Sequestration Nation: Our Future Economic Standing Is on the Line

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Some of the most insidious effects of sequestration are those whose full effect will not be felt for years to come. Such is the case with the $95 billion in federal research and development, or R&D, spending that will be eliminated from the budget between 2013 and 2021. Cutting R&D spending is one of the most glaring examples of the shortsightedness of sequestration because any benefit of deficit reduction accomplished this way could be far outweighed by the negative impacts it will have on future economic growth.

As President Barack Obama described in his 2011 State of the Union address, decreasing R&D spending in order to reduce the deficit is “like lightening an overloaded airplane by removing its engine. It may make you feel like you’re flying high at first, but it won’t take long before you feel the impact.” Sustained economic growth relies upon sustained increases in productivity, and much of the productivity in the U.S. economy stems from consistent technological innovation. According to Alan Leshner, CEO of the American Association for the Advancement of Science, or AAAS, “Over 50 percent of the U.S. economic growth has come from science and technology advances since World War II.”

Sequestration’s R&D cuts will exacerbate an already troubling trend of decreasing R&D spending in the United States. Federal investment in research and development as a share of discretionary spending has fallen from 17 percent in 1962 to 9 percent today. Through 2021 sequestration will reduce federal spending on R&D by $95 billion, resulting in a reduction in GDP of at least $203 billion, according to a report by the Information Technology and Innovation Foundation, or ITIF. According to the same report, another effect of decreased R&D spending could be 800,000 fewer jobs over the next four years.

To make matters worse, the continuing trend of reducing R&D spending is taking place at the same time that economic competitors such as China are increasing their commitment to research and development. Whereas the United States increased R&D expenditure by an average of less than 6 percent per year between 1992 and 2009, China’s annual growth in R&D expenditure was almost 19 percent over the same time period. According to the AAAS, federal funding of research and development already decreased by 18 percent between 2009 and 2012.

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