ing funds or if necessary through the investment of new funds. Special attention should go to the physical sciences, engineering, mathematics, and information sciences and to Department of Defense (DOD) basic-research funding. This special attention does not mean that there should be a disinvestment in such important fields as the life sciences (which have seen growth in recent years) or the social sciences. A balanced research portfolio in all fields of science and engineering research is critical to U.S. prosperity. This investment should be evaluated regularly to realign the research portfolio-unsuccessful projects and venues of research should be replaced with emerging research projects and venues that have greater promise. Action B-2: Provide new research grants of $500,000 each annually, payable over five years, to 200 of our most outstanding early-career researchers. The grants would be made through existing federal research agencies-the National Institutes of Health (NIH), the National Science Foundation (NSF), the Department of Energy (DOE), DOD, and the National Aeronautics and Space Administration-to underwrite new research opportunities at universities and government laboratories. Action 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-through reallocation of existing funds or if necessary through the investment of new funds-to ensure that universities and government laboratories create and maintain the facilities and equipment needed for leading-edge scientific discovery and technological development. Universities and national laboratories would compete annually for these funds. Action B-4: Allocate at least eight percent of the budgets of federal research agencies to discretionary funding that would be managed by technical program managers in the agencies and be focused on catalyzing high-risk, high-payoff research. Action B-5: Create in the Department of Energy (DOE) an organization like the Defense Advanced Research Projects Agency (DARPA) called the Advanced Research Projects Agency-Energy (ARPA-E).8 The Director of ARPA-E would report to the Under Secretary for science and would be charged with sponsoring specific research and development programs to meet the Nation's longterm energy challenges. The new agency would support creative "out-of-the-box" transformational generic energy research that industry by itself cannot or will not support and in which risk may be high but success would provide dramatic benefits for the Nation. This would accelerate the process by which knowledge obtained through research is transformed to create jobs and address environmental, energy, and security issues. ARPA-E would be based on the historically successful DARPA model and would be designed as a lean and agile organization with a great deal of independence that can start and stop targeted programs on the basis of performance. The agency would itself perform no research or transitional effort but would fund such work conducted by universities, startups, established firms, and others. Its staff would turn over about every four years. Although the agency would be focused on specific energy issues, it is expected that its work (like that of DARPA or NIH) will have important spin-off benefits, including aiding in the education of the next generation of researchers. Funding for ARPA-E would start at $300 million the first year and increase to $1 billion per year over 5-6 years, at which point the program's effectiveness would be evaluated. Action B-6: Institute a Presidential Innovation Award to stimulate scientific and engineering advances in the national interest. Existing presidential awards address lifetime achievements or promising young scholars, but the proposed new awards would identify and recognize persons who develop unique scientific and engineering innovations in the national interest at the time they occur. 7 The funds may come from anywhere in an agency, not just other research funds. 8 One committee member, Lee Raymond, does not support this action item. He does not believe that ARPA-E is necessary as energy research is already well funded by the Federal Government, along with formidable funding of energy research by the private sector. Also, ARPA-E would put the Federal Government in the business of picking "winning energy technologies❞— a role best left to the private sector. BEST AND BRIGHTEST IN SCIENCE AND ENGINEERING HIGHER EDU CATION 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 Actions Action 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. The Undergraduate Scholar Awards in Science, Technology, Engineering, and Mathematics (USA-STEM) would be distributed to states on the basis of the size of their congressional delegations and awarded on the basis of national examinations. An award would provide up to $20,000 annually for tuition and fees. Action 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. NSF should administer the program and draw on the advice of other federal research agencies to define national needs. The focus on national needs is important both to ensure an adequate supply of doctoral scientists and engineers and to ensure that there are appropriate employment opportunities for students once they receive their degrees. Portable fellowships would provide funds of up to $20,000 annually directly to students, who would choose where to pursue graduate studies instead of being required to follow faculty research grants. Action C-3: Provide a federal tax credit to encourage employers to make continuing education available (either internally or though colleges and universities) to practicing scientists and engineers. These incentives would promote career-long learning to keep the workforce current in the face of rapidly evolving scientific and engineering discoveries and technological advances and would allow for retraining to meet new demands of the job market. Action C-4: Continue to improve visa processing for international students and scholars to provide less complex procedures and continue to make improvements on such issues as visa categories and duration, travel for scientific meetings, the technology-alert list, reciprocity agreements, and changes in status. Action 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 United States-based employers and pass a security screening test, they should be provided automatic work permits and expedited residence status. If students are unable to obtain employment within one year, their visas would expire. Action C-6: Institute a new skills-based, preferential immigration option. Doctoral-level education and science and engineering skills would substantially raise an applicant's chances and priority in obtaining U.S. citizenship. In the interim, the number of H-1B9 visas should be increased by 10,000, and the additional visas should be available for industry to hire science and engineering applicants with doctorates from U.S. universities. Action C-7: Reform the current system of “deemed exports." 