’08 Tech Policy Outlook: The “Innovation Agenda”

Continuing our weekly posts reviewing key technology policy issues facing Congress, this week we tackle the so-called “innovation agenda.” This agenda has been defined by a loose collection of business, academic groups and professional/scientific societies (both ACM and CRA work on these issues) interested in improving the innovation ecosystem. The agenda is organized around four policy areas:

  • funding for basic research in the physical sciences
  • funding and expansion of science, technology, engineering and mathematics (STEM) education programs
  • some form of immigration reform for highly-skilled workers (H1Bs or visas for non-resident students when they graduate with technical degrees), and
  • extending the R&D tax credit.

(Note that not all the groups support all issues of the agenda. For example, neither ACM nor USACM has a position on immigration reform or R&D tax credits, so this post is only going to focus on the first two areas.)

Last year ended on a sour note for the innovation agenda. Congress and the Administration had spent the better part of the year talking it up, but when Congress wrapped up the innovation agenda was 0 for 4, as it flat funded research and many STEM education programs, and took no action on immigration or the R&D tax credit.

Part of the problem, at least for the first two issues, was that a lot of energy went into passing the COMPETEs Act, which authorized more money for research and STEM education programs, but didn’t fund them. Without getting too budget wonky, multi-year authorizations like the COMPETEs Act matter little without the yearly appropriations that actually drive agency spending.

This year, there will be intense focus on trying to fund what was promised in the COMPETEs Act. Unfortunately, the funding picture is not clear.

Over the next few weeks look for two significant events. First, President Bush will present his budget the first week of February. This will establish the framework for continuing to fund his American Competitiveness Initiative. (The initiative seeks to double spending for basic research in the three key physical science agencies). From everything we’ve heard the budget will be promising. While this would be a good first step, the value of the President’s budget in his last term when his party is out of power in Congress is, at best, marginal.

The rest of the action will be in Congress. The second short-term event centers on the supplement funding bill for the current (2008) fiscal year. Shortly after the budget is released, the President will likely request a supplemental funding bill for operations in Iraq. In previous years, this bill has had other “emergency” spending, and there is a chance that Congress could repair some of the damage from the final FY08 appropriation bills. This is likely a long-shot, but any research or education funding in this bill will brighten the longer-run prospects.

Congress will then begin the long grind toward completing the FY09 budget. Research and STEM education funding prospects depend on how big of a priority the Democrats place on them. After last year’s budget was finalized, Senate Majority Leader Harry Reid (D-NV) said, “The President didn’t get his priorities, we got ours.” Considering that research funding and STEM education funding wasn’t among those priorities, this quote is distressing. However, the Democrats have said that fostering innovation is a top legislative priority, so they will have a chance to change this year.

And what a long-grind the appropriations process will be, as budget politics haven’t changed from last year. In fact, they might be worse during this election year. The President and Republicans in Congress will still have incentive to “hold the line” on spending. This would mean the Democrats would have to make some hard decisions right before an election — something that Congress doesn’t do very often. So things are likely to slip until after the election. What happens then is anybody’s guess, because shifting of power in either the Executive or Legislative branch completely changes the political dynamics. We could be waiting until 2009 until this budget fight is resolved.

Beyond the budget, Congress will have at least two chances to deal with STEM education issues. First, the Higher Education Act, which provides the Federal government’s support for the higher education system, is up for renewal. There are several STEM education programs in the mix, but most of the big ones aren’t new, and Congress will likely be making changes at the margin. Second is the No Child Left Behind Act. This legislation provides the Federal government’s support for the k-12 system. Again, there will be important STEM education programs in the mix, but no big new ones. Most of the conflict over this bill will be with its testing requirements for students. Reauthorizing this controversial legislation is a long-shot. We actually don’t expect to see a comprehensive new NCLB act until 2010.

The “innovation agenda” will have a lot of moving pieces this year but, once again, the critical one is the annual budget fight.

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