since
1870, Americans can look forward to real incomes that are twice as
high per person by 2046 and five and a half times higher in 2100,
with new opportunities, higher-paying jobs, better educations, and
healthier, longer lives.

SOURCES OF ECONOMIC GROWTH

Any assessment of the appropriate role of growth policy starts with
an analysis of how economic growth works, that is, how economies
increase their output per person. Most directly, economists analyze
the sources of growth by asking how the "inputs" workers use increase
their output per unit of time. economics offers three key ingredients
for growth.
First, physical capital inputs, such as machines, tools, and
infrastructure, make workers more productive. For example, investments
in telecommunications equipment allow information to be exchanged
rapidly, making wide arrays of workers, from emergency personnel to
business managers, more productive. One source of growth, then, is
this "physical capital deepening," investments that increase the amount
of physical capital per worker.
Second, skill formation makes workers more productive. Investments
in skill formation, or "human capital," include general education but
also education specific to certain occupations, such as engineering,
medicine, and law, as well as training to use certain types of machines
and tools. For example, investment in training telecommunications
engineers pays off in improved communication services. thus, another
source of growth is this deepening of human capital investments that
raise the skills of workers.
Third, growth in advanced economies like the United States
ultimately depends on technological progress, interpreted broadly to
mean the creation and diffusion of new ideas. to continue the
communications example, the advent of the telephone transformed
people's ability to communicate, but once fixed-line telephones had
spread across America, increasing the number of telephones per person
had no such transformational power. Further progress awaited the
invention of better communications technologies--the fax machine, the
mobile telephone, the Internet--which have spurred additional
investment in capital and further increased worker productivity.
Technological progress drives capital deepening and creates new
avenues to increased prosperity.

The foundational role of underlying technological progress can be
inferred by considering the advance of major sectors of the U.S.
economy. For example, advances in transportation were made possible by
the invention and diffusion of numerous technologies, including
engines, trains, automobiles, and airplanes. People and goods can now
cross the country in six hours instead of months. this improvement
was achieved through the invention of ever more advanced technologies.
Box 3-1 considers an additional example--the advance of human health--
at greater length.
Unfortunately, there are cracks in the foundations of America's
growth that need to be addressed. the Nation's innovation system relies
largely on the private sector but also depends on critical public
inputs. For example, basic scientific breakthroughs in engineering,
genetics, chemistry, and many other fields underpin commercial
innovation but provide little or no direct profit themselves, so basic
scientific research relies heavily on public support. Yet publicly
funded research and development fell steadily from the early 1960s
until recently.

________________________________________________________________________
Box 3-1: Technological Progress and the Advance of Health

Improvements in health have been possible through numerous
medical advances. Polio, smallpox, diphtheria, and other debilitating
or deadly viruses have been checked by vaccines. Bacterial infections,
following the discovery of penicillin in 1928, are now treated by a
wide range of antibiotics. Advances in controlling infection, bleeding,
and pain made modern surgery possible, allowing surgeons to save and
improve lives. Meanwhile, advances in the understanding of anatomy,
molecular and cell biology, genetics, chemical synthesis, nuclear
physics, and other areas have produced cascades of innovations for the
diagnosis and treatment of disease. From laser eye surgery to X-ray,
MRI, and ultrasound imaging technologies, to effective chemotherapies
for particular cancers and pharmaceuticals that manage blood pressure,
insulin levels, asthma, and many other chronic conditions, human health
technologies have taken enormous leaps.
Health improvements raise workers' productivity, and increasing
longevity can both extend working lives and encourage higher
education. These mechanisms work to enhance economic growth. But much
of the benefit of improved health--whether the decline in infant
mortality or the direct enjoyment of longer lives--cannot be measured
simply by tracking income per person. Thus, the benefits brought by
these technological advances stand largely in addition to the 25-fold
increase in U.S. per capita income since 1820.
________________________________________________________________________

Meanwhile, U.S. investments in infrastructure no longer lead the
world, either in traditional physical infrastructure or in new
information networks. American households rank only 14th among
advanced countries in the adoption of high-speed Internet, for
example, and average advertised download speeds in the United States
rank 24th. Failure to provide American workers and businesses with
efficient, modern infrastructure raises costs and disrupts the
marketplace, making it increasingly difficult for the American economy
to provide world-leading productivity and innovation.
In skill formation, the United States once led the world in the
proportion of college graduates. It now ranks ninth in this measure
among adults aged 25 to 34. Meanwhile, the quality of the Nation's
primary and secondary education substantially lags other countries,
especially in science and mathematics. these educational challenges are
among the factors associated with stagnating wages among less-educated
workers and with widening wage inequality, and they are further
associated with unequal access to important goods and services,
including health care. Furthermore, these challenges present obstacles
to American workers and businesses seeking the high-productivity,
high-wage jobs in the 21st-century global economy.
Making America more competitive and growing the economy is a
preeminent goal of the Obama Administration. the rest of this chapter
identifies the path forward, focusing on critical public policies and
investments--in the Nation's innovation system and infrastructure and
in the skills of individual Americans--that support rapid, broad-based,
and sustained increases in America's prosperity.

INNOVATION AND ECONOMIC GROWTH

Innovation, the introduction of new or improved goods, services,
or practices into the economy, depends critically on private sector
interest. Businesses, operating in a competitive market system, have
numerous advantages in the creation and implementation of useful new
ideas (Box 3-2). At the same time, the social rewards to innovation
often exceed the private rewards to the original innovator, so the
private sector may fall short in providing innovations and economic
growth (Box 3-3). the Obama Administration is working to shore up
the foundations of our national innovation system through critical
public investments that will accelerate our future prosperity.

