SPEAKERS CONTENTS INSERTS
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SCIENCE, TECHNOLOGY, AND GLOBAL
ECONOMIC COMPETITIVENESS
HEARING
BEFORE THE
COMMITTEE ON SCIENCE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
OCTOBER 20, 2005
Serial No. 109–27
Printed for the use of the Committee on Science
SCIENCE, TECHNOLOGY, AND GLOBAL ECONOMIC COMPETITIVENESS
24–132PS
2006
SCIENCE, TECHNOLOGY, AND GLOBAL
ECONOMIC COMPETITIVENESS
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HEARING
BEFORE THE
COMMITTEE ON SCIENCE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
OCTOBER 20, 2005
Serial No. 109–27
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas
LAMAR S. SMITH, Texas
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CURT WELDON, Pennsylvania
DANA ROHRABACHER, California
KEN CALVERT, California
ROSCOE G. BARTLETT, Maryland
VERNON J. EHLERS, Michigan
GIL GUTKNECHT, Minnesota
FRANK D. LUCAS, Oklahoma
JUDY BIGGERT, Illinois
WAYNE T. GILCHREST, Maryland
W. TODD AKIN, Missouri
TIMOTHY V. JOHNSON, Illinois
J. RANDY FORBES, Virginia
JO BONNER, Alabama
TOM FEENEY, Florida
BOB INGLIS, South Carolina
DAVE G. REICHERT, Washington
MICHAEL E. SODREL, Indiana
JOHN J.H. ''JOE'' SCHWARZ, Michigan
MICHAEL T. MCCAUL, Texas
VACANCY
VACANCY
BART GORDON, Tennessee
JERRY F. COSTELLO, Illinois
EDDIE BERNICE JOHNSON, Texas
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LYNN C. WOOLSEY, California
DARLENE HOOLEY, Oregon
MARK UDALL, Colorado
DAVID WU, Oregon
MICHAEL M. HONDA, California
BRAD MILLER, North Carolina
LINCOLN DAVIS, Tennessee
RUSS CARNAHAN, Missouri
DANIEL LIPINSKI, Illinois
SHEILA JACKSON LEE, Texas
BRAD SHERMAN, California
BRIAN BAIRD, Washington
JIM MATHESON, Utah
JIM COSTA, California
AL GREEN, Texas
CHARLIE MELANCON, Louisiana
DENNIS MOORE, Kansas
C O N T E N T S
October 20, 2005
Witness List
Hearing Charter
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Opening Statements
Statement by Representative Sherwood L. Boehlert, Chairman, Committee on Science, U.S. House of Representatives
Written Statement
Statement by Representative Bart Gordon, Minority Ranking Member, Committee on Science, U.S. House of Representatives
Written Statement
Prepared Statement by Representative Vernon J. Ehlers, Chairman, Subcommittee on Environment, Technology, and Standards, Committee on Science, U.S. House of Representatives
Prepared Statement by Representative Jerry F. Costello, Member, Committee on Science, U.S. House of Representatives
Prepared Statement by Representative Eddie Bernice Johnson, Member, Committee on Science, U.S. House of Representatives
Prepared Statement by Representative Michael M. Honda, Member, Committee on Science, U.S. House of Representatives
Prepared Statement by Representative Russ Carnahan, Member, Committee on Science, U.S. House of Representatives
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Prepared Statement by Representative Sheila Jackson Lee, Member, Committee on Science, U.S. House of Representatives
Prepared Statement by Representative Brian Baird, Member, Committee on Science, U.S. House of Representatives
Witnesses:
Mr. Norman R. Augustine, Retired Chairman and CEO, Lockheed Martin Corporation
Oral Statement
Written Statement
Biography
Dr. P. Roy Vagelos, Retired Chairman and CEO, Merck & Co.
Oral Statement
Written Statement
Biography
Dr. William A. Wulf, President, National Academy of Engineering
Oral Statement
Written Statement
Biography
Discussion
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Appendix 1: Answers to Post-Hearing Questions
Responses on behalf of Norman R. Augustine, Retired Chairman and CEO, Lockheed Martin Corporation; P. Roy Vagelos, Retired Chairman and CEO, Merck & Co.; and, William A. Wulf, President, National Academy of Engineering
Appendix 2: Additional Material for the Record
Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future, National Academy of Sciences, National Academy of Engineering, and Institute of Medicine, February 2006
SCIENCE, TECHNOLOGY, AND GLOBAL ECONOMIC COMPETITIVENESS
THURSDAY, OCTOBER 20, 2005
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 10:00 a.m., in Room 2318 of the Rayburn House Office Building, Hon. Sherwood L. Boehlert [Chairman of the Committee] presiding.
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HEARING CHARTER
COMMITTEE ON SCIENCE
U.S. HOUSE OF REPRESENTATIVES
Science, Technology, and Global
Economic Competitiveness
THURSDAY, OCTOBER 20, 2005
10:00 A.M.–12:00 P.M.
2318 RAYBURN HOUSE OFFICE BUILDING
1. Purpose
On Thursday, October 20, 2005, the House Science Committee will hold a hearing to receive testimony on the report released by the National Academy of Sciences on October 12 entitled Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. The report, which was requested by Congress, recommends ways to strengthen research and education in science and technology.
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2. Witnesses
Mr. Norman R. Augustine, Retired Chairman and CEO of the Lockheed Martin Corporation. Mr. Augustine chaired the National Academy of Sciences (NAS) committee that wrote the report.
Dr. P. Roy Vagelos, Retired Chairman and CEO of Merck & Co. Dr. Vagelos served on the NAS committee that wrote the report.
Dr. William A. Wulf, President of the National Academy of Engineering and Vice Chair of the National Research Council, the principal operating arm of the National Academies of Sciences and Engineering.
3. Overarching Questions
What are the principal innovation-related challenges the United States faces as it competes in the global economy?
What specific steps should the Federal Government take to ensure that the United States remains the world leader in innovation?
4. Brief Overview
While the U.S. continues to lead the world in measures of innovation capacity—research and development (R&D) spending, number of scientists and engineers, scientific output, etc.—recent statistics on the level of U.S. support for research relative to other countries indicate that this lead may be slipping. Overall U.S. federal funding for R&D as a percentage of gross domestic product (GDP) has declined significantly since its peak in 1965, and the focus of this R&D has shifted away from the physical sciences, mathematics, and engineering—the areas of R&D historically most closely correlated with innovation and economic growth.
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At the same time, other nations—particularly emergent nations such as China and India—have recognized the importance of innovation to economic growth, and are pouring resources into their scientific and technological infrastructure, rapidly building their innovation capacity and increasing their ability to compete with the United States in the global economy.
In May 2005, at the request of Congress, the National Academy of Sciences (NAS) began a study of ''the most urgent challenges the United States faces in maintaining leadership in key areas of science and technology.'' NAS assembled a high-level panel of senior scientists and business and university leaders and produced a report in five months.
The NAS report offers four broad recommendations: (A) increase America's talent pool by vastly improving K–12 science and mathematics education; (B) sustain and strengthen the Nation's traditional commitment to long-term basic research; (C) make the United States the most attractive setting in which to study and perform research; and (D) ensure that the United States is the premier place in the world to innovate. (The executive summary of the NAS report is attached in Appendix A.)
The NAS report also describes 20 explicit steps that the Federal Government could take to implement its recommendations. The report estimates the total cost of these steps to be $9.2–$23.8 billion per year.
5. Summary of NAS Report
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In May of this year, Senators Lamar Alexander and Jeff Bingaman, Chairman of the Energy Subcommittee and Ranking Member of full Senate Committee on Energy and Natural Resources, respectively, asked the National Academy of Sciences (NAS) to conduct a study of ''the most urgent challenges the United States faces in maintaining leadership in key areas of science and technology.'' In June, Science Committee Chairman Sherwood Boehlert and Ranking Member Bart Gordon wrote to the NAS to endorse the Senate request for a study and suggest some additional specific questions (the text of the Senate and House letters are attached in Appendices B and C). The study was paid for out of internal Academy funds, and NAS released the report on October 12.
The Problem
The NAS report begins by describing how science and engineering are critical to American prosperity. Technical innovations, such as electricity and information technology, have increased the productivity of existing industries and created new ones and improved the overall quality of life in the U.S. The report then examines how the U.S. is doing relative to other countries in science and technology today—looking at indicators such as science and engineering publications, R&D investment, venture capital funding, and student proficiency levels—to see if the U.S. is positioned to make the next generation of innovations needed to maintain U.S. competitiveness and security going forward.
''Worrisome indicators'' outlined in the report(see footnote 1) include:
The United States today is 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.
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In 2003, only three American companies ranked among the top 10 recipients of patents granted by the United States Patent and Trademark Office.
In Germany, 36 percent of undergraduates receive their degrees in science and engineering. In China, the figure is 59 percent, and in Japan 66 percent. In the United States, the corresponding figure is 32 percent.
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). About one-third of the 4th graders and one-fifth of the 8th graders lacked the competence to perform basic mathematical computations.
The NAS report concludes that education, research, and innovation are essential if the U.S. is to succeed in providing jobs for its citizenry.
Recommendations and Steps the Federal Government Should Take to Implement Them
The NAS report makes four recommendations, each of which is supported by explicit steps that the Federal Government could take to implement the recommendations. These recommendations and steps are provided verbatim below; more details on each step are available in the report executive summary in Appendix A.
10,000 Teachers, 10 Million Minds and K–12 Science and Mathematics Education
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Recommendation A: Increase America's talent pool by vastly improving K–12 science and mathematics education.
Implementation Steps:
A–1: Annually recruit 10,000 science and mathematics teachers by awarding four-year scholarships and thereby educating 10 million minds.
A–2: Strengthen the skills of 250,000 teachers through training and education programs at summer institutes, in Master's programs, and Advanced Placement and International Baccalaureate (AP and IB) training programs and thus inspire students every day.
A–3: Enlarge the pipeline by increasing the number of students who take AP and IB science and mathematics courses.
Sowing the Seeds through Science and Engineering Research
Recommendation B: Sustain and strengthen the Nation's traditional commitment to long-term basic research that has the potential to be transformational to maintain the flow of new ideas that fuel the economy, provide security, and enhance the quality of life.
Implementation Steps:
B–1: Increase the federal investment in long-term basic research by 10 percent a year over the next seven years.
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B–2: Provide new research grants of $500,000 each annually, payable over five years, to 200 of our most outstanding early-career researchers.
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.
B–4: Allocate at least eight percent of the budgets of federal research agencies to discretionary funding.
B–5: Create in the Department of Energy an organization like the Defense Advanced Research Projects Agency called the Advanced Research Projects Agency-Energy (ARPA–E).
B–6: Institute a Presidential Innovation Award to stimulate scientific and engineering advances in the national interest.
Best and Brightest in Science and Engineering Higher Education
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 Steps:
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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.
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.
C–3: Provide a federal tax credit to encourage employers to make continuing education available (either internally or through colleges and universities) to practicing scientists and engineers.
C–4: Continue to improve visa processing for international students and scholars.
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 U.S.-based employers and pass a security screening test, they should be provided automatic work permits and expedited residence status.
C–6: Institute a new skills-based, preferential immigration option.
C–7: Reform the current system of ''deemed exports.''
Incentives for Innovation and the Investment Environment
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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 Steps:
D–1: Enhance intellectual property protection for the 21st century global economy.
D–2: Enact a stronger research and development tax credit to encourage private investment in innovation.
D–3: Provide tax incentives for U.S.-based innovation.
D–4: Ensure ubiquitous broadband Internet access.
Costs of the Recommendations
The NAS report provides a ''back of the envelope'' estimate of the annual cost to the Federal Government of each of the implementation steps that are recommended.
For the three steps in Recommendation A (increase America's talent pool by vastly improving K–12 science and mathematics education): $1.5–$2.4 billion per year.
For the six steps in Recommendation B (sustain and strengthen the Nation's traditional commitment to long-term basic research): $1.1–$3.4 billion per year.
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For the seven steps in Recommendation C (make the United States the most attractive setting in which to study and perform research): $1.6–$3.6 billion per year.
For the four steps in Recommendation D (ensure that the United States is the premier place in the world to innovate): $5.1–$14.4 billion per year.
The total cost of these steps would be $9.2–$23.8 billion per year.
6. Issues Related to Specific Recommendations in the NAS Report and Related Questions for the Witnesses
In the invitation letter for the hearing, each of the witnesses was asked to answer questions about the three specific recommendations discussed below. These were major recommendations that seemed to call for further elaboration.
Recommendation B–1: Increase the federal investment in long-term basic research by 10 percent a year over the next seven years: Numerous reports and groups in recent years have suggested doubling federal funding for basic research, as the NAS report recommends.(see footnote 2) (The authorization bill for the National Science Foundation the Congress passed in 2002 called for doubling that agency's budget, and Congress did double the budget of the National Institutes of Health over the past six years or so.) While these reports have included a rationale for increasing federal R&D spending, none has explained the reason why a specific level of spending needs to be achieved by a particular date. The U.S. currently spends $56 billion annually on non-defense R&D, more than the rest of the G–7 countries(see footnote 3) combined. Also, total R&D spending (government and industry) in the U.S. has remained relatively constant as a percentage of the U.S. gross domestic product, indicating that investment in R&D has grown as the U.S. economy has grown, begging the question of why increased federal investment is necessary. (This may be especially true if federal R&D is being invested in the same kinds of research as private R&D rather than in kinds of research, particularly basic research, that might otherwise be neglected.)
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In addition, the NAS report argues that federal investment in basic research fuels economic growth by contributing new ideas that can eventually lead to commercial products. Yet recent surveys of industry suggest that companies' investments in R&D have had only a very limited impact on the success of the individual companies.(see footnote 4) What is true for individual companies is not necessarily true for nations as a whole; R&D may contribute greatly to the relative economic success of the U.S. as a whole, while not being so important to any individual company. (This would make sense. Nations stay ahead through innovation, but individual companies may have other comparative advantages.) But the company statistics and attitudes on R&D at least raise the question about whether the contribution of R&D to economic success is exaggerated, and how federal R&D investment contributes to overall economic success.
Questions in the witness letters on this recommendation:
How did the study panel arrive at the recommended 10 percent annual increase in federally-sponsored basic research over the next seven years? What other options did the panel consider and what led to the choice of 10 percent?
Recent surveys of industry suggest that basic research performed at universities and transformational technological innovation have only a very limited impact on the success of individual companies. Is the impact of research and innovation different for the economy as a whole than it is for individual companies?
Recommendation B–4: Allocate at least eight percent of the budgets of federal research agencies to discretionary funding: A number of recent reports have expressed concern that the current grant selection system in most agencies shies away from daring proposals. The view is that when funding is tight (like now), researchers and the peer review system both tend to favor incremental research proposals—projects that are guaranteed to produce results—results that are generally in keeping with existing ideas. In this situation, high-risk research (especially that proposed by young investigators or involving interdisciplinary studies) can be underfunded or neglected entirely. The NAS report recommends that funding be set aside at federal research agencies (and distributed at program officers' discretion) for high-risk, high-payoff research. While such research is valuable, so is the research that provides steady if incremental advances on existing scientific questions. In addition, not every agency is equally well equipped to solicit and select high-risk projects. Finally, even if setting aside such funding is a good idea, it's unclear whether eight percent is a reasonable amount.
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Questions in the witness letters on this recommendation:
How did the study panel arrive at the recommended eight percent allocation within each federal research agency's budget to be managed at the discretion of technical program managers to catalyze high-risk, high-payoff research? What other options did the panel consider and what led to the choice of eight percent?
Recommendation B–5: Create in the Department of Energy an organization like the Defense Advanced Research Projects Agency called the Advanced Research Projects Agency-Energy (ARPA–E): The recommendation seems to assume that the main reason the U.S. has not made more progress in deploying technologies that use less energy or that use alternative energy sources is that the technology is not being developed. But numerous studies have concluded that the primary problem in energy technology is that existing advanced technologies never get deployed. These studies tend to recommend policy changes to encourage the deployment of advanced technologies, as opposed to recommending (or merely recommending) programs to develop new technologies. For example, a recent American Council for an Energy Efficient Economy study estimated that ''adopting a comprehensive set of policies for advancing energy efficiency could lower national energy use by 18 percent in 2010 and 33 percent in 2020.''(see footnote 5) Similarly, a 2001 NAS study on automotive fuel economy described numerous existing technologies that could reduce dependence on foreign oil, but are not yet deployed.
In addition, it is not clear whether the DARPA analogy is entirely apt. DARPA funds advanced technologies that will eventually be used by the Pentagon. The government itself would not be the main purchaser of technologies developed by ARPA–E, so those technologies would still face existing problems in finding markets. It is also unclear how the research that would be supported by ARPA–E would differ from that already funded by the Department of Energy's current conservation and renewable energy research programs.
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Questions in the witness letters on this recommendation:
Industry and government have both developed numerous energy production and energy efficiency technologies that have not been deployed. How did the study panel arrive at its implicit conclusion that technology development is the greater bottleneck (as opposed to policy) in developing energy systems for a 21st century economy?
7. General Issues
Overall Federal Support for R&D
The amount of the country's overall wealth devoted to federal R&D has declined significantly since the post-Sputnik surge in support for R&D. According to Office of Management and Budget statistics, in 1965, funding for federal R&D as a percentage of GDP (measured as outlays), also known as R&D intensity, was slightly over two percent (Chart 1). In 2005, it is estimated to be 1.07 percent.
While this ratio has recently begun to increase again, turning upward over the last five years, the majority of those increases have gone toward short-term defense development and homeland security applications. For example, the Department of Defense (DOD) R&D increases alone—most of which have supported development projects that have very little impact on innovation or broader economic development—has accounted for almost 70 percent of the overall R&D increases of the last five years. Of the remaining increases, 75 percent has gone to the National Institutes of Health (NIH) and the Department of Homeland Security (DHS). At $71 billion and $29 billion, respectively, the R&D budgets of DOD and NIH now account for over 75 percent of all federal R&D. Meanwhile, funding for the physical sciences and engineering—the areas historically most closely associated with innovation and economic growth—have been flat or declining for the last thirty years.
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Also, the long-term outlook for the federal budget does not favor future increases in discretionary spending (through which almost all R&D is funded). Absent major policy changes, the growth in mandatory federal spending—primarily for health and retirement benefits and payments on the national debt interest—will demand a significantly greater share of the government's resources.
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Shift of Private Sector R&D
During the heyday of the corporate research laboratory in the middle decades of the 20th century, U.S. corporate laboratories supported all stages of R&D, from knowledge creation to applied research to product development, and were quite successful in their efforts to nurture innovation. The most notable example of this was AT&T's Bell Laboratories, which grew to be one of the world premier research organizations of the last century, developing numerous breakthrough technologies that changed American life, including transistors, lasers, fiber-optics, and communications satellites. Researchers at Bell Labs and other corporate laboratories were eligible for, and received, grants from federal research agencies such as the National Science Foundation and DOD, but they received core support from the parent company and they conducted basic and applied research directed toward developing technology relevant to the company's business.
While overall growth of industry-funded R&D has remained strong in recent years, the focus of this R&D has shifted significantly away from longer-term basic research in favor of applied research and development more closely tied to product development. Because of market demands from investors to capitalize on R&D quickly, large corporate laboratories of the Bell Labs model are increasingly rare (notable exceptions include companies such as IBM and GE). Instead, corporations now focus research projects almost exclusively on lower-risk, late-stage R&D projects with commercial benefits, leaving the Federal Government as the predominant supporter of long-term basic research.
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Increasing Competitiveness of Foreign Countries
While trends of support for the innovation system in the U.S. have showed signs of slowing, other nations are committing significant new resources to building their science and technology enterprises. More than one-third of OECD (Organization for Economic Cooperation and Development) countries have increased government support for R&D by an average rate of over five percent annually since 1995. The European Union has recently established a target to achieve EU-wide R&D intensity of three percent of the EU economy by 2010. (By comparison, the current U.S. R&D intensity, public and private sector combined, is 2.6 percent of GDP.) Similarly, individual nations, including South Korea, Germany, the U.K. and Canada, have recently pledged to increase R&D spending as a percentage of GDP.
However, no nation has increased its support for innovation as dramatically as China. It has doubled its R&D intensity from 0.6 percent of its GDP in 1995 to 1.2 percent in 2002 (this during a time of rapid GDP growth). R&D investments in China by foreign corporations have also grown dramatically, with U.S. investments alone increasing from just $7 million in 1994 to over $500 million in 2000. China is now the third largest performer of R&D in the world, behind only the U.S. and Japan.
The increased innovation capacity of other countries is also becoming evident in output-based R&D benchmarks. For example, the U.S. share of science and engineering publications published worldwide declined from 38 percent in 1988 to 31 percent in 2001, while Western Europe and Asia's share increased from 31 to 36 percent and 11 to 17 percent, respectively. Similar trends have occurred in the area of U.S. patent applications and citations in scientific journals.
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Education and Workforce Issues
While the supply and demand of future scientists and engineers is notoriously difficult to predict, most experts believe that the transition to a knowledge-based economy will demand an increased quality and quantity of the world's scientific and technical workforce. As is the case with R&D figures, trends in the distribution of the world's science and engineering workforce are also unfavorable to long-term U.S. competitiveness.
The world is catching up and even surpassing the U.S. in higher education and the production of science and engineering specialists. China now graduates four times as many engineering students as the U.S., and South Korea, which has one-sixth the population of the U.S., graduates nearly the same number of engineers as the U.S. Moreover, most Western European and Asian countries graduate a significantly higher percentage of students in science and engineering. At the graduate level, the statistics are even more pronounced. In 1966, U.S. students accounted for approximately 76 percent of world's science and engineering Ph.D.s. In 2000, they accounted for only 36 percent. In contrast, China went from producing almost no science and engineering Ph.D.s in 1975 to granting 13,000 Ph.D.s in 2002, of which an estimated 70 percent were in science and engineering.
Meanwhile, the achievement and interest levels of U.S. students in science and engineering are relatively low. According to the most recent international assessment, U.S. twelfth graders scored below average and among the lowest of participating nations in math and science general knowledge, and the comparative data of math and science assessment revealed a near-monopoly by Asia in the top scoring group for students in grades four and eight. These students are not on track to study college level science and engineering and, in fact, are unlikely ever to do so. Of the 25–30 percent of entering college freshmen with an interest in a science or engineering field, less than half complete a science or engineering degree in five years.
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All of this is happening as the U.S. scientific and technical workforce is about to experience a high rate of retirement. One quarter of the current science and engineering workforce is over 50 years old. At the same time, the U.S. Department of Labor projects that new jobs requiring science, engineering and technical training will increase four times higher than the average national job growth rate.
