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Speeches/Testimony [3 of 5]
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Michelle K. Van Cleave Speech Files
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Originally Processed With FOIA(s):
foia Number:
2005-0336-F
2005-0336-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Science and Technology Policy, Office of (OSTP)
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Van Cleave, Michelle, Files
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Speech Files
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62114
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62114-003
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Speeches/Testimony [3 of 5]
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We have 726 national
labs.
U.S. SCIENCE POLICY
TALKING POINTS
0
Science plays a very important role in the Bush Administration. The most
important reasons for this are the President's recognition of the influence of
science on national and international policy and the President's receptivity, and
the receptivity of his top officials, for the best information and advice in this
area.
o
President Bush has a strong belief that research and development are a vital
investment in our future. This is reflected in the increase in the total R&D
budget by 7 percent to $71.2 billion and an 8 percent increase in the basic
research spending.
Underlying Themes in the Administration's Science and Technology Policy
0
There are several themes underlying the Administration's science policy.
0
First, to preserve the initiative, independence, and creativity of American
scientists through a stable multiyear pattern of funding for basic research and
continued real growth in federal R&D funding.
0
Second, to foster a more efficient and effective coupling between R&D and
commercialization efforts.
o
Third, to maintain the integrety of science advice and to ensure that the best
scientific advice is an integral part of all policy decisions on the environment.
0
Fourth, to contribute to international cooperation through support of large
science projects and cooperation on a wide range of other scientific endeavors.
o
Fifth, to improve national literacy in science and mathematics and meet future
requirements for trained people in science and engineering. This is essential
for our future economic prosperity in an increasingly technological and
competitive world.
Federal R&D Budget Priorities
0
Three principles are followed in prioritizing agency requests for R&D funding:
0
First, support is required for programs that address national needs and
concerns.
0
Second, there must be adequate support for basic research. Basic research --
and particularly university-based, individual-investigator and small group
research constitutes the heart of our science and technology enterprise.
0
Third, we must ensure an adequate level of funding for the scientific
infrastructure and facilities in this country, including large facilities.
Development of Science Policy in the Administration
0
One of the most important developments in science policy in the United States
is the reorganization and revitalization of the Federal Coordinating Council for
Science, Engineering and Technology (FCCSET).
o
The FCCSET is an interagency group within the Executive Office that is
charged with reviewing, integrating, and coordinating the R&D activities of the
federal government that cut across the missions of more than one federal
agency.
o
The best example of how the FCCSET works is in the field of global change
research. The FCCSET Committee on Earth Sciences took all of the disparate
research being done by federal agencies on the global environment and
organized it into a U.S. Global Change Research Program--a coherent,
government-wide approach to the scientific understanding of global change.
o
I expect FCCSET to provide this type of coordination to other important areas
of science and to be a powerful influence in helping to shape and implement
federal science policy.
o
FCCSET will also help to develop and review, in close cooperation with the
Office of Management and Budget, annual and long-range federal budget plans
in selected cross-cutting areas of science.
o
The FCCSET will receive input from the private sector through a newly formed
President's Council of Advisors on Science and Technology. This is a group of
12 distinguished scientists and engineers that report to the President. Because
I chair both the FCCSET and PCAST, I have the opportunity to coordinate
actions of the two groups so that they can benefit from eachother's activities.
International Science Policy
0
In the area of international science policy, the U.S. government seeks to ensure
that science is an integral part of U.S. foreign relations and that science
issues are adequately considered in the development of foreign policy. For
example, we seek to encourage international participation in a number of large,
world-class science projects such as ITRE and global change research. Finally,
we seek to coordinate and we have participated in a number of multilateral
and bilateral efforts to improve the infrastructure for science and technology
around the world and to strengthen science and technology cooperation.
0
As our depth of knowledge increases, effective communication among scientists
in different disciplines becomes ever more critical. The U.S. Government will
continue to play an important role in facilitating the necessary cross-
fertilization among scientific communities.