________________________________________________________________________

Box 3-2: The Power of Market-based Innovation

Good ideas come from many quarters and from surprising directions,
so their nature and source are fundamentally hard to foresee. The
market system draws on American ingenuity from the ground up, relying
on those individuals with close proximity to particular goods,
services, or practices to develop the next-generation idea. Innovation
can come from established firms, which developed the transistor,
laser, and smartphone, for example, and from entrepreneurs, who led
the creation of airplanes, personal computers, and Internet search
engines.
Markets provide the crucible in which innovations are tested,
then improved or discarded. Ultimately, it is buyers--consumers and
other firms--who decide whether a new or improved good or service is
worth paying for. The market system, with its price signals about
costs and consumer demand, helps businesses direct their innovative
efforts to high-value areas.
Once an idea is successfully demonstrated in the market, the market
system invites other innovators to build on these ideas. For example,
the laser turned out to have applications--in surgical devices and
manufacturing tools, in computer printers, barcode scanners, and DVD
players--far beyond those its early creators imagined. Early and
uncertain visions of a large market for personal computers were
realized only through a torrent of marketplace innovations across a
vast array of established and entrepreneurial firms.
The market system also works to spread the best ideas, because
competitive pressures favor the expansion of those firms with the
most efficient methods and most desirable products. Flexible capital
and labor markets pivot scarce resources toward the best ideas,
constantly reinventing the American economy.
________________________________________________________________________


Basic Research

Basic scientific research typically has little direct commercial
return, so its costs are not easily borne by firms. Yet downstream,
commercial innovation is dependent on achievements in basic science.
The biotechnology industry builds on Watson and Crick's discovery of
the structure of DNA. the Web-based innovations and storefronts of the
new economy build on government and university development of the
Internet. Americans draw on achievements in basic science throughout
their daily lives--in driving a car, using an electronic device,
taking modern medications, talking on a telephone, or finding
information online.

________________________________________________________________________

Box 3-3: The Social Gains from Innovation

The social gains from innovation typically extend well beyond the
profits earned by the innovative enterprise. Telephones, light bulbs,
subway trains, dishwashers, antibiotics, lasers, computers, Web
browsers, and smartphones, for example, all offer large and ongoing
social gains for Americans that far outstrip any commercial return to
the original innovators. There are several reasons for this tendency.
First, users will pay for an innovation only if its benefits exceed
its price. These benefits in excess of the price--the "consumer
surplus"--mean that much of the innovation's immediate value will
accrue to the users rather than to the innovator. Second, the
innovating business will face pressures to lower prices as other
businesses imitate the successful innovation, especially once any
intellectual property rights expire, transferring the innovation's
value more fully to the user. Finally, a successful innovation often
launches additional innovations, the benefits of which are not
captured by the original innovator and additionally spill over to
users.
Given that these users are workers or consumers, the social
gains from innovation largely accrue through rising labor
compensation, new workforce opportunities, and the higher quality
and increasing variety of Americans' consumption. On average, the
private firm may capture only a small percentage of the social gain
from innovation. Thus, all Americans have an important stake in the
innovation system. At the same time, because technological advances
can be biased toward educated workers, investments in human capital
become critical to ensure that the gains from workplace innovations
remain widely shared, as discussed at the end of this chapter.
________________________________________________________________________

Given the importance of basic research, coupled with its low
private return, the American innovation system relies on public support
of university and government researchers who work to develop scientific
breakthroughs and make these breakthroughs publicly available. this
open science model for basic research expands collective knowledge and
allows anyone with a good idea to tap these advances. Whether
discovering fundamental properties of nature, developing understandings
of disease that open new pathways for treatment, or creating the
breakthroughs in nanotechnology that may revolutionize modern
manufacturing, basic science will continue to create new foundations
for future progress.
In 2009, the Obama Administration put in place the largest funding
increase in basic science in U.S. history with an $18.3 billion
contribution from the American Recovery and Reinvestment Act. More
broadly, the Administration is committed to doubling the long-term
funding for three key basic science agencies, the National Science
Foundation, the Department of energy's Office of Science, and the
National Institute of Standards and technology laboratories. With
these commitments and others, the Administration is working towards
those frontiers that promise new industries and new growth. In clean
energy and electric vehicles, nanotechnology, advanced manufacturing,
biotechnology, wireless communications, and other promising fields,
the Administration is deploying resources to create fundamental
breakthroughs at the beginning of the innovation pipeline. these
priority areas are discussed further below.

Intellectual Property Rights

Effective protection of intellectual property rights, including
patents and copyrights, is an essential role of government in
encouraging innovation. Innovation typically requires substantial
investments in the labor and materials necessary to create, develop,
and test a new idea and then see it through to the marketplace. If
others can steal the idea once it is proven, undermining the ability
of the creator to recoup the costs of the innovative investment, then
the incentive to innovate is reduced. Intellectual property rights
address this problem by giving the innovator a limited-duration right
to exclude others' use, thus helping to ensure that the private
sector has the incentives to make innovative investments. In
President Lincoln's words, the patent system adds "the fuel of
interest to the fire of genius."
Intellectual property rights are particularly important to
industries that make substantial investments in research and
development (R&D), and R&D-intensive industries are leaders in driving
U.S. growth and competitiveness. For example, among U.S. industries
that produce internationally tradable goods and services, industries
with above-average R&D levels generated more than twice the output and
sales per employee, accounted for about 60 percent of exports, and
accounted for five of the six U.S. industries that generated a trade
surplus during the 2000-2007 period (Pham 2010).
Recognizing the importance of intellectual property, the Obama
Administration is determined to improve the function of the patent
system. the United States Patent and trademark Office (USPTO)
currently faces a backlog of 719,000 patent applications, and the
average delay between patent application and patent grant has risen
to 35 months. these delays are untenable for businesses, especially
entrepreneurial businesses, which often rely on licensing their
patents to generate revenue. the Obama Administration has begun to
implement a five-year plan to improve the quality and timeliness of
patent issuance. this strategic plan includes steps to redesign the
agency's information technology infrastructure, reform the reward
system for patent examiners, and hire 1,000 additional examiners,
while a new pilot program is also opening the USPtO's first branch
office. the Administration is also seeking legislative authority to
give the USPTO greater capacity to meet its ever-increasing workload
and improve patent quality. Legislative priorities include letting the
USPTO set and keep its patent fees, so that it can expand its
operations to meet its workload, and allowing "post-grant review,"
which can help limit errors in patent issuance and thus reduce costly
litigation and market uncertainty.
The Administration is also working aggressively to protect
against copyright and patent infringement. the Nation's first
Intellectual Property enforcement Coordinator, working within the
executive Office of the President, has released a Joint Strategic
Plan to coordinate U.S. government actions to combat unauthorized
use of intellectual property, both domestically and internationally,
and is facilitating voluntary cooperative efforts by the private
sector to reduce infringement. the Department of Justice and the
Department of Homeland Security have increased law enforcement
activity, including shutting down Web sites trafficking in
infringing content, prosecuting theft of innovative trade secrets,
and coordinating global law enforcement sweeps against counterfeit
drugs. In addition, the United States trade Representative has
negotiated the first international enforcement agreement, the
Anti-Counterfeiting trade Agreement, to limit global trade in
counterfeited goods and pirated copyrighted works.

