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Focus on Regulation

The Trump Administration Issues Its R&D Budget Priorities for FY 2020

On July 31, the Director of the Office of Management and Budget, Mick Mulvaney, and the Deputy Assistant to the President, Office of Science and Technology Policy, Michael Kratsios, jointly issued a memorandum on “FY 2020 Administration Research and Development Budget Priorities.” This is an annual document, providing overall policy guidance to the federal agencies as they prepare their budget submissions for the next fiscal year. The guidance does not include any specific funding targets, or other specific direction. But the guidance does give an indication of Administration thinking, and that thinking is showing signs of better appreciating the role of federal research and development spending in building a more robust economy than reflected in last year’s guidance.

The aspect of the Administration’s approach to concerns that U.S. leadership in technology was slipping, endangering U.S. military superiority, that has grabbed the headlines has been the effort to rein China in – most notably through revisions to the law controlling foreign investments in the United States (CFIUS). These revisions are embodied in legislation entitled the Foreign Investment Risk Review Modernization Act (FIRRMA), which was incorporated into the National Defense Authorization Act for Fiscal Year 2019 (NDAA for FY 2019). As of this writing, the NDAA for FY 2019 has passed both chambers, and is awaiting presidential signature. Limiting Chinese investments in U.S. “emerging and foundational technology” companies, as FIRRMA will do, might limit the flow of U.S. developed technology breakthroughs to China, but it will do nothing to help the United States to make those breakthroughs in the first place. Indeed, it might even slow U.S. technological progress if the flow of Chinese capital to U.S. start-ups is reduced by implementation of FIRRMA.

More quietly, the FY 2020 guidance seems to reflect a different, more positive approach to the apparent slippage of U.S. technological superiority. The FY 2020 guidance declares that

Federal R&D dollars focused primarily on basic and early-stage applied research, paired with targeted deregulation, and investment in science, technology, engineering, and mathematics (STEM) education and workforce development, will strengthen the Nation’s innovation base and position the United States for unparalled job growth, continued prosperity, and national security.

The reference in the FY 2019 guidance to budget neutrality is nowhere to be seen in the FY 2020 guidance. Although both documents state that federal spending should focus on basic and early-stage applied research, the FY 2020 guidance notes the importance of programs that improve the transition of federally funded technologies from discovery to practical use. In addition, the FY 2020 guidance is sprinkled with far more references to specific technology areas, reflecting an enthusiasm that seems lacking in the FY 2019 guidance. There are references to artificial intelligence, autonomous systems, hypersonics, advanced microelectronics (including exploring novel pathways to advance computing in a post-Moore’s Law era), computing (and in particular quantum information science), and cyber capabilities (including adaptive and automated defensive measures). There is also a discussion of the importance of creating the conditions for the development of an industrial base for commercial activities in space.

Enthusiasm, and expressions of recognition of the importance of research and development, including recognition of the critical role that federal funding of basic research plays in the building of a foundation for technological leadership, is all well and good, but providing the resources to back up the words of the guidance is what really counts. If Congress adopts the Senate Appropriations Committee’s two billion dollar plus bump-up in R&D funding, compared to the House-passed bill and compared the President’s budget, that will go a long way in answering the question whether the U.S. has the will to do what is necessary to maintain its technological edge.

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