Industry Concerns and Reports
Some leading U.S. businesses have become increasingly vocal about concerns that the U.S. is in danger of losing its competitive advantage. In an effort to call attention to these concerns, several industry organizations have independently produced reports specifically examining the new competitiveness challenge and recommending possible courses of action to address it. Prominent among these efforts is the National Innovation Initiative (NII), a comprehensive undertaking by industry and university leaders to identify the origins of America's innovation challenges and prepare a call to action for U.S. companies to ''innovate or abdicate.'' The December 2004 NII final report, Innovate America: Thriving in a World of Challenge and Change, is intended to serve as a roadmap for policy-makers, industry leaders, and others working to help America remain competitive in the world economy.
Other industry associations that have also produced recent reports include AeA (formerly the American Electronics Association), the Business Roundtable, Electronic Industries Alliance, National Association of Manufacturers, and TechNet. While the companies and industry sectors represented by these organizations varies widely, one general recommendation was common to all of the reports: the Federal Government needs to strengthen and re-energize investments in R&D and science and engineering education. The Science Committee held a hearing on July 21, 2005 on U.S. Competitiveness: The Innovation Challenge to examine the issues raised in these reports and how federal science and engineering research and education investments impacts U.S. economic competitiveness.
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Appendix A
Executive Summary of National Academy of Sciences Report, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future
The United States takes deserved pride in the vitality of its economy, which forms the foundation of our high quality of life, our national security, and our hope that our children and grandchildren will inherit ever-greater opportunities. That vitality is derived in large part from the productivity of well-trained people and the steady stream of scientific and technical innovations they produce. Without high-quality, knowledge-intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our people will face a lower standard of living. Economic studies conducted before the information-technology revolution have shown that even then as much as 85 percent of measured growth in U.S. income per capita is due to technological change.(see footnote 6)
Today, Americans are feeling the gradual and subtle effects of globalization that challenge the economic and strategic leadership that the United States has enjoyed since World War II. A substantial portion of our workforce finds itself in direct competition for jobs with lower-wage workers around the globe, and leading-edge scientific and engineering work is being accomplished in many parts of the world. Thanks to globalization, driven by modern communications and other advances, workers in virtually every sector must now face competitors who live just a mouse-click away in Ireland, Finland, China, India, or dozens of other nations whose economies are growing.
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CHARGE TO THE COMMITTEE
The National Academies was asked by Senator Lamar Alexander and Senator Jeff Bingaman of the Committee on Energy and Natural Resources, with endorsement by Representatives Sherwood Boehlert and Bart Gordon of the House Committee on Science, to respond to the following questions:
What are the top 10 actions, in priority order, that federal policy-makers could take to enhance the science and technology enterprise so that the United States can successfully compete, prosper, and be secure in the global community of the 21st Century? What strategy, with several concrete steps, could be used to implement each of those actions?
The National Academies created the Committee on Prospering in the Global Economy of the 21st Century to respond to this request. The charge constitutes a challenge both daunting and exhilarating: to recommend to the Nation specific steps that can best strengthen the quality of life in America—our prosperity, our health, and our security. The committee has been cautious in its analysis of information. However, the available information is only partly adequate for the committee's needs. In addition, the time allotted to develop the report (10 weeks from the time of the committee's meeting to report release) limited the ability of the committee to conduct a thorough analysis. Even if unlimited time were available, definitive analyses on many issues are not possible given the uncertainties involved.
This report reflects the consensus views and judgment of the committee members. Although the committee includes leaders in academe, industry, and government—several current and former industry chief executive officers, university presidents, researchers (including three Nobel prize winners), and former presidential appointees—the array of topics and policies covered is so broad that it was not possible to assemble a committee of 20 members with direct expertise in each relevant area. Because of those limitations, the committee has relied heavily on the judgment of many experts in the study's focus groups, additional consultations via email and telephone with other experts, and an unusually large panel of reviewers. Although other solutions are undoubtedly possible, the committee believes that its recommendations, if implemented, will help the United States achieve prosperity in the 21st century.
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FINDINGS
Having reviewed trends in the United States and abroad, the committee is deeply concerned that the scientific and technical building blocks of our economic leadership are eroding at a time when many other nations are gathering strength. We strongly believe that a worldwide strengthening will benefit the world's economy—particularly in the creation of jobs in countries that are far less well-off than the United States. But we are worried about the future prosperity of the United States. Although many people assume that United States will always be a world leader in science and technology, this may not continue to be the case inasmuch as great minds and ideas exist throughout the world. We fear the abruptness with which a lead in science and technology can be lost—and the difficulty of recovering a lead once lost, if indeed it can be regained at all.
This nation must prepare with great urgency to preserve its strategic and economic security. Because other nations have, and probably will continue to have, the competitive advantage of a low-wage structure, the United States must compete by optimizing its knowledge-based resources, particularly in science and technology, and by sustaining the most fertile environment for new and revitalized industries and the well-paying jobs they bring. We have already seen that capital, factories, and laboratories readily move wherever they are thought to have the greatest promise of return to investors.
RECOMMENDATIONS
The committee reviewed hundreds of detailed suggestions—including various calls for novel and untested mechanisms—from other committees, from its focus groups, and from its own members. The challenge is immense, and the actions needed to respond are immense as well.
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The committee identified two key challenges that are tightly coupled to scientific and engineering prowess: creating high-quality jobs for Americans and responding to the Nation's need for clean, affordable, and reliable energy. To address those challenges, the committee structured its ideas according to four basic recommendations that focus on the human, financial, and knowledge capital necessary for U.S. prosperity.
The four recommendations focus on actions in K–12 education (10,000 Teachers, 10 Million Minds), research (Sowing the Seeds), higher education (Best and Brightest), and economic policy (Incentives for Innovation) that are set forth in the following sections. Also provided are a total of 20 implementation steps for reaching the goals set forth in the recommendations.
Some actions involve changes in the law. Others require financial support that would come from reallocation of existing funds or, if necessary, from new funds. Overall, the committee believes that the investments are modest relative to the magnitude of the return the Nation can expect in the creation of new high-quality jobs and in responding to its energy needs.
10,000 TEACHERS, 10 MILLION MINDS IN K–12 SCIENCE AND MATHEMATICS EDUCATION
Recommendation A: Increase America's talent pool by vastly improving K–12 science and mathematics education.
Implementation Actions
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The highest priority should be assigned to the following actions and programs. All should be subjected to continuing evaluation and refinement as they are implemented:
Action A–1: Annually recruit 10,000 science and mathematics teachers by awarding four-year scholarships and thereby educating 10 million minds. Attract 10,000 of America's brightest students to the teaching profession every year, each of whom can have an impact on 1,000 students over the life of their careers. The program would award competitive four-year scholarships for students to obtain Bachelor's degrees in the physical or life sciences, engineering, or mathematics with concurrent certification as K–12 science and mathematics teachers. The merit-based scholarships would provide up to $20,000 a year for four years for qualified educational expenses, including tuition and fees, and require a commitment to five years of service in public K–12 schools. A $10,000 annual bonus would go to participating teachers in underserved schools in inner cities and rural areas. To provide the highest-quality education for undergraduates who want to become teachers, it would be important to award matching grants, perhaps $1 million a year for up to five years, to as many as 100 universities and colleges to encourage them to establish integrated four-year undergraduate programs leading to Bachelor's degrees in science, engineering, or mathematics with teacher certification.
Action A–2: Strengthen the skills of 250,000 teachers through training and education programs at summer institutes, in Master's programs, and Advanced Placement and International Baccalaureate (AP and IB) training programs and thus inspires students every day. Use proven models to strengthen the skills (and compensation, which is based on education and skill level) of 250,000 current K–12 teachers:
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Summer institutes: Provide matching grants to state and regional one- to two-week summer institutes to upgrade as many as 50,000 practicing teachers each summer. The material covered would allow teachers to keep current with recent developments in science, mathematics, and technology and allow for the exchange of best teaching practices. The Merck Institute for Science Education is a model for this recommendation.
Science and mathematics Master's programs: Provide grants to universities to offer 50,000 current middle-school and high-school science, mathematics, and technology teachers (with or without undergraduate science, mathematics, or engineering degrees) two-year, part-time Master's degree programs that focus on rigorous science and mathematics content and pedagogy. The model for this recommendation is the University of Pennsylvania Science Teachers Institute.
AP, IB, and pre-AP or pre-IB training: Train an additional 70,000 AP or IB and 80,000 pre-AP or pre-IB instructors to teach advanced courses in mathematics and science. Assuming satisfactory performance, teachers may receive incentive payments of up to $2,000 per year, as well as $100 for each student who passes an AP or IB exam in mathematics or science. There are two models for this program: the Advanced Placement Incentive Program and Laying the Foundation, a pre-AP program.
K–12 curriculum materials modeled on world-class standards: Foster high-quality teaching with world-class curricula, standards, and assessments of student learning. Convene a national panel to collect, evaluate, and develop rigorous K–12 materials that would be available free of charge as a voluntary national curriculum. The model for this recommendation is the Project Lead the Way pre-engineering courseware.
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Action A–3: Enlarge the pipeline by increasing the number of students who take AP and IB science and mathematics courses. Create opportunities and incentives for middle-school and high-school students to pursue advanced work in science and mathematics. By 2010, increase the number of students in AP and IB mathematics and science courses from 1.2 million to 4.5 million, and set a goal of tripling the number who pass those tests, to 700,000, by 2010. Student incentives for success would include 50 percent examination fee rebates and $100 mini-scholarships for each passing score on an AP or IB mathematics and science examination.
The committee proposes expansion of two additional approaches to improving K–12 science and mathematics education that are already in use:
Statewide specialty high schools: Specialty secondary education can foster leaders in science, technology, and mathematics. Specialty schools immerse students in high-quality science, technology, and mathematics education; serve as a mechanism to test teaching materials; provide a training ground for K–12 teachers; and provide the resources and staff for summer programs that introduce students to science and mathematics.
Inquiry-based learning: Summer internships and research opportunities provide especially valuable laboratory experience for both middle-school and high-school students.
SOWING THE SEEDS THROUGH SCIENCE AND ENGINEERING RESEARCH
Recommendation B: Sustain and strengthen the Nation's traditional commitment to long-term basic research that has the potential to be transformational to maintain the flow of new ideas that fuel the economy, provide security, and enhance the quality of life.
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Implementation Actions
Action B–1: Increase the federal investment in long-term basic research by 10 percent a year over the next seven years, through re-allocation of existing funds(see footnote 7) 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.
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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).(see footnote 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 long-term 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.
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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.
BEST AND BRIGHTEST IN SCIENCE AND ENGINEERING HIGHER EDUCATION
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.
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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–1B(see footnote 9) 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.
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Action C–7: Reform the current system of ''deemed exports.''(see footnote 10) The new system should provide international students and researchers engaged in fundamental 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:
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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,(see footnote 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.
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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, 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.
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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,''(see footnote 12) respondents in only one of the 16 countries polled (India) indicated the United States.
For the cost of one chemist or one engineer in the United States, a company can hire about five chemists in China or 11 engineers in India.(see footnote 13)
For the first time, the most capable high-energy particle accelerator on Earth will, beginning in 2007, reside outside the United States.(see footnote 14)
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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.(see footnote 15)
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.(see footnote 16)
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.(see footnote 17)
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.(see footnote 18)
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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.(see footnote 19)
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.(see footnote 20)
In 2003, only three American companies ranked among the top 10 recipients of patents granted by the United States Patent and Trademark Office.(see footnote 21)
In Germany, 36 percent of undergraduates receive their degrees in science and engineering. In China, the figure is 59 percent, and in Japan 66 percent. In the United States, the corresponding figure is 32 percent.(see footnote 22)
The United States is said to have 10.5 million illegal immigrants, but under the law the number of visas set aside for ''highly qualified foreign workers'' dropped to 65,000 a year from its 195,000 peak.(see footnote 23)
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In 2004, China graduated over 600,000 engineers, India 350,000, and America about 70,000.(see footnote 24)
In 2001 (the most recent year for which data are available), U.S. industry spent more on tort litigation than on R&D.(see footnote 25)
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Chairman BOEHLERT. The hearing will come to order.
Before we start the official part of today's hearing, I would like to take a moment to recognize a real person to illustrate the importance of the issues we are going to be discussing today. Neela Thangada, who is in the audience today. Neela, would you please stand?
Just yesterday, she won the Discovery Channel Young Scientist Challenge. She got into the finals of this contest by doing an individual project on plant cloning and won by demonstrating leadership, teamwork, and scientific problem-solving on a series of experiments related to forces of nature, a very timely thing for this year's contest. Now let me point out that Neela is 14. She is in the seventh grade. What she is doing is so exciting. She is accompanied by her mom. Where is mom, Neela? You know, when I first met Neela, this is not as a politician, this is just an observation, I didn't know which one was the student and which one was the mom. Mom, please stand and be recognized. I want to thank you for the guidance you are providing.
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Neela is what this whole hearing is about and what the whole Augustine report is about, so we are so pleased to see you, and thank you for joining us.
It is a pleasure to welcome everyone here this morning for our hearing on the new and vitally important National Academy report, ''Rising Above the Gathering Storm.'' This report is already getting an unusual amount of media coverage, and how refreshing that is to have the media concentrating on something that is not sensational but is critically important, a tribute, in part, to the reputations and work of our witnesses here today, and that is helping to jump-start, and in other quarters, to intensify, a national discussion on research and education and the Nation's future.
The overarching message of the report is simple and clear, and it is one the Congress had better heed. And the message is this: complacency will kill us. ''Where there is no vision, the people perish.'' If the United States rests on its withering laurels in the competitive world, we will witness the slow erosion of our preeminence, our security, and our standard of living. That is a very sobering message. We used to be so far ahead of everybody else in the global enterprise that when we looked around, we couldn't even find a person in second place. Now we can't even take a nanosecond to look over our shoulder, because they are breathing down our neck.
It is a message that this committee has been trying to send for many, many years, and now, joined by Chairman Wolf of the Appropriations Committee and some of our other friends over there who get it, indeed this committee has pressed, sometimes successfully and, unfortunately, sometimes not, for many of the specific proposals in the Academy report. So Mr. Augustine, you guys are really helping us, and I appreciate it.
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We have authorized increased spending on basic research, including funding for research equipment and for more daring and cross-disciplinary research, and we have created programs like the Noyce Scholarships to try to attract more top students into teaching. And Neela, consider teaching as a career, will you please? And like Tech Talent to get more students who express interest in science, math, and engineering to complete majors in those fields.
We have pushed for greater funding for the education directorate at the National Science Foundation and for the basic and applied research programs at the Department of Energy.
But clearly, we haven't done enough. We have all of the zeal of the most fervent missionary, and we are trying, but we haven't done enough, and we haven't succeeded nearly as much as we would like. That is why the Augustine report helps this. Science programs still have to scrounge around for every additional cent. Young scientists still have to beg for funds. Our education system is still producing too many students who can not compete with our counterparts around the world. And the Federal Government is still ignoring our fundamental energy problems while wasting money pandering to special interests.
So I urge our witnesses today, who are among the most prominent and respected leaders in the Nation, to redouble your efforts to get the word out about this report. We need a lot more missionary work, especially in this era of fiscal constraint. While Congress turns its attention to fixing the immediate problems caused by the literal storms that have hit our coasts, we can't skimp on the funds needed to address the gathering storm described so starkly in your report.
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There is an exchange in a Hemingway novel in which one character asks another how he went bankrupt. He answers, ''Two ways. First gradually and then suddenly.'' As a nation, we are gradually going bankrupt now in the ways described in the Academy report. If we don't act, we are going to wake up one day and find ourselves suddenly unable to compete.
I look forward to further guidance this morning on exactly what we should do to compete. And I hope we will have a spirited discussion about the details of the Academy report recommendations. But as we argue about the specifics, and it won't be so much an argument, it will be sort of a debate, I hope we can all come away with an open and even greater commitment to address the problems that the report lays before us.
[The prepared statement of Chairman Boehlert follows:]
PREPARED STATEMENT OF CHAIRMAN SHERWOOD L. BOEHLERT
It's a pleasure to welcome everyone here this morning for our hearing on the new and vitally important National Academy report ''Rising Above the Gathering Storm.'' This report is already getting an unusual amount of media coverage—a tribute, in part, to the reputations and work of our witnesses today—and that is helping to jump-start (and in other quarters, to intensify) a national discussion on research and education and the Nation's future.
The overarching message of the report is simple and clear, and it's one the Congress had better heed. And the message is this: complacency will kill us. If the United States rests on its withering laurels in this competitive world, we will witness the slow erosion of our preeminence, our security and our standard of living. It's a sobering message.
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It's also a message that this committee has been trying to send for many years, now joined by Chairman Wolf and some of our other friends on Appropriations. Indeed, this committee has pressed—sometimes successfully, sometimes not—for many of the specific proposals in the Academy report.
We have authorized increased spending on basic research, including funding for research equipment and for more daring and cross-disciplinary research; and we have created programs like the Noyce Scholarships to try to attract more top students into teaching, and like Tech Talent to get more students who express interest in science, math and engineering to complete majors in those fields.
We have pushed for greater funding for the education directorate at the National Science Foundation (NSF) and for the basic and applied research programs at the Department of Energy.
But we clearly haven't done nearly enough. Science programs still have to scrounge around for every additional cent; young scientists still have to beg for funds; our education system is still producing too many students who cannot compete with their counterparts around the world; and the Federal Government is still ignoring our fundamental energy problems while wasting money pandering to special interests.
So I urge our witnesses today—who are among the most prominent and respected leaders in this nation—to redouble your efforts to get the word out about this report. We need a lot more missionary work, especially in this era of fiscal constraint. While Congress turns its attention to fixing the immediate problems caused by the literal storms that have hit our coasts, we can't skimp on the funds needed to address the ''gathering storm'' described so starkly in your report.
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There's an exchange in a Hemingway novel in which one character asks another how he went bankrupt. He answers, ''Two ways. First gradually and then suddenly.'' As a nation, we're gradually going bankrupt now in the ways described in the Academy report. If we don't act, we're going to wake up one day and find ourselves ''suddenly'' unable to compete.
I look forward to getting further guidance this morning on exactly what we should do to compete, and I hope we have a spirited discussion about the details of your recommendations. But as we argue about the specifics, I hope we can all come away with an even greater commitment to address the problems this report lays before us.
Chairman BOEHLERT. With that, it is a pleasure to turn to my partner in this venture, the Ranking Member from Tennessee, Mr. Gordon.
Mr. GORDON. Thank you, Mr. Chairman.
Let me, once again, concur with your statements and also say that I have witnessed firsthand your passion for these issues. You are a leader in the area, and I appreciate working with you on it.
Let me also thank the Committee for the work you have done, Mr. Augustine. Once again, you have done a tremendous service for the country.
And let me say this, without diminishing what you have done. To a great extent, what you have done is just rehash what we already knew and brought it together from different sources. There is not a lot new here, and I don't mean that as—I mean, I think it is good that we have brought it together. I think that it is good that we can look to your report and say these are leaders in academia, with the private sector, and hopefully get us more energy in trying to accomplish something here. But again, as our Chairman has pointed out, this committee has passed many of these things already.
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And so really, what I would like to hear you talk a little bit about is how do we get the private sector, and what do you intend to do to help implement these proposals. I mean, again, you know, we have to have more energy. Clearly, what we are doing is not enough. And I would like to hear something about that.
The other thing that I noted reading through this report is that, with the exception of talking about R&D credits, there really wasn't much said about the private sector in this area. Now maybe you didn't think that was your charge, but I think the charge said what are some federal policies that deal with it. The R&D credit is one of those. And I pose this question that I would like to hear more about. There seems to be a growing disparity between top level CEO and other kind of salaries and the salaries of others in those companies in relationship to other countries. And is this leading us to a situation where those top executives are so pushed because of this type of compensation that they have to be so quarterly oriented to having results that the private sector is not doing its part in R&D? And is there some, I mean, I guess, one, is this accurate? And if it is not, then that is fine. If it is accurate, then is there a federal role in somehow trying to encourage looking beyond the quarter? Looking beyond. I mean, right now folks, in two or three years, can make all of the money they can spend the rest of their life. So you know, as long as they keep the stock up, why should I worry about five years from now? Why should I make these investments?
Again, if I am wrong, I would like to know.
The other thing is in your statement, and it was $10 billion, I hate to say, is a modest amount of money, but it is not, I think in terms of investment and in terms of our budget, it is a reasonable amount of money to spend. And you are talking about how we need to reallocate. We can get part of this by reallocating some funds within, I guess, our current budget. But I didn't see the section about what to allocate and what were those specifically. So if you have some suggestions in addition to reallocate, which ones we should reallocate, I would like to hear that today.
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So with that in mind, again, I want to thank you. This is an important document. This is a document that we all need to wave and that we all need to charge forward with. It is important to our kids and our grandkids. So I thank you for it.
Again, my questions did not try to diminish what you did but to try to take this a step farther.
Thank you.
[The prepared statement of Mr. Gordon follows:]
PREPARED STATEMENT OF REPRESENTATIVE BART GORDON
I want to join Chairman Boehlert in welcoming everyone to this morning's hearing.
I also want to thank our distinguished panel for not only taking the time to appear before us today, but for their time and effort in preparing this report.
The title of this report, ''Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future,'' summarizes the challenge before us.
There is a general uncertainty about our country's future economic prospects and a desire for guidance on how to move forward. I think that the report provided by the Panel takes some steps towards providing that guidance.
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A few disturbing facts from the report jumped out at me:
The large wage disparity between U.S.-based scientists and engineers and their competitors in China and India; and
The 110 chemical facilities that have closed or are slated for closure in the U.S. coupled with the 120 large chemical plants currently under construction globally—one new plant in the U.S. and 50 in China.
China is producing more than 600,000 engineers per year.
As the report notes, ''Thanks to globalization, workers in virtually every sector must now face competitors who live just a mouse-click away, . . .'' I'm left wondering where will the good high-paying jobs be for the next generation—in the U.S. or in some other country.
The report outlines a number of specific actions we can take to improve the innovation environment in the U.S. Many of these recommendations are familiar to us because they are what the Science Committee has advocated in legislation.
For example, substantial increases in funding for NSF and the Office of Science at DOE. In the area of science education, the Committee has authorized scholarships for math, science and engineering students to obtain teaching certificates as well as the math and science partnership program to improve the training of new teachers.
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There seems to be a broad consensus on what the U.S. should be doing, but the Administration has not followed through in its funding requests.
This report highlights that our current federal R&D investment strategies are not up to meeting the global competitive paradigm of the 21st century. The recommendations represent a challenge to the Administration and to Congress to take action now.