INDUSTRIAL COMPETITIVENESS: THE FEDERAL RESPONSE
D. ALLAN BROMLEY
Assistant to the President for Science and Technology
Executive Office of the President
Empowering America's Industrial Competitiveness
Fairfax, Virginia
May 30, 1990
1
Last week the President's Council of Advisors on Science and Technology met
in Washington, and during that meeting we had a very interesting discussion about
the problems of industrial competitiveness. Harold Shapiro, the president of
Princeton University and a distinguished economist, made the very good point that the
term "competitiveness" has become firmly established in the national consciousness;
one study found, for example, that the term appeared 5,700 times in the titles of
newspaper and magazine articles between 1983 and 1987. Yet there is still much
uncertainty surrounding the definition of competitiveness. To some people it means a
positive balance of trade. To others it means the ability for firms to compete in
global markets. Because of this uncertainty, it is still possible to argue whether
America has a competitiveness problem at all.
I tend to take a broader view of competitiveness. I would define it as the
President's Council on Competitiveness did two years ago: as the ability of a nation
to produce a high and rising standard of living for its citizens. If a nation is to do
so, it must continually improve its productivity. And in today's economies, nothing is
so important to productivity as scientific and technological progress.
Viewed in this broader light, the federal government has no more important
task than to create an environment in which private industry can remain competitive.
If private industry cannot remain competitive, the federal government will be unable
to achieve all of its other goals in areas of national concern -- in defense, in health
care, in education, in the protection of the environment. Economic productivity is the
foundation on which we build our national policy, and we ignore that foundation at
our peril.
Private industry is the driver of productivity in this country. The federal
government therefore needs to make it possible for American industry to do what it
does best: to innovate, to compete, and to excel in national and global markets. In
many cases, this requires simply leveling the playing field for American firms and
2
getting out of the way. The challenge to the federal government is to decide what
kinds of actions are appropriate.
I will be talking today about a wide range of actions that the federal
government has been taking and will be taking to help industries maintain their
competitive edge. These actions range from broad macroeconomic policies to specific
programs designed to address immediate concerns. At first glance, these efforts may
appear relatively unrelated. But together I believe that they represent a
comprehensive, long-range, responsible approach to the challenges facing American
industry. It is an approach that will ultimately result in a stronger, more stable
industrial base, one that is well equipped to meet the challenges of the 21st century.
MANUFACTURING MATTERS
I want to begin by talking about an important aspect of industry in the 21st
century, an aspect that is too often ignored: manufacturing. We in this country are
the victims of what I would describe as a dangerous myth: that the United States
has moved, in a rather leisurely fashion, from an agricultural economy to a
manufacturing economy to a service economy. Nothing could be farther from the
truth. To say that we have moved beyond manufacturing would be as absurd as
saying that we have moved beyond agriculture. Unfortunately, this myth has begun to
permeate our culture, with very harmful effects.
One is that in science and technology we tend to focus on the revolutionary
types of discoveries, the ones for which people are awarded Nobel prizes, rather than
on the evolutionary developments. Yet these evolutionary advances are the ones that
allow companies to bring products to the market a little faster, a little cheaper, and a
little more reliably. It is extremely distressing to note that at MIT, one of our most
distinguished engineering schools, fewer than 4 percent of its engineering graduates
demonstrate even the slightest interest in production or manufacturing.
Much of this problem is a cultural one, and like many of the problems I'll be
discussing it will be solved only through simultaneous efforts on a number of fronts.
3
We have to reemphasize the importance of manufacturing on many levels, from the
boardroom to the classroom. The federal government has instituted a number of
policies that affect manufacturing. These policies also have an important indirect
effect: they focus attention on this important component of our national competitive
stance.
STRUCTURAL PROBLEMS IN THE ECONOMY
This renewed focus on manufacturing and production is all for the better, and
we should welcome it. But our problems in competitiveness do not reside entirely in
manufacturing. They may show up there, but many of them originate in much deeper
structural problems that are not going to be easy to resolve. These problems include:
The cost of capital
A reduced willingness to take technological risks
Inequitable trading policies
The quality of the technical workforce
And a general wariness about cooperation among various entities in
government, industry, and universities
The federal government clearly has a role to play in addressing these problems.
But before I turn to this federal role, I want to make another very important point.
The response of the federal government must be built on more than just correcting
deficiencies. A successful strategy must also exploit the strengths and advantages
unique to the United States.
Undoubtedly the United States' greatest strength is our infrastructure for
research and development. Since World War II, the generous support provided by the
federal government, and by the American taxpayer, has given the United States the
strongest scientific and technological enterprise that the world has ever seen. It is a
national and global resource; it is essential for our standing in the world.
