Statement by ITIF President Robert D. Atkinson on the State of the Union

January 25, 2011

The President is 100 percent right when he calls for investment in science, technology, education and energy innovation. The country that invests in innovation today will have jobs and wealth tomorrow. Other countries understand this and are investing billions to win the innovation race. We are kidding ourselves to think otherwise. We must decide right now if the Great Recession marks the end of the American century or a “Sputnik moment” that revives our innovative spirit and capability.

Transformative technologies, robust research in sciences, a world class education system, targeted tax breaks and regulatory reform represent investments in the scientists and entrepreneurs who will create the jobs of the future. Expensive farm subsidies, duplicative defense spending and runaway entitlements, on the other hand, represent investments in next year’s reelection bids.

We are particularly encouraged by the President's strongest-yet statement on the importance of energy innovation. Whether the impetus is energy security, climate change or simply meeting tomorrow's energy needs, innovation in this sector today is vital to our long-term competitiveness. We hope the President and Congress will find the way to make the president's vision a reality.

ITIF applauds the President’s call for tax reform but urges the Administration and Congress not be lulled into the simpler-is-better trap. ITIF has long argued that effective corporate rates are too high and that valuable credits, such as the R&D credit are too stingy. However, a complex economy sometimes benefits from a complex tax system. Computer chips are different from potato chips and they shouldn’t be taxed the same way. New machinery and equipment is different from housing and they shouldn’t be taxed the same way.

ITIF has urged the creation of a new corporate competitiveness tax credit that would include a much more generous credit for research and development, and a credit for business investments in workforce training and new capital equipment, especially software. Making these investments will cost money in the short run. But they will generate potentially huge returns to the economy and the government in the long run.

The President’s speech was a robust endorsement of the idea that innovation must play a central role in economic competitiveness. Congress has already endorsed this idea by reauthorizing the COMPETES Act last year with a provision to create a national competitiveness and innovation strategy. There will be plenty of issues that Congress and the Administration will disagree over this year. Innovation should not and must not be one of them.



Through its research, policies proposals, and commentary, the Information Technology and Innovation Foundation is working to advance and support public policies that boost innovation, e-transformation and productivity. For additional information, visit ITIF at or contact Steve Norton at (202) 626-5758 or [email protected].