I am interested about one of the Panel's statements which is that some of its recommendations ''require funds that would ideally come from the re-allocation of existing funds.'' What is not identified is what funds should be re-allocated or why. I hope our witnesses will provide some more detail into the Panel's thinking.
We can all agree that more R&D will result in more innovation, but one issue not addressed by this report is will it really generate more and better jobs in the U.S.? Or will the exploitation of these innovations quickly move to countries with lower cost labor?
I hope the panel has some thoughts on how to ensure that the development of new technologies leads to the creation of new jobs in the U.S. One only has to look at most types of consumer electronics—the history of VCR technology as an example—to see that we have often lost the economic payoff from technology invented here.
In closing, it seems that we understand the challenges we face and we have agreement on how to address these challenges. What is lacking is the political will to make the investment.
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I would like to point out that his report represents a consensus of panelists representing business, academic, and education leaders. I would challenge the Panel to press the Administration and Congress to fund their recommendations. As a nation, we cannot afford not to.
[The prepared statement of Mr. Ehlers follows:]
PREPARED STATEMENT OF REPRESENTATIVE VERNON J. EHLERS
I am delighted with the Academy for producing this report, and am pleased that the Committee is taking the time to delve into the report's recommendations and proposed implementation.
For many years, I have stressed the need to increase our national investment in fundamental research and education. Despite passing an authorization bill to double the budget of the National Science Foundation (NSF) by 2008, we are still falling very short of that goal set by Congress in 2002. Each year, the chasm between the authorization and appropriation broadens, while at the same time the NSF education budget continues to diminish. But today there are an increasing number of voices joining the chorus recognizing the need for change. The voices are louder and clearer as the message begins to unify: build our science, technology, engineering and math skills, and we will maintain the strength and competitiveness of the United States. Business, industry and academic leaders are all drawing attention to the connection between our prosperity and a technically-skilled workforce. As we see the indications that our science and math education is slipping, we are jeopardizing our quality of life and national security, especially for our children and grandchildren. Without bolstering our science and technology infrastructure, we cannot expect these trends to change.
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There are many challenging questions raised by the report; it will take the strong dedication of the Committee and Chair to share these recommendations with a variety of stakeholders. I thank the witnesses today for their good work, and encourage them and the others they represent to continue to publicize this problem and lobby Members of Congress to make national competitiveness a priority through their strong support of fundamental research and education. I commend the witnesses for being here today, and look forward to continuing to work with you to not only share your report recommendations, but to actively seek solutions.
[The prepared statement of Mr. Costello follows:]
PREPARED STATEMENT OF REPRESENTATIVE JERRY F. COSTELLO
Good morning. I want to thank the witnesses for appearing before our committee to discuss the report released by the National Academy of Sciences (NAS) on October 12, 2005 entitled, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. I commend Chairman Boehlert and Ranking Member Gordon for holding this hearing today because the recommendations this report issued will provide our committee with good policy options to explore to ensure new ideas and innovation.
In June of this year, Chairman Boehlert and Ranking Member Gordon wrote to NAS to endorse the Senate request for a study of ''the most urgent challenges the United States faces in maintaining leadership in key areas of science and technology,'' to provide advice and recommendations for maintaining U.S. leadership in science and technology in the face of growing global competition. Today, Americans are feeling the effects of globalization because a substantial portion of our workforce finds itself in direct competition for jobs with lower-wage workers around the globe. It comes as no surprise that high-tech jobs are being out-sourced to foreign countries like China and India. Without high-quality, knowledge intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our constituents will face a lower standard of living. I am very concerned about the issue of off-shoring and out-sourcing and how these trends will affect current scientists and engineers, as well as the future employment opportunities and career choices of students.
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A few months ago, Ranking Member Gordon and I hosted our first in a series of several bipartisan roundtable discussions to frame what is known and unknown about supply and demand for the Science and Technology workforce, outline factors that influence supply and demand, and explore policy options. From the first Roundtable, we learned that it is difficult to determine how many jobs we have lost because we do not have sufficient or accurate data on the problem. I believe we have to raise awareness of this issue—the federal research and development budget—in order to keep high wage science and engineering jobs here in the U.S.
Despite claims to the contrary by the Administration, the Federal R&D budget is not faring well, particularly the non-defense component which has been flat for 30 years. In FY06, the Administration proposed a 1.4 percent spending reduction in the federal science and technology budget. Reductions like this continue to chip away at the U.S. research base and jeopardize our economic strength and long-term technological competitiveness. Innovation does indeed drive our economic growth, but we must have the knowledge base to drive innovation. Encouraging more children in careers in math and science is a needed start but only the beginning. We must do better in understanding the global competition facing our science and engineering workforce.
I hope this hearing will draw us closer to an answer of how we can ensure the U.S. benefits from innovation, compete with foreign scientists and engineers without lowering salaries, increase funding for basic research in the physical sciences and engineering, and improve teacher recruitment and retention so we can increase student interest levels and their knowledge and understanding of these valuable subjects.
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I welcome our panel of witnesses and look forward to their testimony.
[The prepared statement of Ms. Johnson follows:]
PREPARED STATEMENT OF REPRESENTATIVE EDDIE BERNICE JOHNSON
Thank you, Mr. Chairman and Ranking Member.
The United States has slashed its federal investment in scientific research. In 1965, in the Sputnik era, funding for federal research and development as a percentage of gross domestic product was slightly over two percent. In 2005, it is estimated to be 1.07 percent.
As a result, scientists are not getting the money they need and are pursuing alternative careers. Young people see the trend and opt not to study science.
Meanwhile, other nations have ramped up their technical infrastructure and workforce. The National Academies' recent report on the United States and global competitiveness found that in Germany, 36 percent of undergraduates receive their degrees in science and engineering. In China, the figure is 59 percent, and in Japan 66 percent. In the United States, the corresponding figure is 32 percent.
I concur that these are ''worrisome indicators'' indeed. Our competitiveness is quietly slipping. We are a net importer of high technology products, and soon we will be a net importer of people with high technology expertise.
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I am glad the National Academies published this report and hope the leadership of this Congress will act on these recommendations. Progress is expensive, but decay is intolerable.
[The prepared statement of Mr. Honda follows:]
PREPARED STATEMENT OF REPRESENTATIVE MICHAEL M. HONDA
Chairman Boehlert and Ranking Member Gordon, I thank you for holding this important hearing today and for requesting that the study ''Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future'' be undertaken.
This report makes a many good recommendations in a number of areas. In the area of education, for example, it suggests that we should recruit new science and math teachers, that we should strengthen the skills of teachers the math, science, and engineering subject areas, and we increase the number of students who take math and science courses.
But what I do not see in the recommendations troubles me. What I think is missing is the idea of teaching innovation.
I'm worried that if we simply try to produce a bunch of new scientists and engineers with the same skills as the ones who are unemployed back home in my district today, things aren't going to get any better here. China and India will be able to produce more scientists and engineers than us, and if they are paid less, work will still be done overseas.
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We have been lucky in the past that a few people who were innately innovative and inventive also had enough knowledge in math and science to make breakthroughs in these areas that started entirely new industries. Skilled scientists and engineers have been able to sustain incremental progress in these new industries, but the pressure from other nations is growing ever greater.
While some people are simply blessed with the special skills of innovation and invention and they have prospered in the past, we need to realize that these skills are teachable and bring them into our curriculum. An MIT–Lemelson/NSF study on invention recognized this and suggested incorporating innovation into our curriculum, and Singapore's Minister of Education has begun to make such changes to his own country's curriculum to prepare his country for the future.
I hope that the witnesses will address this shortcoming of their report during the hearing, and that the Committee will pay attention to this important issue in the future.
[The prepared statement of Mr. Carnahan follows:]
PREPARED STATEMENT OF REPRESENTATIVE RUSS CARNAHAN
Mr. Chairman and Mr. Ranking Member, thank you for again bringing this important issue to our attention in the Science Committee.
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For years, the U.S. has felt the backlash of an increasingly competitive global market, most sharply felt in the loss of jobs as they shift overseas. I applaud the effort to look beyond the problems and causes associated with competing in a global marketplace and to look toward solutions.
It is our duty as leaders of this nation to wisely consider options and vigorously advocate for the right changes. Our workforce, and thus many of our constituents' livelihoods, depend on it.
Mr. Augustine, Dr. Vagelos, and Dr. Wulf, thank you for your efforts with this report and for appearing before us today. I look forward to hearing your testimony.
[The prepared statement of Ms. Jackson Lee follows:]
PREPARED STATEMENT OF REPRESENTATIVE SHEILA JACKSON LEE
Mr. Chairman, let me first thank you for holding this important hearing regarding the recent report published by the National Academy of Sciences. I would also like to thank our witnesses, Mr. Augustine, Dr. Vagelos, and Dr. Wulf, for being here today.
The report being presented to us today highlights what is becoming more and more apparent in recent years, that the United States is losing footing as the dominant knowledge, innovation, and business center of the world; our policies are resulting in the deterioration of our economy. As highlighted in the testimony, an overwhelming amount of evidence points to this. Students today are less prepared to face the global market than they once were, and foreign students are becoming more and more prepared. The most glaring statistic to me contained in the testimony was that in 2003, foreign students earned almost 60 percent of engineering doctorates awarded in U.S. universities!
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Our children today are not being given the tools necessary to compete in the world of tomorrow. We are not giving them the proper training, the proper teachers or incentive to succeed. This is an issue that must cross party lines and rest at the heart of all Americans because this is about the future strength of our nation. We became the world's greatest economic power through innovation and education, and today we must renew that challenge to push the boundaries of discovery.
The importance of a strong scientific and technological enterprise is a primary factor in driving economic growth. Substantial and sustained U.S. investments in research and education over the last 50 years spawned an abundance of technological breakthroughs that transformed American society and helped the U.S. to become the world's dominant economy. Economists estimate that these technological advances have been responsible for half of U.S. economic growth since the end of World War II. The relationship between innovation and economic growth has only grown in recent years as the world shifts to an increasingly knowledge-based economy. In an age where information travels around the world at previously unimaginable speeds, the United States must continue to stay steps ahead of everyone else. This means that status quo policies on education will not work.
At the same time, other nations—particularly emerging nations such as China and India—have recognized the importance of science and technology to economic growth, and are pouring resources into their scientific and technological infrastructure, rapidly building their human capital and dramatically increasing their ability to compete with U.S. businesses on the world stage.
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As was mentioned in the testimony, there unfortunately will not be a Sputnik-like event, where the United States gets a powerful wakeup call. Instead, our decline in competitiveness is occurring slowly, and from a combination of many factors. The foundation our mothers and fathers laid for us slowly crumbles around us. This is why I find this hearing to be so important. We as the Federal Government must ensure that our nation does not lag behind in innovation and discovery. We must ensure that our children are properly prepared to face the increasingly challenging global market. Finally, we must continue to ensure that we in the United States continue to be the Nation that sets the bar for everyone else.
I would again like to thank our witnesses for being here today, and I look forward to an open and enlightened conversation on the powerful suggestions made in this report.
[The prepared statement of Mr. Baird follows:]
PREPARED STATEMENT OF REPRESENTATIVE BRIAN BAIRD
Mr. Chairman, I would like to thank you and Ranking Member Gordon for raising importance to the issue of math and science education as it relates to scientific and technological competitiveness. I would also like to thank the witnesses—Mr. Augustine, Dr. Vagelos, and Dr. Wulf—for testifying today on the recently released National Academy of Sciences report entitled, ''Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future.'' One of the recommendations made in this report is to vastly improve K–12 math and science education. I could not agree more. This should be one of the highest priorities of the Federal and State governments and I look forward to reviewing the testimony of our witnesses and the specific recommendations from this report to translate these recommendations into Congressional action.
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With the topic of today's discussion centering around science competitiveness, it could not be more appropriate to honor a guest visiting the Committee today, as she can speak directly to the importance of a quality science education—and she can do so quite well I might add. This honoree is Neela Thangada, the winner of the Discovery Channel Young Scientist Challenge, and her mother, Mrudula Rao Thangada. Neela was named ''Top Young Scientist'' at an awards ceremony yesterday evening for her project, ''Effects of Various Nutrient Concentrations on the Cloning of the Eye of the Solanum Tuberosum at Multiple Stages'' or, in laymen's terms, she set out to explore potato cloning.
I had the chance to meet with her and her mother before the hearing, and was impressed with her enthusiasm for science and discovery and her ability to effectively speak about her research. She is indeed an incredible young lady.
Her trip to the House Science Committee today from her home in Texas was the result of an important public-private partnership initiated by the Discovery Channel. Every year since 1999, Discovery has launched the competition in partnership with Science Service to nurture the next generation of American scientists at a critical age when interest in science begins to decline. The cutting-edge competition gives 40 of the Nation's top middle school students the opportunity to demonstrate their scientific know-how and push the limits of their knowledge in the quest for the title of America's ''Top Young Scientist of the Year.''
More than 9,500 middle school students have formally entered the Challenge since its inception, and these students are drawn from an initial pool of 75,000 students annually. Previous winners have attained more than $500,000 in scholarship awards and participated in science-related trips that have taken them to the far corners of the globe, from the Galapagos Islands to the Ukraine.
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This year's finalists traveled to Washington, D.C., to compete in team-based, interactive challenges designed around the theme of ''Forces of Nature.'' In the wake of the recent natural disasters that ravaged the Gulf Coast of the United States and Southeast Asia, each student faced simulated challenges—from fog banks to hurricanes to tsunamis—that utilized their broad range of knowledge in order to understand the implications and scope of natural disasters.
Public-private partnerships such as these exist to challenge and engage our students and we must continue to support such programs. However, we must also better prepare and inspire our math and science teachers to provide the highest-quality education for all students throughout the country. We can start by implementing some of the recommendations laid out here today.
Chairman BOEHLERT. Thank you very much.
And you will notice the similarity in theme between, you know, this is not a division. The center of this committee separating the Democrats from the Republicans doesn't separate us at all on the importance of the subject matter today. This is something that Mr. Gordon and I and every single Member of this committee, on both sides, believe passionately in and work, we think, hopefully, effectively on. And that is why we welcome what you bring to the table. And we want to give it as much attention as possible.
I would suggest that this probably, if we are looking on the grand scheme of things on the Hill today of what is going on, there is probably no more important discussion than the one we are having right here. And quite frankly, it doesn't have a lot of sex appeal for a lot of the media. And so we don't get a lot of coverage. I don't care if they print what I say, but I darn sure care about printing what you guys are going to say to us. That message has to get out.
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And the other observation I would make, and we have had it in private conversations, but I will make it again for the official record, I know that some of the captains of industry, in circles you travel, you know and they know and we know that we have got to do better. And in the polite conversation we have at these various functions, they will talk about such needs as getting back to the basics of greatly improving K–12 science and math education. There is no more basic building block for the foundation of the future development of this nation than that. And they will talk to me all of the time about it. Some of the great names in the captains of industry will talk to me about that. And then they will talk to me about the importance of our investment in long-range research, about how magnificent the National Science Foundation is, sponsoring university-based research, and why we need young scholars like I have been privileged to introduce here today to inspire them to greater heights. And I say to them, ''You know what?'' I have told these guys, ''You people have got more lobbyists running around this Hill, high-priced lobbyists who know what they are doing, and they are very smart, and they are very effective, and they knock on the door and they come in. You know, they don't come in to talk to me about the importance of K–12 science and math education or investing more in the science enterprise. They are in to discuss the latest tweaking needed in the tax policy or the adjustment necessary for trade policy. They are thinking of the moment and the bottom line for the next quarterly statement.'' And I understand that. But there is never enough time to get to the second part of their agenda, which is what we are discussing today.
So that is why I think this is very important, and that is why I applaud what you have done, and so does Mr. Gordon. I mean, we have had conversation about your work, and boy, we couldn't be happier. And we just want to try to—we are going to play the role of dentist this morning and sort of pull from you some new ideas on what we can do beyond the report, because this town is filled with reports that have gone on for years and the libraries of the various Committee rooms and offices have reports that are gathering dust. They read them initially and say, ''Oh, what a great report,'' and then go on to the next thing and never go back to look at the report.
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I pledge to you, and I think I can do it for both of us, that we are going to follow through, because some of the things that you have mentioned here we are already doing, but we are nickel-and-diming the issue. We have got to make some substantial investments, and it is an investment that is going to pay handsome dividends.
With that, let me present our distinguished panel.
Mr. Norman Augustine, Retired Chairman and CEO, Lockheed Martin Corporation. Mr. Augustine is a frequent visitor to this committee and to Capitol Hill and has served in so many capacities in government and in the private sector with great distinction. Dr. P. Roy Vagelos, Retired Chairman and CEO, Merck & Company. And Doctor, you are preceded by your reputation, and we thank you for the great work you are doing. And a dear friend of long standing who is constant counsel for this committee, Dr. William Wulf, President of the National Academy of Engineering.
Every day, what good comes from government usually comes because government has the common sense, to work with leaders in the private sector to interact and to be guided and to develop an agenda that offers some positive approaches to some thorny problems. And we have before us three people who are always there to propose workable solutions. And for that, we are eternally grateful.
With that, let me say the general rule, and you know the ground rules, is don't get nervous when the light comes on, but we would ask that you summarize your opening statement. And I'm not even going to put an arbitrary time limit on it, because this is so important and you are the only panel. And we will go right to it.
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With that, Mr. Chairman, the floor is yours.
STATEMENT OF MR. NORMAN R. AUGUSTINE, RETIRED CHAIRMAN AND CEO, LOCKHEED MARTIN CORPORATION
Mr. AUGUSTINE. Well, thank you, Mr. Chairman, and Members of the Committee. And I thank you in particular for all of your efforts in this area in the past—really, it was by virtue of your committee and your colleagues in the Senate that gave us the opportunity to take on our study. And we, all 20 members, I can assure you, feel very compassionate about the topic.
Also, I would like to congratulate Neela. My congratulations and ours. She is an example to why we are here.
I would, Mr. Chairman, with your permission, like to submit a longer statement for the record and brief——
Chairman BOEHLERT. Without objection, your entire statement will appear in the record. And summarize it in any manner you think is appropriate.
Mr. AUGUSTINE. Thank you very much.
The thrust of our committee's findings are fairly straightforward. They would begin by saying that we conclude that individuals' prosperity, the prosperity of individuals, depends very heavily upon the quality of the jobs they can hold. And collectively, our prosperity depends very heavily on the tax revenues that our government can acquire, which, in turn, depend upon the quality of the jobs our citizens can hold. So quality jobs are at the root of our discussions.
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But there has been a major change brought about by technology largely in this scenario. That change some people refer to as the ''death of distance''. And it has been brought about by the advent of advanced information processing, storage and transmissions that have made those functions almost free in today's world. What that means is that jobs that used to have to be performed by people who are in near proximity to their work or to each other now can be performed by people all around the world. And that, in turn, means that Americans, when they compete for jobs, will no longer compete with their neighbors. They will compete with people throughout the globe. And that is true not only at the so-called lower end of the job spectrum, it will be true throughout the job spectrum. This is in a world where there are three billion new capitalists who have appeared in the last 15 years since the end of the Cold War.
The United States operates at a considerable disadvantage today in this competition for jobs. You could—I was in Vietnam recently. You could hire 20 assembly workers for the minimum U.S. wage. In India today, you could hire 11 engineers for the cost of one in the United States. And they are very good engineers. Many of them trained at our universities.
And as I said, few jobs are safe. Today, if you go to many hospitals in this country and have a CAT scan or an X-ray, there is a fair chance it will be read by a physician in Bangalore. Similarly, there is an office very near to where we are now that, if you go in their building, they have a flat screen on the wall, and their receptionist there very pleasantly helps you find the person you are supposed to go see and controls access to the building. She is in Bangalore. I am sure you are familiar with many other examples of this type.
Is this not good that the rest of the world is prospering? And our committee's conclusion is a resounding yes. It will make the world safer. It will create more customers for our products, and it will create less costly products for our consumers. But as with all times of tectonic changes, there are likely to be winners, and there are likely to be losers. And our committee's goal is to help assure that America will be among the winners.
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There is an enigma, and your quote from Hemingway, Mr. Chairman, summarizes it better than I am able to do it. But we are in an environment where we are not likely to see sudden warnings such as we had on 9/11, Pearl Harbor, Sputnik. It is more like the proverbial frog being gradually boiled. Thomas Friedman has summarized by saying, in his great book ''The World is Flat,'' globalization has ''accidentally made Beijing, Bangalore, and Bethesda next door neighbors.'' And indeed, when it comes to seeking a job, those jobs are just a mouse click away to many people throughout the world.
We operate at a severe disadvantage in the labor cost area, but there are other indicators that are not particularly good, either. One of the things that has been keeping us going, as this committee knows so well, in the area of science, has been the number of very talented foreign-born individuals who have chosen to come to America and live and work here. Today, 38 percent of the Ph.D.s in America working in science and technology are foreign-born. Fifty-nine percent of last year's doctorates in engineering were foreign students, and that is at U.S. universities.
But if you look at how we are doing ourselves with our native-born population, a recent test of mathematical understanding among about tenth grade students conducted in various nations of the world, the United States was in 27th place.
This sort of thing is propagating into the industrial world where last year U.S. chemical companies closed 70 plants in the United States. They have earmarked 40 more to close. At the same time, there are 120 new chemical plants being built in the world, each with a price tag of $1 billion or more. Of those, one is in the United States and 50 are in China.
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U.S. companies now spend more money on litigation and related costs than they spend on research and development, Mr. Gordon, to your point. These are trends that we can not long survive. And as we know, once you lose your lead in R&D, it takes a very long time to recover it, if, indeed, one can at all.
The committee that we assembled through the auspices of the National Academies included 20 members, four or five CEOs or former CEOs of Fortune 100 companies, three nobel laureates, presidents of five or six major universities, several former presidential appointees, as far as I know, from both parties. We didn't ask that question. And they, as you said, Mr. Chairman, with regard to your committee, come together in a spirit of unanimity on each of the issues that we have discussed.
I will close my opening remarks by indicating that we have provided four recommendations. They tend to be rather broad. We have backed them with 20 quite specific implementing actions, things you can go do, some of which you are doing, some of which we do need to do more of.
Of the four general recommendations, the one that all 20 of us agree is the highest priority, is to fix the K–12 science and technology education system in this country, public education. Secondly is to put more money into basic research in specific fields, namely into the physical sciences, mathematics, engineering, and computer sciences. This should be done not to disinvest in the health and biological sciences, which are very important, but they have just seen a period of major investment. Thirdly, to encourage more students to study math and science and engineering and to make it easier to attract foreign students to study and stay in our country in those fields. And then lastly, to create an environment that makes the United States an attractive place for innovation that will attract companies from abroad as well as our own companies to invest here rather than abroad.
