As Congress continues its ongoing game of paintball with the president, a large issue is going largely unaddressed. While many creative ideas to modify some or all of the financial commitments of entitlements are very much in the forefront of conversations, questions about our national defense spending are much more binary and simplistic. The dynamic is one of make cuts (less safe) or make cuts elsewhere (stay safe).
I believe that by framing the conversation this way, or portraying a discussion of national defense spending as a matter of patriotism, getting obscured is a great opportunity for our nation. Moreover, the dynamic of budgetary politics makes some cutting of defense expenditure inevitable. Therefore, the key question going forward is not whether there will be national security spending cuts, but where and to what they will be made. How this question is answered could have an unexpected consequence on our real national security.
A little-appreciated part of our national economy is the strong interdependence between our national defense establishment and our industrial progress. For example, most of the technology that you are using to read this blog post was fostered and encouraged in a significant way by federally funded research and development and our national security apparatus. GPS, the Internet, artificial intelligence, advanced material science, semi-conductors and voice enablement are all examples of technologies that were fostered by national security R&D spending and national defense acquisition. The interplay of national security requirements and technological development is a strong, essential and unappreciated part of what has made the United States a technological leader, and created the conditions for much of our industrial development.
The current budget discussion regarding defense spending (as manifest in sequestration) does not differentiate R&D and innovation as a priority item, notwithstanding its importance as a driver of new technologies and industrial opportunity. Choices regarding readiness, current program acquisition, personnel, R&D and others are being lumped together in a single conversation. Moreover, it appears that where cuts are discussed, or more to the point, cuts are allocated, priority is given to protecting current system procurement (i.e., the F35 fighter or other advanced large weapons procurement). These are complex issues to be sure, but the phrase "burning the furniture to stay warm" seems to describe the approach that many are currently taking to managing defense spending cuts.
A second unintended consequence of the current national security budget discussion could be the de-emphasis of small business and entrepreneurial approaches to solving national security problems. National defense spending is heavily concentrated -- around 1,500 companies get 90 percent of dollars spent by the Department of Defense, for example. Programs that focus on promoting startup innovators, such as the SBIR program, as well as other mechanisms to provide grants and assistance to emerging businesses allow national security program managers to access entrepreneurial approaches to technology problems. Cuts in these programs, even on a pro rata basis with other defense spending cuts, will likely have a disproportionate effect on small businesses and entrepreneurs looking to address national security challenges, due to the fragility of small businesses when compared to larger, well-capitalized companies.
Taken together, changes in R&D and small business innovation spending are likely to have an adverse effect on what is arguably the most important aspect of national security spending. Our national security does not merely depend upon the technology and systems we deploy today; it depends upon our primacy as a leading industrial power. And, as technologies become more advanced, and the scientific and engineering knowhow required to develop new industries become more demanding, a failure to focus on innovation may result in a nation that is economically irrelevant.
A failure to focus on emerging innovators may harm national security in two other areas. Firstly, many of the national security challenges that the United States now face occur with a much faster cycle between attack method and defensive response. We see this in areas such as cyber security and asymmetric uses of force currently, and are likely to see this in other areas (for example, biological warfare) over time. A shorter threat cycle requires more rapid and creative approaches. Entrepreneurial small businesses are often more nimble than larger established organizations when new approaches and technologies are required in short product development cycles.
Secondly, as defense spending is questioned and cuts are made, questions of efficiency and "value for money" will become a larger part of the consideration for spending decision. Access to innovative and entrepreneurial approaches to solving problems will become more important. Again, the advantages of promoting R&D and entrepreneurial small businesses are an important part of the solution set.
As our nation addresses national security, I hope that our policy makers remember that non-traditional sources of innovation and defense technology are an essential part of our national security. Fostering the relationships, and continuing to invest in supporting new and entrepreneurial approaches to technology challenges, is an essential part of promoting comprehensive national security. It is important to remember that.
Jonathan Aberman is Managing Director of Amplifier Ventures and Executive Director of the Ballston Innovation Initiative. The Bi2 is a three month community based program to promote and connect innovation and entrepreneurship with national security. Information about the Bi2 can be found at ballstoni2.com.
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