10 The new system should provide international students and researchers engaged in funda 9 The H-1B is a nonimmigrant classification used by an alien who will be employed temporarily in a specialty occupation of distinguished merit and ability. A specialty occupation requires theoretical and practical application of a body of specialized knowledge and at least a Bachelor's degree or its equivalent. For example, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts are specialty occupations. See http://uscis.gov/graphics/howdoi/ h1b.htm 10 The controls governed by the Export Administration Act and its implementing regulations extend to the transfer of technology. Technology includes "specific information necessary for the 'development,' 'production,' or 'use' of a product" [emphasis added]. Providing information that is subject to export controls-for example, about some kinds of computer hardware-to a foreign national within the United States may be "deemed" an export, and that transfer requires an Continued mental research in the United States with access to information and research equipment in U.S. industrial, academic, and national laboratories comparable with the access provided to U.S. citizens and permanent residents in a similar status. It would, of course, exclude information and facilities restricted under national-security regulations. In addition, the effect of deemed-exports regulations on the education and fundamental research work of international students and scholars should be limited by removing all technology items (information and equipment) from the deemed-exports technology list that are available for purchase on the overseas open market from foreign or U.S. companies or that have manuals that are available in the public domain, in libraries, over the Internet, or from manufacturers. 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 Actions Action D-1: Enhance intellectual-property protection for the 21st century global economy to ensure that systems for protecting patents and other forms of intellectual property underlie the emerging knowledge economy but allow research to enhance innovation. The patent system requires reform of four specific kinds: • Provide the Patent and Trademark Office sufficient resources to make intellectual-property protection more timely, predictable, and effective. • Reconfigure the U.S. patent system by switching to a "first-inventor-to-file" system and by instituting administrative review after a patent is granted. Those reforms would bring the U.S. system into alignment with patent systems in Europe and Japan. • Shield research uses of patented inventions from infringement liability. One recent court decision could jeopardize the long-assumed ability of academic researchers to use patented inventions for research. • Change intellectual-property laws that act as barriers to innovation in specific industries, such as those related to data exclusivity (in pharmaceuticals) and those which increase the volume and unpredictability of litigation (especially in information-technology industries). Action D-2: Enact a stronger research and development tax credit to encourage private investment in innovation. The current Research and Experimentation Tax Credit goes to companies that increase their research and development spending above a base amount calculated from their spending in prior years. Congress and the administration should make the credit permanent,11 and it should be increased from 20 percent to 40 percent of the qualifying increase so that the U.S. tax credit is competitive with that of other countries. The credit should be extended to companies that have consistently spent large amounts on research and development so that they will not be subject to the current de facto penalties for previously investing in research and development. Action D-3: Provide tax incentives for United States-based innovation. Many policies and programs affect innovation and the Nation's ability to profit from it. It was not possible for the committee to conduct an exhaustive examination, but alternatives to current economic policies should be examined and, if deemed beneficial to the United States, pursued. These alternatives could include changes in overall corporate tax rates, provision of incentives for the purchase of high-technology research and manufacturing equipment, treatment of capital gains, and incentives for long-term investments in innovation. The Council of Economic Advisers and the Congressional Budget Office should conduct a comprehensive analysis to examine how the United States compares with other nations as a location for innovation and related activities with a view to ensuring that the United States is one of the most attractive places in the world for long-term innovation-related investment. From a tax standpoint, that is not now the case. Action D-4: Ensure ubiquitous broadband Internet access. Several nations are well ahead of the United States in providing broadband access for home, school, export license. The primary responsibility for administering controls on deemed exports lies with the Department of Commerce, but other agencies have regulatory authority as well. 11 The current R&D tax credit expires in December 2005. and business. That capability will do as much to drive innovation, the economy, and job creation in the 21st century as did access to the telephone, interstate highways, and air travel in the 20th century. Congress and the administration