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So with that opening, I will turn to my colleagues and thank you for this opportunity. And we look forward to your questions.
[The prepared statement of Mr. Augustine follows:]
PREPARED STATEMENT OF NORMAN R. AUGUSTINE
Mr. Chairman and Members of the Committee,
Thank you for this opportunity to appear before you on behalf of the National Academies' Committee on Prospering in the Global Economy of the 21st Century. As you know, our effort was sponsored by the National Academy of Sciences, National Academy of Engineering and Institute of Medicine (collectively known as the National Academies). The National Academies were chartered by Congress in 1863 to advise the government on matters of science and technology.
The Academies were requested by Senator Alexander and Senator Jeff Bingaman, members of the Senate Committee on Energy and Natural Resources to conduct an assessment of America's ability to compete and prosper in the 21st century—and to propose appropriate actions to enhance the likelihood of success in that endeavor. This request was endorsed by Representatives Sherwood Boehlert and Bart Gordon of the House Committee on Science.
To respond to that request the Academies assembled 20 individuals with diverse backgrounds, including university presidents, CEOs, Nobel Laureates and former presidential appointees. The result of our committee's work was examined by over forty highly qualified reviewers who were also designated by the Academies. In undertaking our assignment we considered the results of a number of prior studies which were conducted on various aspects of America's future prosperity. We also gathered sixty subject-matter experts with whom we consulted for a weekend here in Washington and who provided recommendations related to their fields of specialty.
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It is the unanimous view of our committee that America today faces a serious and intensifying challenge with regard to its future competitiveness and standard of living. Further, we appear to be on a losing path. We are here today hoping both to elevate the Nation's awareness of this developing situation and to propose constructive solutions.
The thrust of our findings is straightforward. The standard of living of Americans in the years ahead will depend to a very large degree on the quality of the jobs that they are able to hold. Without quality jobs our citizens will not have the purchasing power to support the standard of living which they seek, and to which many have become accustomed; tax revenues will not be generated to provide for strong national security and health care; and the lack of a vibrant domestic consumer market will provide a disincentive for either U.S. or foreign companies to invest in jobs in America.
What has brought about the current situation? The answer is that the prosperity equation has a new ingredient, an ingredient that some have referred to as ''The Death of Distance.'' In the last century, breakthroughs in aviation created the opportunity to move people and goods rapidly and efficiently over very great distances. Bill Gates has referred to aviation as the ''World Wide Web of the 20th century.'' In the early part of the present century, we are approaching the point where the communication, storage and processing of information are nearly free. That is, we can now move not only physical items efficiently over great distances, we can also transport information in large volumes and at little cost.
The consequences of these developments are profound. Soon, only those jobs that require near-physical contact among the parties to a transaction will not be opened for competition from job seekers around the world. Further, with the end of the Cold War and the evaporation of many of the political barriers that previously existed throughout the world, nearly three billion new, highly motivated, often well educated, new capitalists entered the job market.
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Suddenly, Americans find themselves in competition for their jobs not just with their neighbors but with individuals around the world. The impact of this was initially felt in manufacturing, but soon extended to the development of software and the conduct of design activities. Next to be affected were administrative and support services. Today, ''high end'' jobs, such as professional services, research and management, are impacted. In short, few jobs seem ''safe'':
U.S. companies each morning receive software that was written in India overnight in time to be tested in the U.S. and returned to India for further production that same evening—making the 24-hour workday a practicality.
Back-offices of U.S. firms operate in such places as Costa Rica, Ireland and Switzerland.
Drawings for American architectural firms are produced in Brazil.
U.S. firm's call centers are based in India—where employees are now being taught to speak with a mid-western accent.
U.S. hospitals have X-rays and CAT scans read by radiologists in Australia and India.
At some McDonald's drive-in windows orders are transmitted to a processing center a thousand miles away (currently in the U.S.), where they are processed and returned to the worker who actually prepares the order.
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Accounting firms in the U.S. have clients tax returns prepared by experts in India.
Visitors to an office not far from the White House are greeted by a receptionist on a flat screen display who controls access to the building and arranges contacts—she is in Pakistan.
Surgeons sit on the opposite side of the operating room and control robots which perform the procedures. It is not a huge leap of imagination to have highly-specialized, world-class surgeons located not just across the operating room but across the ocean.
As Tom Friedman concluded in The World is Flat, globalization has ''accidentally made Beijing, Bangalore and Bethesda next door neighbors.'' And the neighborhood is one wherein candidates for many jobs which currently reside in the U.S. are now just a ''mouse-click'' away.
How will America compete in this rough and tumble global environment that is approaching faster than many had expected? The answer appears to be, ''not very well''—unless we do a number of things differently from the way we have been doing them in the past.
Why do we reach this conclusion? One need only examine the principal ingredients of competitiveness to discern that not only is the world flat, but in fact it may be tipping against us.
One major element of competitiveness is, of course, the cost of labor. I recently traveled to Vietnam, where the wrap rate for low-skilled workers is about twenty-five cents per hour, about one-twentieth of the U.S. minimum wage. And the problem is not confined to the so-called ''lower-end'' of the employment spectrum. For example, five qualified chemists can be hired in India for the cost of just one in America. Given such enormous disadvantages in labor cost, we cannot be satisfied merely to match other economies in those other areas where we do enjoy strength; rather we must excel . . . markedly.
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The existence of a vibrant domestic market for products and services is another important factor in determining our nation's competitiveness, since such a market helps attract business to our shores. But here, too, there are warning signs: Goldman Sachs analysts project that within about a decade, fully 80 percent of the world's middle-income consumers will live in nations outside the currently industrialized world.
The availability of financial capital has in the past represented a significant competitive advantage for America. But the mobility of financial capital is legion, as evidenced by the willingness of U.S. firms to move factories to Mexico, Vietnam and China if a competitive advantage can be derived by doing so. Capital, as we have observed, crosses geopolitical borders at the speed of light.
Human capital—the quality of our work force—is a particularly important factor in our competitiveness. Our public school system comprises the foundation of this asset. But as it exists today, that system compares, in the aggregate, abysmally with those of other developed—and even developing—nations . . . particularly in the fields which underpin most innovation: science, mathematics and technology.
Of the utmost importance to competitiveness is the availability of knowledge capital—''ideas.'' And once again, scientific research and engineering applications are crucial. But knowledge capital, like financial capital, is highly mobile. There is one major difference: being first-to-market, by virtue of access to new knowledge, can be immensely valuable, even if by only a few months. Craig Barrett, a member of our committee and Chairman of Intel, points out that 90 percent of the products his company delivers on December 31st did not even exist on January 1st of that same year. Such is the dependence of hi-tech firms on being at the leading edge of scientific and technological progress.
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There are of course many other factors influencing our nation's competitiveness. These include patent processes, tax policy and overhead costs—such as health care, regulation and litigation—all of which tend to work against us today. On the other hand, America's version of the Free Enterprise System has proven to be a powerful asset, with its inherent aggressiveness and discipline in introducing new ideas and flushing out the obsolescent. But others have now recognized these virtues and are seeking to emulate our system.
But is it not a good thing that others are prospering? Our committee's answer to that question is a resounding ''yes.'' Broadly based prosperity can make the world more stable and safer for all; it can make less costly products available for American consumers; it can provide new customers for the products we produce here. Yet it is inevitable that there will be relative winners and relative losers—and as the world prospers, we should seek to assure that America does not fall behind in the race.
The enigma is that in spite of all these factors, America seems to be doing quite well just now. Our nation has the highest R&D investment intensity in the world. We have indisputably the finest research universities in the world. California alone has more venture capital than any nation in the world other than the United States. Two million jobs were created in America in the past year alone, and citizens of other nations continue to invest their savings in America at a remarkable rate. Total household net worth is now approaching $50 trillion.
The reason for this prosperity is that we are reaping the benefits of past investments—many of them in the fields of science and technology. But the early indicators of future prosperity are generally heading in the wrong direction. Consider the following:
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For the cost of one engineer in the United States, a company can hire 11 in India.
America has been depending heavily on foreign-born talent. Thirty-eight percent of the scientists and engineers in America holding doctorates were born abroad. Yet, when asked in the spring of 2005, what are the most attractive places in the world in which to live, respondents in only one of the countries polled indicated the U.S.A.
Chemical companies closed seventy facilities in the U.S. in 2004, and have tagged forty more for shutdown. Of 120 new chemical plants being built around the world with price tags of $1 billion or more, one is in the U.S. Fifty are in China.
In 1997 China had fewer than 50 research centers managed by multi-national corporations. By 2004 there were over 600.
Two years from now, for the first time, the most capable high-energy particle accelerator on Earth will reside outside the United States.
The United States today is a net importer of high technology products. The U.S. share of global high tech exports has fallen in the last two decades from 30 percent to 17 percent, while America's trade balance in high tech manufactured goods shifted from a positive $33B in 1990 to a negative $24B in 2004.
In a recent international test involving mathematical understanding, U.S. students finished in 27th place among the nations participating.
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About two-thirds of the students studying chemistry and physics in U.S. high schools are taught by teachers with no major or certificate in the subject. In the case of math taught in grades five through 12, the fraction is one-half. Many such students are being taught math by graduates in physical education.
In one recent period, low-wage employers like Wal-Mart (now the Nation's largest employer) and McDonald's created 44 percent of all new jobs. High-wage employers created only 29 percent.
In 2003 foreign students earned 59 percent of the engineering doctorates awarded in U.S. universities.
In 2003 only three American companies ranked among the top 10 recipients of patents granted by the U.S. Patent Office.
In Germany, 36 percent of undergraduates receive their degrees in science and engineering. In China, the corresponding figure is 59 percent, and in Japan it is 66 percent. In the U.S., the share is 32 percent. In the case of engineering, the U.S. share is five percent, as compared with 50 percent in China.
The United States is said to have over 10 million illegal immigrants, but the number of legal visas set-aside annually for ''highly qualified foreign workers'' was recently dropped from 195,000 per year down to 65,000.
At a time when the world's nations are clamoring to obtain science and engineering talent, U.S. law will grant a visa for outstanding foreign students to attend U.S. universities only if they promise they will go home when they graduate.
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In 2001 (the most recent year for which data are available), U.S. industry spent more on tort litigation and related costs than on research and development.
As important as jobs are, the impact of these circumstances on our nation's security could be even more profound. In the view of the bipartisan Hart-Rudman Commission on National Security, ''. . .the inadequacies of our system of research and education pose a greater threat to U.S. national security over the next quarter century than any potential conventional war that we might imagine.''
The good news is that there are things we can do to assure that America does in fact share in the prosperity that science and technology are bringing the world. In this regard, our committee has made four broad recommendations as the basis of a prosperity initiative—and offers 20 specific actions to make these recommendations a reality. They include:
''Ten Thousand Teachers, Ten Million Minds''—which addresses America's K–12 education system. We recommend that America's talent pool in science, math and technology be increased by vastly improving K–12 education. Among the specific steps we propose are:
Recruitment of 10,000 new science and math teachers each year through the award of competitive scholarships in math, science and engineering that lead to a Bachelor's degree accompanied by a teaching certificate—and a five-year commitment to teach in a public school.
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Strengthening the skills of 250,000 current teachers through funded training and education in part-time Master's programs, summer institutes and Advanced Placement training programs.
Increasing the number of students who take Advanced Placement science and mathematics courses.
''Sowing the Seeds''—which addresses America's research base. We recommend strengthening the Nation's traditional commitment to long-term basic research through:
Increasing federal investment in research by 10 percent per year over the next seven years, with primary attention devoted to the physical sciences, engineering, mathematics, and information sciences—without disinvesting in the health and biological sciences.
Providing research grants to early career researchers.
Instituting a National Coordination Office for Research Infrastructure to oversee the investment of an additional $500M per year for five years for advanced research facilities and equipment.
Allocating at least eight percent of the existing budgets of federal research agencies to discretionary funding under the control of local laboratory directors.
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Creation of an Advanced Research Projects Agency–Energy (ARPA–E), modeled after DARPA in the Department of Defense, reporting to the Department of Energy Undersecretary for Science. The purpose is to support the conduct of out-of-the-box, transformational, generic, energy research by universities, industry and government laboratories.
Establish a Presidential Innovation Award to recognize and stimulate scientific and engineering advances in the national interest.
''Best and Brightest''—which addresses higher education. In this area we recommend:
Establishing 25,000 competitive science, mathematics, engineering, and technology undergraduate scholarships and 5,000 graduate fellowships in areas of national need for U.S. citizens pursuing study at U.S. universities.
Providing a federal tax credit to employers to encourage their support of continuing education.
Providing a one-year automatic visa extension to international students who receive a science or engineering doctorate at a U.S. university, and providing automatic work permits and expedited residence status if these students are offered employment in the U.S.
Instituting a skill-based, preferential immigration option.
Reforming the current system of ''deemed exports'' so that international students and researchers have access to necessary non-classified information or research equipment while studying and working in the U.S.
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''Incentives for Innovation''—in which we address the innovation environment itself. We recommend:
Enhancements to intellectual property protection, such as the adoption of a first-to-file system.
Increasing the R&D tax credit from the current 20 percent to 40 percent, and making the credit permanent.
Providing permanent tax incentives for U.S.-based innovation so that the United States is one of the most attractive places in the world for long-term innovation-related investments.
Ensuring ubiquitous broadband Internet access to enable U.S. firms and researchers to operate at the state-of-the-art in this important technology.
It should be noted that we are not confronting a so-called ''typical'' crisis, in the sense that there is no 9/11, Sputnik or Pearl Harbor to alert us as a nation. Our situation is more akin to that of the proverbial frog being slowly boiled. Nonetheless, while our committee believes the problem we confront is both real and serious, the good news is that we may well have time to do something about it—if we start now.
Americans, with only five percent of the world's population but with nearly 30 percent of the world's wealth, tend to believe that scientific and technological leadership and the high standard of living it underpins is somehow the natural state of affairs. But such good fortune is not a birthright. If we wish our children and grandchildren to enjoy the standard of living most Americans have come to expect, there is only one answer: We must get out and compete.
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I would like to close my remarks with a perceptive and very relevant poem. It was written by Richard Hodgetts, and eloquently summarizes the essence of innovation in the highly competitive, global environment. The poem goes as follows:
Every morning in Africa a gazelle wakes up. It knows it must outrun the fastest lion or it will be killed.
Every morning in Africa a lion wakes up. It knows it must outrun the slowest gazelle or it will starve.
It doesn't matter whether you're a lion or a gazelle—when the sun comes up, you'd better be running.
And indeed we should.
Thank you for providing me with this opportunity to testify before the Committee. I would be pleased to answer any questions you have about the report.
Response to House Committee on Science Questions
1. How did the study panel arrive at the recommended 10 percent annual increase in federally-sponsored basic research over the next seven years? What other options did the panel consider and what led to the choice of 10 percent?
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After reviewing the proposals for enhanced research funding that have been made in recent years, the committee concluded that a 10 percent annual increase over a seven-year period would be appropriate. This achieves the doubling that was in principle part of the NSF Authorization Act of 2002 approved by Congress and the President, but would expand it to other agencies and focus that increase on the physical sciences, engineering, mathematics, and the information sciences as well as DOD basic research.
The committee viewed enhanced funding in these fields as urgent. It chose the 10 percent level and seven-year time frame as the best way for these funds to be spent effectively. The base for this doubling (federal funding for the fields listed plus DOD basic research—not including the specified fields so there is no double-counting) was approximately $8 billion in FY 2004.
By taking this action, the balance of the Nation's research portfolio in fields that are essential to the generation of both ideas and skilled people for the Nation's economy and national/homeland security would be restored. That does not mean that there should be a disinvestment in such important fields as the life sciences (which have in fact 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.
As indicated in the National Academies Committee on Science, Engineering, and Public Policy's (COSEPUP) 1993 report Science, Technology, and the Federal Government: National Goals for a New Era
The United States needs to be among the world leaders in all fields of research so that it can
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Bring the best available knowledge to bear on problems related to national objectives even if that knowledge appears unexpectedly in a field not traditionally linked to that objective.
Quickly recognize, extend, and use important research results that occur elsewhere.
Prepare students in American colleges and universities to become leaders themselves and to extend and apply the frontiers of knowledge.
Attract the brightest young students.(see footnote 26)
2. How did the study panel arrive at the recommended eight percent allocation within each federal research agency's budget to be managed at the discretion of technical program managers to catalyze high-risk, high-payoff research? What other options did the panel consider and what led to the choice of eight percent?
The committee found that at many agencies approximately one to three percent of a program's budget is to be managed at the discretion of the program managers. The committee believes, as shown through the Defense Advanced Research Projects Agency (DARPA) model, that more risky research that crosses disciplinary lines can be funded by using the ''strong program manager'' approach as is the case at DARPA. Some committee members believed that five percent was sufficient, others 10 percent—in the end a compromise was reached at eight percent. The committee is flexible about the specific number as long as the goal of catalyzing high-risk, high-payoff research (as opposed to incremental research) is achieved. Experience shows that research investments of this type are exceptionally highly leveraged.
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3. Industry and government have both developed numerous energy production and energy efficiency technologies that have not been deployed. How did the study panel arrive at its implicit conclusion that technology development is the greater bottleneck (as opposed to policy) in developing energy systems for a 21st century economy?
The committee believes that both policy and technology play a role in responding to the Nation's need for clean, affordable, and reliable energy.
While the implementation of some technologies, such as nuclear energy, is discouraged by policy, we still face environmental and safety challenges only science and engineering research can ameliorate—even if policy-makers were willing to deploy that technology today. There are no doubt questions of cost and policy that affect use of various energy technologies. When was the last nuclear plant commissioned? But those policy decisions are often directly linked to technical capabilities or the absence thereof. No 'final' solutions without serious problems are waiting in the wings for policy changes. Nuclear energy is an (the) important potential source of energy but it has security and waste disposal/storage problems that have not been handled satisfactorily. That is a prime example of a policy problem that requires research to unlock it.
Similarly, the Nation, as the report indicates, has made substantial strides in efficiency, but much more can be done. Yes there is existing efficiency technology that can be deployed, and, following market forces if oil prices do not return to recent levels, will probably be used increasingly.
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As a result, the Nation will not significantly decrease energy dependence without technology—policy changes alone are insufficient. The production of electricity and mobility on a worldwide basis cannot go on for ever in their present form. This country is running a significant risk of remaining substantially dependent on foreign oil.
The history of science and technology suggests that radical new solutions may well be available. The field of energy has not been viewed as exciting by a generation of engineering students. The time required to effect an energy solution from research to implementation is considerable. The rate of growth of the energy problem (usage) worldwide is likely to have profound effects.
We believe that the Advanced Research Projects Agency (ARPA–E) proposed by the committee can jump start new approaches to high risk/high payoff research of the type that DARPA has historically performed to great effect for the military. It can capture the talents of outstanding young people in industry and academia. DARPA is a demonstrably effective approach to advanced research and development, and Energy is one of the most important challenges to our nation's future.
4. Recent surveys of industry suggest that basic research performed at universities and transformational technological innovation have only a very limited impact on the success of individual companies. Is the impact of research and innovation different for the economy as a whole than it is for individual companies?
There is broad consensus among economists that for decades the growth of the U.S. economy has been driven by technological advances and innovation. These come almost exclusively from two sources—companies and universities. Companies are devoting fewer and fewer resources to longer-term research that contributes to the common base of technology that is available to all; i.e., work that improves our national capacity but doesn't necessarily directly drive that company's profits. Universities are increasingly the only avenue for the research that will lead to fundamentally new things and to a highly-educated workforce. Most large companies now strive for a large percentage of their products to have been developed within the last two or three years. This requires constant and focused innovation. The immediate crowds out the strategic.
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Truly transformational technologies do not come along every day, and cannot be readily predicted. But one thing is certain—if we do not invest in research and advanced training for scientists and engineers, they will not occur at all—at least not in the United States.
Because of this, the committee disagrees with the first premise in the question. Industry gains not only from the new knowledge generated as a result of academic research, but also from the skilled people generated as a result of research.
Although many industries as diverse as the pharmaceutical and banking industry understand the linkage of their business to science and technology, others do not always fully understand the linkages between its day-to-day activities and science and technology. For example, at one point, we thought that the trucking industry was not particularly sensitive to science and technology. But the trucking industry certainly has been able to enhance its competitiveness by using tools such as the global positioning system, advanced lightweight materials, the ability to use the Internet, and weather forecasting to enhance its ability to locate the best route to a destination thus lowering its operating cost. In addition, its competitiveness could be enhanced further if new ways are developed for the industry to be more efficient in its use of fuel and if more affordable fuels are developed.
As a result, when looking at its primary operations, a single company may not see direct use of basic research if it has not licensed a patent, contracted for studies or undertaken its own work. But slightly below the surface the substantial contribution of basic research to essentially every company is evident.
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For some industries, research provides them with the talented people they need whose education is influenced in substance, thinking and methods by basic research experience/training. Talented graduates for corporate laboratories are a primary deliverable of basic research operations at universities. Many major companies, in addition, support basic research at universities first and foremost to gain access to these people.
Secondly, essentially every company buys technology whose function and cost are controlled by basic research conducted earlier. So companies that assemble products using others' components may not be involved in basic research directly but their business remains dependent on the basic research behind the component technologies that they use.
Third, basic research creates the new technologies and new enterprises that these companies will sell to, or buy from or even become. Frankly, it is difficult to think of a company that does not use technology at some level, and that technology evolved from basic research.
Fourth, the people generated as a result of the higher education they receive, underpinned by basic research, create whole new industries and jobs. For example, in 1997, BankBoston conducted the first national study of the economic impact of a research university. It found that graduates of the Massachusetts Institute of Technology founded 4,000 firms which, in 1994 alone, employed at least 1.1 million people and generated $232 billion of world sales. Further, if the companies founded by MIT graduates and faculty formed an independent nation, the revenues produced by the companies would make that nation the 24th largest economy in the world. Within the United States, the companies founded by MIT graduates employed a total of 733,000 people in 1994 at more than 8,500 plants and offices in the 50 states—equal to one out of every 170 jobs in America. Eighty percent of the jobs in the MIT-related firms are in manufacturing (compared to 16 percent nationally), and a high percentage of products are exported.
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COMMITTEE BIOGRAPHIC INFORMATION
NORMAN R. AUGUSTINE [NAE*] (Chair) is the retired Chairman and CEO of the Lockheed Martin Corporation. He serves on the President's Council of Advisors on Science and Technology and has served as Under Secretary of the Army. He is a recipient of the National Medal of Technology.
CRAIG BARRETT [NAE] is Chairman of the Board of the Intel Corporation.
GAIL CASSELL [IOM*] is Vice President for Scientific Affairs and a Distinguished Lilly Research Scholar for Infectious Diseases at Eli Lilly and Company.