Antitrust and the Innovative Marketplace

The U.S. antitrust agencies evaluate the extent to which a merger
between existing competitors can reduce the degree of competition in a
market. In situations where firms actively innovate to improve their
position vis-ï¿½-vis their competitors, the agencies must consider
whether those innovations would still be pursued should the merger
go forward. Given the importance of innovation to economic growth,
sound merger enforcement policy aims to promote innovation by
approving mergers that are likely to create efficiencies and
potentially spur innovation, while preventing mergers that may
inhibit innovation through a reduction in competition.
In August 2010, the Antitrust Division of the Department of
Justice and the Federal trade Commission issued new Horizontal Merger
Guidelines, which describe the merger enforcement policies of the two
agencies. the new guidelines include, for the first time, a section
explaining how the agencies assess whether a merger is likely to
inhibit innovation by, for example, reducing a firm's incentive to
continue a product development effort or initiate new product
development.


The Research and Experimentation Tax Credit

Even with well-functioning intellectual property rights and
markets, and with public support for basic scientific research,
commercial innovation incentives still tend to fall short of the
social benefits. the Research and experimentation (R&e) tax credit
is therefore an important tool to enhance private sector innovation
incentives and accelerate economic growth. In 2007, the R&e tax
credit supported 12,548 corporations and 56,000 individual taxpayers
with $8.8 billion in credits. Recent studies find that research tax
credits translate dollar-for-dollar into increases in current
research spending, especially over the longer run as businesses
develop their research enterprises (Hall and Van Reenen 2000; Bloom,
Griffith, and Van Reenen 2002). Unfortunately, because the R&e credit
is temporary and must be renewed periodically, uncertainty about the
credit's availability reduces its incentive effect, especially in
planning projects that will not be initiated and completed before
the credit's expiration.
The Obama Administration has proposed to expand, simplify, and
permanently extend the R&e tax credit. the proposal will expand the
credit by approximately 20 percent, making a commitment of $100
billion over the next 10 years, which represents the largest
commitment in the tax credit's history. the Administration also
proposes to make the credit easier to use, providing a simple 17
percent credit rate to businesses, and to make the credit permanent,
ensuring that businesses can count on the credit as they plan
research investments that span multiple years.

Entrepreneurship

The United States has long recognized the role of
entrepreneurship in tapping American ingenuity to develop new products
and solve problems. Small firms typically produce more patents per
dollar of R&D than do large firms. New businesses are also engines of
job growth, with small firm births creating 40 million U.S. jobs
between 1992 and 2005. Yet entrepreneurs face special challenges.
Raising funds is difficult for firms that are new and have little
collateral or no established reputation, even if they have a great
idea. Moreover, disclosing ideas in pursuit of funding can risk
losing the idea to established firms. Should a startup be capable of
financing the initial innovative investment, long administrative
delays in patent issuance typically delay licensing opportunities and
may cause the startup to fail.
Government support for entrepreneurship can help ensure that good
ideas from all sources enter markets, thereby boosting economic
growth. For example, the Small Business Innovation Research (SBIR)
program, which is managed by the Small Business Administration and
supported by 11 federal agencies, assists small entrepreneurial
businesses to compete for federal research and development awards. A
recent report shows that during the 10-year period ending in 2006,
businesses participating in the SBIR program frequently accounted for
more than 20 of R&D Magazine's top 100 high-technology products of
the year. the Administration's new Startup America initiative will
facilitate entrepreneurship across the country, investing $2 billion
in capital for entrepreneurs, improving the regulatory environment
for young businesses, and increasing connections between
entrepreneurs and high-quality business mentors. Meanwhile, on a
different dimension, the Affordable Care Act will remove obstacles
to entrepreneurship by enabling Americans to start and join new
businesses without giving up access to health coverage, both by
allowing workers with preexisting conditions to maintain their
health insurance and by allowing Americans under age 26 to remain on
their parents' insurance. Chapter 7 considers small business
challenges and Administration policies in greater detail.