4
The United States has several other great strengths of which we can justifiably
be proud.
0
We have a university system that is the envy of the world and that routinely
attracts the brightest young people from around the world.
0
We have an open and hospitable society, so that students and professionals
who come to this country often stay here and make major contributions to our
economy and culture.
0
We have a business climate that encourages new companies and allows
successful companies to grow quickly into major businesses.
0
And we have a culture that continues to prize and reward innovation, which
has become the keystone of modern economies.
The United States needs to maintain these strengths if we are to remain a
world economic leader. Both the public and the private sectors need to increase their
support for research and development in universities and industry. These activities
are responsible for the strength of our science and technology base, and we must not
ignore them as other concerns are addressed.
But strong technology is not always enough. Our strength in technology has
not prevented a steady erosion in market share in many industries. As an industry
matures, companies cannot afford to rest on past achievements, because in today's
economy a static company is a declining company. Rather, they must continue to
innovate and enhance the application of technology throughout the production process.
U.S. firms are increasingly learning this lesson, and as they do they are starting to
gain back some of the ground that has been lost to foreign competitors.
5
THE MACROECONOMIC CLIMATE
As I said at the outset, the federal government must make it possible for firms
to innovate and compete. Thus its most important responsibility is to help create the
macroeconomic climate in which industrial innovation can flourish. I am not an
economist, so I do not speak with absolute authority on these issues. But I do believe
that without a business climate that encourages innovation, the other efforts I shall
be discussing will have only marginal effects.
The single most important factor in the business climate is the ability to invest,
which in turn is related to the availability, cost, and patience of capital. Many have
pointed out that the cost of capital in the United States is higher than it is for our
major competitors, and the emphasis in this country is on short-term returns on
investments. In contrast, the most important factor behind Japan's success as a
producer is its persistently high rate of investment and its willingness to take long-
term risks.
Several factors contribute to making capital more expensive here than it is
elsewhere. The federal budget deficit, tax provisions, low savings rates, and
uncertainty about the future can all drive up the cost of capital.
The Bush Administration is firmly committed to lowering capital costs in this
country. We are working to reduce the budget deficit, most immediately through the
budget summit initiated by the President. We are also working to reduce the capital
gains tax to promote risk taking and encourage a long-term focus for investors. We
have proposed, most recently in the 1991 budget document, several actions that would
increase domestic savings and thereby promote investment.
More general regulatory concerns also have an influence on competitiveness.
Many of these concerns are being addressed by the Council on Competitiveness, which
the President established under the leadership of the Vice-President. For example,
the Council has developed a strategy to reform the existing maze of product liability
laws. The Bush Administration has also recently proposed changing antitrust laws to
allow companies to enter more easily into joint production ventures.
6
A proposal that focuses specifically on research and development is the
research and experimentation tax credit. The President has proposed changes to the
present tax credit to encourage U.S. industry to invest in long-range research. These
changes include making the tax credit permanent and extending it to cover
expenditures by startup firms. The intention is to encourage rapid growth of research
and development as well as sustained commitments for R&D support.
Trade policies are also a major part of the competitiveness equation. The U.S.
government has a duty to ensure fair trade treatment for U.S. industry in the global
marketplace. Dumping and other unfair trading practices must not and will not be
tolerated. U.S. companies must have access to world markets free from tariff and
nontariff barriers. And our intellectual property rights must be protected.
This Administration is working to reduce barriers to fair and free trade
through bilateral negotiations and the ongoing round of GATT talks. The U.S.
representative to those talks is forcefully promoting the opening of world markets and
the creation of fair trading rules. Intellectual property issues are also being
addressed both in GATT and bilaterally.
EDUCATION AND COMPETITIVENESS
Governments at all levels have another fundamental responsibility in ensuring
industrial competitiveness. They have an obligation to provide young Americans with
the education they will need to be productive and successful workers in the American
economy.
I'm sure you are all aware of the studies showing American students last or
almost last in international comparison of scientific and mathematical achievement.
But what we should keep in mind is that ten years from now, or twenty years from
now, those scores are going to translate into competitive advantages among nations.
We are shortchanging our children's futures by providing them with an inferior
education.
7
Precollege education will remain largely a state and local responsibility. But
the federal government must assume an appropriate role in supporting the states and
localities, particularly in mathematics and science education.
