A consensus is forming in Washington that the federal government is not doing enough to help American innovation. New research suggests that federal underinvestment is contributing to sluggish productivity and eroding America’s global competitiveness. Current public spending on research and development (R&D) stands at roughly $130 billion — dwarfed by the private sector’s more than $450 billion. This is a complete reversal of R&D spending in the decades following World War II, when the federal government led the way.
Large increases in federal R&D may now be imminent. Spurred by a pandemic disaster and fierce global competition with China — and buoyed by the success of the government-led effort to develop COVID-19 vaccines — policymakers across the political spectrum are calling for more R&D funding. It’s not just how much money the federal government spends on R&D that matters, however, but what it spends its money on. Lawmakers looking to boost innovation must make sufficient allocations for basic science, which historically has helped make the U.S. a world leader in science and technology.
In 2020, lawmakers in Congress unveiled a bipartisan, bicameral bill — the Endless Frontier Act — that allocates $100 billion over five years to create a technology directorate within the National Science Foundation (NSF). A new version of the bill recently was reintroduced and is being considered on the Hill. Additionally, the Biden administration’s massive infrastructure plan allocates $250 billion for research, including $50 billion to restructure NSF along the same lines as the Endless Frontier Act.