Wisconsin Technology Council Wisconsin Technology Council

Inside Wis: Beginning of ‘sequester’ budget cuts drive home debate over federal R&D role

March 1, 2013

By Tom Still

 

Embedded in the national debate over automatic cuts in the federal budget – the so-called “sequester” – is a question that could hit Wisconsin harder than many states: What is Washington’s role in fostering innovation?

 

The answer is vital to the state’s academic research institutions, many of its entrepreneurs and the larger goal of making Wisconsin more competitive in the global economy.

 

Major research universities such as the UW-Madison and the Medical College of Wisconsin, academic health centers, small businesses driven by R&D and others are bracing for the effects of “sequestration,” or automatic spending cuts, to programs that have historically attracted federal dollars.

 

These programs finance basic research as well as applied research that spurs American innovation while creating new companies and jobs, which are the life’s blood of the U.S. economy.

 

Unless Congress and the Obama administration pull off the “Jedi mind meld” the president envisioned Friday, rolling cuts will take place in the National Institutes of Health, the Centers for Disease Control and Prevention, the Agency for Healthcare Research and Quality, the Food and Drug Administration and the National Science Foundation. Estimates vary, but some experts fear two-thirds of all new research grants would be eliminated.

 

In a Feb. 27 letter to Wisconsin’s two U.S. senators, UW System President Kevin Reilly predicted the UW-Madison alone could lose about $35 million in research funding over the coming year. That’s off a base of roughly $1 billion per year.

 

“The figure would be compounded by losses at all the institutions because every institution of the UW System receives NSF funding, which is scheduled for deep cuts,” Reilly said. “Of equal concern is the fear that research agencies will slow down renewals and reduce the aggregate number of new awards that are approved. This will result in fewer grants approved, less research undertaken, and a reduced capacity to grow the economy or advance medical care.”

 

The issue is more important to Wisconsin than most states because academic R&D is one of relatively few areas in the federal budget where the state performs well. Wisconsin boast a little more than 1.8 percent of the nation’s population but it attracts nearly 2.2 percent of the nation’s academic R&D spending. The state also fares well in attracting its share of Small Business Innovation Research grants, which are awarded by 11 different federal agencies to companies and researchers with the most promising commercial technologies.

 

Will all the gloom-and-doom take place overnight now that the March 1 deadline has passed? Not really. It will take some time for federal agencies to figure out where cuts will take place, and how soon, and Congress and Obama still face a March 27 deadline for passing a “continuing resolution” for the current fiscal year.

 

Just as the “fiscal cliff” debate before Jan. 1 resulted in some giant cans being kicked down the road, so might the latest sequester crisis.

However, the debate is so far missing a sense of bipartisan consensus that was evident even during last fall’s presidential election. Republican Mitt Romney said one of the government’s useful roles is fostering innovation while investing in technologies – power generation, fuel cells, nanotechnology and materials science – that spur economic growth. For his part, Obama has stressed the importance of alternative energy and related technologies and using two-year colleges to train workers in tech and health fields.

One of America’s enduring advantages in a competitive world is its ability to invent and innovate. The marketplace can’t pull out new ideas if they aren’t there. Federal investment in R&D since World War II has been the seed corn for countless ideas, thousands of companies and millions of private-sector jobs that might not exist today if not for a commitment to basic research.

Wisconsin doesn’t haul in a wealth of defense or Medicare dollars, at least compared to other states, but its R&D centers and entrepreneurs compete admirably for merit-based grants. That’s an edge that could be lost if cuts over time fall disproportionately on research and development.


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