I have recently helped to set up an interagency committee on science and
mathematics education chaired by Admiral Watkins, the Secretary of Energy, and I
have very high expectations for that committee. The federal government already
spends a substantial amount of money for science and mathematics education -- over
$1.5 billion in five Federal agencies. The challenge is to coordinate the various
programs and expenditures of the federal government so that they have the optimum
effect.
FEDERAL SUPPORT OF TECHNOLOGY
I would like to turn now to the more specific question of the government's
development of technology. We tend to think of the federal government as the
supporter of basic research in this country, and in fact it does fund over half of this
research. But the federal government supports more applied research and
development than it does basic research, even if you look only at commercial R&D.
Traditionally, the federal government has supported these activities for two
reasons: to meet its own needs in such areas as defense and space, and to meet
broader national needs such as new and better means of providing health care,
agricultural productivity, and pollution clean-up.
The government relies to a great extent on its own laboratories and on private
industry to undertake this applied research and development. Furthermore, it
encourages these activities to be managed in such a way as to optimize the
commercial applications of this research and development.
Approximately $15 billion is proposed in the FY 1991 budget for civilian
applied research and development. Over $1.5 billion of this amount would be
allocated to developing advanced technologies such as robotics, high performance
computing, and semiconductor technologies. On the defense side, the budget requests
8
nearly $5.6 billion for basic, applied, and developmental research that supports our
future national security.
It is therefore clear that the federal government already supports a great deal
of technology development. Many of these previous investments have been very
successful in developing technologies that have important civilian applications, such
as agriculture, health, and aeronautics.
GENERIC, PRECOMPETITIVE TECHNOLOGIES
The Bush Administration believes that the federal government should continue
to participate with the private sector in developing technology. Furthermore, the
Administration has made a commitment to support generic, precompetitive
technologies that are important in both the public and private sectors. These are
technologies where no single company can capture enough of the benefits to justify
investing an adequate amount of R&D in them. The rationale for investing in these
technologies is essentially the same as that for investing in basic research: individual
companies cannot bear the cost and risk of such investments given the diffuse nature
of the benefits. Examples include certain materials technologies (such as
superconductivity), information technologies (such as high performance computing),
and biotechnologies (such as scaled-up bioprocesses).
In a speech to the American Electronics Association on March 7, President
Bush pointed specifically to the importance of these precompetitive technologies. He
said, "This Administration is committed to working with you in the critical
precompetitive development stage where the basic discoveries are converted into
generic technologies that support both our economic competitiveness and our national
security. Here again we can help to level the international playing field on which you
operate."
This is a policy that I wholeheartedly support, and I shall do my best to assist
in its execution. One of the four Associate Directors in my office, William Phillips, is
specifically in charge of industrial technology, and he and I will be working closely
9
with the rest of the Administration, with the Commerce Department, and with the
Defense Department to promote the federal government's development of commercially
important technologies.
POOLING RESOURCES TO TAKE ON PROBLEMS
In addition to directly funding the development of technologies, the federal
government can make it easier for industry to develop commercial technologies. One
way to do this is by catalyzing the formation of consortia or networks of industries,
such as SEMATECH, along with federal laboratory and university participants.
Particularly for small and medium-sized businesses, such consortia make it possible
to pool resources and specialize on problems, so that each individual firm does not
have to reinvent the technological wheel.
Already, we are starting to see the kinds of collaborative arrangements that I
believe will be much more common in the future. DuPont, Hewlett-Packard, and Los
Alamos National Laboratory have established an $11 million joint venture that is
exploring applications for the new high-temperature superconducting materials. The
University of Illinois, an Agriculture Department laboratory, the state of Illinois, and
six different U.S. companies have set up a consortium focused on biotechnology
products. Roughly 200 cooperative R&D agreements between federal laboratories and
private companies are now ongoing.
In general, the hundreds of laboratories funded by the federal government
embrace an astonishing breadth and depth of the best science and technology to be
found. This base of knowledge represents one of our most valuable national assets.
Federal laws and policies now in place make it the responsibility of every federal
technology manager -- defense or civilian -- to consider the commercial ramifications
of the work they are supporting and to try to encourage its commercial potential. We
will be building on these previous laws and policies to develop mechanisms that will
expedite the diffusion of the results of federally supported R&D to industry. These
mechanisms will include active licensing of inventions and removal of barriers to
10
commercial development, as well as marketing of federally developed computer
software.