National Priority Areas

For national priorities where innovation is critical but market
failures impede progress, government can help spur technological
advances. Priority areas include developing clean energy sources,
using information technology to improve health care and reduce costs,
and nurturing the bio- and nanotechnology revolutions. the
Administration is harnessing mechanisms, from basic research to
government procurement, to help spark American ingenuity in these
areas, driving economic growth and building the future industries
that can provide American workers with quality jobs in the future
global economy.
In clean energy, the Department of energy's Advanced Research
Projects Agency-energy (ARPA-e) has awarded nearly $400 million to
more than 120 research projects that seek fundamental breakthroughs
in energy technologies. the Administration's fiscal year 2012 Budget
will more than double total funding to date for ARPA-e. It will also
double, from three to six, the number of energy Innovation Hubs,
bringing innovative thinkers from different disciplines together to
create research breakthroughs on tough problems. One new energy
Innovation Hub will focus on improving batteries and energy storage,
with applications to advanced vehicles. Overall, the FY 2012 Budget
will significantly expand R&D investments in critical electric
vehicle components while transforming the existing $7,500 tax credit
for electric vehicles into a rebate available to all consumers at
the point of sale. Building on existing initiatives like the
Advanced technology Vehicles Manufacturing loan program, which has
invested over $2.4 billion to support three electric car factories
in California, Delaware, and tennessee, these initiatives are
working to meet the President's goal of putting 1 million advanced
vehicles on the road by 2015. Meanwhile, Department of energy tax
credits have leveraged gigawatts of private sector investments in
wind, solar, and geothermal technologies, and the U.S. Navy is
driving demand for new fuels by committing to convert half of the
fuel used for powering its planes, ships, and vehicles to alternative
fuels by 2020.
In health care, advances in information technology can help
prevent medical errors; improve delivery of care for patients,
doctors, and nurses; lower costs; and create data platforms to
encourage further innovation. the Administration is making
investments to accelerate the adoption of electronic health records,
develop standards for secure exchange of health information over the
Internet, and promote mobile and Web-based health technologies. the
Strategic Health IT Advance Research Projects (SHARP) program is
funding potentially game-changing advances to overcome obstacles to
the adoption of health information technology.
The Administration has been making critical investments in
biotechnology, nanotechnology, and advanced manufacturing. through
the Recovery Act, the Administration has invested in sequencing 1,800
complete human genomes, more than a 50-fold increase over the 34
genomes sequenced before Recovery Act funding, creating new capacity
for understanding many diseases while also driving down DNA
sequencing costs. the National Nanotechnology Initiative is
developing a strategic plan to coordinate federal investments in
nanotechnology fields, including investments to promote health,
energy, materials, electronics and other applications. the FY 2012
Budget also increases investments at key science agencies to
catalyze breakthroughs for advanced manufacturing applications and
provides funding to initiate the Advanced Manufacturing technology
Consortia Program, a public-private partnership that will help spur
innovation in manufacturing systems and shorten the time needed for
innovations to reach the market.

INFRASTRUCTURE AND ECONOMIC GROWTH

Public investments in infrastructure reduce production and trade
costs, enhance capital and labor mobility, and provide platforms to
stimulate innovation. During the 1900s, America's infrastructure
investments focused on the Nation's transportation systems and public
utilities, including electrification, which provided a platform for
the birth of major new industries and better opportunities for the
American workforce. today, as demand continues to grow and existing
infrastructure decays, significant and renewed investment in our
transportation and electricity systems is required.

The 21st century also calls for critical investments in the
information and communication technology (ICt) infrastructure,
including broadband Internet and wireless spectrum investments,
that increasingly underpins the economy and provides abundant
opportunities for further innovation and growth. telecommunications
investments have historically predicted substantial growth among
advanced countries, and rapid adoption of ICt was associated with
faster U.S. growth during the early Internet years. Of the world's
250 largest ICt companies today, 75 have their home in the United
States; these 75 companies generated total revenues of more than
$1 trillion in 2009. Additionally, ICt accounts for about 50 percent
of U.S. venture capital spending, a key element in transforming
innovative ideas into commercial applications (OeCD 2010). Annual
private investment in information processing equipment and software
in the United States doubled between 1995 and 2009, growing 2.5
times faster than other U.S. private fixed investment.

Roads, Railways, and Runways

The United States has a rich history of government investment
in transportation infrastructure leading to long-term economic
benefits. the interstate highway system represents one example.
Research has shown that well-designed infrastructure investments can
raise economic growth, productivity, and land values, while also
providing significant positive spillovers to economic development,
energy efficiency, public health, and manufacturing.
In September 2010, President Obama announced a plan to renew and
expand America's transportation infrastructure and increase government
efficiency in making infrastructure investments. the plan includes a
$50 billion investment to renew 150,000 miles of depreciating roads,
construct and maintain 4,000 miles of passenger rail, and rehabilitate
150 miles of runways. Overall, the FY 2012 Budget seeks a six-year
surface transportation reauthorization package totaling $556 billion,
more than a 60 percent increase above the previous six-year package.
the Administration is also seeking to modernize the transportation
infrastructure to help people and goods move efficiently and keep
American markets competitive. For example, the FY 2012 Budget
provides $53 billion over the next six years for passenger rail,
including the development of a high-speed rail system that will be
accessible by 80 percent of Americans within 25 years, and $1.24
billion for the Next Generation Air transportation System, a
multiyear effort to improve efficiency, safety, and capacity of the
Nation's aviation infrastructure.

The President's infrastructure plan also calls for the creation
of a National Infrastructure Bank to leverage private capital and
select projects of greatest national significance. the infrastructure
bank, to be funded at $30 billion over six years, would depart from
the Nation's traditional infrastructure decisionmaking process and
instead weigh projects of national and regional significance against
each other and fund those judged to have the greatest return to
American taxpayers.

Electricity Infrastructure

Successful electrification across the United States in the
early 1900s provided a general purpose technology upon which many
further innovations would build, from lighting and household
appliances to radio and television to computers and information
technology. With rising carbon pollution and growing worldwide demand
for scarce energy resources, the U.S. electricity infrastructure now
faces new challenges. the Administration is currently taking numerous
steps to modernize the Nation's electric grid and provide cleaner,
more efficient, and more secure energy sources, largely through Smart
Grid projects and transmission infrastructure financing.
The National Institute of Standards and technology is
coordinating Smart Grid standards, and the Recovery Act provided
$4.1 billion for related Smart Grid investments. By providing a
two-way flow of information, a Smart Grid promises to enable homes
and businesses to manage electricity consumption based on need and
price, thus reducing their utility bills. For example, energy usage
and billing data can be provided nearly in real time to the consumer
through smart meters or other technologies. Such data services can
enable smart thermostats and smart home appliances to adjust their
energy cycles based on price signals. Smart Grid technologies also
include those that enable the broader electricity transmission
infrastructure to operate more reliably and effectively, preventing
brown-outs and other disruptions that can undermine the efficiency
of the electric grid. Overall, Smart Grid technologies promise to
lower consumer costs, increase the reliability of the electric grid,
and facilitate the adoption of other innovative technologies, such
as renewable energy resources and electric vehicles.
Smart Grid investments alone are not expected to alleviate fully
the need for increased high-voltage transmission capacity. the
Recovery Act also increased the borrowing authority of the power
marketing agencies within the Department of energy by $6.5 billion
to finance new transmission investments that can accommodate
increased generation to meet future energy demand, enhance grid
reliability, and integrate location-constrained renewable energy
resources. taken together, investments in Smart Grid and
electricity distribution and transmission will help modernize the
Nation's electric grid, making electricity delivery to U.S. citizens
more efficient, secure, and reliable.