STEVEN CHU [NAS*] is the Director of the E.O. Lawrence Berkeley National Laboratory. He was a co-winner of the Nobel prize in physics in 1997.
ROBERT GATES is the President of Texas A&M University and served as Director of Central Intelligence.
NANCY GRASMICK is the Maryland State Superintendent of Schools.
CHARLES HOLLIDAY JR. [NAE] is Chairman of the Board and CEO of DuPont.
SHIRLEY ANN JACKSON [NAE] is President of Rensselaer Polytechnic Institute. She is the Immediate Past President of the American Association for the Advancement of Science and was Chairman of the U.S. Nuclear Regulatory Commission.
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ANITA K. JONES [NAE] is the Lawrence R. Quarles Professor of Engineering and Applied Science at the University of Virginia. She served as Director of Defense Research and Engineering at the U.S. Department of Defense and was Vice-Chair of the National Science Board.
JOSHUA LEDERBERG [NAS/IOM] is the Sackler Foundation Scholar at Rockefeller University in New York. He was a co-winner of the Nobel prize in physiology or medicine in 1958.
RICHARD LEVIN is President of Yale University and the Frederick William Beinecke Professor of Economics.
C.D. (DAN) MOTE JR. [NAE] is President of the University of Maryland and the Glenn L. Martin Institute Professor of Engineering.
CHERRY MURRAY [NAS/NAE] is the Deputy Director for Science and Technology at Lawrence Livermore National Laboratory. She was formerly the Senior Vice President at Bell Labs, Lucent Technologies.
PETER O'DONNELL JR. is President of the O'Donnell Foundation of Dallas, a private foundation that develops and funds model programs designed to strengthen engineering and science education and research.
LEE R. RAYMOND [NAE] is the Chairman of the Board and CEO of Exxon Mobil Corporation.
ROBERT C. RICHARDSON [NAS] is the F.R. Newman Professor of Physics and the Vice Provost for Research at Cornell University. He was a co-winner of the Nobel prize in physics in 1996.
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P. ROY VAGELOS [NAS/IOM] is the retired Chairman and CEO of Merck & Co., Inc.
CHARLES M. VEST [NAE] is President Emeritus of MIT and a Professor of Mechanical Engineering. He serves on the President's Council of Advisors on Science and Technology and is the Immediate Past Chair of the Association of American Universities.
GEORGE M. WHITESIDES [NAS/NAE] is the Woodford L. & Ann A. Flowers University Professor at Harvard University. He has served as an adviser for the National Science Foundation and the Defense Advanced Research Projects Agency.
RICHARD N. ZARE [NAS] is the Marguerite Blake Wilbur Professor of Natural Science at Stanford University. He was Chair of the National Science Board from 1996 to 1998.
BIOGRAPHY FOR NORMAN R. AUGUSTINE
NORMAN R. AUGUSTINE was raised in Colorado and attended Princeton University where he graduated with a BSE in Aeronautical Engineering, magna cum laude, an MSE and was elected to Phi Beta Kappa, Tau Beta Pi and Sigma Xi.
In 1958 he joined the Douglas Aircraft Company in California where he held titles of Program Manager and Chief Engineer. Beginning in 1965, he served in the Pentagon in the Office of the Secretary of Defense as an Assistant Director of Defense Research and Engineering. Joining the LTV Missiles and Space Company in 1970, he served as Vice President, Advanced Programs and Marketing. In 1973 he returned to government as Assistant Secretary of the Army and in 1975 as Under Secretary of the Army and later as Acting Secretary of the Army. Joining Martin Marietta Corporation in 1977, he served as Chairman and CEO from 1988 and 1987, respectively, until 1995, having previously been President and Chief Operating Officer. He served as President of Lockheed Martin Corporation upon the formation of that company in 1995, and became its Chief Executive Officer on January 1, 1996, and later Chairman. Retiring as an employee of Lockheed Martin in August, 1997, he joined the faculty of the Princeton University School of Engineering and Applied Science where he served as Lecturer with the Rank of Professor until July, 1999.
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Mr. Augustine served as Chairman and Principal Officer of the American Red Cross for nine years and as Chairman of the National Academy of Engineering, the Association of the United States Army, the Aerospace Industry Association, and the Defense Science Board. He is a former President of the American Institute of Aeronautics and Astronautics and the Boy Scouts of America. He is currently a member of the Board of Directors of ConocoPhillips, Black & Decker and Procter & Gamble and a member of the Board of Trustees of Colonial Williamsburg and Johns Hopkins and a former member of the Board of Trustees of Princeton and MIT. He is a member of the President's Council of Advisors on Science and Technology and the Department of Homeland Security Advisory Board and was a member of the Hart/Rudman Commission on National Security.
Mr. Augustine has been presented the National Medal of Technology by the President of the United States and has five times been awarded the Department of Defense's highest civilian decoration, the Distinguished Service Medal and has received the Joint Chiefs of Staff Distinguished Public Service Award. He is co-author of The Defense Revolution and Shakespeare In Charge and author of Augustine's Laws and Augustine's Travels. He holds eighteen honorary degrees and was selected by Who's Who in America and the Library of Congress as one of the Fifty Great Americans on the occasion of Who's Who's fiftieth anniversary. He has traveled in nearly 100 countries and stood on both the North and South Poles.
Chairman BOEHLERT. Thank you very much.
Dr. Vagelos.
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STATEMENT OF DR. P. ROY VAGELOS, RETIRED CHAIRMAN AND CEO, MERCK & CO.
Dr. VAGELOS. Thank you, Mr. Chairman and Committee Members. I am delighted to be here to talk about my specific interest in this committee work.
And let me start with K–12 education since that was mentioned by both the Chairman and Mr. Gordon. Mr. Gordon made the statement that much of what is recommended is a rehash of old material. And to some degree, that is true. The problem is that if you go to the American public today, they will tell you that they are not pleased with the results of what we are doing in K–12 education, and therefore, the committee looked very hard. And as Norm just mentioned, among the committee of 20 people, the unanimous number one priority was to do something in K–12 education.
So let me tell you a couple of things that we focused on. First of all, a recognition that if one is going to teach in science and mathematics, that one should have had some expertise and some courses in those fields that are going to be taught in K–12, especially in grades eight through twelve. What we have found is that many of the teachers have had no major, and not even a good course in the subjects that they are teaching. So you will have a teacher teaching physics or chemistry or mathematics never having had a major course in those areas. And so can we expect such teachers to turn on our young people to be able to enter these fields?
We decided not, and therefore, what are we recommending?
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We are suggesting several programs that are aimed at just that kind of thing. For instance, there are students who are already majoring as undergraduates in mathematics, science, and engineering, and there is a program, for instance, it is called ''U Teach'' at the University of Texas in Austin, which selects these students and offers them scholarships if they will also take some courses in education and learn to teach during the four years that they are already majoring in these subjects that they are going to potentially teach. Now these are the people who really understand their subjects.
And so one of the recommendations is 10,000 students per year of that sort nationally who are going to be expert in their field and who are becoming teachers, and the payback is that they teach for five years.
Another program that we have. So that would cover 10,000 new teachers coming through the mill. If you take the large numbers of people who are already teaching in these subjects and say can we resuscitate them because they don't really have the expertise. And we have a program, several programs for them.
The one I like best is those people who are willing to come back for a Master's degree and spend two years, two summers and weekends to take a Master's in subject matter, whether it is physics, chemistry, technology, or mathematics, and they end up, at the end of two years, as master teachers, really understanding deeply their subject and being able to turn out other teachers and certainly to recruit and excite students.
In addition to these Master's programs, there are programs that are summer institutes, large numbers of these, where teachers come back for two to four weeks annually have their education in specific subject matter improved. So these are the kinds of people who can turn people on and students on.
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Now we can do that for teachers. We can also increase the number of students that are going through middle and high schools who go into science and math by inducing them to take advanced placement courses and tests or international baccalaureate subjects. And there is a program, again which was tested and has been going for 10 years in Texas, centered in Dallas in this instance, where both the teachers are trained in the summer institutes to teach advanced courses, and students are induced by offering them scholarships, and then if they pass the test, they get a bonus of $100. Not only do the students get $100, but the teachers get $100. Now this program has been going on for 10 years, and the number of students taking these advanced placement courses and tests has gone up tenfold, 10 times over the course of 10 years. Now the beauty of that is that these students who are now taking advanced courses are more likely to go into such courses when they go to college.
Okay. So those are two programs that I think are really important and have been demonstrated to work. And so this is what we would recommend.
We would also recommend a development of a curriculum, a national curriculum, that would be voluntary and available through the Internet to, available to all teachers nationally and all school districts that could be optimizing all of these subjects that we are talking about.
To jump ahead, to get students then to go into science, engineering, mathematics, computer sciences, there would be scholarships, undergraduate scholarships at the level of $25,000 per year, competitive, picking the best students in the country to go into these, also 5,000 fellowships for graduate study in such subjects to get our students in there and in the same subjects, and finally, as Norm just talked about the international students, we would like to have a correction and improvement in both the visa and the immigration policies so that we can continue to attract or attract again those kinds of top students internationally who were coming to the United States and have been slowed down because of various problems since 9/11.
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So I think, in summary, I think we all agree that K–12 is important. Certainly our higher education is also important. But it is not only important for competitiveness, it is important for the jobs, the high-knowledge jobs of the future that are going to dictate our economy.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Vagelos follows:]
PREPARED STATEMENT OF P. ROY VAGELOS
Mr. Chairman and Members of the Committee.
Thank you for this opportunity to appear before you on behalf of the National Academies' Committee on Prospering in the Global Economy of the 21st Century. As you know, our effort was sponsored by the National Academy of Sciences, National Academy of Engineering and Institute of Medicine (collectively known as the National Academies). The National Academies were chartered by Congress in 1863 to advise the government on matters of science and technology.
Mr. Augustine, Chair of the Committee, has discussed the overall concerns the Committee has about the future vitality of the United States economy. During my testimony, I will focus on the problems that we're having in K through 12 education. The Committee believes the education issue is the most critical challenge the United States is facing if our children and grandchildren are to inherit ever-greater opportunities for high-quality, high-paying jobs—and our solution and recommendations to respond to the Nation's challenge in K–12 science, mathematics, engineering, and technology education were the Committee's top priority.
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The Committee found that the American public is not satisfied with the K through 12 education available for their children. They are worried about the international comparative surveys that show that children outside the United States—even those in countries with far less resources than ours—rank higher than their own children in their understanding of mathematics or science.
The Committee then made the recommendation we call ''10,000 teachers, 10 million minds'' which proposes increasing America's talent pool by vastly improving K–12 science and mathematics education.
In developing its action steps to reach this goal, the Committee first focused on what part of K–12 science, mathematics, engineering, and technology education was of greatest concern. The Committee immediately recognized that many of these teachers do not have sufficient education in these fields, and its recommendations respond to that concern.
Of all its action steps, the Committee's highest priority is a program that would annually recruit 10,000 of America's brightest students to the science, mathematics, and technology K–12 teaching profession. The program would recruit and train excellent teachers by providing scholarships to students obtaining Bachelor's degrees in the physical or life sciences, engineering, or mathematics to gain concurrent certification as K–12 science and mathematics teachers. Over their careers, each of these teachers would educate 1,000 students, so that each annual cadre of teachers educated in this program would impact 10 million minds.
The program would provide merit-based scholarships of up to $20,000 a year for four years for qualified educational expenses, including tuition and fees, and would require a commitment to five years of service in public K–12 schools. A $10,000 annual bonus would go to program graduates working in under-served schools in inner cities and rural areas.
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To provide the highest-quality education for undergraduates who want to become K–12 science and mathematics teachers, it would be important to award matching grants, perhaps $1 million a year for up to five years, to as many as 100 universities and colleges to encourage them to establish integrated four-year undergraduate programs leading to Bachelor's degrees in science, engineering, or mathematics with concurrent teacher certification.
This program, modeled after a very successful program in Texas (and which is being replicated in California), takes advantage of those people who are already in science, mathematics, engineering, and technology higher education programs and offer them the ability to get into teaching. It also incorporates in-classroom teaching experiences, master K–12 teachers, and ongoing mentoring—the combination of which produces highly qualified teachers with the skills and support to remain effective in the classroom.
Our second action step focuses on strengthening the skills of 250,000 current K–12 science and mathematics teachers through summer institutes, Master's programs, and Advanced Placement and International Baccalaureate (AP and IB) professional development programs. Each of these activities also builds on very successful model programs that can be scaled up to the national level.
In the case of the summer institutes, the Committee recommends that the Federal Government provide matching grants for state-wide and regional one- to two-week summer institutes to upgrade the content knowledge and pedagogy skills of as many as 50,000 practicing teachers each summer. The material covered would allow teachers to keep current with recent developments in science, mathematics, and technology and allow for the exchange of best teaching practices. The Merck Institute for Science Education is a model for this recommendation.
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For the science and mathematics Master's programs, the Committee recommends that the Federal Government provide grants to universities to develop and offer 50,000 current middle-school and high-school science, mathematics, and technology teachers (with or without undergraduate science, mathematics, or engineering degrees) two-year, part-time Master's degree programs that focus on rigorous science and mathematics content and pedagogy. The model for this recommendation is the University of Pennsylvania Science Teachers Institute.
In the case of AP, IB, and pre-AP or pre-IB training, the Committee recommends that the Federal Government support the training of an additional 70,000 AP or IB and 80,000 pre-AP or pre-IB instructors to teach advanced courses in mathematics and science. Assuming satisfactory performance, teachers may receive incentive payments of up to $2,000 per year, as well as $100 for each student who passes an AP or IB exam in mathematics or science. There are two models for this program: the Advanced Placement Incentive Program and Laying the Foundation, a pre-AP program.
The Committee also proposes that high-quality teaching be fostered with world-class curricula, standards, and assessments of student learning. Here, the Committee recommends that the Department of Education convene a national panel to collect, evaluate, and develop rigorous K–12 materials that would be available free of charge as a voluntary national curriculum. The model for this recommendation is the Project Lead the Way pre-engineering courseware.
Why are we doing this? Because, as Mr. Augustine mentions, many of the teachers who are teaching subjects have no background in the subjects that they are teaching. It is very hard for someone who does not have a physics education to turn students on to physics, because they have no basic feeling for the subject. Teachers with strong content knowledge, either through a Bachelor's or Master's program, who also have strong pedagogy skills and access to ongoing skills updates can be truly effective at encouraging students in science, mathematics, and technology fields. That is the thesis that we've built on.
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The Committee also proposes a program that will enlarge the pipeline by encouraging more students to take AP and IB science and mathematics courses and tests through providing more opportunities and incentives for middle-school and high-school students to pursue advanced work in science and mathematics. The Committee suggests a national goal of increasing the number of students in AP and IB mathematics and science courses from 1.2 million to 4.5 million, and setting a goal of tripling the number who pass those tests, to 700,000, by 2010. Student incentives for success would include 50 percent examination fee rebates and $100 mini-scholarships for each passing score on an AP or IB mathematics and science examination.
The reason we are encouraging more students to participate in AP/IB courses is because we have found, through the Dallas-based AP Incentive Program, that those students who take AP/IB courses are twice as likely to enter and complete college as those who do not. Of particular interest is the ability of programs such as the University of California College Prep Program to reach currently under-served areas or populations of students with specific learning needs through online access to teachers and tutors.
We also propose scholarships for American undergraduates who are willing to go into science and technology and engineering and fellowship programs for those pursing graduate science and engineering degrees in areas of national need.
In sum, the Committee is proposing a whole spectrum of recommendations that will enhance the quality of science, mathematics, engineering, and technology education for all American students and providing incentives for Americans to pursue higher education degrees in these fields. By taking the proposed actions, we believe that the United States will be better positioned to compete as a country for future high knowledge jobs.
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Thank you for providing me with this opportunity to testify before the Committee. I would be pleased to answer any questions you have about the report.
BIOGRAPHY FOR P. ROY VAGELOS
Dr. Vagelos served as Chief Executive Officer of Merck & Co. Inc., for nine years from July 1985 to June 1994. He was first elected to the Board of Directors in 1984 and served as its Chairman from April 1986 to November 1994.
Dr. Vagelos joined the worldwide health products firm in 1975 as Senior Vice President of Research and became President of its research division in 1976; in addition, starting in January 1982, he served as Senior Vice President of Merck with responsibility for strategic planning. He continued to hold both positions until 1984, when he was elected Executive Vice President.
Before assuming broader responsibilities of business leadership, Dr. Vagelos had won scientific recognition as an authority on lipids and enzymes and as a research manager. This followed a decision early in his career to put his principal energies into research rather than the practice of medicine.
Dr. Vagelos received a A.B. degree (1950) from the University of Pennsylvania, where he was elected to Phi Beta Kappa, the academic honor society. He received his M.D. from Columbia University (1954) and was elected to Alpha Omega Alpha, the medical honor society. After internship and residency (1954–56) at Massachusetts General Hospital in Boston, he joined the National Institutes of Health in Bethesda, Maryland.
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At the NIH (1956–66) he served in the National Heart Institute, holding positions in cellular physiology and biochemistry—first as Senior Surgeon and then as Head of Section of Comparative Biochemistry, both in the Laboratory of Biochemistry.
In 1966, Dr. Vagelos joined Washington University in St. Louis, Missouri, as Chairman of the Department of Biological Chemistry of the School of Medicine. In addition, from 1973 to 1975, he assumed more extensive responsibilities as Director of the University's Division of Biology and Biochemical Sciences, which he founded.
Dr. Vagelos has received honorary Doctor of Science degrees from Washington University (1980) for his research achievements and important influence on national science policy; Brown University (1982) for distinguished contributions to the advancement of knowledge as a teacher, research scientist, and head of one of the Nation's outstanding laboratories; the University of Medicine and Dentistry of New Jersey (1984) for outstanding leadership in biomedical research leading to drugs and other therapeutic agents of direct benefits to mankind; New York University (1989) for contributions in helping to discover and produce medicines that both extend and enhance life; Columbia University (1990) for an extraordinary range of accomplishments in biological science, pharmaceutical research, and leadership in the pharmaceutical industry; the New Jersey Institute of Technology (1992) for his contributions to medical research; Pamukkale University in Turkey (1992); and the University of New York at Stony Brook (1994) for outstanding achievement; Mount Sinai Medical School (1997); and the University of British Columbia (1998). He received Honorary Doctor of Laws degrees for leadership in the battle to conquer diseases from Princeton University (1990), the University of Pennsylvania (1999) and Harvard University (2003). Rutgers University (1991) granted him honorary Doctor of Humane Letters degree in recognition of his ''ambitious agenda to develop effective cures for the most perplexing illness of our time.''
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The author of more than 100 scientific papers, he received the Enzyme Chemistry Award of the American Chemical Society in 1967. He was elected in 1972 to the American Academy of Arts and Sciences and the National Academy of Sciences, and in 1993 to the American Philosophical Society. In 1989 he received the Thomas Alva Edison Sciences Award from Governor Thomas Kean. In 1993, he received the Lawrence A. Wien Prize in Social Responsibility from Columbia University. In 1994 he received the C. Walter Nichols Award from New York University's Stern School of Business. In 1995 he received the National Academy of Science Award for Chemistry in Service to Society. In 1998 he was awarded the Prince Mahidol Award conferred by His Majesty the King in Bangkok (Thailand). In 1999 he received the Othmer Gold Medal from the Chemical Heritage Foundation and Bower Award in Business Leadership from Franklin Institute.
Dr. Vagelos was Chairman of the Board of Trustees of the University of Pennsylvania from October 1994 to June 1999, having served as a trustee since 1988. He also served as Co-Chairman of the New Jersey Performing Arts Center from 1989–99, was President and CEO of the American School of Classical Studies at Athens from 1999–2001 and served in the National Research Council Committee on Science and Technology for Countering Terrorism in 2002.
He is currently Chairman of Regeneron Pharmaceuticals, Inc. and Theravance, Inc., two biotech companies. He is also Chairman of the Board of Visitors at Columbia University Medical Center where he also chairs the Capital Campaign. He serves on a number of public policy and advisory boards, including the Donald Danforth Plant Science Center and the Danforth Foundation.
Dr. Vagelos is married to the former Diana Touliatos. They live in New Jersey, and have four children and seven grandchildren.
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Dr. Vagelos was born on October 8, 1929, in Westfield New Jersey.
Chairman BOEHLERT. Thank you very much, Doctor.
Dr. Wulf.
STATEMENT OF DR. WILLIAM A. WULF, PRESIDENT, NATIONAL ACADEMY OF ENGINEERING
Dr. WULF. Good morning, Mr. Chairman.
I have to say I am particularly delighted to be here this morning with Norm and Roy. I would point out that Norm Augustine is a member of the National Academy of Engineering, and in fact, was its Chairman a few years ago.
Just echoing your comments before, I think the issue that we are talking about today is the most important issue facing our country. It may not be the most urgent, but I believe it is the most important.
I wasn't a member of Norm's committee, and so I can't hope to represent the content of ''Rising Above the Gathering Storm'' as well as Norm or Roy, so I am not going to try, but I would like to make three points.
First, as Norm suggested, the problem is, itself, a creeping crisis. In fact, it is not a problem; it is a set of problems. And those set of problems I view as rather like tiles in a mosaic. Each one of them viewed up close, perhaps, doesn't sound like a crisis and isn't, perhaps, likely to provoke action, but if you stand back and you look at the overall mosaic, a pattern emerges. It is a pattern of short-term thinking, a pattern of lack of long-term investment. It is a pattern for preserving the status quo rather than reaching for the next big goal. It is a pattern that presumes that we in the United States are entitled to a better quality of life than others and that all we have to do is to circle the wagons and defend that entitlement. It is a pattern that does not balance the dangers and opportunities in current circumstances.
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I don't have time to talk about all of the tiles in this mosaic, and I would largely be redundant with the report that is the subject of this hearing if I did, but they include the dramatic decline in industry-based basic research, the flat-to-declining federal support of research in the physical sciences and engineering, the increasingly short-term risk averse nature of the research that is supported, the discouraging effect on foreign students and scholars of our current visa policy and its impact on our ability to get the world's best and brightest to come to the United States and to contribute to our security and prosperity, the draconian proposals for handling of deemed exports in basic research, and their chilling impact on long-term basic research at universities, and finally, the rapid growth in the use of the category of sensitive but unclassified information and its impact on the free flow of scientific information.
My second point is that although the problems depicted in ''Rising Above the Gathering Storm'' may not have a Sputnik-like wake-up event, that does not mean they are unimportant. Quite the contrary. In my view, collectively, they are the most important issue currently facing the United States.