It is also important that this transfer of technology be guided by the potential
users. The federal government has a relatively poor track record where it has
invested in civilian technology without close involvement at the outset from potential
users. If U.S. industry wants government assistance and is willing to coinvest, there
is some hope for success. But if industry does not perceive the need or is not
interested, there is little point in the government's engaging in technology push.
THE ROLE OF THE DEPARTMENT OF COMMERCE
In addition to the national laboratories, the Department of Commerce is going
to be heavily involved in working with industry on the development of industrial
technologies. I will be working closely in this area with Robert White, the new
Deputy Under Secretary for Technology at Commerce, as well as with Tom Murrin,
who is here today.
In particular, we expect the National Institute of Standards and Technology to
be a major player in technology development. I might single out two new programs
as examples. The Advanced Technology Program is aimed at assisting businesses in
developing precompetitive, generic technologies that will widely benefit the private
sector. This program will support joint ventures and other research arrangements
that have been suggested and developed by industry.
Another promising program involves the Manufacturing Technology Centers,
which are designed to disseminate new manufacturing technologies within industry,
and particularly within small business.
I see both of these programs as experimental. If they meet with the success
that I and my colleagues in the Commerce Department believe they will, we hope that
they will substantially expand in the future.
11
STATE ACTIVITIES
I know that you have just heard a talk about technology transfer at the state
level, so I am not going to dwell on that subject. But I should point out that the
federal government has the opportunity to leverage state initiatives in ways that can
greatly increase their effectiveness. To take just one example, the federal government
has the opportunity to convey information about local success stories to other areas
that could benefit from similar initiatives. Again, I expect the Department of
Commerce to be a central player in this effort.
CONCLUSION
This has been a long list of federal initiatives, but I hope in this way to have
demonstrated an important point. The federal government holds the issue of
industrial competitiveness to be among its highest priorities. Not only is the federal
government involved in the development of technology. It is also seeking to influence
the other factors -- economic, educational, fiscal, regulatory, and even cultural -- that
affect the position of U.S. firms in world markets.
Of course, the federal government cannot go it alone. Other institutions and
individuals need to get involved -- and most particularly the leaders of industry in
this room. The primary responsibility for the nation's competitiveness must, in the
final analysis, rest with the private sector.
But the federal government can do a great deal. It can establish a strategic
vision, emphasize the importance of our nation's competitive position, catalyze the
activities that will make a difference. This is what the Bush Administration has been
seeking to do, and it will continue to do so in the future.
final 11 april
8:00 P.M.
PROPOSED REMARKS
BY
WILLIAM H. WEBSTER
DIRECTOR OF CENTRAL INTELLIGENCE
BEFORE THE
WORLD AFFAIRS COUNCIL OF BOSTON
BOSTON, MASSACHUSETTS
APRIL 12, 1990
IT IS ALWAYS A PLEASURE TO VISIT MASSACHUSETTS. I LOOK
FORWARD TO RETURNING IN MAY FOR MY 45TH COLLEGE REUNION.
ACTUALLY, THE WAR DELAYED MY GRADUATION UNTIL 1947. IN BETWEEN
THOSE TWO DATES, WINSTON CHURCHILL VISITED WESTMINSTER COLLEGE
IN MY HOME STATE OF MISSOURI, AND DELIVERED HIS NOW FAMOUS
"IRON CURTAIN." SPEECH. FOR THE NEXT FOUR DECADES, THE SOVIET
UNION MAINTAINED RIGID CONTROL OF THE SATELLITE STATES FORMING
THE WARSAW PACT. ON ONE SIDE OF THE IRON CURTAIN LAY THE
EUROPEAN DEMOCRACIES; ON THE OTHER A MONOLOTHIC FORM OF
TYRANNY. OUR SOVIET EXPERTS LISTENED WITH STETHOSCOPES FOR ANY
SIGN OF HICCUPS THAT WOULD SUGGEST SIGNIFICANT CHANGE IN SOVIET
INTENTIONS AND CAPABILITIES. BY 1961, THE BERLIN WALL WAS
UNDER CONSTRUCTION. MY YOUNGER DAUGHTER KATIE WAS BORN AS IT
WAS GOING UP. SHE HAD LIVED HER ENTIRE LIFE IN THE SHADOW OF
THAT SYMBOLIC STRUCTURE. AND THEN LAST YEAR, THE YEAR HER
FIRST CHILD WAS BORN, IT CAME DOWN. A NEW LIFE, AND IN MANY
RESPECTS, NEW OPPORTUNITIES IN A RAPIDLY CHANGING WORLD. NO
MORE LISTENING FOR HICCUPS. TODAY WE CONFRONT A PACE OF CHANGE
THAT IS UNPRECENDENTED IN MODERN HISTORY. MUCH OF THE CHANGE
HAS OCCURRED WITHIN JUST THE PAST SIX MONTHS. BUT ALTHOUGH
THEY MAY BE RECENT, THESE CHANGES HAVE ALTERED MANY OF OUR
EXPECTATIONS FOR COUNTRIES -- EVEN REGIONS -- AROUND THE WORLD.