Information Networks

In less than a decade, broadband (or high-speed) Internet access
has transformed the American economy. the explosion in business-
to-business (Figure 3-2), business-to-consumer, and government-to-
consumer "e-commerce" has dramatically reduced transactions costs
by reducing geographic and time constraints. Households can
comparison shop, register their cars, and pay their bills online,
saving time and money. Many workers can save hours of commuting time
through telecommuting. More generally, broadband has expanded the
ability to communicate ideas and information, a key to faster
problem solving and innovation. the great potential for high-speed,
low-cost information networks to trigger continued economic growth
lies in their role as a general purpose technology that businesses
and households can use in creative ways--some not yet imagined--to
further transform their productive capacities.



In 2000, about 3 percent of Americans aged 18 and older had
broadband at home. By 2010, the share had grown to about 66
percent.\1\ Despite this tremendous progress, evidence suggests that
the United States trails behind a substantial number of other
advanced countries in broadband
_______________
\1\ Smith 2010. Similar adoption rates are found in other studies;
see Department of Commerce 2010.


adoption. One international comparison of broadband subscriptions
per 100 inhabitants shows the United States ranking 14th (Figure 3-3)
(OeCD 2010).



Jobs increasingly require Internet skills, but while 97 percent
of schools are connected to the Internet, more than 50 percent of
teachers say slow or unreliable Internet access presents obstacles to
their use of technology in the classroom (FCC 2010). Additionally,
broadband adoption is relatively low among certain groups of
Americans, including poor households, African American and Hispanic
households, and rural households (Department of Commerce 2010). As
broadband becomes essential to learning, working, and improving
productivity, these gaps in broadband adoption create a "digital
divide" in the opportunities available to different groups of
Americans.
To expand broadband Internet availability and strengthen this
critical platform for the Nation's economic growth, the Administration
has awarded $6.9 billion through the Recovery Act. these funds in part
support the National telecommunications and Information
Administration's Broadband technology Opportunities Program, which is
deploying "middle-mile" infrastructure in areas with nearly 40
million households and 4 million businesses, bringing broadband to
approximately 24,000 institutions, including schools, libraries,
health care facilities, and public safety entities. these funds also
support the Rural Utilities Service's Broadband Initiatives Program,
which is bringing broadband access to approximately 2.8 million
households, 364,000 businesses, and 32,000 community anchor
institutions like hospitals and schools in rural America.
Spectrum policyis another critical component in managing the
Nation's information infrastructure. More and more Americans are
connecting wirelessly to broadband Internet services using
computers, smartphones, and e-book readers, and increasing numbers of
smart machines, such as smart parking meters and remote patient
health monitoring systems, rely on wireless infrastructure.
Smartphone penetration among Americans increased almost threefold
between 2006 and 2009 by one measure, a trend that has multiplied
wireless data traffic. the rapid expansion of wireless technologies
may contribute substantially to future American productivity and
economic growth, but additional gains will require allocating more
electromagnetic spectrum for commercial and government use.
On behalf of the American people, the Federal Government manages
the rights to electromagnetic spectrum, a scarce national resource.
Today, the United States has provided just over 500 megahertz of
spectrum for mobile communication. experts believe that the United
States will require hundreds of megahertz more of spectrum in coming
years, yet only 50 megahertz are in the pipeline for commercial use.
The Administration has committed to developing 500 megahertz of
additional wireless spectrum and ensuring that spectrum is allocated
to its highest-value uses.
Freeing additional spectrum to avoid "spectrum crunch" is
essential to nurturing the next generation of high-speed wireless
services and further innovations that businesses and entrepreneurs
are beginning to deploy. However, more spectrum alone will not
guarantee secure and interoperable systems that can support
critical applications, such as public safety, or the extension of
these essential wireless platforms to Americans living in remote
rural areas. the Administration has budgeted over $18 billion to
catalyze deployment of a nationwide, interoperable public safety
wireless network, to invest in research solutions to overcome
wireless technology obstacles, and to help businesses extend the
next generation of wireless services to 98 percent of all Americans,
including those in remote rural areas.

