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The Decline of U.S. R&D Funding

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As members of Congress felt the first effects of the sequester on tarmacs at Dulles and Reagan months ago, they moved quickly to end the FAA furloughs. However, they neglected to act upon the far more serious threat facing the country under sequestration.

That threat is an impending R&D collapse.

This seems odd given that in an era when Republicans and Democrats can't seem to agree on much, one area where they have been able to reach consensus is on the importance of the United States remaining a leader in scientific research and innovation.

But as the country settles in for a long sequester, the cuts in R&D will be felt immediately. Federally funded research from energy to agriculture will drop nearly 9 percent this year with similar cuts in the years to come.

According to the Information Technology & Innovation Foundation (ITIF), these cuts will cause a shortfall in federal R&D spending of about $95 billion by 2021. ITIF estimates that such a large cut in R&D spending will reduce U.S. GDP by up to $860 billion over the same period.

Strengthening the blow, these reductions come at a time when the rest of the world is starting to increase their investments in research programs. While the U.S. still spends the most in real terms, America has dropped to fifth in spending in relation to its GPD. That title was lost in 2000 when Japan took the top spot.

While U.S. spending remains stagnant and, under sequestration, soon to be nonexistent, China's spending has continued to rise. The People's Republic is expected to spend $220 billion this year, just over half of the U.S.'s total. However, that is an increase of 11.6 percent from 2012 spending levels. If that kind of growth continues, the U.S. will fail to be the global leader in total R&D spending by 2023.

As federal funding is slashed, public officials shouldn't hold their breath for the private sector to make up for the gap.

The reason: corporations rarely invest in basic research, mostly due to the fact that they will be unable to reap the full financial rewards of the knowledge gained in the process. If they do commit capital to a project, once the results are implemented in a product, other firms will be able see how that knowledge was gained through patents and reverse engineering.

That is why U.S. R&D spending is critical. The federal government funds about 60 percent of all basic research in the United States. That research often springboards other companies to invest in auxiliary programs giving rise to new products and discoveries. Together they form a symbiotic relationship -- without federally funded basic research, the private sector will falter.

Notwithstanding, there is clear evidence that government-funded R&D programs bolster innovation and the economy. These programs often lead to the formation of new markets and products, some never thought imaginable.

Just think where Silicon Valley would be today without the federal government laying the groundwork for the Internet or developing mobile phone technology. The latter of which has created over 500,000 mobile app jobs in the U.S. since the introduction of the iPhone.

The U.S. has a storied history of R&D successes. The launching pad for this string of trophies happened with the "Sputnik Crisis" that awoke a nation into gazing into the stars. That moment was a success because the Space Race was not a partisan issue but was an American issue. Leaders on both sides of the aisle understood the importance of investing in R&D programs to compete with the Soviets and lead the world.

President Obama and Republican leaders often are at odds over issues where there is serious ideological divide. The division in R&D funding is purely political. It is time to put away those differences and start funding these programs that drive the economy and foster innovation.