At the New Jersey Technology Council’s Innovation Conference on Oct. 19, Rep. Rush Holt (D-N.J.), a former assistant director of the Princeton Plasma Physics Laboratory and a big supporter of tech innovation, discussed his plans to help N.J. and America recapture their past glory as beacons of science and technological innovation. “Washington,” he observed, “finds itself with two starkly different visions of the government’s role in research and development,” but despite recent setbacks, Holt said he refuses to take a pessimistic view.
Holt, probably best known nationally for his recent defeat of IBM’s Watson in a simulated round of “Jeopardy,” said he remembers when N.J. had all the components in place for innovation, was the envy of the world and served as a universal leader. N.J., like the United States, is now “no longer the unquestioned leader in innovation,” he told the group, which met at AT&T; Inc. offices in Bedminster. Over the past decade, five other countries have pulled away from the pack. Holt said the U.S. is still innovating, but “we’ve lost ground relative to other countries.”
To help companies, Holt reissued his call for a law to make the R & D tax credit permanent and tradable. “Many startups aren’t making enough profit to take advantage of the R & D tax credit,” he said. The traditional credit offers little benefit for high-tech startup companies, Holt explained, because they do not generate enough sales to use it. The bill he is proposing would allow small businesses all over the U.S. to sell their unused 2010 and 2011 R & D tax credits to generate capital now. New Jersey and Pennsylvania both have successful programs through which companies can sell the credits they are unable to use, giving needed capital to new businesses, he stated.
Holt pointed to the 2005 National Academy of Sciences report “Rising Above the Gathering Storm” for recommendations the U.S. could follow to regain its prominence in innovation. The report discussed the problems of educating children in science, technology and engineering and the difficulties of our outdated patent system. It was a call to action that briefly attracted Congress’s attention. In 2007, Congress passed the America COMPETES Act, which called for an Advanced Research Projects Agency-Energy (ARPA-E), modeled after the successful Defense Advanced Research Projects Agency. ARPA-E would concentrate on energy research and new science and technology education programs, among other areas. However, “appropriations did not follow.”
Holt said Congress’s response to the Gathering Storm report was insufficient then and still is today, even after a follow-up report, subtitled “Rapidly Approaching Category 5,” was issued. That report stated the U.S. needed a roadmap to achieve competitiveness. In fact, he added, the U.S. is alone among top nations in “innovating” by not having a National Competitiveness and Innovation Strategy. The White House has created an outline for such a strategy, but, thanks to Congress, the only aspect of it achieved so far is patent reform, he pointed out.
After visiting growing, job-creating companies in his district, which spans five N.J. counties, Holt noted that most of those businesses had had to reinvent themselves, and the way they did that was through research and development. “They had invested in R & D and continued to innovate,” he said.
Holt was critical of the idea that R & D investment should be aimed at only the private sector, saying the federal government can provide a climate for innovation and there is an important role for federally funded research. “I’m not arguing that the federal government can mandate innovation,” he said, but he does believe the private sector can’t be expected to perform the kind of basic research that will create, for example, new instrumentation or methodology leading to new industries. Since the 1960s, funding of federally sponsored research is down by two thirds when looked at as a percentage of the GDP, he said, and while the private sector has filled in some of the missing pieces, it has not completely made up for that loss.