SSTI Editorial: FY08 Budget Request: Research Up; Economic Development Down

When one looks beyond the first few pages of many sections of the agencies’ fiscal year 2008 budget request summaries, the mental concept of a television rerun appears. As SSTI staff pored through the budget this week, several found ourselves saying, “Didn’t we read the same thing last year?”

In many cases, we did. And why not? Congress failed to consider most of the president’s budget proposals for FY 2007 when the same political party ruled the executive and legislative branches, so why not float the ideas again when power is split? Could they fare any worse than FY07 when so few budget priorities have emerged?

Now some will say hold on. That could be a little too harsh an assessment of what’s going on in FY07. There are a few highlights this budget go-around:

• Research spending appears to be growing this year in the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards & Technology. The president asked for that in the American Competitiveness Initiative, and Congress may deliver much of the first year’s request.
• It may be a year without a final budget, but it also appears it will be a year without a Santa Claus. Most congressional earmarks have been stripped from the FY07 Continuing Resolution that passed the House and is working its way across the Senate Floor – a journey it must complete before the current funding patch falls off Feb. 15.
• The Administration’s attempts to eliminate or significantly cut most federal support for economic development and TBED programs will be thwarted by Congress again as programs may receive FY06 funding levels for year without much debate.

Which brings us back to the old rerun analogy when we look at the FY08 budget request. NSF, DOE, NIST all would receive increases. Eliminating congressional earmarks from the request is a trick every Administration will use each year in presenting its budget request – maybe this time it will stick.

But the most tired element of the story being retold once again in the FY08 budget request is the idea that the public sector – more specifically, the federal government – does not have much of a role in supporting those elements of an innovation system that occur outside a university research center or federal laboratory. Once again, nearly every federal program that supports state, local and regional TBED strategies, community development and traditional economic development is on the chopping block. The agency summaries below document the continuing attempt to disengage the federal government from its important role as a collaborative TBED partner with states and communities across the country.

The U.S. remains the most innovative country in the world overall when measured on a national level, but innovation does not occur evenly within America. Some regions enjoy above-average rates of technology entrepreneurship, equity capital availability and economic success while others do not. The systems to nurture innovation in some areas of the country may need minor public investments or encouragement to work better. Other regional innovation systems may need major investments or reinvestments as their economic drivers adjust to a global economy.

Increased levels of investment in research, science and engineering such as those outlined in the Administration’s FY08 budget request are important, but so, too, is investing in the programs and initiatives that increase the likelihood of commercial success for the businesses and technology entrepreneurs throughout the country that will commercialize the results of federal research investments.

Just as the federal government is retooling its R&D investments, it is time to rethink the direction and shape of the rest of its innovation investments. Some of the programs mentioned below may be based on outdated approaches to supporting state and regional growth. It may be time for change. That is very likely given that very few federal programs currently provide funding for the kinds of initiatives incorporated into the successful TBED strategies adopted across the country by state and communities working to transform their local economies into global innovation leaders.

Change may be needed, but not by lowering the amount of federal funding invested in regional economic growth as is suggested in the FY08 budget request. Rather, change must come in how the federal government works with its state and local partners toward strengthening regional TBED strategies. That may require fewer pots of federal money with more flexibility for state and local decision makers but they need to be larger pots, not smaller ones.

What remains to be seen is how - and if - Congress responds to the Administration's FY08 request.



A PDF version of this federal budget issue is available at http://www.ssti.org.