should take action-mainly in the regulatory arena and in spectrum management-to ensure widespread affordable broadband access in the near future. CONCLUSION The committee believes that its recommendations and the actions proposed to implement them merit serious consideration if we are to ensure that our nation continues to enjoy the jobs, security, and high standard of living that this and previous generations worked so hard to create. Although the committee was asked only to recommend actions that can be taken by the Federal Government, it is clear that related actions at the State and local levels are equally important for U.S. prosperity, as are actions taken by each American family. The United States faces an enormous challenge because of the disadvantage it faces in labor cost. Science and technology provide the opportunity to overcome that disadvantage by creating scientists and engineers with the ability to create entire new industries-much as has been done in the past. It is easy to be complacent about U.S. competitiveness and pre-eminence in science and technology. We have led the world for decades, and we continue to do so in many research fields today. But the world is changing rapidly, and our advantages are no longer unique. Without a renewed effort to bolster the foundations of our competitiveness, we can expect to lose our privileged position. For the first time in generations, the Nation's children could face poorer prospects than their parents and grandparents did. We owe our current prosperity, security, and good health to the investments of past generations, and we are obliged to renew those commitments in education, research, and innovation policies to ensure that the American people continue to benefit from the remarkable opportunities provided by the rapid development of the global economy and its not inconsiderable underpinning in science and technology. SOME WORRISOME INDICATORS • When asked in spring 2005 what is the most attractive place in the world in which to "lead a good life,"1 respondents in only one of the 16 countries polled (India) indicated the United States. • For the cost of one chemist of one engineer in the United States, a company can hire about five chemists in China or 11 engineers in India.2 • For the first time, the most capable high-energy particle accelerator on Earth will, beginning in 2007, reside outside the United States.3 • The United States is today a net importer of high-technology products. Its share of global high-technology exports has fallen in the last two decades from 30 percent to 17 percent, and its trade balance in high-technology manufactured goods shifted from plus $33 billion in 1990 to a negative $24 billion in 2004.4 • Chemical companies closed 70 facilities in the United States in 2004 and have tagged 40 more for shutdown. Of 120 chemical plants being built around the world with price tags of $1 billion or more, one is in the United States and 50 in China.5 • Fewer than one-third of U.S. 4th grade and 8th grade students performed at or above a level called "proficient" in mathematics; "proficiency" was considered the ability to exhibit competence with challenging subject matter. Alarmingly, about one-third of the 4th graders and one-fifth of the 8th graders lacked the competence to perform basic mathematical computations.6 • U.S. 12th graders recently performed below the international average for 21 countries on a test of general knowledge in mathematics and science. In addition, an advanced mathematics assessment was administered to U.S. students who were taking or had taken precalculus, calculus, or Advanced Placement calculus and to students in 15 other countries who were taking or had taken advanced mathematics courses. Eleven nations outperformed the United States, and four countries had scores similar to the U.S. scores. No nation scored significantly below the United States.7 • In 1999, only 41 percent of U.S. 8th grade students received instruction from a mathematics teacher who specialized in mathematics, considerably lower than the international average of 71 percent.8 • In one recent period, low-wage employers, such as Wal-Mart (now the Nation's largest employer) and McDonald's, created 44 percent of the new jobs, while high-wage employers created only 29 percent of the new jobs.9 • In 2003, only three American companies ranked among the top 10 recipients of patents granted by the United States Patent and Trademark Office.10 1 Interview asked nearly 17,000 people the question: "Supposed a young person who wanted to leave this country asked you to recommend where to go to lead a good life-what country would you recommend ?" Except for respondents in India, Poland, and Canada, no more than one-tenth of the people in the other nations said they would recommend the United States. Canada and Australia won the popularity contest. Pew Global Attitudes Project, July 23, 2005. 2 The Web site http://www.payscale.com/about.asp tracks and compares pay scales in many countries. Ron Hira, of Rochester Institute of Technology, calculates average salaries for engineers in the United States and India as $70,000 and $13,580, respectively. 3 CERN, http://public.web.cern.ch/Public/Welcome.html. 4 For 2004, the dollar value of high-technology imports was $560 billion; the value of hightechnology exports was $511 billion. See Appendix Table 6-01 of National Science Board's Science and Engineering Indicators 2004. 5 "No Longer The Lab Of The World: U.S. chemical plants are closing in droves as production heads abroad," Business Week (May 2, 2005). 6 National Center for Education Statistics, Trends in International Mathematics and Science Study, 2003, http://nces.ed.gov/timss. 7 Data are from National Science Board. 2004. Science and Engineering Indicators 2004 (NSB 04-01). Arlington, VA: National Science Foundation. Chapter 1. 8 Data are from National Science Board. 2004. Science and Engineering Indicators 2004 (NSB 04-01). Arlington, VA: National Science Foundation. Chapter 1. 9 Roach, Steve. More Jobs, Worse Work. New York Times. July 22, 2004. 10 U.S. Patent and Trademark Office, Preliminary list of top patenting organizations. 2003, http://www.uspto.gov/web/offices/ac/ido/oeip/taf/top03cos.htm. |