I am hardly alone in that view. There is an increasingly wide recognition of it, I believe. In my written testimony, there are references to some recent reports from a variety of sources that reflect this deep concern, from the National Academies, from the private sector, from government agencies, and from academia. Despite the differing perspectives of the authoring organizations, there is surprising consistency among this report.
As is said in the American Electronics Association report, and I quote, ''We are slipping. Yes, the United States still leads in nearly every way one can measure, but that does not change the fact that the foundation on which this lead was built is eroding. Our leadership in technology and innovation has benefited from an infrastructure created by 50 years of continual investment, education, and research. We are no longer maintaining that infrastructure.''
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In my view, the erosion alluded to by the AEA, if unchecked, will lead to a poorer quality of life for our grandchildren, and quite possibly to a world that is less secure and less free.
My third, and final, point is that it is all about innovation and the multifaceted environment that supports innovation. There is wide agreement in the reports cited in my written testimony that the U.S. ability to innovate has been the source of its prosperity, and hence that ensuring our ability to continue to innovate is central to our future prosperity and security. Each of these reports proposes specific policy options to do this. Many of them are similar, few are identical. I think that is because there is no simple formula for innovation. There is, instead, a multi-component environment that collectively encourages, or discourages, innovation. Just to mention a few of the components of this environment: there must be a vibrant research base; there must be an educated workforce; there must be a culture that permits and even encourages risk taking; there must be a social climate that attracts the best and brightest to practice engineering, whether from within the country or outside it; there must be ''patient capital'' available to the entrepreneur; the tax laws must reward investment; there must be adequate and appropriate protection for intellectual property; and there must be laws and regulations that protect the public but also encourage experimentation.
To prosper in the future, we need to attend to all of these components of the innovation environment.
In summary, by almost any objective measure, the United States is doing very well at the moment. But, the prosperity and security that we now enjoy is the result of decades of investment, research, and education. We now see a pattern, a mosaic, of disinvestment, of a retreat from bold research, and of a declining interest of American youth in education in science and engineering. We see a pattern suggesting a shift from creating the new to protecting the status quo. No single tile in this mosaic is going to ruin the American economy, which perhaps makes it all the more dangerous. There is a chance that we won't take action until the consequences become apparent in a decade or two, at which point it may be too late.
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Thank you for the opportunity to testify, Mr. Chairman.
[The prepared statement of Dr. Wulf follows:]
PREPARED STATEMENT OF WILLIAM A. WULF
Good afternoon, Mr. Chairman and Members of the Committee. My name is William (Bill) Wulf and, since 1996, I have been on leave from the University of Virginia to serve as President of the National Academy of Engineering (NAE).
Founded in 1964, the NAE provides engineering leadership in service to the Nation. It operates under the same congressional act of incorporation that established the National Academy of Sciences, signed in 1863 by President Lincoln. Under this charter the NAE is directed ''whenever called upon by any department or agency of the government, to investigate, examine, experiment, and report upon any subject of science or art [technology].'' The NAE's 1998 strategic plan, however, goes beyond this reactive, ''whenever called upon,'' role to one in which we are to ''Promote the technological health of the Nation. . ..'' It is much in the latter spirit that I am here today.
I am particularly delighted to be here in the company of Norm Augustine, former Chairman of the NAE, to testify on what I believe to be the most important (as opposed to urgent) issue facing our country. I was not a member of Norm's Committee, but I participated in its initial meeting and tracked its progress closely, so I first want to acknowledge and thank all of the stellar committee members for the enormous energy and creativity that went into producing the report. I hope that the Science Committee will appreciate that the Academies' committee's willingness to spend countless hours on this report was the result of their depth of concern over our nation's future.
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I cannot hope to represent the content of ''Rising Above the Gathering Storm'' as well or as fully as Norm Augustine or Roy Vagelos, so I won't try—but I would like to draw attention to three points.
First, unfortunately the problem is a ''creeping crisis.''
Unfortunately the problems we are concerned about don't have a Sputnik-like wake-up call.
You all know the storied procedure for boiling a frog. They say that if you drop a frog in boiling water, it will jump out. But, if you put a frog in cool water and heat it very slowly, the frog won't jump out, and you'll get a boiled frog. The theory is that each small, incremental rise in temperature is not enough of a crisis to make the frog react. I don't know if this story is true, but it fits my purpose—the slowly warming water is a creeping crisis for the frog!
Our creeping crisis is not a slow, one-dimensional change like the frog's water temperature. We are facing a number of problems—each one like a tile in a mosaic. No one of these problems by itself creates the sort of crisis that provokes action. But if you stand back and look at the collection of problems, a disturbing picture emerges—a pattern of short-term thinking and a lack of long-term investment. It's a pattern for preserving the status quo rather than reaching for the next big goal. It's a pattern that presumes that we in the United States are entitled to a better quality of life than others and that all we have to do is circle our wagons to defend that entitlement. It's a pattern that does not balance the dangers and opportunities in current circumstances.
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I do not have the time to discuss all the tiles in this mosaic, and I would be largely redundant with the report that is the subject of this hearing if I did, but they include:
— The dramatic decline in industry-based basic research.
— The flat-to-declining federal support of research in the physical sciences and engineering.
— The increasingly short-term, risk-averse nature of the research that is supported.
— The discouraging effect on foreign students and scholars of our current visa policies, and its impact on our ability to get the world's best and brightest to come to the U.S. and contribute to our security and prosperity.
— The draconian proposals for handling of ''deemed exports'' in basic research, and their chilling impact on long-term basic research at universities.
— The rapid growth in the use of the category of ''sensitive but unclassified'' information, and its impact on the free flow of scientific information.
Second, nonetheless the problem is both important and widely recognized.
Although the problems depicted in ''Rising Above the Gathering Storm'' may not have a Sputnik-like wake-up event, that does not mean they are unimportant. Quite the contrary; in my view collectively they are the most important issue currently facing the United States. I am hardly alone in that view; there is an increasingly wide recognition of it. Below are references to recent reports from a variety of sources that reflect this deep concern:
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— From the National Academies(see footnote 27),(see footnote 28)
— From the private sector(see footnote 29),(see footnote 30),(see footnote 31),(see footnote 32),(see footnote 33),(see footnote 34)
— From government agencies,(see footnote 35),(see footnote 36),(see footnote 37),(see footnote 38) and
— From academia(see footnote 39),(see footnote 40)
Despite the differing perspectives of the authoring organizations, there is surprising consistency among these reports. They all identify problems like the tiles in my mosaic as representing serious long-term problems for the country—problems that require action now! As is said in the American Electronics Association (AeA) report3:
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''We are slipping. Yes, the United States still leads in nearly every way one can measure, but that does not change the fact that the foundation on which this lead was built is eroding. Our leadership in technology and innovation has benefited from an infrastructure created by 50 years of continual investment, education and research. We are no longer maintaining this infrastructure.''
In my view, the erosion alluded to by the AeA, if unchecked, will lead to a poorer quality of life for our grandchildren—and quite possibly to a world that is less secure and less free.
Third and finally, it's all about innovation and the multi-faceted environment that supports innovation.
There is wide agreement in the reports cited above that the U.S. ability to innovate has been the source of its prosperity—and hence that ensuring our ability to continue to innovate is central to our future prosperity and security. Each of these reports proposes specific policy options to do this—many of them are similar, but few are identical. I think that is because, in my view, there is no simple formula for innovation. There is, instead, a multi-component ''environment'' that collectively encourages, or discourages, innovation. Just to mention a few of the components of this environment:
There must be a vibrant research base.
There must be an educated workforce.
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There must be a culture that permits and even encourages risk-taking.
There must be a social climate that attracts the best and brightest to practice engineering—whether from within the country or outside it.
There must be ''patient capital'' available to the entrepreneur.
The tax laws must reward investment.
There must be adequate and appropriate protection for intellectual property.
There must be laws and regulations that protect the public while also encouraging experimentation.
To prosper in the future we must attend to all the components of this innovation environment—and in particular we need to be sure that they are attuned to the current and future technologies rather than those of the past (when many of the components of the environment were first created).
In Summary
By almost any objective measure, the U.S. is doing very well at this moment. But, the prosperity and security that we now enjoy is the result of decades of investment, research and education. We now see a pattern, a ''mosaic,'' of disinvestment, of a retreat from bold research, and of a declining interest of American youth in education in science and engineering. We see a pattern suggesting a shift from creating the new to protecting the status quo. No single tile in this mosaic is going to ruin the American economy—which perhaps makes it all the more dangerous. There is the chance that we won't take action until the consequences become apparent in a decade or two, at which point it will be too late.
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Thank you for the opportunity to testify, Mr. Chairman. I would be pleased to answer any questions the Committee might have.
BIOGRAPHY FOR WILLIAM A. WULF
Personal:
Wm. A. Wulf, President, National Academy of Engineering, 2101 Constitution Ave., NW, Washington, DC; e-mail: wwulf@nae.edu
University Professor and AT&T Professor of Engineering and Applied Science, Department of Computer Science, Thornton Hall, University of Virginia
Education:
B.S., Engineering Physics, University of Illinois, 1961
M.S., Electrical Engineering, University of Illinois, 1963
Ph.D., Computer Science, University of Virginia, 1968
Positions:
President, National Academy of Engineering, 1996 to present.
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AT&T Prof. of Engr., University of Virginia, 1988 to present.
Assistant Director, National Science Foundation, 1988 to 1990.
Chairman & CEO, Tartan Laboratories Inc., 1981 to 1987.
Professor, Carnegie-Mellon University, 1975 to 1981.
Associate Professor, Carnegie-Mellon University, 1973 to 1975.
Assistant Professor, Carnegie-Mellon University, 1968 to 1973.
Instructor, University of Virginia, 1963 to 1968.
Descriptive Biography:
Dr. Wulf was elected President of the National Academy of Engineering (NAE) in April 1997; he had previously served as Interim President beginning in July 1996. Together with the National Academy of Sciences, the NAE operates under a congressional charter and presidential executive orders that call on it to provide advice to the government on issues of science and engineering.
Dr. Wulf is on leave from the University of Virginia, where he is a University Professor and the AT&T Professor of Engineering and Applied Science. Among his activities at the University were a complete revision of the undergraduate Computer Science curriculum, research on computer architecture and computer security, and an effort to assist humanities scholars exploit information technology.
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In 1988–90 Dr. Wulf was on leave from the University to be Assistant Director of the National Science Foundation (NSF) where he headed the Directorate for Computer and Information Science and Engineering (CISE). CISE is responsible for computer science and engineering research as well as for operating the National Supercomputer Centers and NSFNET. While at NSF, Dr. Wulf was deeply involved in the development of the High Performance Computing and Communication Initiative and in the formative discussions of the National Information Infrastructure.
Prior to joining Virginia, Dr. Wulf founded Tartan Laboratories and served as its Chairman and Chief Executive Officer. Before returning to academe, Dr. Wulf grew the company to about a hundred employees. Tartan developed and marketed optimizing compilers, notably for Ada. Tartan was sold to Texas Instruments in 1995.
The technical basis for Tartan was research by Dr. Wulf while he was a Professor of Computer Science at Carnegie-Mellon University, where he was Acting Head of the Department from 1978–1979. At Carnegie-Mellon Dr. Wulf's research spanned programming systems and computer architecture; specific research activities included: the design and implementation of a systems-implementation language (Bliss), architectural design of the DEC PDP–11, the design and construction of a 16 processor multiprocessor and its operating system, a new approach to computer security, and development of a technology for the construction of high quality optimizing compilers. Dr. Wulf also actively participated in the development of Ada, the common DOD programming language for embedded computer applications.
While at Carnegie-Mellon and Tartan, Dr. Wulf was active in the ''high tech'' community in Pittsburgh. He helped found the Pittsburgh High Technology Council and served as Vice President and Director from its creation. He also helped found the CEO Network, the CEO Venture Fund, and served as an advisor to the Western Pennsylvania Advanced Technology Center. In 1983 he was awarded the Enterprise ''Man of the Year'' Award for these and other activities.
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Dr. Wulf is a member of the National Academy of Engineering, a Fellow of the American Academy of Arts and Sciences, a Corresponding Member of the Academia Espanola De Ingeniera, a Member of the Academy Bibliotheca Alexandrina (Library of Alexandria), and a Foreign Member of the Russian Academy of Sciences. He is also a Fellow of five professional societies: the ACM, the IEEE, the AAAS, IEC, and AWIS. He is the author of over 100 papers and technical reports, has written three books, holds two U.S. Patents, and has supervised over 25 Ph.D.s in Computer Science.
Discussion
Chairman BOEHLERT. Thank you for leaving us with some degree of comfort by your closing statement, ''By almost any objective, the United States is doing very well at this moment.'' Guess what? That is not good enough. That might make us feel better, we may be doing very well, but our competition is doing a lot better a lot quicker. So this is serious business.
And Dr. Vagelos, you know, you emphasized something that is so very important. Right back to the basics, K–12 science and math education. You know, I am sort of tired of appearing before business groups, as I do frequently, and to get some guy raising his hand, I will call on him, and you know, he starts moaning and groaning about K–12 education and the high schools are graduating students that we can't hire because they can't function, and we have to start training them. And I listen to them moan and groan, and I acknowledge that it is a serious problem we have got to address, and then I will say to him and all of the other representatives of business in the audience, and I did this a couple of times at a Chamber of Commerce meeting and a National Association of Manufacturers, ''All right, you hot shots in business. Let me ask you a question.'' All right. Well, that is sort of unusual. I say, ''How many of your employees, Mr. President of this company, Mr. Manager of that company, how many of your employees serve on a local school board?'' You know. The answer, usually the response is, ''Gee, we don't know.'' ''Go back and check, will you, please? And then, in a couple weeks, let me know.'' And I never hear back. You know why? They check and they don't run. Well, gee, we are in business to make a profit, and it is too important. And why not have them run for school boards?
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And then the other thing is, and I am giving you some of my pet theories, but I want to work together, because I want to follow through on this and go forward on this. How many letters do you think the average Member of Congress gets from his or her constituents saying, ''You know, we have got to invest more in basic research, as a government,'' or, ''We should do better by the National Science Foundation,'' which is a primary funder of all university-based research? Do you know how many letters? Probably the average congressperson gets zero. And I doubt if there is a sitting Member of either the House or the Senate who campaigned on doing better by the science enterprise. You know, we have got to reform Social Security. We are going to get out of Iraq. We are going to do all of these things, but they don't talk about these things. And I say, once again, Mr. Augustine, I will say to people like the Chairman of the Board of Lockheed Martin, your former position, ''Why don't you look at your Board of Directors?'' It reads like a Who's Who in America. All well compensated, all very heavily influential in the political process, some Republican, some Democrat. They are all over the lot. I would suggest that if Board Member X from central Oklahoma or Board Member Y from northern Kansas called up his or her representative and said, ''Look. Here is something that Congress is ignoring, and this is very important. You have got to do better by K–12 science and math education, and I don't see how the hell you propose to do so if you are cutting funding for the Education Directorate at the National Science Foundation, and I want you to do something about that.'' People would begin to take notice.
So I don't think this is too daunting a task, and I want to have some follow-through with you guys after this. You know, there are 435. You get 435 master cards, and we can get a file on each Member of Congress. And then we can just sort of work them and figure out how we can get them to focus on this subject area.
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So with that, a sort of preamble of my speech, let me ask you this. Help us prioritize your recommendations. And help us explain how you decided on a 10 percent increase. Can we go with those two?
Mr. Augustine.
Mr. AUGUSTINE. Thank you.
I will be glad to begin.
The question of prioritizing, we feel, quite strongly, that one has to view our recommendations as a package. We did single out as the highest priority K–12, because that seemed to underpin everything we are doing. If we don't solve that problem, we have lost.
Beyond that, the reason we view it as a package is, for example, to create more scientists and engineers but to not increase the research budget for them to work on just creates people without jobs. And so this is a closely-knit package that we have proposed. We gathered 60 experts in various fields who came to Washington for two days with us, and they made recommendations as to what we should recommend to you. They made over 150 recommendations, which we boiled down and refined. So what you are seeing is our prioritized list of the very top ones. There were others we didn't consider.
Your question of why 10 percent, and you are referring to the increase in basic research in the specific fields. Our motivation was to, rather quickly, increase the budget in those fields, which have been basically flat in real dollars for 20 years. That contrasts sharply with the progress in the biological sciences. So we wanted to do it as quickly as we could, but we also want to be sure the money is spent efficiently. And it is our view that about 10 percent per year, this is obviously judgmental, is about what you can increase and spend very efficiently. It might be 15 percent. It might be eight percent, but it would be in that range.
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The question of why we put the seven-year limit on it; it turns out, of course, that 10 percent per year for seven years roughly doubles the existing $8 billion budget in this area. That is encouraging to us, and seems rational in the sense that the Congress, with your leadership, recently proposed that the NIH budget be doubled. And the Administration supported that. That was through the authorization process, unfortunately not through the appropriations process.
So that would be my answer to your question. I am sorry. Did I say NIH? I meant NSF.
Chairman BOEHLERT. Yeah. Yeah. It is NSF. Well, you know, we are following the NIH model, and everybody got nervous, because we doubled the NIH budget over five years, and I really think the basic reason is because it does so much in research in things like Alzheimer's and cancer and everything else, and Members couldn't vote fast enough, because they had looked out and said there, but for the grace of God, go I and vote aye. And we ought to do the same thing with the physical sciences and following that model. And a lot of people with biological sciences interested in NIH were concerned that I was trying to cut their funding. I don't want to cut their funding one dime. It is important. But I want to elevate NSF.
But the basic problem is, and this is our problem on Capitol Hill. We passed the legislation putting the NSF on a path to double its budget over five years. We had a big ceremony down at the White House. The president signed it, we patted each other on the back. Boy, we felt good. But that didn't appropriate one dime. And while we put the agency on a path with authorization from this committee to double a budget over five years, you know, the percentage increase is a little better than flat, but not a heck of a lot better. You know what the total budget is? I bet you if you asked the board members of Merck or Lockheed Martin or anybody else, what do you think NSF gets. You know, they sponsor, basically, all university-based research in America. They wouldn't know, $5 billion a year. You know what, they spend more than that in a coffee break over in the Pentagon. That is another place you are associated with. And I am for national defense, but we have got to get some priorities in order.
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My time is expired.
Mr. Gordon.
Mr. GORDON. As I said earlier, I admire my Chairman's passion for this issue. I am also the beneficiary of, hopefully, some extra time that could be allocated to me over the next few weeks because of all of his passion here. And I do admire it.
As the Chairman said, the National Science Foundation, we passed an authorization to double it. It was signed by the President, yet the President never has made those requests. I think one of the benefits of your proposal is that you went beyond flowery rhetoric and gave us some specific recommendations.
You also have specific recommendations for an action plan. You gave us an action plan on what to do. What about an action plan on how to get it implemented, how to get the President to make these proposals, how to get Congress to go forward? Or do you feel like your job is over? Have you given us the sheet and now you all are going home? Mr. Augustine, is there another step?
Mr. AUGUSTINE. No, we believe that our job has just begun, and we do have a plan. I should say that we are in a difficult position, because the National Academies don't lobby, by policy. On the other hand, the National Academies do provide information, disseminate information, share views, and we intend to do a lot of that. And we would hope that we will have the opportunity to do that broadly with the Business Roundtable, with labor unions, with other organizations that are interested in this topic, with teachers. And indeed, we do plan to pursue this, and our members have——
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Mr. GORDON. Good.
Mr. AUGUSTINE.—in fact, been——
Mr. GORDON. Well, I would hope that you would put together, around my office, I, you know, sort of have a, I don't know whether it is a saying, but if it is not written down, it is not a plan. And we would hope that, not as extensively as this, but that you might put together an action plan for implementing, whether informally or formally, meet with us and tell us how we can help. And we would all like to work together on that.
The second question that I have, back when the original President Bush was President, he and Congress got together and passed something called PAYGO. We had a big deficit, and we wanted to do something about it, and we all know that the first thing you do when you are in a hole, you stop digging. And that is what PAYGO tried to do. Every time there was legislation that came to the Floor, it had to have a fiscal note to say what it cost. And you had to have either additional revenue or you had to have offsets for that. That was passed two more times under, again, under two Presidents and several Congresses. Unfortunately, it expired in 2002, and we can't get the current Congress to renew that.
But going back to that same type of idea, it is going to be hard to get additional funds. Nobody likes to talk about taxes, and maybe we will just say fee or something here. Do you have any suggestions as to a fee that might be appropriate on, maybe, the business sector somewhere that would be dedicated for this $10 billion? You know, and that it would be a, you know, somewhat of a tit for tat if we have, you know, one-eighth of a percent additional something here that would go to these various teaching programs? Do you have any recommendations on that?
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Mr. AUGUSTINE. I am afraid I will have to disappoint you here, because our committee's charter really didn't include looking for offsets of——
Mr. GORDON. Well, I am just asking you as informed individuals and——
Mr. AUGUSTINE. As an individual, and not speaking for the committee, you know, kind of the way I look at it is that we have gross domestic product of $12 trillion. The Federal Government spends, as you know, $2 trillion a year. Last year, I am told that our citizens lost $7 billion betting on the Super Bowl. The cost of litigation to corporations in America is about 10 to 20 times what we have asked for here. And so it is our belief that this kind of money can be found. Now I have my own personal list, as I am sure everybody else does, of, you know, where I would start looking for money, but it is not particularly relevant, because I have no expertise in the subject.
Mr. GORDON. Well, we are not voting on a budget today, because there wasn't the ability, the will, or whatever to go from a $35 billion reduction to $50 billion. So that was $15 billion that apparently couldn't be found. And it was a pretty hard effort. Now maybe they will find it next week, I don't know. So yes, there is probably, you know, there is enough money sloshing around. But if that is the answer, then we are not going to get this done.
Mr. AUGUSTINE. Well, you know, I, as an individual, feel, I can't speak for other CEOs. I feel so strongly that it is in the best interest of our companies that if it requires an additional tax of some kind to fix some of these problems, and it is not a huge amount of money in the grand scheme of things, I personally would support that kind of thing. But again, I can't speak for the——
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Mr. GORDON. Well, I think that would be another, again, the follow-up, both in the action plan and implementing this, and if the business community thinks it is important, it would give a lot of credibility and a lot of cover for folks. And I think that we want it as small as possible. It needs to be dedicated so that you know where it is going, and this old PAYGO kind of process. So I would hope that, again, with all of those big thinkers as you are around doing big thinking, that that might be added to the agenda.
And again, thank you all for your, well, let me add, does anyone else want to comment on any of those subjects?
Dr. VAGELOS. Mr. Gordon, I haven't really thought on the source, but there are sources, even within the current research budget of the government that I think could be reallocated. I would not like to discuss them at this time, because I—they just haven't been generalized, but I certainly have ideas. And I certainly would support, also, an increase in taxes that would cover these subjects.