THEY HAVE ALSO TESTED US AND I THINK THEY HAVE PROVED HOW
DIFFICULT AND HOW IMPORTANT IT IS TO STAY AHEAD OF THE CURVE.
THIS EVENING I WOULD LIKE TO FOCUS ON SOME OF THE RECENT
CHANGES IN EASTERN EUROPE AND THE SOVIET UNION, AND THE
INTELLIGENCE ISSUES THAT WE WILL FACE IN THE NEW DECADE. TWO
OF THOSE ISSUES, WEAPONS PROLIFERATION AND GLOBAL ECONOMICS,
WILL, I BELIEVE, GROW IN IMPORTANCE AS WE APPROACH THE NEXT
CENTURY. FOR NOW, MUCH OF WHAT CONCERNS OUR POLICYMAKERS IS
AFFECTED BY EVENTS UNFOLDING IN EUROPE -- ELECTIONS, THE
PROCESS OF TRANSITION, AND PROSPECTS FOR THE FUTURE.
2
THE POLITICAL LANDSCAPE IN THE SOVIET UNION AND EASTERN
EUROPE IS CHANGING DRAMATICALLY. BY MID-JUNE, SEVEN NATIONS OF
EASTERN EUROPE WILL HAVE HELD LOCAL OR NATIONAL ELECTIONS. FOR
MOST OF THEM, THESE ARE THE FIRST MULTI-PARTY ELECTIONS SINCE
WORLD WAR II. ELECTIONS ARE BRINGING KEY ISSUES TO THE FORE,
BUT THEY DO NOT GUARANTEE AN EASY TRANSITION FROM COMMUNISM.
THEY WILL HAVE TO BE ACCOMPANIED BY TOUGH REFORMS -- REFORMS
THAT ARE GOING TO BRING HOME THE HARDSHIP OF UNEMPLOYMENT,
HIGHER FOOD PRICES AND INFLATION. WE ARE SEEING THIS ALREADY
IN POLAND, WHERE THE GOVERNMENT HAS MOVED AHEAD WITH
COMPREHENSIVE REFORM. THE COSTS ARE QUICKLY MOUNTING.
UNEMPLOYMENT HAS JUMPED FROM 55,000 IN JANUARY TO MORE THAN
250,000, AND IS EXPECTED TO REACH A MILLION BY THE END OF THE
YEAR.
THERE IS NO PERFECT MODEL FOR TRANSITION IN EASTERN
EUROPE. WHAT IS HAPPENING THERE IS UNPRECEDENTED. BUT WHILE
3
THESE COUNTRIES FACE SIMILAR PROBLEMS, EACH WILL GO THROUGH A
DIFFERENT TRANSITION PROCESS THAT REFLECTS ITS UNIQUE HISTORY
AND ITS INDIVIDUAL TIES TO THE WEST.
PROFOUND TRANSFORMATION IS TAKING PLACE IN EAST GERMANY,
HUNGARY, POLAND AND CZECHOSLOVAKIA, WHERE THE COMMUNIST PARTIES
ARE IN FULL RETREAT. PROGRESS IN THESE "NORTHERN TIER"
COUNTRIES HAS ALREADY BEEN BREATHTAKING -- FREE SPEECH, A
RAPIDLY DEVELOPING FREE PRESS, STRICT LIMITATIONS ON THE FEARED
INTERNAL SECURITY SERVICES. AND NOW, NEW POLITICAL PARTIES ARE
TAKING CHARGE AND PUSHING FORWARD WITH FURTHER CHANGE.
