Commercial Innovation Gets Nod in Obama’s Budget

The Metropolitan Policy program’s Blueprint for American Prosperity places the nation’s—and metropolitan areas’—capacity for commercial innovation at the center of national economic concern, and President Obama’s first budget makes important gestures in that direction.

Numerous Blueprint papers argue that smart investments in science, technology, R&D, and other innovation assets are crucial drivers of productive growth in America—growth that continually creates quality jobs and rising wages in America. Along the way, Blueprint authors have argued that the federal government—after years of drift—should: embrace innovation as an explicit national priority; increase federal science and R&D efforts, especially in clean energy technologies; support regional industry clusters; and in general encourage technology adoption—all activities that will stimulate both metropolitan and national vitality.

Now, President Obama’s FY 2010 budget overview squarely embraces many such concerns. Along those lines, the outline castigates the nation’s recent “delinquency” on making fundamental investments in long-term economic growth and champions innovation as the way prosperity has “always risen from the ground up.”

To start with, the budget guide provides a 16-percent increase over 2008 funding levels for the National Science Foundation and similarly large increases for the Department of Energy’s Office of Science and the Department of Commerce’s National Institute of Standards and Technology. The budget also increases support for Commerce’s Manufacturing Extension Partnership (MEP) and Technology Innovation programs—important efforts to assist technology adoption by small and mid-sized firms.

In addition, and more boldly, the outline places heavy emphasis—as have Blueprint authors—on increasing the nation’s woefully inadequate R&D levels in energy technology and so spurring the greening of the U.S. economy. Current federal R&D investments languish at about half their 1980 levels, as observed a recent Blueprint paper proposing the creation of a national network of high-powered, commercialization-oriented innovation centers. And so the Obama budget outline calls for applying some $15 billion a year of revenues from a future cap-and-trade system for reducing greenhouse gas emissions reduction to funding “vital investments in a clean energy future.” Such investments to speed the investigation, development, demonstration, deployment, and commercialization of renewable and efficient energy technology are welcome and represent an important start toward moving the energy R&D portion of the innovation budget to a needed $20 to $30 billion a year.

But even then, increasing the magnitude of the nation’s energy R&D is only a part of the needed reform. Also critical is improving the way in which federal energy R&D is conducted. Therefore, we hope the Obama administration and Congress will see the value of investing some of the coming new energy funds in starting a few of the Blueprint’s proposed regionally based energy discovery-innovation institutes (e-DIIs) in the next budget. Neither Obama’s cap-and-trade scheme nor his important energy tax credits and loan guarantees will by themselves get us where we need to go in terms of a clean energy future. Equally or perhaps more important will be courageous work to transform the format of a troubled federal energy enterprise and improve its ability to move breakthrough technologies toward commercialization. Decentralized, applications-oriented collaboration networks like e-DIIs offer one way to do that.

For all that, the most gratifying single item in the preliminary budget request—from a metropolitan point of view—may be a rather small one, tucked away on page 52 of the document. There, the budget outline anticipates a request for $50 million for regional planning and matching grants within the Economic Development Administration to foster and strengthen regional innovation clusters that leverage regions’ existing competitive strengths to boost job creation and economic growth. This exactly responds to the recommendation Blueprint authors Karen Mills, Elisabeth Reynolds, and Andrew Reamer made in the paper, “Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies” last spring. And in so doing, it embodies in a proposed new program a signal tenet of the Blueprint: that metropolitan regions—and regional industry clusters—represent the most potent source of productivity at a moment of national economic crisis. Let’s hope enactment of the innovation clusters proposal becomes an augury of energetic new appreciation of the centrality to U.S. economic recovery of metropolitan economies in general and industry clusters in particular.