SKILLS AND ECONOMIC GROWTH

Ensuring that future economic growth is rapid, sustained, and
broadly based requires investments in Americans' skills. education is
the pathway to higher-income jobs and the growing industries of the
21st century. education is also needed to train the next generation
of researchers and innovators, who will drive future technological
progress. For both reasons, Americans' skills are critical to future
economic prosperity. the Obama Administration is working to ensure
that our educational system is internationally competitive,
comprehensive, and innovative in preparing our workforce for an
increasingly knowledge-intensive economy.
The rapid technological changes of the 20th century not only
enhanced productivity and created new industries but also increased
demand for skilled labor (Goldin and Katz 2007). Higher education is
the key to many modern occupations, and over the years Americans
have correspondingly raised their educational attainment, with
average years of schooling at age 30 rising 6.2 years between 1900 and
2000. But American gains in educational attainment are slowing.
Average schooling duration in the final quarter of the 20th century
increased at only about one-third of its previous pace. Compared with
other countries, American educational attainment also appears to be
falling behind.
While growth in educational attainment has slowed, the demand for
skilled workers continues to increase. According to the Bureau of Labor
Statistics, 14 of the 30 fastest-growing occupations in the United
States require at least a bachelor's degree, with 7 others requiring
either an associate's degree or a postsecondary vocational certificate
or award. Moreover, over the past 30 years, the return to a college
education has also risen, further suggesting that increasing demand
for high-skilled workers is outstripping their supply. Figure 3-4
shows wage and salary income by degree attainment from 1963 to 2009.
In 2009, workers with a bachelor's degree or more earned more than
twice as much as those with only a high school diploma, while those
with some college or an associate's degree earned 25 percent more.
These wage premiums have risen 72 percentage points and 10 percentage
points, respectively, since 1963. Although not shown in the figure,
the returns to postgraduate education have risen even more steeply.
In the mid-1960s, those with postgraduate degrees earned about 50
percent more than high school graduates; by 2009, this wage premium
had more than tripled to 159 percent.
While earnings of workers who have attended college have risen,
the annual income of those with only a high school degree or less has
fallen since the 1970s, even before the declines during the recent
recession. High school dropouts have fared the worst among all
workers, with earnings falling 12 percent, in real terms, since 1963.
These workers currently earn 30 percent less than high school
graduates. this trend mirrors a broader pattern of rising wage and
income inequality in the United States, with gains from economic
growth concentrated in some segments of the population. In the past
20 years, real income for the top 20 percent of all households has
grown by 20 percent, while incomes for households in the bottom half
of the distribution have been essentially flat. By contrast, in other
periods of economic growth, such as that from World War II to the
mid-1970s, advances in labor income were spread roughly evenly
throughout the wage distribution (Goldin and Katz 2007). A leading
hypothesis about the causes of rising income inequality over the past
30 years points to technological advances that have increased the
demand for high-skilled workers, while the supply of these workers
has not accelerated to meet the demand (Katz and Murphy 1992).
Institutional factors, such as declines in unionization and the real
minimum wage, may also have played a role in increased wage
inequality (DiNardo, Fortin, and Lemieux 1996).



Further, the overall data on educational attainment mask large
disparities by race and socioeconomic status. Whereas 49 percent of
non-Hispanic whites aged 25 to 34 hold a postsecondary degree, only
29 percent of African Americans and 19 percent of Hispanics do. In
addition, children from high-income households are almost four times
as likely to obtain a postsecondary degree by age 24 as those from
low-income families.
Finally, achievement lags in science, technology, engineering,
and mathematics (SteM) fields, all areas that show high wage returns
to training and underpin future innovation. Recent test results in
primary and secondary education suggest that American schoolchildren
are lagging behind in math and science. the 2009 Programme for
International Student Assessment survey, for example, showed that
American students placed 17th of 34 developed countries in science
and 25th in math.\2\
President Obama recognizes that education is not only a driver
of growth but also the surest way for individuals to share in the
gains from growth. the challenge in developing a world-leading
workforce involves both increasing educational attainment and
enhancing the quality of education in this country. that is why the
President has established a goal for the United States to resume
world leadership in college degree attainment by 2020. to reach this
goal, the Nation must raise its college completion rate from 40
percent to 60 percent. that requires 8 million additional young
people to graduate from America's colleges and universities over the
next 10 years.
The Administration has put forward a two-pronged strategy that,
first, seeks to ensure that higher education is accessible and
affordable to all individuals and, second, promotes innovative reform
to ensure educational quality. the Administration's strategy gives
states incentives to innovate toward comprehensive education reform
as well as to adopt college- and career-ready standards of
achievement. effective education requires support from cradle to
career. Reforms are needed at every level to produce a strong and
competitive workforce.

Early Childhood Education

The years before kindergarten are among the most significant in
shaping a child's foundation for learning and school success. Research
shows that high-quality early learning programs help children arrive
at kindergarten ready to succeed in school and in life, reducing
achievement gaps that first appear at early ages. Disadvantaged
students who have access to such programs realize positive gains in
their cognitive, social, emotional, and language skills (Cunha et
al. 2006). Investments in early childhood education can improve
academic attainment, reduce the need for special education,
and increase future graduation rates. early childhood education also
has been shown to reduce future crime and teenage pregnancy for
disadvantaged children. Furthermore, investments in high-quality
early childhood learning programs have been shown to be extremely
cost-effective, with lasting returns to society as high as
17 percent per year (Belfield et al. 2006).
Recognizing the benefits of early childhood learning, the
Administration's FY 2012 Budget proposes to establish a new,
competitive early Learning Challenge Fund (eLCF). States would
compete for grant
__________________
\2\ Results of the most recent National Assessment for educational
Progress show that, although American students have improved in
math over the past 30 years, only 26 percent of 12th graders are
"proficient" or better in math.


aid from this fund by establishing systems of early learning that
set high standards and ensure that more children enter kindergarten
with the skills necessary for success. the fund would promote
evidence-based evaluation of programs, strategies for families
and parents to assess the quality of early learning programs, and
the creation of age-appropriate curricula and assessment systems.