THE FIRST OF THE FREE ELECTIONS THIS SPRING WAS A
RESOUNDING VOTE FOR NON-COMMUNIST RULE. THOSE ELECTIONS, WHICH
WERE HELD IN EAST GERMANY LESS THAN 4 WEEKS AGO, MARKED AN
IMPORTANT STEP FORWARD FOR GERMAN UNIFICATION AND A MARKET
ECONOMY. THE NEW POLITICAL LEADERS HAVE AGREED TO A COALITION
GOVERNMENT THAT WILL MOVE AHEAD WITH UNIFICATION TALKS. THE
4
NEW GOVERNMENT IS EXPECTED TO BE PRESENTED TO THE NEW
PARLIAMENT FOR APPROVAL TODAY.
THE COMMUNISTS ALSO FARED POORLY IN HUNGARY. IN THE FIRST
FREE ELECTIONS SINCE WORLD WAR II, COMPLETED IN A SECOND ROUND
THIS PAST WEEKEND, THE VOTERS WERE ABLE TO CHOOSE FROM A DOZEN
POLITICAL PARTIES. THE PARTY MOST LIKELY TO LEAD THE COALITION
GOVERNMENT IS STRONGLY NATIONALISTIC AND HAS PLEDGED TO MOVE
AHEAD WITH ECONOMIC REFORM.
IN THE BALKANS, THE PROCESS OF TRANSFORMATION IS MORE
COMPLICATED. POLITICAL OPPOSITION IS NOT WELL-DEVELOPED IN
MANY OF THESE COUNTRIES. IN BULGARIA, FOR EXAMPLE, COMMUNISTS
STILL STAND A GOOD CHANCE OF PLAYING A MAJOR ROLE IN THE
GOVERNMENT, EVEN AFTER THE ELECTIONS WHICH ARE SCHEDULED TO
TAKE PLACE IN JUNE. AND IN ROMANIA, SOME -- PARTICULARLY THE
INTELLECTUALS AND STUDENTS -- ARE CONCERNED THAT THE NATIONAL
SALVATION FRONT WILL SIMPLY REPLACE THE COMMUNIST PARTY AND NOT
5
OFFER THE HOPED-FOR CHANGE. WE HEAR MURMURINGS LIKE "THE
REVOLUTION HAS BEEN HIJACKED." IN ETHNICALLY TROUBLED
YUGOSLAVIA, A FIRST ROUND OF ELECTIONS WERE HELD THIS WEEKEND
IN THE REPUBLIC OF SLOVENIA -- THE FIRST MULTI-PARTY ELECTIONS
TO BE HELD IN THAT COUNTRY SINCE WORLD WAR II. THE RESULTS SO
FAR INDICATE STRONG SUPPORT FOR SECESSION -- A THEME THAT IS
LIKELY TO SPILL OVER INTO ELECTIONS LATER THIS MONTH IN THE
NEIGHBORING REPUBLIC OF CROATIA. IN OTHER AREAS OF THE
COUNTRY, THE POTENTIAL FOR ETHNIC UNREST REMAINS HIGH.
ETHNIC STRIFE PRESENTS OBSTACLES TO REFORM THROUGHOUT THE
BALKANS. IN ROMANIA, STRAINS BETWEEN THE NEARLY TWO MILLION
ETHNIC HUNGARIANS AND THE ROMANIAN MAJORITY IN TRANSYLVANIA
HAVE ERUPTED INTO VIOLENCE. AND INDEED THAT VIOLENCE PLAYED A
ROLE IN THE HUNGARIAN ELECTIONS, WHERE THE NATIONALIST PARTIES
PROBABLY GAINED MORE VOTES THAN THEY WOULD HAVE BUT FOR THE
VIOLENCE BEING EXPERIENCED BY THEIR COUNTRYMEN IN ROMANIA.
6
A KEY FACTOR FOR ALL OF EASTERN EUROPE HAS BEEN THE
REMARKABLE CHANGE IN THE SOVIET UNION. THE SOVIET UNION SHARES
THE CHALLENGES OF REFORM THAT THE EAST EUROPEAN COUNTRIES ARE
FACING, AND IT TOO HAS ENTERED A NEW ERA OF ELECTIONS THAT ARE
BRINGING UNPRECEDENTED CHANGE. GIVEN ITS TREMENDOUS SIZE AND
CULTURAL DIVERSITY, ITS HISTORICAL AND POLITICAL EXPERIENCE,
THE CHALLENGES FOR THE SOVIET UNION ARE EVEN GREATER.