But let me say that although the statements that I have heard today that corporations are not doing enough is a general statement that doesn't cover all corporations. And let me give you an example. At Merck, 15 years ago, we started what we called the Merck Institute for Science Education and developed a program for K–6 students in the region around our locations in the United States, of which there are several. And we have a person who heads that, Carlo Parravano, who is previously a professor of physical chemistry at a university and with a passion for teaching young people. And the idea is to train teachers in the K–6 level to understand some level of hands-on science in order to excite and demystify science for young children, because it demystifies for those teachers who are exposed in summer institutes, and then they are followed by master teacher visitations during the course of a year to get the children excited about science. Merck started this program about 15 years ago, and it has continued. It is so good that the NSF actually is replicating some of it. And Merck continues to invest in that regard.
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So some companies, at least, are doing that. And I know of other companies doing similar programs. So I would like not to leave with a negative thought of all corporations not being interested in K–12, because they are, indeed. And certainly in higher education, many research corporations invest in universities and in high schools to bring up the number of people who are going into technology because they are looking at their future workforce, frankly. It really benefits them to have better people coming through the pipelines.
Mr. GORDON. Yeah, I don't think, hopefully no one overtly or insinuated that everyone is in that boat. What we want is to find incentives to increase that leadership.
But thank you very much.
Chairman BOEHLERT. Thank you.
Mr. GORDON. I would also, in fact, I would like to request if you do have any kind of material on the Merck program——
Dr. VAGELOS. Yes.
Mr. GORDON.I would like to see that so we might be able to see how we could replicate it, also.
Chairman BOEHLERT. Well, just let me stress that what Merck has done, what Lockheed is doing, Westinghouse scholarships, corporate America is magnificent in its generosity in so many instances, so I don't want anyone to go away from this with the impression that this committee, particularly, does not acknowledge the great contributions corporate America is making. But they need to do a better job, and so do we. And you know, before we start asking you to do a better job, we have got to look ourselves in the mirror and say are we doing a better job. And I hope it—yes, Doctor. Did you want to make an observation?
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Dr. VAGELOS. I just want to say something about the long-term investment in research, because it is so crucial to what we are talking about. First of all, we have to have people who can do it, so that is K–12 and higher education. But are corporations really making a difference? And have we impacted health? Yeah, we have spent, the Nation has spent, you know, billions in the last 25 years. Has it been worth it? Well, I will give, as an example, what happened in 1981. There was the identification of a new thing called AIDS. It turned out a couple years later, the virus was identified through work at NIH and the Pasteur Institute, but then the universities and industry both focused on how do you handle this virus, a virus which caused the disease which was 100 percent lethal. And within, you know, a decade, you have the development of several different mechanisms of antiretroviral drugs that, in combination, converted a 100-percent lethal disease to a disease, which is a chronic infection where people leave hospitals, go back to work, and live normal lives. Now that is the interaction between basic research investing by government and research investment by industry.
There are other things that are coming today. We heard in the paper today an advance in breast cancer outcomes using Herceptin, a drug that has been around for a while, but it is a monochromal antibody. Here is a technology that has been essentially developed in the United States over the last 25 years and is having an impact now. There is a vaccine being developed both by Merck and by GSK that will prevent cervical cancer. This is against human papilloma virus. This has come from years of basic research now converted to—do you know how long it takes to make a vaccine?
Chairman BOEHLERT. Oh, I know that.
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Dr. VAGELOS. And do you know the panic now over influenza, avian flu?
Chairman BOEHLERT. Well, that gets into a different subject. Let us get to Ms. Biggert, because she will get us back on course here, because this is such an enthusiastic group that we all could talk forever, but I hope it should not go unnoticed that we have a higher percentage of both sides of the aisle participating in this hearing than I will bet you any other hearing on Capitol Hill, which is a testament to the importance that we view the subject and to the distinguished panel we have.
Ms. Biggert.
Ms. BIGGERT. Thank you, Mr. Chairman.
First of all, I just wanted to mention that I did serve as President of my local high school school board, and I appreciate all that you are doing. The problem that we always had was, first of all, to find the teachers that were the best and the brightest for what we wanted in our school. And then the second was to keep up with technology and the equipment that changed so to have available for the students.
But I really wanted to talk about or ask questions to focus attention on energy and your proposal for the creation of a DARPA-like entity at the Department of Energy.
It has been my experience representing a DOE National Lab, and serving as the Chairman of the Subcommittee on Energy here in this committee, that the bigger problem is technology transfer, getting new technologies or the products of government-funded research from the lab to the market. And I know that so many times things, for example, right after 9/11, we found that the labs really had done the research, had the products that then could go, for example, to the subway to identify, you know, foreign chemicals in there and things like that that were there, but nobody had ever really processed that or gone further.
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So my first question is what specific problem was the committee trying to address through this recommendation, recommendation B5?
Mr. AUGUSTINE. There you go. Your question is a very good one and touches on a number of points we have debated at length. Really, the problem we saw, maybe I should say, in the way of background, the company I had the privilege of serving has operated for the DOE a number of National Labs, and so we had some experience with the challenges. And the notion with ARPA–E was to do for the Department of Energy what DARPA has done for the Department of Defense, specifically to take high-risk, very high-payoff transformational research, support that research, and then to transfer it into industry, and to where it could produce products. There does seem to be a gap between the DOE's ability to produce great new products, great new ideas, just as you have cited, and to make something happen. And our hope was that this might provide that transformational mechanism.
The reason we think it could well work is that ARPA–E, the Advanced Research Projects Agency–Energy that we have proposed, would not do research itself. It would support research that was done in universities and done in industry and possibly in the labs of National Labs themselves. It would be competitively awarded, and so there would be a built-in involvement of industry and of universities that you don't have in the labs themselves. And part of the reason we don't have it in the labs is the well-meaning conflict of interest rules we have that makes it hard for companies to access some of this information.
Ms. BIGGERT. I understand that there were a couple, one or more members, that did not agree with this recommendation, and——
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Mr. AUGUSTINE. Yes, of all of the 20 recommendations we made, one member disagreed with one recommendation, and it was this one. And this particular individual felt, and I hope I can do justice to his views, that we already are spending a great deal of money on energy research in the government and that the industrial firms in the field are also devoting a great deal of money to research. And this individual believed that there was no more money needed at this point and also that the government would be in a position of picking winners and losers in terms of research and companies, and that wouldn't be healthy. Now I personally don't share that view, but I think I have done justice to his position.
Ms. BIGGERT. Well, it sounds like, then, that this really is a way to move from the lab to market. Is that the major focus of it, or just the basic research itself?
Mr. AUGUSTINE. Well, I think it is two things. The first is what you said. It is a way to build a bridge to getting ideas and research out and applied. The second is to be able to spend more money on transformational, breakthrough, high-risk, long-term research that companies just won't perform and that the NSF and the NIH and Defense Department are all doing much less of because of their risk aversion.
Ms. BIGGERT. So much, particularly in the labs, it seems like, you know, the basic research in physical sciences, so many times, what might start out to be a project to work on one item will be able to discover something else, and it will probably, you know, be much more of the thing that is going to change the world or whatever. Will this destroy that at all by having to compete for these grants on specific types of research?
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Mr. AUGUSTINE. Not at all. And your point is such a good one. And that is one reason, of course, why industry is reluctant to invest in basic research, because what you come up with may help your competitor more than it helps you, and whereas the ARPA-E idea would promote that.
In addition, we had another recommendation that you are familiar with, I am sure, that the government labs be provided latitude to spend eight percent of their budget at the discretion of the people in the lab that know better than the central managers where those other opportunities are popping up.
Ms. BIGGERT. I think some people have tried to cut that back, which is disturbing, because that is a very——
Chairman BOEHLERT. The gentlelady's time has expired. Thank you very much.
Ms. BIGGERT. Thank you.
Chairman BOEHLERT. Mr. Miller, the Floor is yours for 300 seconds.
Mr. MILLER. Thank you, Mr. Chairman.
Mr. Chairman, I rarely pass the chance to ask questions to amplify some point, but this panel has made all of the points that I think need to be made.
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Mr. Chairman, I will disagree with you on one point. You said you thought no Member of Congress campaigns on the need to fund basic research to provide for science education and to try to move ideas, the product research, from the laboratory to the market. Mr. Chairman, I do. I represent a textile District. I represent a District that has lost a lot of jobs, and I voted against CAFTA, but I tell the folks who ask me all of the time not how are we bringing the jobs back, but where are the new jobs coming from, that our future can not be having low-skilled jobs in labor-intensive industries. It has to be the most innovative economy in the world, and that means research, funding research. It means science education. It means a commitment to community colleges where people learn new job skills throughout their lifetimes and will have to go back again and again. And it means efforts to move to provide the funding and the assistance to take research out of the laboratory to the marketplace.
So Mr. Chairman, I am delighted to be here, and my enthusiasm for this topic, I think, may be the equal of yours.
Chairman BOEHLERT. Dr. Ehlers.
Mr. EHLERS. Thank you, Mr. Chairman.
And I will join Mr. Miller in the ranks of those who campaign for science. In fact, my very first election, I scored a coup on a live TV debate when all of the attorneys running against me were saying that they would come here and straighten out the laws, the business people were coming here saying they would come here to balance the budget. And I pointed out that if we elected an attorney, we would add one to the 175 already here, and I didn't think that would make much difference. If we elected a businessperson, we would add one to the 137 already here, and I didn't think that would make much difference. But if they elected me, they would double the number of scientists in the Congress, and that would make a difference, and it seemed to resonate with the people.
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I also am in somewhat the same camp as Mr. Miller. When I read your executive summary, I haven't had time to read the whole report yet, but I just checked them off, and virtually everything, with one small exception, is exactly what I have been advocating for 12 years here. And I want to thank you very, very much for an excellent report, not just because you agree with me, but because you make the case well, and it is what this country needs. And now it is up to us, as a Congress, to implement that.
So I congratulate you. I am afraid I have to go vote somewhere else, but let me just try to clarify one point.
We talked about ARPA–E. And by the way, I think it would be better to call it ''DARPE,'' and maybe you could have a stuffed doll named ''DARPE,'' you know, as a symbol. Come up with something catchy. But DARPA has been a powerful force in basic research in this country. All right.
Chairman BOEHLERT. Only a physicist would have his cell phone with Beethoven's Fifth.
Mr. EHLERS. No, it is only a fourth. I don't drink.
But DARPA has been extremely successful, but it has been very much a basic research agency. And yet, in the discussion I just heard, it sounded like you are talking about this as much a tech transfer as a basic research entity. And I think the Department of Energy badly needs this sort of thing. I am not questioning that, but it is not clear to me precisely what you are trying to accomplish here. If the goal is to have the Department of Energy address, in a more direct way, the national problems that we face, I would heartily welcome that. We have huge energy problems here, and I would like to see that happen. But tech transfer, we have CRADAs. I don't know if they are still around, but they were very successful. And we could address technology transfer through an MEP-like type of program or agriculture extension program, which I would also favor.
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But could you just give me a little clarification, a little more clarification I would say? What are you really trying to achieve with the ARPA–E proposal?
Mr. AUGUSTINE. I am glad you asked to give us an opportunity to clarify, and I will call on my colleagues, with your permission, to add, and so I will be brief.
The intent with the ARPA–E is, indeed, to focus on basic research of a specific kind, namely high-risk, high-payoff, long-term, generic applications. That is the focus. I think where I misled you is I was addressing the question of how, once you have done that, do you get that applied, get it out where it becomes useful. And my answer to that was that ARPA–E would not do research of its own, but rather, with funds, work by others, including universities, industry, and the National Labs competitively awarded. And that is the way I was suggesting that the knowledge could be transferred.
Mr. EHLERS. Yeah. I guess my response to that, and I heard that answer, but that, in itself, won't transfer it unless you have industrial partners for each grant, or something of that sort. But NSF gives direct grants to universities, and that doesn't guarantee the results get transferred. I think you really have to build in a specific mechanism to do it, and that is what I was trying to clarify.
Dr. VAGELOS. May I add something to that, Norm, and that is there is the feeling on the committee, as the majority of the committee, that there are ideas and basic observations that are made at universities principally which are not mature enough to be picked up by either industry or the VCs. And these just will not be funded, because they are sort of falling in between the cracks. People are not yet recognizing that these can be applied, and therefore, there would be a committee that includes industry people, who are identifying these ideas that are otherwise not going to be funded, but the best of these to be brought along so that they would gain the visibility so that they would be either picked up by industry or capitalized in some other way.
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Mr. EHLERS. So you basically want to bridge the valley of death?
Dr. VAGELOS. Exactly.
Mr. EHLERS. Yeah. Well, thank you very, very much for an excellent report. I really appreciate what you have done. Thank you.
Mr. HALL. [Presiding] The Chair recognizes Mr. Green, the gentleman from Texas.
Mr. GREEN. Thank you, Mr. Chairman. And I thank the Ranking Member as well.
Mr. Augustine, your comments were quite shocking, and I appreciate the way you presented them. They were very much an awakening, to a certain extent. And I appreciate each member of the panel for what you have presented.
I would like to start, if I may, with Dr. Wulf.
Dr. Wulf, sir, your colleagues had indicated that they would support a tax increase, if you will. Do you have a similar view?
Dr. WULF. Well, of course, I am not a captain of industry like the two gentlemen sitting to my right, but I have to say that more than one CEO has said to me that they can't invest in research within their own company easily, because that detracts from the bottom line, and it is an optional cost. And so the market, Wall Street, will penalize them for doing that. And I think Norm has a marvelous story about that. But if they were taxed the same amount and that money was guaranteed to go into research, they would be happy.
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Mr. GREEN. Thank you.
A quick comment. It appears that with reference to fixing, as it was articulated, K–12, it appears that many of our young people, and even their parents, don't see education as the way out. And I think that is very unfortunate, but the Powerball, lottery, athletics, rock stars, they seem to dominate the persona of the successful person. And unfortunately, there is this belief among too many young people that that is the way out for them.
So my first question is, is there a one-size-fits-all remedy for fixing K–12, because you have urban versus rural, you have inner city versus outer city, you have some cultural concerns that, in my opinion, will have to be addressed? How do we make sure that when we fix K–12, we fix it for all of the children, regardless of whether they are rural or they are urban, whether they are inner city or outer city? It seems that there is a little bit more to concern ourselves with, if we truly want to leave no child behind.
And I would like for each of you, if you would, to address the aspect of leaving no child behind. And I will start with you, Mr. Augustine, if you would, please.
Mr. AUGUSTINE. Well, thank you for that question. And I am very glad you asked it.
Certainly, there has been a change that today the students don't look at education or being a physicist, by and large, as the way out. In my own case, I was the first in my family to go to college. I was the second to go to high school. But my parents made very clear to me that the way out, the way ahead, was education. And that was just fundamental. We have lost that, to a great degree.
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The way I think that we address this question of the different backgrounds, different interests of students, is through the teachers, because the one thing that all of those students have in common is the teachers. And if we give them good teachers that show them that know their subject, that know what they are talking about, that inspire them, demand excellence, I don't think it matters where you come from, that is going to make a difference in your life, I think. So that is why we focused on teachers.
Roy?
Dr. VAGELOS. Yeah, well, you took the words right out of my mouth on focusing on teachers and getting them to understand the subjects that they teach.
Mr. Green, you come from the State of Texas, and you may have caught, I don't know whether you have caught or were in the room when I mentioned that the advanced placement incentive program, which originated in Dallas, really introduces the concept that you can train teachers who are already teaching to be able to teach advanced placement. You can incentivize students to take that by offering them the courses and a $100 bonus, if they pass. And taking a school district, which is largely poor and has many immigrants and under-served minorities, you can increase the number of students taking advanced placement courses and passing them by tenfold with such a program, it is those students, they won't be stars, or they may not be all of the athletes, but you can increase, including minority students, the number of students taking these advanced programs and the advanced programs are in math and science. So that is one thing that can affect every city. And that is one of the programs we are recommending.
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Dr. WULF. Just to answer your question very directly, no, I do not believe that one size fits all. I think all of my adult life we have been collectively, as a society, talking about the problems we have with K–12 education. And we have made, in my view, very, very little progress. We have this seminal event of ''A Nation at Risk'' being published and getting a lot of attention focused on the problem, and yet, I think if you objectively look at where we are relative to, what, 15 years ago, when that report was published, I would find it very hard to argue that we have made very much progress. And I think a lot of the reason is that people have advanced one silver bullet after the next and that is not just going to work. We have to attack it on a very broad front. I happen to concur that focusing on teachers is a very, very, very important piece of it, but that is not all of it, either.
Chairman BOEHLERT. Thank you very much.
The gentleman's time has expired.
Let me point out that we created a scholarship program, an incentive program, to get the best and the brightest in the undergraduate years majoring in science, math, and engineering, and agreed to give them a stipend each year and in exchange for an agreement to teach for two years, and we had that on the books authorized from this committee for several years before we got one thin dime. And now we are spending a grand total, I think, of about $5 million a year on it. That shows you where our priorities are, unfortunately.
Mr. Hall.
Mr. HALL. I thank you. And I thank this panel here. And I thank the very distinguished Mr. Chairman, you have mentioned the attendance here. It is no wonder when you read the array of men and women who are giving their time. And Norm Augustine is no stranger here. The Augustine report was a bible for us for about 10 years in the '80s. Thank you for that and others of you.
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And I think it is very, very important that we seek ability to compete in this century with jobs and especially for older people. You know, Norm, I am the oldest guy in Congress, or in the House, and when that guy from West Virginia finally takes everybody's advice and leaves, well, I will be the oldest in Congress. And jobs are important. Other than my opponents, my wife has even suggested that, you know, I should quit, but at 82, I checked with Wal-Mart, and they weren't hiring any greeters. I didn't have a cap and a pistol. I couldn't be a crossing guard for anybody, but what a wonderful thing it is for you to give your valuable time, and your time to prepare to get here, to give us your time here, and your time staying here.
You know, with China calling us out on the world energy allocation and their end of the space program now, we have got so many, so many reasons to listen to this group here.
But let me ask you this, the 60 subject matter experts, are they of the same caliber? And how do you all work together? And when do the 20 and the 60 ever get together?
Dr. VAGELOS. Well, sure. These were experts that were recommended largely by the committee. The committee was invited by the President of the National Academy of Sciences. Twenty-one people were called, as I understand it. Twenty people responded, which is an incredible response rate.
Mr. HALL. Right.
Dr. VAGELOS. Now they were asked to suggest their priorities individually and other experts in the United States who would be able to speak to these subjects, and they also were asked to prioritize their recommendations. And then there was one major long weekend around-the-clock meeting, and then numerous conference calls and trading of tons of information through the Internet. That is the way we ran the thing.
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Mr. HALL. Peter O'Donnell is a special friend of mine, and——
Dr. VAGELOS. He was right in the middle of it.
Mr. HALL.—a great and giving person in our part of the country. And because I was late getting here, I have been on other committees, I don't know what questions have been asked, but if I have any questions, I will submit them to you later, but I am sure that the Chairman and Ranking Member have asked, probably, the proper questions, and I can refer to the record for that.
And I thank you for your time. Very much I thank you for giving your ability to your country.
I yield back.
Chairman BOEHLERT. Thank you very much.
Mr. Honda.
Mr. HONDA. Thank you, Mr. Chairman.
I will be real quick and to the point, because we are going to be asked to vote.
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I went through the report and just generally perused the recommendations and everything, and I was captivated by the term ''innovation'' running through the whole report, but you have never addressed the concept of teaching innovation creativity. And I think that that is the piece that we are missing. And when I speak with some of the other folks in education and who have just recently retired from high tech or, you know that their main concern is that if we are talking about producing more science students and more folks adept at math and science, that we will still be outperformed by India and China, because they are going to do the same thing. When we talk about the history of Silicon Valley, we know that Silicon Valley is not only a geographic place, but it is a phenomena of a combination of folks or of factors. And one of the factors is the talent and the people. And one of the factors of the talent of the people is their innate ability to be creative and inventive. We don't teach that, and it is a teachable skill to be able to teach innovation and creativity.
What is your opinion about making education a goal for this nation, the teaching of innovation and creativity? And what do you think the costs may be and with the insights you have from your own report?
Dr. WULF. One of the things that I have focused a lot of my attention on in the last nine years that I have been President of the Academy has been engineering education reform. And a strong theme running through that is that engineering is all about creativity. It is all about—as Theodore von Karman said, ''creating what has never been.'' And so making engineering education better adapted and suited to the actual environment that engineers are going to practice in really involves teaching creativity and innovation.
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Mr. HONDA. But there——
Dr. WULF. And so that is starting to happen.
Mr. HONDA. Right. But there is no curricula that speaks to creativity or innovation, and in the discussion in the report, I don't see that as being highlighted or important. It is mentioned, but you know, teaching math and science, if we keep teaching the way we have taught, we still teach youngsters and people a compartmentalized approach to math and science, and it should be multi-disciplinary and integrated and then teaching how to teach innovation and creativity. And if that is not a stated goal, how will we understand and know that that is going to be one of the outcomes?
Dr. WULF. There actually are a number of engineering schools around the country now, which make innovation and creativity central to the curriculum.
Mr. HONDA. Would you be willing to have a long discussion on that——
Dr. WULF. I sure would.
Mr. HONDA.—in your report?
Dr. WULF. Well, the report is the report.
Mr. HONDA. Well, the report is a document that people look at to refer to from experts in the field, and if it is not specifically mentioned as a goal, but it is only mentioned as one of the things that we look for, but is not specifically addressed, I wonder whether it is going to have the impact that we are looking for.
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Dr. WULF. I would be happy to share with you another pair of reports, which collectively have the title, ''The Engineer of 2020''——
Mr. HONDA. Okay. Thank you.
Dr. WULF.—which focuses on that.
Mr. HONDA. Dr. Vagelos, I thought maybe you might have a comment.
Dr. VAGELOS. Well, the teaching innovation, I think, is very difficult than you are suggesting. Because the innovators, you can have great scientists who make key observations and then someone else comes along and takes that observation to the next step. An example, the discovery of penicillin, which was about 1928, something like that, by Fleming, and it sat around in his lab for a couple of years, and he essentially gave up. This was taken up by a scientist about 10 years later who saw that it was important, and they took the step to make it in large amounts and discover what this substance was that was able to kill organisms and might be a drug. And so it takes certain kinds of people. And I don't know that it is. A lot of it is innate. There were lots of people thinking about programming when Bill Gates came along. There is only one Bill Gates.
