House Panel Puts in Motion Reauthorization of COMPETES Act

The House Science Committee took an all-too-unheralded step toward bolstering U.S. competitiveness in the years ahead with its bipartisan approval April 28 of a five-year reauthorization of the America COMPETES Act.  That is welcome news.

The Information Technology and Innovation Foundation has been a leading advocate for the COMPETES Act since it was enacted in 2007 and has helped shape the legislation.  The COMPETES Act broke new ground in addressing America’s growing national innovation deficit and aimed to marshal the country’s abundant talent and resources more efficiently toward meeting rising global challenges.  The $82 billion measure that came out of the Science Committee on a 29-8 vote is a solid measure that would be made even stronger with recommendations ITIF put forward in a report in March, “Eight Ideas for Improving the America COMPETES Act,” and more robust funding in the energy area.

It is great that lawmakers are giving thoughtful consideration to the importance of innovation at this time.  As ITIF has documented the United States is slipping when it comes to innovation.  The House Science Committee bill recognizes that investing in key areas such as a nanotechnology, networking and information research and development, as well as science, technology, engineering and math (STEM) education are vital steps to take this year.

It is particularly encouraging that the legislation adopts some ideas ITIF has been promoting for the last few years.  One is the idea of “regional innovation clusters.”  The idea here is to bring together local governments, non-profits, educational institutions and others in a given region to apply for federal grants to  help fuel  innovations that can create jobs and economic opportunities from the talent and resources in that  particular community.  The ultimate goal of this legislation is turn ideas into new businesses and new jobs and the local stakeholders are best suited to figuring out how to spur job-creating innovation. For example, regional clean energy innovation clusters would accelerate the pace of clean energy innovation and technology commercialization that is needed to face climate change.

In addition, the legislation takes a few small steps toward better coordination of our national innovation policy with a provision that would establish an Office of Innovation and Entrepreneurship at the Department of Commerce to spur the commercialization of new products, technologies, processes and services.   To be sure, commercialization of innovation is critical for a national competitiveness strategy. Current U.S. policy pays too little attention to this.  To that end, ITIF called for the creation of a program to get rid of barriers that block or slow great ideas coming out of universities, state and federal labs from getting into the marketplace in the form of new products and services.  That recommendation was included in ITIF’s report as was a proposal to fund industry-university government research and deployment centers. This would help close the gap between basic and applied research and help ensure the progress of research undertaken with practical applications in mind.   If this idea were to be included in the final version of the COMPETES Act reauthorization, it would complement the regional innovation clusters.

Another recommendation in ITIF’s report was for the establishment of an Office of Innovation Policy within the Office of Management and Budget.  Its purpose would be to review federal regulations’ possible impact on innovation.  While the House Science Committee bill aims to improve inter-agency coordination on innovations and competitiveness strategies, a new agency, housed within the executive office of the president, would also be an effective tool in making sure federal policies do not hinder innovation.    In a related recommendation, ITIF suggested creating a National Innovation and Competitiveness Strategy, not unlike what has been done with Broadband policy this year.

Such ideas for better coordination of innovation activities are not aimed at empowering the federal government to take sole responsibility of the country’s economic life.  On the other hand, if we as a country have agree  the federal government should encourage educators, universities, state governments and the private sector to focus on key  technologies and sectors, then it make sense to do in the most efficient and effective manner possible.

In terms of STEM education, the House Science Committee measure would continue and expand policies established in the current law.   While STEM is a crucial element of innovation, ITIF continues to believe there are ways to make it even more effective.  For example, ITIF recommended funding specialty math and science high schools.  The goal would be to ensure that 250,000 students with the greatest ability and aptitude in STEM can flourish in unique environments but not detract from the effort to acquaint all students with these disciplines.  ITIF also supports funding a joint government-industry program for STEM Ph.D. fellowships.  This would improve the laboratory-workplace connection and direct the best minds to the commercial endeavors of companies.  In its report, ITIF also proposed allowing foreign students who receive STEM Ph. D.s for U.S. universities to automatically qualify for green cards.  The volatile immigration debate notwithstanding, ITIF thinks it makes sense to retain the talent nurtured in U.S. universities, which are still among the very best in the world.  These future immigrants might create the next “big thing” as previous immigrants have done.

In the energy area, the bill reauthorizes programs of the Advanced Research Projects Agency for Energy (ARPA-E), which pursues high-risk, high-reward energy technology development, at a level of $1 billion a year by 2015.  With innovation in the energy sector central to climate change and the creation of green jobs, even doubling that amount would be good policy.  At the same time, the bill reauthorizes the establishment of up to eight Energy Innovation Hubs to help advance the U.S.’s transition to a clean energy economy, and support the growth of new sectors of the economy and the jobs that come with them.   These hubs (three of which have received funding already) could yield the game-changing innovation that could transform how we produce and use energy.   The bill gives the secretary of Energy considerable discretion on how to allocate those funds.  Congress should consider funding more of them that would possible at the $210 million level in 2015 called for in the bill.

Finally, while the Science Committee has no jurisdiction on tax policy, ITIF has recommended that a COMPETES Act reauthorization include a collaborative research and development tax credit.  We know that more and more firms work with each other or institutions to lower R&D costs but our tax laws do not reflect this.  By creating a tax incentive, we could boost investment in research undertaken in collaborative arrangements.

The size of the federal budget deficit and its impact on our “children and grandchildren” was on the minds of lawmakers from both parties at the committee markup but in the end there was bipartisan recognition that investments today are vital for long-term growth.  In fact, it was Republican Roscoe Bartlett of Maryland, who prides himself on his fiscal discipline as well as his 17 grandchildren and 2 great-grandchildren, who said the bill was justified, no matter its multi-billion price tag.  He asserted that if Congress has taken up something like the COMPETES Act 20 years ago, elected officials might not be fretting about deficits and a sluggish economy because the country would be more productive and competitive.

That is what Congress should keep in mind as COMPETES moves to the house floor and then action in the Senate.