USA chapter [16] [P3]:Layout 1 18/10/10 17:57 Page 28 Within an overall programme that approaches one trillion dollars, Transforming our Economy with Science and Technology aims to ‘put scientists to work looking for the next great discovery, creating jobs in cutting-edge technologies and making smart investments that will help businesses in every community succeed in a global economy. Thomas Ratchford and William Blanpied on the Obama administration's plans for stimulating the economy USA chapter [16] [P3]:Layout 1 18/10/10 17:57 Page 29 2 . United States of America J. Thomas Ratchford and William A. Blanpied INTRODUCTION American journal Science featured a one-page article entitled Breakdown of the year: financial meltdown. The Research and development (R&D) in the United States of credit crisis will undoubtedly have negative repercussions America (USA) have prospered over the five years since the for investment in R&D in the USA, as in other countries, UNESCO Science Report 2005 was published. The political and may delay the commercialization of promising environment has remained conducive to a large federal role technologies. Although the Science article did not point in defence and basic research, while the universities have the finger at the economists whose risk models were of America States United continued to strive for excellence in research and teaching, partially responsible for the financial crisis, nor at the beneficiaries of generous federal subventions and project handful of PhD physicists who were employed on high support. Operating in a friendly policy environment, salaries by Wall Street firms to conduct such analyses, companies have invested unprecedented amounts in they were clearly culpable to some extent for the research. The threatening cloud on the horizon for R&D is financial meltdown. the global economic recession. The economic downturn first became visible in the USA in S&T IN THE OBAMA ADMINISTRATION the last quarter of 2008, after the collapse of the country’s credit system in what has become known as the subprime On 20 January 2009, Barack H. Obama was sworn in as the mortgage crisis. The crisis first hit the world’s headlines USA’s 44th President after George W. Bush’s eight years in office. after the federal government refused to bail out Lehman The global economic recession President Obama inherited has Brothers. The firm filed for Chapter 11 bankruptcy provided a unique backdrop for his administration and its protection on 15 September 2008. American International stance on science and technology (S&T). Group, the world’s largest insurer, was bailed out the next day at an eventual cost of between US$134 billion and In response to the deepening crisis, the incoming Obama US$180 billion. In the following weeks, several leading administration proposed a second economic stimulus lending institutions also folded, including Bear Stearns. package which was approved by Congress – the US Others would be saved in extremis by federal intervention. parliament – in February 2009. This package included significant one-time funding for federal S&T organizations By the end of 2008, millions of mortgaged American through 2010. The Administration’s detailed budget homes had been seized by creditors. Between June 2008 request for fiscal year 2010, submitted to Congress during and June 2009, 2 million jobs were lost. Unemployment the first week of May 2009, also included significant rose from nearly 4% to about 10% of the working requests for these organizations. population, a deterioration not seen in over 25 years. By early 2009, two of the three leading car manufacturers The president articulated his vision of the future in an were having to be bailed out by the federal government. address to the National Academy of Sciences on 29 April Both General Motors and Chrysler were later reorganized 2009. He pledged an increase in gross domestic expenditure following bankruptcy. As of May 2009, GDP had on R&D (GERD) from 2.7% to 3% of GDP, requiring a rise in contracted by slightly more than 3% on an annual basis, both government and industrial expenditure. This, he with a low of 6.4% for the first quarter. emphasized, would contribute to the development of less expensive solar cells, learning software that could provide At the time of writing in October 2009, GDP had superior computer tutorials and, above all, alternative, clean expanded for the first time in a year in the third quarter at energy sources. ‘Energy,’ he asserted, ‘is this generation’s Space shuttle an annual rate of 3.5%, according to the Department of great project.’ He suggested that the USA should commit Endeavour lifting off from NASA’s Commerce. Economists were fearful, however, that the itself to reducing carbon pollution by 50% by 2050 against Kennedy Space recovery might not last, as government programmes to the 1990 base year. To this end, he reiterated his intention to Center on stimulate consumer spending were due to expire and create an Advanced Research Project Agency for Energy 15 July 2009 for a rendezvous with both public debt and unemployment kept rising steadily. (ARPA-E) within the Department of Energy. This agency the team at the would be analogous to the Department of Defense’s International Space Station In the same issue in which its Breakthrough of the Year Advanced Research Project Agency (DARPA) in conducting was announced on 19 December 2008 (Box 1), the high-risk, high-reward research. Photo: NASA 29 USA chapter [16] [P3]:Layout 1 18/10/10 17:57 Page 30 UNESCO SCIENCE REPORT 2010 If there is a common thread running through President policy regime and, in the modern world of federally Obama’s S&T policies, funding and people, it is a funded research, the government role is central. Life for commitment to a green future: reducing greenhouse dissenters, even in science, has always been tough. The gasses and using clean energy. This commitment is real test of this policy will be whether federal funding of reflected in stronger standards for vehicle efficiency scientific opinions not ‘politically correct’ will flourish. (CAFÉ standards) and proposals for a ‘cap and trade’ regime to reduce greenhouse gas emissions. Funding President Obama views investment in science, technology There is also a renewed emphasis on federal involvement and innovation (STI) as important components of the in industrial technology development and a tilt towards nation’s economy, as emphasized in both his stimulus fewer controls on some controversial research, such as that package and his 7 May budget request for R&D in his utilizing stem cells. It remains to be seen how these trends proposed budget for fiscal year 2010. will endure beyond the current economic recession. In a speech to the National Academy of Sciences on The fundamental policies that have undergirded the 29 April 2009, the president promised to meet two support for R&D in the USA for more than a half a century important benchmarks: are expected to remain in place. These include generous federal support for basic research and a policy firstly, that the nation would carry GERD to 3% of GDP environment favourable to private-sector funding of R&D. by the time he left office, compared with the unofficial estimate of 2.7% for 2008. This ratio has never reached Overall, the Obama administration and the Democratic or exceeded 3%; it peaked at 2.9%, in 1962; majority in Congress – the President himself being a I secondly, that the research and experimentation tax Democrat – are expected to be more amenable to credit would be made permanent. This is a tax credit federal R&D expenditure than the Republican party, for R&D investment by industrial firms which has been especially when it comes to federal programmes that renewed by Congress periodically. strengthen industrial R&D. President Obama appears to be engaged on science issues and is known as a ‘science The president’s promise has been greeted favourably by guy’. His policy changes include new guidelines on industry. Both pledges require substantial investment by embryonic stem cell research. These new guidelines industry and a concomitant favourable industrial research allow federal funding for research only on new stem cell policy environment. lines created from surplus embryos at fertility clinics. They include rigorous eligibility standards and lines People created in the laboratory to study particular diseases are Material to the effects of these budget increases are the S&T not allowed. The New York Times, in an editorial of 22 leaders in the new administration. They have the April 2009, complained that the new guidelines were responsibility to implement these increases wisely and to ‘disappointing’. The guidelines under President Bush, advise on how best to deploy S&T in the service of the nation. themselves a political compromise, permitted federal funding of research on 21 cell lines. The Obama The Obama administration has a strong S&T team. The guidelines also appear to be a political compromise but fact that important appointments were made early on lean further towards the free scientific enquiry end of sent a positive signal. President Obama’s choice for the spectrum. In July 2009, the Obama Administration Science Advisor and Assistant to the President for Science further modified its rules regarding stem cell research in and Technology was John Holdren, former head of the response to criticisms reported in the April New York Harvard Kennedy School’s Science, Technology, Public Times editorial. Policy Program at the Belfer Center for Science and International Affairs. Holdren is a strong supporter of Of greater structural policy importance is an Obama controls on greenhouse gases. He has also, in the past, memorandum insulating scientific decisions by federal expressed support for clean coal and advanced nuclear government officials from political influence.