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PCAST Urges More R&D Funding, Deregulation and Tax Credits to Save US Innovation

NEW YORK (GenomeWeb News) – A White House-appointed panel said today that if the US is to continue to be the global leader in technology and innovation then the federal government needs to take actions to keep it that way, by spending more on basic research, encouraging more industry investments in R&D, and taking a more active role in making research universities hubs for the "innovation ecosystem."

In a new report, the President's Council of Advisors on Science and Technology said that the rise of other international players in science — coupled with a shift away from basic and early-applied research by a private sector that is focused on "near-term results" and lowering risk — poses a risk to the status of the US as the top dog in innovation.

In the report, Transformation and Opportunity: The Future of the US Research Enterprise, PCAST argues that although "American technical ingenuity and commercial vibrancy remain the envy of the world, that status will be challenged by a group of global players and "innovation itself may increasingly migrate abroad."

Losing its ranking atop the science and innovation world would not only cost the US jobs, but entire industries that support the kinds of general benefits Americans value, such as living longer and healthier lives, having safer food to eat, cleaner water to drink, and enhanced national security, the PCAST report warns.

"It's a two-pronged message," William Press, who co-chaired the PCAST working group that was primarily responsible for drafting the report, said in a statement today. "We need to strengthen basic research at our great universities—that's the primary platform on which new industries are built. And we need policies that encourage industry to keep the commercially directed parts of research and development in the US. If we do both, then we can continue to create new industries and new jobs here at home."

To pursue these goals, PCAST urges in the report, the US should increase R&D expenditures from the current level of 2.9 percent of GDP to 3 percent, and the government should develop policy incentives that will enhance the share of these investments that is made by private industry, which is currently around two-thirds of the total R&D expenses in the country.

Congress and the White House also should try to develop ways to ensure that federal research funding is stable and predictable, including funding that supports research infrastructure and facilities, the report suggests. The government could do this by creating a cross-agency, multi-year program and financial plan similar to the Department of Defense's Future Years Defense Program, or by coupling multi-year funding authorizations to actual R&D appropriations.

PCAST also argues that the Research and Experimentation Tax Credit (R&D Tax Credit) should be made permanent, and it should be increased from a rate of 14 percent to 20 percent. The report also recommends that this credit should be made more useful to small and medium-sized enterprises that spend heavily on R&D by instituting refundable tax credits, transferable tax credits, or modifications in the definition of "net operating loss" to give an advantage to spending on R&D.

The Office of Management and Budget and other offices also should eliminate regulations and policies that do not add value or enhance accountability, particularly those that cut into the productivity of US research universities, PCAST advises.

In addition, PCAST recommends that education in science, technology, engineering, and mathematics (STEM) should be improved, particularly through the adoption of empirically validated best practices for attracting and retaining the most talented STEM students. It said that the US should implement federal policies for attracting and retaining the world's best researchers and students from abroad, such as giving STEM graduates from accredited US universities fast-tracked, long-term visas.

In a press conference held this afternoon to unveil the report at the National Academy of Sciences in Washington, DC, National Science Foundation Director Subra Shuresh echoed PCAST's call for greater stability and predictability of federal research funding. Shuresh pointed out that the US is one of the only industrialized nations to fund research budgets via single-year plans, noting that the German Research Foundation and the European Commission plan their science funding budgets over five- and seven-year plans, respectively.

At the press briefing, John Holdren, director of the White House Office of Science and Technology Policy and PCAST co-chair, noted that the council members had met with President Barack Obama yesterday to talk about research and innovation priorities.

He said that while the US still has no "match" in terms of R&D capabilities and investment, "we do have rivals, more and more of them all the time."

"The bottom line," Holdren said, "is that it has never been more important that we as a nation invigorate our innovation sector."

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