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Thursday, January 12, 2012
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Acting Deputy Secretary of Commerce Rebecca Blank
Remarks at Consumer Electronics Show, Las Vegas, Nevada

It's great to see all of you.

I frequently talk with groups about American innovation. And no matter how many Democrats or how many Republicans are in the room, there is common agreement that our ability to innovate as a nation will determine what kind of economy—and even what kind of country—our children and grandchildren will inherit. It will decide whether the United States will offer the same economic opportunities for future generations that it did for our parents and grandparents.

There has been an ongoing and often deeply divisive debate in Washington over how this economic future might develop. On one side, you've got a group for whom federal fiscal austerity is the Rosetta Stone of every tough policy question America faces.

I understand their concerns, and I agree that we need more fiscal discipline in the Federal budget. But any approach where we cut the budget across the board has two big problems.

In the short-run, it could threaten a still-fragile economy that is finally starting to show some real strength—adding 200,000 jobs last month. Over the past year, budget cuts at the state and local level have been dragging down economic growth; sharp near-term declines in federal spending will only exacerbate this problem

And in the long-run, across-the-board cuts in federal spending ignore the very strategies that helped make America the pre-eminent economic power of the 20th century. It threatens our ability to invest in key priorities, particularly those things that foster innovation and economic growth.

Instead, we need to be smart about budget cuts. There are some things that the Federal government does that are deeply important to our long-term economic future, and we can't threaten those.  I'm going to focus on three of these areas that are crucial to innovation: Investment in basic research; a strong educational system; and a modern infrastructure.

Innovation is crucial to the economy.  And while private citizens and private businesses are the primary source of new ideas—from concept to commercialization—the government plays a key role in this effort. The returns in new jobs and new technologies have traditionally far exceeded the money invested on the front end by the federal government
 
Basic research and development activities are under-provided by businesses, and governments around the world recognize the need for public support of this type of work at universities and research institutes.

Historically, so have American policy makers—Republicans and Democrats. The U.S. has a proud tradition of supporting the work of federal and university labs. And this support has helped change our world. For proof, check out some of the technologies on display right here at CES—from flat-panel displays to semiconductors to wireless ultrasound for rural healthcare. They were deeply reliant, at an early stage, on research funded by wisely spent tax dollars.

To further that formula for success, President Obama signed into law last year the America COMPETES Reauthorization Act. This bipartisan bill called on the federal government to invest in our nation's long-term future through science education and through increased funding for basic research and development.

What's more, this administration has focused on a series of initiatives in these areas, including:

• Implementing a significant increase in funding for basic research and development, with the goal of bringing government support for R&D back to a level not seen since the Kennedy Administration, thereby reversing the decades-long decline in federal funding of basic research;
• Making strategic investments to expand educational opportunity for students by increasing Pell Grants and investing in community colleges; and 
• Reforming the U.S. Patent Office to improve patent quality and streamline the examination process in order to speed products to market faster.  The American Invents Act modernizes the U.S. patent system, and passed with strong bipartisan support this past September.

We're coupling those efforts with a renewed focus on manufacturing, a focus that recognizes the manufacturing sector accounts for 67 percent of new R&D in the country.

President Obama recently launched the White House Office of Manufacturing Policy, which is co-chaired by Commerce Secretary Bryson, and we recently announced the opening of a national program office for the Advanced Manufacturing Partnership, which seeks to foster the growth of high-tech manufacturing in the U.S.

We know we have a lot of work to do. For too long, America underinvested in the priorities that helped make the country the pre-eminent economic power of the last century—education, infrastructure and research.

As the rest of the world grew more competitive, the U.S. too often allowed itself to coast on its past strengths. The result? The public goods that support our economy - our schools, our infrastructure, our basic science—have eroded, and with it, so has our ability to compete economically.
 
Today, the U.S. ranks 14th in the world in terms of the percentage of college graduates it produces. We used to be Number One.

The World Economic Forum now ranks our infrastructure 24th-best. We used to be top 10.

These numbers are alarming, because they have a direct impact on our ability, as a nation, to compete on a global scale. And as a recent report released by the Department indicated, it was our unsurpassed commitment to those areas in the past that helped make America the greatest economic power the world has ever seen.

Of course, this administration does not believe government has all the answers. But it does believe we can learn from what's worked before and play a role in creating the conditions that make inspiration, innovation and invention more likely to happen in the future.

Because it's hardly a secret that innovation is the motor that generates American jobs today, and it will certainly be the driving force that creates the jobs of tomorrow. Our innovative abilities are deeply intertwined with our progress as a nation.

It's no coincidence that the countries that leverage the fruits of science and technology for greater social and economic good lead the world in well-paying jobs and in standards of living.

After all, nearly all net job creation in the U.S. comes from innovative start-up firms that are less than five years old.

And those jobs offer better pay. In innovation-intensive fields, wages increased more than twice as fast as the national average.

Those things don't just happen.  The public sector has to understand where its involvement is most important and has to make the necessary investments - setting clear priorities in tight budgetary times.

Only with a laser-sharp focus on education, innovation and infrastructure, will we build the basis for a 21st century economy that allows American businesses to flourish in an increasingly competitive global market. And only when American businesses flourish will we see the sort of job growth and income growth that assures economic opportunity to middle class Americans.

Thank you again for being here and for your input. I'm looking forward to the conversation.