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Will Business Step In to End a Sequester-Driven Research Funding Gap?

The views expressed are those of the author and are not necessarily those of Scientific American.


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Image from President Obama’s campaign to end the sequester. The campaign addresses national security, men and women in uniform, people living with mental illness, seniors, small business, and students and teachers. Basic science research, curiously, is not mentioned prominently in the campaign. Courtesy of Whitehouse.gov.

By now we’re all painfully aware of the federal government’s across-the-board cutbacks on discretionary spending—better known as the sequester—and how it has imperiled publicly funded scientific research in the U.S. The only thing less clear than the sequester’s long-term impact on academia, industry and the economy is how to end its austerity measures, which could last through 2021.

A group of science and technology pundits on Tuesday posited some potential approaches to overcoming the sequester during a teleconference hosted by the Center for Policy on Emerging Technologies (C-PET). Based on their suggestions, however, we’ll be living with the current budget cuts for some time.

A predominant question is how to make up for shortfalls in funding for early stage research. Industry, which has long benefitted from publicly funded research, could be encouraged to make up for the government’s lack of early stage funding by investing more in the R&D it ultimately uses to sell its products, C-PET president Nigel Cameron noted during Tuesday’s teleconference. Apple, which ended its most recent earnings period with $145 billion in cash, “is sitting on more money than the federal government spends on all of its discretionary R&D combined,” Cameron added. In essence, industry could, for a time, begin to freight the bill for earlier stages of the R&D process, not necessarily a significant burden as most investment occurs later on when bringing products to market.

If companies don’t want to spend more on basic science, then their most important role in preventing the sequester from long-term damage to the economy and U.S. competitiveness could be to bring to bear their considerable lobbying influence to get the government to decide where to spend limited funds, said Nagy Hanna, a C-PET senior fellow and former head of corporate strategy at the World Bank. “They have to have a collective voice and effort to push policy makers [to see] that this is important not just for university systems but for the longer term impact on the U.S. economy,” he added.

Arguments over the U.S.’s lasting competitiveness within the global economy resonate on both sides of the aisle in Congress. Perhaps it’s time to highlight the growing crisis by laying out the implications of a research funding deficit that lasts beyond the end of this decade, said Jennifer Poulakidas, head of government relations for the Association of Public and Land-Grant Universities, which advocates for universities nationwide. For example, the influential 2005 National Academies report “Rising Above The Gathering Storm: Energizing and Employing America for a Brighter Economic Future,” paved the way for the America Competes Act in 2007 (reauthorized in 2010), which emphasizes the importance of funding high-risk, high-reward research. That act, among other things, set baselines for funding, including the goal of doubling the annual appropriations for the National Science Foundation by 2011. Yet another turgid policy tome may for some members of Congress seem like an old and tired argument, but “it still makes the case for why federal investment in basic research is important,” she added.

The sequestration was “a strange little accident” that took place at a time when there’s been a lot of opposition to federal government spending, Cameron said, and U.S. scientists have come to rely on federal funding for basic research, with the government picking up more than one third of research and development tab.

The federal budget sequestration kicked in March 1 after Congress and the Obama administration failed to come up with a compromise plan for reducing federal budget by $4 trillion, leading to more than $1 trillion in cuts to the federal government’s discretionary spending allowance. Unless an alternative is proposed, the sequestration will continue through fiscal 2021, although spending will increase a bit annually beginning in fiscal 2014.

In the meantime, researchers are left fighting for a bigger piece of a shrinking pie, Poulakidas said. In the 1970s, the mandatory side of the federal budget—which includes programs such as Medicare, Medicaid and Social Security—accounted for 40 percent of spending. By 2017, mandatory programs are expected to gobble up about 74 percent of the federal government’s finances, she added.

A full assessment of the sequestration’s impact won’t be possible for years, when government, industry and academia can look back at lost opportunities that arose from not investing enough in basic research. Poulakidas said, “It’s hard to fight sequestration because we can’t make specific arguments about what we’re losing.”

Larry Greenemeier About the Author: Larry Greenemeier is the associate editor of technology for Scientific American, covering a variety of tech-related topics, including biotech, computers, military tech, nanotech and robots. Follow on Twitter @lggreenemeier.

The views expressed are those of the author and are not necessarily those of Scientific American.





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  1. 1. syzygyygyzys 12:30 am 05/8/2013

    It isn’t the government picking up the tab. It is taxpayers. If researchers were a bigger voting block, funding wouldn’t be an issue. Politicians move taxpayer money to those likely to reelect them.

    Even some of the nuttier projects are a better use of tax money than where a lot of it goes now.

    Link to this
  2. 2. ttheobald 5:05 am 05/8/2013

    Fat f’ing chance. Business isn’t interested in research. They’re interested in engineering and development. BIG difference.

