SAN ANTONIO, TEXAS—Researchers across the United States are well aware that times are tight. Despite a recent budget proposal from the Obama administration to increase spending on federal R&D by 7% next year, dollars flowing to research have largely been flat in recent years, and declining when inflation is taken into account. The long-term outlook is even worse. Growing federal commitments to Medicare, Medicaid, social security, and interest on the federal debt continue to chew up a greater proportion of the federal budget. The money for “discretionary” items that’s left over—including R&D—is expected to drop to 23% of the federal budget by 2040, down from 67% in 1970 and 36% in 2012. So it’s perhaps no surprise that basic researchers are beginning to look for new sources of support.
At the annual March Meeting of the American Physical Society (APS) here this week, a pair of physicists floated one new idea: Congress should create a $100 billion national endowment to help fund basic research. The endowment, which they’re calling the National Research Bank, isn’t an official proposal of APS. Rather, says Michael Lubell, a physicist at the City College of New York who is pushing the idea, “we’re trying to start a conversation.”
That conversation began last summer when Lubell got together with a longtime friend, Tom Culligan, then the legislative director for Representative Frank Wolf, a Republican from Virginia who had just announced his decision to retire from Congress. Wolf and Culligan were staunch supporters of federal funding for basic research. So Culligan and Lubell began hashing out ideas for coming up with a new pot of money for supporting research that wouldn’t fall prey to the ever-tightening budget realities of Washington.
They settled on an idea that hinges on proposed Congressional action to rewrite the rules governing U.S. corporate income taxes, an idea that enjoys widespread bipartisan support in Washington. Companies are currently charged a 35% tax on corporate profits earned in the United States, a level that many business leaders argue is excessive. To get around those taxes, multinationals often shift earnings to overseas subsidiaries or parent companies, which face little or no U.S. taxes unless the money is brought back to the United States. According to The Wall Street Journal, U.S. companies have accumulated an estimated $2 trillion in foreign profits. President Barack Obama recently proposed charging companies a 14% tax on those accumulated earnings, and charging them 19% of future overseas profits, in an effort to help pay for infrastructure improvements to the nation’s roads, bridges, and airports. Members of Congress, meanwhile, have proposed dropping the corporate tax rate even further.
If any of these proposals come to fruition, the result could bring in hundreds of billions of dollars to the U.S. Treasury. So Lubell and Culligan hatched the idea of the Research Bank, which would take $100 billion of the newly repatriated money. Like a university endowment, Lubell says, the idea would be to invest the funds and use the proceeds to fund research deemed worthy by the Bank’s board of directors. The endowment, Lubell suggests, could be managed as a public-private partnership, so that it couldn’t be tapped by Congress to pay for pressing budgetary needs. At current rates of return, a $100 billion endowment would bring in roughly $7 billion a year. (That’s about equal to the current budget of the National Science Foundation.) About $2 billion of that would be eaten up by inflation, leaving $5 billion to support research.
While sizable, that’s still a small sum compared with the $32.7 billion that the U.S. government is expected to spend on basic research this year. Nevertheless, Lubell says it could help pay for research that’s increasingly being squeezed out of the federal system. “It could be used to provide matching funds for agency funding, and look at high-risk projects,” he says.
But the idea faces a long road through Congress. Not only would corporate tax reform need to make it through today’s Washington gridlock, but even if it did, other special interests will likely be angling for their cut of the windfall. Another concern is whether a future Congress would be more apt to cut federal support for basic research even further, knowing that the endowment might pick up the slack. But Scott Franklin, a physicist at the Rochester Institute of Technology in New York who has been helping Lubell push the Research Bank idea, says he doubts this relatively small fund would change the equation. “Those pressures are already there,” Franklin says.
In an effort to get their idea out there, 2 weeks ago Lubell, Franklin, and other researchers went to Capitol Hill and met with staff members of 160 members of Congress. “The visit was very positive,” Franklin says. “They encouraged us to continue the dialogue.” Franklin adds that he and his colleagues plan to do just that in an upcoming presentation to the APS’s policy committee. Convincing them should be the easy part. Then it gets hard. Says Lubell: “It’s a heavy lift.”
Meanwhile, physical scientists aren’t the only researchers thinking about creative funding methods. Last week, a coalition of biomedical research advocacy groups and a Washington, D.C.–based think tank released a report outlining a number of strategies for sustaining the more than $30 billion budget of the National Institutes of Health (NIH), which provides about one-half of all U.S. funding for basic research. “[P]olicymakers should consider separating NIH’s budget from the broader” battles over federal spending, urges the report, Healthy Funding: Ensuring a Predictable and Growing Budget for the National Institutes of Health. Among the options: moving to multiyear funding, instead of annual appropriations, and dedicating certain revenue streams to NIH. But Congress would have to approve those changes, too—an unlikely scenario in the short term.