America COMPETES: Vital for Economic Competitiveness

So it’s time to get this done. Late last Friday the Senate passed a severely edited version of the America COMPETES Reauthorization Act of 2010 to continue funding for a number of science, education, and technology programs and agencies. That means HR 5116 now heads back to the House for a vote as early as today—a vote that, while in some ways frustrating, remains essential. The bottom line: House members and metropolitan stakeholders should work hard to pass this imperfect, too-slight reauthorization of one of the nation’s key vehicles for maintaining its economic competitiveness, especially because it happens to contain an exciting and timely new “regional innovation program.”

To be sure, the Senate bill represents a significant retrenchment from the $84 billion bipartisan bill the House passed in May.

Trimmed back to just a three-year extension, the $43 billion reduces both the dollar size but also the degree of policy innovation that the House has envisioned.

The growth of ARPA-E, the Advanced Research Projects Agency–Energy, for example, will be constrained. No investments would be made in the Department of Energy’s Energy Innovation Hubs initiative. And metro-based leaders will be disappointed to hear that the Senate omits the House’s small but important piloting of a regionally-embedded clean energy innovation consortium model developed by the New England Clean Energy Council and informed by this paper my group released a few years ago. Such reductions of scale and ambition renew concerns that the nation is simply not yet ready or able to respond forcefully enough to the nation’s continued economic and competitive drift.

And yet, while too many concessions have been made, it is important to remember that the Senate’s amendments keep alive the essential bipartisan project of the original America COMPETES legislation.  The bill keeps the budgets of the National Science Foundation, the Department of Energy’s Office of Science, and the Department of Commerce’s National Institute for Standards and Technology on a path toward doubling them over 2007 levels. Likewise, by funding ARPA-E at around $300 million a year, the Senate bill continues to invest in high-risk, high-reward energy technology development, even as it authorizes significant investments in improving “STEM” education. 

Beyond that, and of critical note to regional leaders, the new bill builds on important House ideas and authorizes the creation, in Sec. 603, of a “regional innovation program” to “encourage and support the development of regional innovation strategies, including regional innovation clusters.” Central to this is a new competitive grant program that will make awards available to regional cluster initiatives on a matching basis. 

This is a big deal. At Brookings, my colleague Bruce Katz and I are gratified because the proposed program embodies key features of the outline for a new program we proposed two years ago. But far more important here is the new recognition by Congress that one of the great flaws of current U.S. economic policy today, as Bruce and I wrote a few months ago, has been that it pays too little attention to the practical mechanics of real-world innovation, which depend heavily on the messy, synergistic dynamics of transactions, relationships, information spillovers, and competition among real firms in real places—interactions that are the substance of regional innovation clusters. That the Senate bill firmly affirms that recognition and responds to it with a meaningful regional program makes up for a lot and would if passed help complement the nation’s overly narrow, research-oriented innovation stance with an exciting new bottom-up focus on supporting the myriad ways real-world firms, trade associations, suppliers, universities, community colleges, workforce boards, and state and local governments together turn research into innovation and jobs.

Securing that low-cost enhancement of performance across the U.S. innovation system in 2010 is reason enough by itself for the House to approve H.R. 5116, the America COMPETES Reauthorization Act.