• November 23, 2014

The Multibillion-Dollar Threat to Research Universities

The Multibillion-Dollar Threat to Research Universities 1

Spencer Platt, Getty Images

A geneticist at the U. of Connecticut examines human embryonic stem cells, a promising area of research that has depended largely on federal funds.

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Spencer Platt, Getty Images

A geneticist at the U. of Connecticut examines human embryonic stem cells, a promising area of research that has depended largely on federal funds.

With each day, the so-called fiscal cliff looms larger as Congress and President Obama work to come to agreement on a federal-deficit compromise, which so far has proven elusive. Absent such an agreement by year's end, far-reaching spending cuts will be triggered as result of the Budget Control Act of 2011, through a mechanism called sequestration.

These reductions in federal spending, expected to total more than $1-trillion over the next nine years, would reduce the country's budget deficit—but would almost certainly come at a perilously high cost to the short-term stability and long-term vitality of the U.S. economy.

The stakes could hardly be higher for research universities, which are the engines that power much of the country's scientific, technological, and economic growth. Universities account for more than half of the basic research conducted in the United States, work that often serves as the backbone of commercial research-and-development efforts by private-sector companies.

Those companies, which already collectively invest $250-billion a year in such efforts—much of it focused on the development side—simply don't have the resources to devote to pure research on a scale needed to keep the United States at the forefront of scientific and technological innovation.

That funding void has been filled to a large extent by the U.S. government, which pays for about 60 percent of the basic research conducted by American universities. The historical return for that federal investment has been spectacular by any measure—jobs created, economic output, contributions to the well-being of people around the world.

Indiana University, for example, has a long history of research discoveries that have yielded advances in human knowledge and produced some of the world's most ubiquitous commercial products. But many of those discoveries would not have been made without support from the National Institutes of Health, the National Science Foundation, the Department of Energy, and the Department of Defense.

In the 2010-11 fiscal year, the university spent $509-million on research, much of it the result of the types of federal grants that would be at risk if the budget sequestration occurs. The same story is being played out across the United States, where research-university faculty and students are every day engaged in work that has the potential to save lives and improve the standard of living of Americans today and well into the future.

This significant economic force for societal good is being jeopardized by sequestration, which would require across-the-board spending cuts of as much as 9 percent from 2011 levels for most federal agencies. The result in 2013: A $12.5-billion reduction in federally financed research, which could cost the U.S. economy an estimated 200,000 jobs, according to the Information Technology & Innovation Foundation.

Over the nine-year course of the Budget Control Act, the shortfall in federally supported research from 2011 levels would reach $95-billion under the most conservative assumptions, according to the foundation, using data from the Congressional Budget Office. If one assumes that federal funds for research would otherwise have grown as a constant percentage of gross domestic product—still a conservative assumption—then the gap as a result of sequestration balloons to $330-billion during the period 2013-2021.

The loss of such funds would curb key research efforts and reduce university-powered economic activity in the short term and would undoubtedly result in an even larger drag on the country's knowledge economy in the long run. It also would jeopardize this country's standing as the world's pre-eminent technological and scientific power, as China, India, and Brazil, among other countries, continue to pour money into government-sponsored research in an effort to emulate the formula that has worked so well for so long in the United States.

Sequestration is not the answer to our nation's fiscal challenges. We should address them through comprehensive measures that focus on the real causes of these problems, measures that do not indiscriminately cut a wide swath through programs that enable scientific research at the highest levels and serve the long-term interests of our economy.

Michael A. McRobbie is president of Indiana University.

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