Obama Chooses Tech Innovation in Debt Debate
Forget whether or not the $4.5 trillion package deal over the debt ceiling gets passed or whether a much more modest plan wins the day. By even suggesting the deal, President Barack Obama has put all the cards on the table. We already knew that Obama favors preserving (and even bolstering) non-defense discretionary spending. What counts this latest revelation as a major development, however, is that Obama has chosen to protect non-defense discretionary spending over entitlement programs such as Medicare, Medicaid, and Social Security. For those who think that science and technology will be the source of solutions for problems ranging from heart disease to global warming, in addition to being the cause of the next economic boom, this is a major endorsement.
When we say a term as cumbersome as “non-defense discretionary spending,” we’re liable to lose a few people in the conversation. Discretionary spending is that which, from year-to-year, is not a so-called “mandatory” payment. A mandatory payment is that which the U.S. has already agreed to pay, including entitlements programs, government employees’ pensions, required payments on debt (including interest), etc.
Non-defense discretionary spending currently makes up about 20% of America’s spending. That 20% is a hodgepodge of different government agencies and expenditures that swell and shrink when different political parties take power. In sum, most of that spending is on infrastructure maintenance and improvement, education, and scientific and technological innovation. On the surface, spending on interstate roads and bridges seemingly has nothing to do with grants for cancer research. But it does.
This is the part of the budget in which the government does magical things that people, businesses and even multi-national corporations cannot do on their own. It takes 10-15 years for typical innovations to be ready to go to market. Modern financial markets do not have the stomach for this type of long-term investment, and often cannot produce the scale of funding necessary to adequately produce results on a grand scale. The types of projects we’re talking about are on par with the Hoover Dam, atomic energy (and bombs), interstate highways, the cure for polio, space exploration, the computer chip, the internet, robotics, artificial intelligence, nano technology and on and on. Granted, not all advancements are made directly through government funding, but almost all have at least nominal government support in the way of tax breaks (which count as discretionary spending in the budget).
This is one of the best, highest-return investments a government can make. Economists have shown that government investment in science and technology is one of the most effective and profitable investments that can be made. One fascinating study by Battelle, a scientific institution, outlined how the government’s $3.8 billion investment in the Human Genome Project reaped nearly three quarters of a trillion dollars in economic activity thus far, resulting in $3.7 billion in added tax revenue in 2010 alone.
If we are to solve the herculean problems that are on the not-so-distant horizon — like global warming, food shortages, energy independence and security, obesity, cancer, and heart disease — as well as fund and fast-track development of the technologies that will lead to the next economic boom (as well as the ones thereafter) while simultaneously keeping the United States as the economic, financial, scientific, technological and moral center of the world, we must do more than pay lip service to investing our tax dollars wisely — we must actually fight for it when everything else is on the line. It’s good to know that we currently have a president that knows what the Rolling Stones knew: We can’t always get what we want — entitlements — but if we try, we’ll find we get what we need – innovation.
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