Elementary and Secondary Education

Just as early childhood education is important to prepare
children for primary education, the K-12 system is crucial to prepare
students for college and the workplace. too many students leave high
school with inadequate academic preparation. In the 2007-08 school
year, one in five first-year college students took remedial courses,
a costly situation for both the student and society. the need for
remedial work is also a warning sign that the student is more likely
to drop out without completing his or her degree (Adelman 1998). the
task of improving college and labor market preparedness thus begins
well before a student reaches college or the labor market.
The Administration is committed to fostering innovation that
will improve educational outcomes. the Recovery Act created Race to
the top, the largest-ever federal competitive investment in school
reform. Race to the top is designed to spur state and local reforms
in K-12 education by allowing states to innovate and formulate their
own solutions. the program provides competitive grants to encourage
and reward states that have taken action to improve teacher quality,
adopt college- and career-ready standards, incorporate better data
into decisionmaking, and improve student achievement in low-
performing schools.
Encouraged by the Race to the top initiative, 48 states worked
together to create a voluntary set of college- and career-ready
standards, which establish a shared set of clear educational
guidelines for language arts and mathematics education. As of
December 2010, 40 states and the District of Columbia had adopted
these standards. Many states also pledged to undertake a variety of
innovative measures, including allowing more charter schools and
promoting the use of better student achievement data to inform
teacher evaluations. In August 2010, nine states and the District of
Columbia were named Phase 2 winners of Race to the top, joining
Phase 1 winners Delaware and tennessee. the program will benefit all
of America's students, whether or not they live in a state that was
awarded a grant. By providing incentives for all states to institute
reforms, the program has spurred reform across the country. thirty-
four states have changed state education laws or policies to make
them more conducive to reform that will provide higher-quality
instruction and give students in low-performing schools access to
the education that they deserve.
Another focus of the Administration's reform efforts is
improving low-performing schools. As established in the Recovery Act,
School Improvement Grants provide a total of $3.5 billion to transform
the lowest-performing schools so that disadvantaged students receive
the instruction and resources they need to succeed in the college or
career of their choice. Already more than 700 schools are
participating in this program.
The theme of giving states incentives to undertake reforms,
adopt national standards of achievement, and improve the lowest-
performing schools is embodied in the Administration's Blueprint for
Reform in K-12, released in March 2010. Building on the success of
Race to the top, the Blueprint seeks to bring innovative strategies
and meaningful standards to all 50 states. this plan will fix No
Child Left Behind's accountability system with a new federal
framework built around five key priorities: implementing college-
and career-ready standards, placing effective teachers and leaders
in every school, providing equity and opportunity for all students,
rewarding states and school districts that excel, and promoting
innovation and continuous improvement. Recognizing the importance of
finding and supporting local solutions, the Blueprint proposes federal
funding to support state and local school district efforts in tackling
these goals. the FY 2012 Budget proposes consolidating dozens of
redundant programs from No Child Left Behind, providing resources to
help schools focus on results. the Blueprint's framework is centered
on rewarding success and providing greater flexibility to local
actors in developing school improvement plans.
In today's global economy, it is essential that all students be
prepared academically for whatever career path they choose. the
Administration has specifically targeted improving education in STEM
subjects to maintain a skilled, innovative workforce in these growing
fields (Box 3-4). In addition, the Obama Administration dramatically
increased funding for the teacher Incentive Fund, which supports
efforts to develop and implement performance-based teacher and
principal compensation systems in high-need schools. In September
2010, grants were awarded to school districts and state education
departments that had developed "rigorous, transparent, and fair"
teacher and principal evaluation systems, as measured by both
higher achievement for students and classroom observations.
________________________________________________________________________

Box 3-4: STEM Education and Educate to Innovate

Training in science, technology, engineering, and mathematics
(STEM) fields is an important pathway to high-quality jobs, and STEM
education is also critical to producing future innovators who will
develop new products and ideas. Recognizing the importance of teachers
in K-12 education and especially in STEM fields, the President has set
a goal of training an additional 100,000 effective STEM teachers over
the next 10 years. The Administration's proposed FY 2012 Budget
includes $100 million devoted to this task.
The Administration's Educate to Innovate campaign focuses
specifically on improving children's education in STEM fundamentals in
the classroom and beyond. Key elements of the campaign are harnessing
public-private partnerships that build support around science and
math teachers, connecting kids to the wonder of invention and
discovery, and raising the profile of science through initiatives
like the White House Science Fair. The Educate to Innovate campaign
hopes to increase STEM literacy; move American students to the top
of the international pack in STEM performance; and expand awareness,
especially among underrepresented groups, of STEM career
opportunities.
As part of this campaign, the President announced the launch of
Change the Equation in September 2010. This nonprofit organization
was formed by the business community in response to the President's
spring 2009 "call to action" at the National Academy of Sciences for
all Americans to join in elevating STEM education as a national
priority. In its first year of operation, Change the Equation will
work with member companies to spread effective STEM education
programs to sites across the country. It will also create a
scorecard to assess the condition of STEM education in all 50
states, building a baseline from which to measure progress in coming
years. Furthermore, Change the Equation will identify and share
principles for effective business involvement in STEM education,
helping its member companies judge and improve the effectiveness of
their own programs through robust self-evaluation tools.
The immediate goal of Change the Equation is to replicate,
within one year, successful privately funded programs in 100 high-
need schools and communities. These programs include robotics
competitions and improved professional development for math and
science teachers. With leadership from the President and the private
sector, a membership of more than 100 CEOs, and funding of $5 million
for its first year of operations, Change the Equation is well
positioned to promote its three key goals: great teaching, inspired
learners, and a committed Nation.
________________________________________________________________________

Advancements in education technology have the potential to
improve K-12 education by personalizing the learning experience and
reducing the time needed for students to gain new knowledge. The
Administration supports several programs, as well as the launch of
an Advanced Research Projects Agency for education, which will
promote education technology innovations. With broadband, cloud
computing, digital devices, and software, these technologies can
spread widely and allow both the identification and adoption of best
practices.

Higher Education

American universities remain a renowned strength of the
Nation's educational system (Box 3-5). to reach the President's goal
of leading the world in college completion by 2020 and to provide the
skilled workforce needed for the economy to thrive, the Administration
has prioritized making the college and university system accessible
and affordable to all.
The Health Care and education Reconciliation Act (HCeRA), signed
in March 2010, helps build a more reliable and effective financial
aid system by making all federal loans--Stafford loans, PLUS loans,
and consolidation loans--available directly to students, ending
subsidies once paid to third-party administrators. By saving $68
billion in subsidies over the next 11 years, the direct loan program
allows for deficit reduction and for greater investments in college
affordability.
To make college more affordable to low-income students, the
Administration also has greatly expanded the Pell Grant program. In
addition to Recovery Act support for the Pell Grant program, HCERA
invests more than $40 billion in Pell Grants, raising the maximum
Pell award from $4,730 in 2008 to $5,550 in 2010 and to an estimated
$5,975 in 2017. Pell Grants can be applied toward traditional college
expenses as well as to vocational and adult education programs.
The impact of these efforts is already evident, with nearly 8
million Pell Grant recipients in the 2009-10 academic year. that is
more than double the figure from 10 years earlier and is 26 percent
above the 2008-09 level. Furthermore, the average award of $3,646 is
25 percent larger than the average award in 2008-09.
In addition, the American Opportunity tax Credit (AOtC),
established in the Recovery Act, provides up to $2,500 a year for
college tuition and related expenses for American families. the AOTC
is refundable, thereby also reaching lower-income families. the tax
credit increased tax incentives for higher education by more than
90 percent and benefited 8.3 million students and their families in
2009. In December 2010, the President signed an extension of the AOTC
through the end of 2012, and he has proposed making it permanent.