    Link to this
  3. 3. Sisko 9:00 am 05/8/2013

    Larry Greenemeier makes a completely false assumption as the basis for his article. The sequester is NOT the reason for the limitation of funding for research. The reason is that the government is spending significantly more than it is generating in revenues. The sequestor is simply a by-product of the situation and not the cause of the situation.

    Industry will spend where it believes the return on investment justifies said investment. The funding cuts to science are not really critical at all.

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  4. 4. jshuey 12:18 pm 05/8/2013

    Fact, my friends: In 2010 private businesses and organizations spent more than twice as much as government on research, including basic research.

    Historically, when the U.S. overtook Britain to become the wealthiest and greatest economic power in the world, ALL research was funded privately.

    Lastly — Sequestration does not “cut” actually spending at all, it merely reduces the total growth in spending.

    In summation, the cry of “wolf” seems dramatically overdone.

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  5. 5. jh443 1:40 pm 05/8/2013

    IMHO, gov’t shouldn’t even be doing research! Big business has suckled at our teat long enough. They should use the profits they’ve already made at our expense to fund their own research.

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  6. 6. plswinford 1:50 pm 05/8/2013

    When big business pays for research, it wants a return on dollars invested. This injects bias into the research (those researchers with the best results for the business that provided the funds are more likely to get new money). Thus science gets corrupted. Bad idea.

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  7. 7. sault 4:05 pm 05/8/2013

    Another logic FAIL by Sisko. If the sequester hadn’t happened, all things being held constant, that research funding would still be there, would it not? While you are correct that the federal government spends more than it takes in, you have to ACTIVELY reduce research funding for it to get cut. And the austerity policies that dare not speak their own name so they go by the less ridiculous term “sequester”, have cut research funding. Or do you still believe that the deficit can cut spending on its own? This has got to be one of the biggest pieces of malarkey you’ve tried to plop down on these boards because all of those deficits that Reagan and Bush II racked up didn’t end up cutting spending! How is this supposed to work now?

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  8. 8. sault 4:08 pm 05/8/2013

    jshuey,

    “Sequestration does not “cut” actually spending at all, it merely reduces the total growth in spending.”

    BULL!!!! Go tell that to all the folks that were stuck at airports due to air traffic controller furloughs and see what they think!

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  9. 9. sault 4:13 pm 05/8/2013

    Look, these companies are so unpatriotic that they’re fine with outsourcing a lot of their production overseas and gutting our manufacturing base just to increase quarterly profits. In addition, their mindless (and leagally-mandated) drive to maximize shareholder “value” and their never-ending hunger for tax loopholes guarantees that there is a slim chance that companies will start funding basic research.

    I do agree that if companies want the funding restored, they should start lobbying for it. If we’ve learned anything over the past few decades, it’s that the power of corporate lobbyists knows no bounds.

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  10. 10. QRIUS1 9:47 pm 05/8/2013

    The sequester is nothing more than an underhanded move by the Tea Party-funded Congressional hacks to get taxpayers with any sense of the future and compassion for others to increase financial support for social programs, charities, and even medical and other scientific research, through donations. If and when the situation gets bad enough for the right-wing wealthy to decide to donate, guess what kinds of political strings will be attached.

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  11. 11. Mr. Mxyzptlk III 9:59 pm 05/8/2013

    U.S. businesses will simply outsource research to India and pay the Indian researchers half or less of what they pay researchers in the U.S. It’s a win-win situation for U.S. business.

    Link to this
  12. 12. Sisko 9:26 am 05/9/2013

    sault– Once again you make an inaccurate claim. I have NEVER written that the budget could be balanced by spending cuts alone. Also, the sequester DID NOT cause the cut to science. The cause of the cuts was the failure by our governement to reach an agreement on a budget. The stupidity of our government is to believe that we can continue to spend 40% more than we generate in revenues without there being huge long term negative consequences.

    Link to this
  13. 13. sault 10:54 am 05/9/2013

    Sisko,

    You still need to work on that reading comprehension thing. You said, “The sequester is NOT the reason for the limitation of funding for research. The reason is that the government is spending significantly more than it is generating in revenues. The sequestor is simply a by-product of the situation and not the cause of the situation.”

    I said, “If the sequester hadn’t happened, all things being held constant, that research funding would still be there, would it not?”

    Please answer yes or no without trying to change the subject. I’m not talking about the balance of spending cuts or revenues or anything like that, I just want to correct your logical error here. The deficit cannot in and of itself cut research funding, right? The across-the-board cuts of the “sequester” are what’s ACTUALLY cutting research, defense and many other areas of government spending, am I correct?

    Link to this
  14. 14. davidjaffe 9:19 pm 05/14/2013

    Of course not. They were supposed to make up for the reduction in government academic support in the ’80s and never really did much, why should this be different?

    Link to this
  15. 15. Quinn the Eskimo 1:25 am 05/20/2013

    R&D is at the tail end of a 50 years orchestrated endeavor to shift research costs to the public tab. Example? Sure: Detroit. Specifically GM.

    No improvement in cars until its LAW.

    Link to this

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