Obama on Innovation

October / November 2009 Volume 7 Number 5

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In September, President Obama delivered a speech on innovation, research investment and sustainable growth at the Hudson Valley Community College in Troy, New York. Following are excerpts from that speech.

A key to strengthening education, entrepreneurship, and innovation—€¦is to harness the full power of the internet, and that means faster and more widely available broadband, as well as rules to ensure that we preserve the fairness and openness that led to the flourishing of the Internet in the first place. So today, FCC Chairman Julius Genachowski is announcing a set of principles to preserve an open internet in which all Americans can participate and benefit. That's an important role that we can play, laying the ground rules to spur innovation. That's the role of government—€”to provide investment that spurs innovation and also to set up common-sense ground rules to ensure that there's a level playing field for all comers who seek to contribute their innovations.

And we have to think about the networks we need today, but also the networks we need tomorrow. That's why I've proposed grants through the National Science Foundation and through the Defense Advanced Research Projects Agency—€”or DARPA—€”which helped develop the internet, to explore the next communications breakthroughs, whatever they may be. That's why I've appointed the first-ever chief technology officer, charged with looking at ways technology can spur innovations that help government do a better and more efficient job.

Basic Research

We also have to strengthen our commitment to research, including basic research, which has been badly neglected for decades. That's always been one of the secrets of America's success—€”putting more and more money into research to create the next great inventions, the great technologies that will then spur further economic growth.

The fact is, though, basic research doesn't always pay off immediately. It may not pay off for years. When it does, the rewards are often broadly shared, enjoyed by those who bore the costs but also by those who didn't pay a dime for that basic research.

That's why the private sector generally under-invests in basic science. That's why the public sector must invest instead. While the risks may be large, so are the rewards for our economy and our society. (It) was basic research in the photoelectric effect that would one day lead to solar panels. It was basic research in physics that would eventually produce the CAT scan. The calculations of today's GPS satellites, they're based on basic research—€”equations Einstein put on paper more than a century ago. Nobody knew they'd lead to GPS, but they understood that as we advance our knowledge, that is what is going to help advance our societies.

When we fail to invest in research, we fail to invest in the future. Yet, since the peak of the space race in the 1960s, our national commitment to research and development has steadily fallen as a share of our national income. That's why I set a goal of putting a full 3 percent of our Gross Domestic Product, our national income, into research and development, surpassing the commitment we made when President Kennedy challenged this nation to send a man to the moon.

Recovery Act Grants

—€¦This month the National Institutes of Health will award more than a billion dollars in research grants through the Recovery Act focused on what we can learn from the mapping of the human genome in order to treat diseases that affect millions of Americans, from cancer to heart disease. I also want to urge Congress to fully fund DARPA, because since its creation it has been the source of cutting-edge breakthroughs from that early Internet to stealth technology.
So as we invest in the building blocks of innovation, from the classroom to the laboratory, it's also essential that we have competitive and vibrant markets that promote innovation, as well. Education and research help foster new ideas, but it takes fair and free markets to turn those ideas into industries.

My budget finally makes the research and experimentation tax credit permanent.
This is a tax credit that helps companies afford the often high costs of developing new ideas, new technologies, new products—€”which means new jobs. And this tax incentive returns two dollars to the economy for every one dollar we spend. Time and again, I've heard from leaders about how important it is. I've also proposed reducing to zero the capital gains tax for investments in small or startup businesses, because small businesses are innovative businesses; they produce 13 times more patents per employee than large companies do.

Now, these tax incentives will spur entrepreneurship. But there are other important steps to foster markets that value and promote risk-takers and idea-makers who've always been the center of our success. That's why it's essential that we enforce trade laws and work with our trading partners to open up markets abroad; that we reform and strengthen our intellectual property system; that we sustain our advantage as a place that draws and welcomes the brightest minds from all over the world; and that we unlock sources of credit and capital which have been in short supply as a result of the financial crisis.

Digital Health Records

—€¦The recovery plan that we passed earlier this year has begun to modernize our health system. So innovation can also help drive down the cost for everybody. We are taking long-overdue steps to computerize America's health records. And this is going to reduce the waste and errors that cost billions of dollars and thousands of lives—€”while protecting patients' privacy. And it's important to note, as well, that the records that are held—€”each of us having our own medical records in digital form—€”holds the potential of offering patients the chance to be more active participants in the prevention and treatment of illness. And health information technology, if implemented effectively, has the potential to unlock so many unanticipated benefits because it provides patterns of data that we don't yet collect but could reveal discoveries that we can't predict in terms of how to cure illnesses.

The same thing is true when it comes to energy. No area will need innovation more than in the development of new ways to produce and use and save energy. I firmly believe that the nation that leads the clean energy economy will be the nation that leads the global economy. And that's why we're doubling our capacity to generate renewable energy, building a stronger and smarter electric grid.
We're investing in technologies to power a new generation of clean-energy vehicles. We've helped reach an agreement to raise fuel economy standards. And for the first time in history, we passed a bill to create a system of clean energy incentives which will help make renewable energy a profitable kind of energy in America, while helping to end our dependence on oil and protect our planet for future generations—€¦.

So that's an overview of our strategy. All these pieces fit together. It's a strategy that's essential for our recovery today, but more importantly, for our prosperity tomorrow. It's a strategy rooted in a deep and abiding faith in the ability of this country to rise to any challenge—€”because that's our history. We're a people with a seemingly limitless supply of ingenuity and daring and talent. And at its best, our government has harnessed those qualities without getting in the way.

After Edison

That's what led to the building of the Erie Canal, which then helped put cities like Troy on the map; that linked east and west and allowed commerce and competition to flow freely between. That's what led a pretty good inventor and a pretty good businessman named Thomas Edison to come to Schenectady and open what is today a thriving mom-and-pop operation known as General Electric.

A former senator from New York, Robert Kennedy, once told us, "The future is not a gift. It is an achievement." It was not an accident, not a gift, that America led the 20th century. It was the result of hard work and discipline and sacrifice, and ambition that served a common purpose. So it must be in the 21st century. Future success is no guarantee. As Americans we always have to remember that our leadership is not an inheritance; it is a responsibility.

So from biotechnology to nanotechnology, from the development of new forms of energy to research into treatments of ancient diseases, there is so much potential to change our world and improve our lives—€”while creating countless jobs all across America. The question is if we are ready to embrace that potential, if we're ready to lead the way once more.