_______________________________________________________________________

Box 3-5: America's universities: leading the World

Despite the relative decline in educational attainment in the
United States, America's universities remain the strongest in the
world. According to the Times Higher Education rankings for 2010-11,
the United States boasts 15 of the top 20 universities in the world.
In addition, American institutions remain the most popular destination
for foreign graduate and undergraduate students. Of students traveling
out of their country of residence for tertiary education, 19 percent
go to the United States, more than the combined share of those who go
to the next two most popular countries, the United Kingdom and
Germany. The remarkable diversity of America's graduate programs has
been shown to increase innovation and research productivity (Stuen,
Maskus, and Mobarak 2010), making these programs even more attractive
to both domestic and international students.
Universities play the dual role of creating new ideas and
training high-skill workers, and American universities lead the world
on this front. Since 1960, 63 percent of Nobel Prize winning research
has been performed in the United States, mostly at universities. The
diversity of the Nation's colleges and universities is a great
strength: 31 percent of the U.S. Nobel Prize winners since 1960 were
foreign born, and 44 percent of these immigrants received their
graduate degrees in the United States.
Furthermore, American universities give students world-class
training for the high-skill jobs of the future. University students
in the United States have the opportunity to learn from the world's
leading scientists and scholars, ensuring that the best new ideas
enter the American workforce. Preparing the American workforce for
the 21st century depends on taking innovative ideas from the
laboratory to the workforce, and universities provide that bridge.
_______________________________________________________________________

Federal efforts to increase financial aid, particularly the Pell
Grant program, are the primary reason that net tuition (tuition minus
grant aid) has fallen at all types of colleges and universities over
the past five years, even as published tuition has risen
substantially. To make higher education more accessible to all
students, the HCERA provides $2.6 billion over the next decade to
strengthen Minority-Serving Institutions (including Historically
Black Colleges and Universities) nationwide. these schools play a
key role in educating low- and middle-income students, enrolling
nearly 60 percent of the Nation's 4.7 million minority undergraduate
students and accounting for nearly one-third of all degree-granting
institutions in higher education. these steps will ensure that
minority students are given every chance to earn degrees and to
enter (or return to) the workforce with the skills they need to
succeed.

Job Training

In addition to traditional education pathways, job training
programs provide vital opportunities for workers to gain new skills
well suited to today's economy. Skill upgrading can be especially
important for displaced workers whose skills might otherwise erode
while they search for new job opportunities. training is provided by
a diverse set of institutions, including proprietary (for-profit)
schools, four-year colleges, community-based organizations, labor
unions, and public vocational and technical schools. Studies have
documented that well-designed training and adult education programs
can improve participants' labor market outcomes, increasing earnings
and the probability of employment (CeA 2009). these improvements
appear to be especially strong in training programs with a targeted
focus on specific sectors, such as technical or high-growth sectors,
and in programs that operate with a high level of employer
involvement (Maguire et al. 2010). the Skills for America's Future
initiative encourages and promotes these types of partnerships
(Box 3-6).
The Administration has acted to promote career training for
displaced workers, giving them the new skills they need to meet the
demands of a competitive economy. HCeRA provides $2 billion to fund
the trade Adjustment Assistance Community College and Career training
Grant Program, which provides grants to institutions of higher
education to improve and expand programs suited to help workers
affected by trade. Under the program, competitive funds will be made
available to community colleges over the next four years to help
increase completion of degrees, certificates, and other industry-
recognized credentials. In addition, the Affordable Care Act, passed
in March 2010, makes investments in workforce training in the high-
growth field of health care, providing funding to train additional
doctors, dentists, physicians' assistants, and much-needed nurses.
Finally, the Administration has called on Congress to
reauthorize and modernize the Workforce Investment Act (WIA). The
aim is to fuel the development and replication of effective practices
in job training, adult education, and vocational rehabilitation. The
Recovery Act provided nearly $4 billion for WIA programs, including
$500 million for adult employment and training activities, nearly
$1.5 billion to train displaced workers, and $750 million for a
program of competitive grants for worker training and placement in
the high-growth sectors of health care and clean energy. About 35
percent of workers receiving job training through WIA programs
attend community colleges, putting those institutions on the front
lines of training America's workforce for the jobs of tomorrow.

______________________________________________________________________

Box 3-6: Skills for America's Future

In October 2010, President Obama announced the creation of the
Skills for America's Future (SAF) initiative to foster collaborative
efforts between the private sector, community colleges, labor unions,
and other institutions, with a commitment to scaling up meaningful
and measurable solutions. The goal is to build a nationwide network
of stakeholders who will work to maximize workforce development
strategies, job training programs, and job placement.
SAF will identify and highlight characteristics of successful
training programs that can be replicated and scaled up to reach more
workers and institutions. The initiative already has the commitment
of private sector leaders, along with innovative institutions, to
advance these efforts. Actively engaging private employers, with
expertise and knowledge of required credentials as well as local
labor market conditions, is critical to the success of training
programs. Building and encouraging collaborative efforts between
private employers and public community colleges and other
institutions is one of the cornerstones of the Skills for America's
Future initiative.
In conjunction with SAF, the President also established the
Skills for America's Future Task Force, cochaired by top-level
Administration policymakers, to coordinate federal efforts to ensure
that the private sector is well poised to work with and leverage
federal training and education efforts.
_______________________________________________________________________

CONCLUSION

Throughout its history, the United States has demonstrated a
remarkable capacity to innovate and generate substantial increases in
American standards of living. With the private sector in the lead
and appropriate public investments where markets fall short,
Americans will continue to see rapid, broad-based, and sustained
economic growth. the Obama Administration is making investments in
our national innovation system, infrastructure, and skills to
provide the right foundations for prosperity. these foundations will
ensure that, year after year, America's greatest resource--its
people--can build a brighter future.