Mr. HONDA. But to say that teaching innovation and creativity is difficult is to beg the issue of whether it should be taught or not, and it is a teachable skill. As a teacher, I know that processes are important. And to have our youngsters in our schools subjected to traditional instruction and not being challenged to think outside the box is, you know. We have a lot of Ph.D.s in my valley that are unemployed. And if we are going to be competitive, I think that, you know, to think out of the box and have them be able to grasp this concept or this ability to innovate——
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Chairman BOEHLERT. Point well taken.
Mr. HONDA.—we will lose——
Chairman BOEHLERT. The gentleman's time has expired. We have a vote on the Floor.
Mr. Carnahan, we would like to get you in. You have been faithful here all morning.
Mr. CARNAHAN. Thank you, Mr. Chairman, and thank you. I share your passion for this, and Mr. Matheson, I guess I have join him, because I talked about this back home as well, research and innovation, and had a fascinating tour back home in St. Louis recently with the company there who is competing internationally, and not just competing, actually expanding their operations, and they are able to do that because of innovation in unique products. And so it was a great boost for me to see a local company doing that, and to see the power of that innovation.
I also want to compliment all of you for your big ideas and for your frankness about how to really go to the next steps and what this is going to cost, but also talk about how you believe it is worth the cost, because it is so important to our future.
I really wanted to focus on a couple of questions in our short time here.
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I think your idea about the scholarships for younger, newer teachers is a good idea. There are some of those out there, but I think we can do more there. I also like the idea of trying to get some of our scientists and engineers that may be laid off or retired to try to get them into teaching programs. But the bottom line is, our ability, I believe, to really improve our system is so much based upon our teachers. And salary levels, we all know, drive that. You know, what about including in these initiatives, you know, doubling the salaries of our teachers in our country? To me, that is fundamental, and I would like your comments about that.
Thank you.
Mr. AUGUSTINE. You have raised a point that was difficult for our committee in the sense that we were asked to address things that could be done at the federal level, and so we didn't spend a lot of time on teachers unions, on increasing teachers' salaries. But I think it would be safe to say there is not a one of us that wouldn't think that teachers' salaries should be substantially increased. But I suspect most of us would have added the footnote that the increase should be merit-based and performance-based, that we shouldn't just double every teachers' salary tomorrow. I am sure you didn't imply that. But I think that we would strongly support an increase in teachers' salaries, if it was based on performance. Yes.
Dr. VAGELOS. And we did, in part, in some of our recommendations, suggested that the teachers who go through these programs go back with an additional salary increase of $10,000. This is a recommendation, but of course these school districts have to decide what they are going to pay. We can make these recommendations. And if the private sector gets in and buys into these programs, as they have done into the advanced placement incentive program in Texas, then the extra funds can come privately to complement what is being done otherwise.
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Mr. CARNAHAN. I just want to say in closing, I came from our state legislature, where I had served on our Education Appropriations Committee. Not once did we ever hear from anyone from the business community talking about education policy. So to me, it is another important thing. I know you are talking about federal level recommendations, but since the bulk of our education funding and policy is driven at the state level, I think it is vital that we engage policy-makers at the State level to begin some of these innovations and also address some of these key funding issues.
So thank you very much.
Chairman BOEHLERT. Thank you very much.
And unfortunately, time has run out. We have to get over to the Floor for a series of votes, and we are not going to ask you to remain. We understand your busy schedules. We will be submitting, Ms. Jackson Lee, Mr. Wu, and others will be submitting questions, and we would ask that you would consider them and respond in a timely manner.
Let me just conclude the hearing by saying how much we appreciate the service that all of you have contributed to the Nation. The compensation is not high in terms of material value. As a matter of fact, it is zero. But I always tell people that serve as well as you do and as effectively as you do, and Mr. Augustine, I am so familiar with your work over the years, and Dr. Wulf, too. Doctor, I don't mean to exclude you, but I know you by reputation. Now I have had the privilege of meeting you. Your compensation is a rich and rewarding experience, and the satisfaction of knowing you have contributed something of significance.
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And with that, the hearing will adjourn, but not before I remind Mr. Augustine of an outstanding invitation to participate in the December 6 conference summit on competitiveness, and we have just had confirmation this morning that Dr. Jack Marburger, the President's Science Advisor, will be a participant.
And I will tell you what my goal is, Norm, for this summit. I want people to be madder than hell that they didn't get an invitation, because we have got a small group, and you got one of them, and I want you to respond in a positive way.
With that, the hearing is adjourned.
Mr. AUGUSTINE. Thank you.
[Whereupon, at 11:42 a.m., the Committee was adjourned.]
Appendix 1:
Answers to Post-Hearing Questions
ANSWERS TO POST-HEARING QUESTIONS
Responses on behalf of Norman R. Augustine, Retired Chairman and CEO, Lockheed Martin Corporation; P. Roy Vagelos, Retired Chairman and CEO, Merck & Co.; and, William A. Wulf, President, National Academy of Engineering
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Questions submitted by Representative Bart Gordon
Q1. Is there a mismatch between the skill sets of graduating scientists and engineers in the U.S. and industry's needs? Did the NAS committee consider whether there is a need to rethink the Ph.D. degree, or the relative production of Ph.D.s versus professional masters degrees or some another type of advanced degree that would be more valuable to industry?
A1. This is a recurrent question about American universities that needs to be revisited periodically. In 1995, for example, the National Academies Committee on Science, Engineering, and Public Policy (COSEPUP) released a report titled ''Reshaping the Graduate Education of Scientists and Engineers.''
As part of that effort, COSEPUP surveyed employers and asked for their evaluation of Ph.D. training. In sum, these employers indicated that they were satisfied with the current structure and concept of Ph.D. training and affirmed U.S. superiority in graduate education, although there are some specific difficulties in the relationship between academe and the profession. Some specific comments include the need for an:
Understanding of the nature of industrial research and an appreciation for applied programs;
Faster response by graduate programs to changing national policies and industrial needs;
Education with more breadth as opposed to narrow specialization;
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Expansion of educational experiences beyond the academic environment through hands-on experiences and in multi-disciplinary teams;
Training in communication skills including teaching and mentoring.
This survey was conducted 10 years ago and conditions may have changed. It is also likely that some progress has been made on these issues since that point.
In terms of the need to rethink the Ph.D., we still support the recommendations in the COSEPUP graduate education report. This report recommended the following:
Offer a broader range of academic options, while maintaining local initiative and not compromising the need to maintain research excellence, control time to degree, and attract women and minority-group members. Specific actions include:
Discourage students from overspecializing
Enhance communication skills and the ability to work in teams
Focus federal financial support mechanisms for graduate students on traineeships as opposed to research assistantships.
Provide better information and guidance to graduate students and engineers and their advisers so they can make informed decisions about professional careers. Specific actions should include:
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Development by the National Science Foundation, in concert with other federal agencies, a national database on employment options and trends;
Provision of career information and advice by academic departments to both prospective and current students in a timely manner;
Encouragement of students once they have met their qualifying requirements to consider the current job market and then reflect on three alternative pathways—Master's degree, traditional Ph.D., or Ph.D. with a dissertation of high standards, but designed for non-academic career and which would take less time to complete.
Devise a national human resource policy for advanced scientists and engineers that would involve examination of the goals, policies, conditions, and unresolved issues of graduate level human resources.
On the issue of the relative production of Master's degree versus Ph.D.s, we have insufficient information to answer that question. In addition, the answer is likely to change over time. However, based on personal experience, it is the opinion of one of us (Augustine) that there is a need, from a industrial standpoint, to greatly increase emphasis on the Master's degree—not at the expense of the Ph.D. but rather at the expense of the Bachelor's as a terminal degree.
Q2. In addition to sponsoring more basic research, should the Federal Government focus more resources on applied, pre-competitive research aimed at the gap between support for basic discovery and support for development up to the stage where the private sector is willing to assume the risk of commercialization? Did the NAS committee consider the need for greater federal support for this kind of bridge funding for applied research between basic research and proof-of-concept?
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A2. The committee that developed the Gathering Storm report agrees that it is important to address this gap—which some have called the ''valley of death.'' It discussed many different options, and among those, placed priority on the establishment of the Advanced Research Projects Agency–Energy (APRA–E). If it proves successful, it could be replicated for other national goals as well.
Q3. During the past two years the Science Committee has heard from academic and industry witnesses about the need for bridge funding, and these witnesses have strongly urged funding for the Advanced Technology Program (ATP). Did the NAS committee consider the ATP program or other possible approaches for addressing this issue?
A3. The committee did discuss the ATP and other related programs. The strengths and weaknesses of ATP have been assessed in prior National Academies studies.
It did not re-evaluate these programs per se, but it did determine that they were insufficient to address the gap described above and so recommended ARPA–E.
Questions submitted by Representative Jerry F. Costello
Q1. I fully agree with your belief that we need better science and math education in our schools. The scholarship idea to provide math, science and engineering students with teaching certificates seems a good idea. But how attractive will teaching be to these students in the long-term? For example, how does the average teacher salary compare to that of a scientist or engineer? How do you think this issue will factor into a student's decision on which track to pursue?
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A1. Economic studies do indicate that the compensation paid to a teacher affects both the teaching pool and teacher tenure. Certainly, the committee would encourage any efforts to enhance compensation for effective science, mathematics, and technology teachers; however, the committee was asked to address actions that could be taken at the federal level not the State or local level where compensation issues are generally addressed. The committee did, however, develop several mechanisms to enhance teacher compensation through bonuses as opposed to salary increases. For example,
New teacher recruitment program (action A–1) provides scholarships of up to $20,000 per year and $10,000 per year bonuses for those who teach in under-served schools in inner cities and rural areas;
Current teachers (action A–2) who participate in the continuing education programs (summer institutes, Master's programs, advanced placement/international baccalaureate (AP/IB) teacher training) would receive incentive stipends of $10,000 annually as long as they engage in classroom and leadership activities;
AP/IB teachers receive a $100 bonus for each student who passes the AP or IB exam in mathematics or science.
Also important are mentoring programs, particularly for new teachers, which are also recommended as part of these programs.
Q2. The perception of many college students is that science and engineering jobs are not remunerative, important and exciting career options. How can careers in science and engineering be made more attractive to students who have the option of pursuing other well paid professional careers with shorter preparation time? Is it enough to offer new scholarships and fellowships as recommended in the NAS report?
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A2. The excitement of science and engineering is best conveyed through inquiry-based education and teachers who have a science, engineering, or mathematics background themselves. The committee believes that by enhancing the science and engineering background of those who teach at the middle and high school level, the excitement of those careers can be conveyed to students. Those students will then take the classes necessary for them to pursue science and engineering careers.
The time for preparation at the Bachelor degree level is somewhat longer in engineering than that in other fields, but the starting compensation is also higher (it is not widely appreciated that the average salary in engineering is very close to that of lawyers, which involves an additional two years of study). Unfortunately, compensation for engineering tends to peak at a lower level than for those business, management, banking, or other such fields. At the graduate level there are also disparities. The National Academies have recommended in past reports that the time to Ph.D. be decreased.
In terms of compensation, salary is just one motivator of those interested in science and engineering careers. Perhaps a bigger influence than compensation on those deciding whether or not to pursue graduate level education is the potential for viable employment and interesting research opportunities. The committee's recommendations in the ''Sowing the Seeds'' section of the report are meant to address those concerns.
Q3. We know that other nations are increasing their science and technology capabilities and are developing large and very capable technical workforces. In addition, U.S. companies are moving, not only manufacturing, but R&D operations abroad. In light of these trends, what kinds of skills will U.S. scientists and engineers need to be able to command a premium in salary over foreign scientists and engineers? That is, how do we compete in the global economy without lowering U.S. salaries and standard of living?
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A3. The United States will continue to be challenged to compete on a pure salary basis with developing countries such as India and China; the primary way to respond to that challenge is to increase the value of our engineers and scientists. The primary mechanism for this is improved education at all levels—which is what the committee suggests. Innovation has been a key U.S. national advantage, and enhancing our emphasis on it at all educational levels plays to our strength. When innovations occur in the United States, it is able to capture at least the near-term market in that innovation area. To maintain the Nation's innovation capacity the Nation needs to invest regularly in its people and its research.
Question submitted by Representative David Wu and Representative Jerry F. Costello
Q1. The report contains convincing arguments and recommendations to foster a climate of innovation in the U.S. But an important question is whether innovations generated in the U.S. will be exploited in the U.S., or abroad. For example, VCR technology was developed in the U.S., but the market was taken over by Asian countries. Traditionally, it has been the exploitation of new technologies, producing products and delivering novel services, which created new, high-paying jobs. What do we need to do to ensure that the fruits of research and innovation result in the creation of substantial numbers of good jobs in the U.S.?
A1. As indicated in the question, traditionally it has been the exploitation of new technologies, producing products and delivering novel services, that have created high paying jobs. For the United States to benefit from the jobs created by that innovation, the research that led to that innovation needs to occur to the United States and the environment in the U.S. must be conducive to innovation in general. That research will only occur in the United States if there are economic incentives for companies to stay here as opposed to moving overseas and if the human talent is available to develop and implement the ideas.
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In its report, the committee calls for a study that will focus on developing the best economic policies to enable the United States to be one of the most attractive places in the world for long-term innovation-related investment. As time passes, some industries will migrate overseas when the technical skills are adequate and the labor market is less expensive. But that does not happen immediately, and until it does the U.S. is able to benefit in terms of the jobs created by that innovation. This is less likely to be the case if the innovation occurs elsewhere.
The U.S. patent system is the Nation's oldest element of policy on intellectual property. A sound system for patent enhances social welfare by encouraging invention and the dissemination of useful technical information. So, in addition, the United States should 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 U.S. Patent and Trademark Office with 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.
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Change intellectual property laws that act as barriers to innovation in specific industries, such as those related to data exclusivity (in pharmaceuticals) and those that increase the volume and unpredictability of litigation (especially in information-technology industries).
Questions submitted by Representative Eddie Bernice Johnson
Q1. Action A–1 of the NAS report's recommendations suggests awarding ''competitive four-year scholarships.'' However, I am concerned that minority and under-served students will be at a disadvantage for these awards because they are already noncompetitive due to their circumstances. Why did the Academy not consider this issue?
A1. We share the Congresswoman's concern; however, the committee did consider this issue and identified a wide range of existing federal and non-federal awards available for minority and under-served students should these students decide to become scientists and engineers. The challenge is not so much funding these students at the undergraduate level, but rather providing them with the resources they need at the middle and high school level—these students particularly need teachers with science and engineering backgrounds who will excite them about science and engineering and encourage them to pursue careers in these areas. Action A–1, therefore, provides a $10,000 bonus to teachers who graduate from this program and who teach in under-served schools in inner cities and rural areas. It is committee's belief that strengthening the teaching of science and math in the early grades will benefit all students and better prepare all students to compete in life.
Q2. The total cost of the Academy's Implementation recommendation is between $9.2 to $23.8 billion per year. The entire NIH budget is around $30 billion per year. How realistic is it that this plan will be implemented and how do we get the public to agree to such an expensive proposition?
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A2. This proposal includes far more than research funding and should be viewed as an investment in the Nation's future, rather than an expense. All four recommendations in the report are part of the fundamental building blocks for the Nation's economy.
Supporting innovation is a cornerstone of the report's conclusions and innovation requires much more than research. To be sure a vibrant research base is essential, but so are an educated workforce, a culture that supports risk-taking, a tax climate the encourages investment, and a host of other things. The report presents a package of proposals that revitalize many of these necessary components of the ''innovation ecosystem.''
Without quality science, mathematics, and technology teachers, our students will not be prepared to be part of a highly technical workforce.
Without students who are well-educated and excited about science and engineering, too few Americans will pursue undergraduate and graduate education in science, engineering, and mathematics. And, if we discourage international talent from coming to the U.S., we will have even less talent available.
If the Nation lacks scientific and technical talent, it will not be able to generate the innovative ideas that create whole new industries. And, if industries relocate overseas because other countries offer better financial incentives, then we won't have high-quality jobs for those in science and engineering or Americans in general. Americans may not fully appreciate the importance of research, but they do recognize the benefits that flow from such research and understand the importance of well paying jobs.
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In short, if the Nation's leaders assign as high a priority to the concerns which have been raised, as does this National Academies committee, the proposed funding will be able to compete very strongly with other demands on the federal budget.
(Footnote 1 return)
See pages 18–19 of this charter for the pages of the NAS report that contain the sources for these statistics.
(Footnote 2 return)
For example, the U.S. Commission on National Security in the 21st Century (the Hart-Rudman Commission, Phase III, 2001) recommended doubling the federal research and development budget by 2010.
(Footnote 3 return)
The six non-U.S. members of the G–7 are France, Great Britain, Germany, Japan, Italy and Canada.
(Footnote 4 return)
Booz Allen Hamilton's Global Innovation 1,000 study was released on October 11, 2005 and is available on line at http://www.boozallen.com. An example of their findings is that companies in the bottom 10 percent of R&D spending as a percentage of sales under-perform competitors on gross margins, gross profit, operating profit, and total shareholder returns. However, companies in the top 10 percent showed no consistent performance differences compared to companies that spend less on R&D.
(Footnote 5 return)
Energy Efficiency Progress and Potential, American Council for an Energy-Efficient Economy, no date.
(Footnote 6 return)
For example, work by Robert Solow and Moses Abramovitz published in the middle 1950s demonstrated that as much as 85 percent of measured growth in U.S. income per capita during the 1890–1950 period could not be explained by increases in the capital stock or other measurable inputs. The big unexplained portion, referred to alternatively as the ''residual'' or ''the measure of ignorance,'' has been widely attributed to the effects of technological change.
(Footnote 7 return)
The funds may come from anywhere in an agency, not just other research funds.
(Footnote 8 return)
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.
(Footnote 9 return)
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
(Footnote 10 return)
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 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.
(Footnote 11 return)
The current R&D tax credit expires in December 2005.
(Footnote 12 return)
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.
(Footnote 13 return)
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.
(Footnote 14 return)
CERN, http://public.web.cern.ch/Public/Welcome.html.
(Footnote 15 return)
For 2004, the dollar value of high-technology imports was $560 billion; the value of high-technology exports was $511 billion. See Appendix Table 6–01 of National Science Board's Science and Engineering Indicators 2004.
(Footnote 16 return)
''No Longer The Lab Of The World: U.S. chemical plants are closing in droves as production heads abroad,'' Business Week (May 2, 2005).
(Footnote 17 return)
National Center for Education Statistics, Trends in International Mathematics and Science Study, 2003, http://nces.ed.gov/timss.
(Footnote 18 return)
Data are from National Science Board. 2004. Science and Engineering Indicators 2004 (NSB 04–01). Arlington, VA: National Science Foundation. Chapter 1.
(Footnote 19 return)
Data are from National Science Board. 2004. Science and Engineering Indicators 2004 (NSB 04–01). Arlington, VA: National Science Foundation. Chapter 1.
(Footnote 20 return)
Roach, Steve. More Jobs, Worse Work. New York Times. July 22, 2004.
(Footnote 21 return)
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.
(Footnote 22 return)
Data are from National Science Board. 2004. Science and Engineering Indicators 2004 (NSB 04–01). Arlington, VA: National Science Foundation, Appendix Table 2–33.
(Footnote 23 return)
Colvin, Geoffrey. 2005. ''America isn't ready.'' Fortune Magazine, July 25. H–1B visas allow employers to have access to highly educated foreign professionals who have experience in specialized fields and who have at least Bachelor's degree or the equivalent. The cap does not apply to educational institutions. In November 2004, Congress created an exemption for 20,000 foreign nationals earning advanced degrees from U.S. universities. See Immigration and Nationality Act Section 101(a)(15)(h)(1)(b).
(Footnote 24 return)
Geoffrey Colvin. 2005. ''America isn't ready.'' Fortune Magazine, July 25.
(Footnote 25 return)
U.S. research and development spending in 2001 was $273.6 billion, of which industry performed $194 billion, and funded about $184 billion. (National Science Board Science and Engineering Indicators 2004). One estimate of tort litigation costs in the United States was $205 billion in 2001. (Leonard, Jeremy A. 2003. How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness. Prepared for the Manufacturing Institute of the National Association of Manufacturers. http://www.nam.org/s—nam/bin.asp?CID=216&DID=227525&DOC=FILE.PDF.
(Footnote 26 return)
COSEPUP. 1993. Science, Technology, and the Federal Government: National Goals for a New Era. Washington, DC: National Academy Press.
(Footnote 27 return)
National Academy of Engineering. 2005. Engineering Research and America's Future: Meeting the Challenges of a Global Economy. Washington, D.C.: Nation Academies Press.
(Footnote 28 return)
National Academy of Sciences, National Academy of Engineering, Institute of Medicine. 2005. Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. Washington, D.C.: National Academies Press.
(Footnote 29 return)
AeA (American Electronics Association). 2005. Losing the Competitive Advantage? The Challenge for Science and Technology in the United States. Washington, D.C. AeA.
(Footnote 30 return)
Business Roundtable. 2005. Tapping America's Potential: The Education for Innovation Initiative. Washington, D.C.: U.S. Chamber of Commerce.
(Footnote 31 return)
Business Roundtable. March 2005. Securing Growth and Jobs: Improving U.S. Prosperity in a Worldwide Economy. Washington, D.C.: U.S. Chamber of Commerce.
(Footnote 32 return)
Council on Competitiveness. 2004. Innovate America. Washington, D.C.: Council on Competitiveness.
(Footnote 33 return)
Electronics Industry Alliance. 2004. The Technology Industry at an Innovation Crossroads. Arlington, VA. Electronic Industry Alliance.
(Footnote 34 return)
National Association of Manufacturers. 2005. The Looming Workforce Crisis: Preparing American Workers for 21st Century Competition. Washington, D.C.: National Association of Manufacturers.
(Footnote 35 return)
National Intelligence Council. 2004. Mapping the Global Future: Report of the National Intelligence Committee's 2020 Project. Washington, D.C.: National Intelligence Council.
(Footnote 36 return)
National Science Board. August 2003. The Science and Engineering Workforce: Realizing America's Potential. Report NSB 03–69. Arlington, Virginia: National Science Foundation.
(Footnote 37 return)
President's Council of Advisors on Science and Technology. January 2004. Sustaining the Nation's Innovation Ecosystems, Information Technology Manufacturing and Competitiveness. Washington, D.C.
(Footnote 38 return)
President's Council of Advisors on Science and Technology—Workforce Education Subcommittee. June 2004. Sustaining the Nation's Innovation Ecosystem: Maintaining the Strength of Our Science & Engineering Capabilities. Washington, D.C.
(Footnote 39 return)
Council of Graduate Schools. June 2005. NDEA 21: A Renewed Commitment to Graduate Education. Washington, D.C.: Council of Graduate Schools.
(Footnote 40 return)
American Association of Universities, To be released.