Fiscal Commission Makes Growth and Competitiveness a Priority

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Publication date: 
7 December 2010
Number: 
119

The  65-page final report released by The National Commission on Fiscal  Responsibility and Reform late last week calls for hundreds of billions of dollars  in funding cuts for domestic and defense programs.  Against this background, it is of  considerable significance that the report advocates “expanding high-value  research and development in energy and other critical areas.”

Commission co-chairs Erskine Bowles and  Alan Simpson supported protecting investments in R&D in their proposal  issued in mid-November.  Last week’s final  report, “The Moment of Truth,” builds on their proposal, and broadly outlines spending parameters for what  are termed high-priority investments.

R&D’s first mention in the final  report was in a section entitled “Our Guiding Principles and Values”:

Cut and invest to promote economic  growth and keep America competitive. We should cut red tape and unproductive  government spending that hinders job creation and growth. At the same time, we  must invest in education, infrastructure, and high-value research and  development to help our economy grow, keep us globally competitive, and make it  easier for businesses to create jobs.”

The report outlines how discretionary  spending reductions totaling more than $50 billion “in immediate cuts” and $200  billion “in illustrative 2015 savings” could be made and enforced.  “Every aspect of the discretionary budget  must be scrutinized, no agency can be off limits, and no program that spends  too much or achieves too little can be spared,” the report states.  Discretionary spending in FY 2012 would be  equal to or lower than FY 2011 spending.   Total discretionary FY 2013 spending, in inflation-adjusted dollars, would  equal FY 2008 levels.   “This path would require  serious belt-tightening,” the report cautions, and would be applied to both  security and non-security programs.  “One  of the Commission’s guiding principles is that everything must be on the table.” 

In the same section on “Discretionary  Spending Cuts, the Commission describes its recommendation to “increase  high-priority investment” as follows:

RECOMMENDATION 1.9: ESTABLISH  CUT-AND-INVEST COMMITTEE TO CUT LOW-PRIORITY SPENDING, INCREASE HIGH-PRIORITY  INVESTMENT, AND CONSOLIDATE DUPLICATIVE FEDERAL PROGRAMS.

“The Commission recommends creating a  new, bipartisan Cut-and-Invest Committee to be charged each year with  identifying 2 percent of the discretionary budget that should be cut and  identifying how to redirect half of that savings, or 1 percent, into high-value  investment. Over the next decade, the Cut-and-Invest Committee will be expected  to recommend more than $200 billion in discretionary cuts, freeing up $100  billion for high-priority investments America will need to remain competitive,  such as increasing college graduation rates, leveraging private capital through  an infrastructure bank, and expanding high-value research and development in  energy and other critical areas.”

This same recommendation criticizes the  “alarming proliferation of [duplicative] federal programs” that “results in  unnecessary deficit spending and crowds out important investments.”  Of note is the following reference to STEM  programs:

“For example, the government funds more  than 44 job training programs across nine different federal agencies, at least  20 programs at 12 agencies dedicated to the study of invasive species, and 105  programs meant to encourage participation in science, technology, education,  and math. Many of these programs cannot demonstrate to Congress or taxpayers  they are actually accomplishing their intended purpose. Programs without  demonstrable results costs taxpayers billions of dollars and fail those the  programs are intended to serve.”

Finally, a one page exhibit later in  the report entitled “Fostering an Economy Recovery” explains:  "A plan to reduce the deficit must  therefore promote economic growth and not undermine the economic recovery. Our  plan would accomplish these goals in at least four ways:"   In addition to “Reduce the deficit  gradually,” “Put in place a credible plan to stabilize the debt,” and “Consider  a temporary payroll tax holiday in FY 2011” is the following:

Implement pro-growth tax and spending  policies. In designing its proposal, the Commission made growth and  competitiveness a priority. For example, our discretionary plan maintains  important funding for education, infrastructure, and high-value R&D, and  establishes a Cut-and-Invest Committee to continue to reprioritize spending  toward investment. . . . ”

The Commission has eighteen members.  Fourteen affirmative votes were needed for  approval of the report, triggering a Senate vote on its recommendations.  Although only eleven members indicated their  support for the report, it is expected that many of the Commission’s recommendations  will be considered during the FY 2012 appropriations cycle.  While the Commission’s recommendation to expand  support for high-value R&D does not guarantee an outcome, the report puts research  on far more favorable grounds than many other government programs.

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