THE CRISIS WE NOW SEE IN THE USSR WILL LIKELY BE DEEP AND
PROLONGED. GORBACHEV'S REFORMS HAVE UNDERMINED THE STALINIST
SYSTEM THAT HE INHERITED AND HAVE PUT THE SOVIET UNION ON THE
ROAD TO A NEW POLITICAL SYSTEM, BUT THE NEW SYSTEM THAT HE IS
TRYING TO CREATE IS NOT YET READY TO TAKE THE PLACE OF THE OLD
ONE HE HAS DISCARDED. ECONOMIC CONDITIONS HAVE DETERIORATED.
CRIME IS INCREASING. ETHNIC TURMOIL IS ESCALATING. AND NOW
MOSCOW FACES PERHAPS ITS GREATEST CHALLENGE -- ATTEMPTS BY
INDIVIDUAL STATES TO SECEDE FROM THE UNION.
7
WHAT WE SEE IN LITHUANIA IS A REPUBLIC THAT HAS TAKEN
SPECIFIC STEPS TO SECEDE, AND IS STRUGGLING WITH MOSCOW IN
PURSUIT OF THAT GOAL. THE SOVIET GOVERNMENT HAS RULED
LITHUANIA'S DECLARATION OF INDEPENDENCE TO BE ILLEGAL, AND HAS
MOVED TO ASSERT ITS CONTROL OF THE TERRITORY AND THE PRIMACY OF
ITS LAWS. THE BATTLE FOR CONTROL OF KEY INSTITUTIONS ESCALATED
LAST WEEKEND WHEN LITHUANIANS FORMED A HUMAN CHAIN TO PREVENT
SOVIET TROOPS FROM ENTERING THE CENTRAL PRESS BUILDING IN
VILNIUS. AND EARLIER THIS WEEK, GORBACHEV'S PRESIDENTIAL
COUNCIL CALLED FOR FURTHER -- BUT UNSPECIFIED MEASURES TO BE
TAKEN AGAINST THE REPUBLIC.
THE SITUATION IS TENSE, AND COOL HEADS ARE NEEDED ALL
AROUND. THE FACT THAT THE EVENTS ARE BEING PLAYED OUT BEFORE
AN INTERNATIONAL AUDIENCE CREATES ENORMOUS PRESSURE, ESPECIALLY
FOR MOSCOW, AS THE WORLD WAITS TO SEE EXACTLY WHAT MEASURES
MOSCOW WILL TAKE NEXT. THE WHITE HOUSE HAS URGED, AND
8
CONTINUES TO URGE, BOTH SIDES TO ENGAGE IN PEACEFUL
NEGOTIATIONS.
ON THE ECONOMIC FRONT, PRESIDENT GORBACHEV HAS FOLLOWED UP
PROMISES TO REDUCE DEFENSE SPENDING AND TO TRANSFER RESOURCES
TO CONSUMER GOODS. AND FOR THE FIRST TIME SINCE THE 1920S,
PRIVATE CITIZENS CAN NOW OWN SMALL FACTORIES AND BUSINESSES.
BUT THE QUESTION REMAINS WHETHER THESE STEPS AND OTHERS TO
FOLLOW WILL SATISFY THE SOVIET PEOPLE. so FAR ATTEMPTS TO HEAD
OFF CONSUMER DISCONTENT HAVE MET WITH VERY LITTLE SUCCESS.
GORBACHEV HAS SOME VERY UNHAPPY CONSUMERS ON HIS HANDS. SOME
STATE ENTERPRISES HAVE GONE PRIVATE, BUT THEY CANNOT OBTAIN
NEEDED SUPPLIES. THE PROBLEMS OF GETTING FOOD AND GOODS TO THE
PEOPLE USING OUTDATED DISTRIBUTION SYSTEMS HAVE ONLY GOTTEN
WORSE. WE BELIEVE THAT AT TIMES THE SOVIETS LOSE UP TO 40
PERCENT OF THEIR PERISHABLE AGRICULTURAL PRODUCTS ON THE POOR
TRANSPORTATION NETWORK. TRAINS ARE DELAYED, AND HUNDREDS OF
SHIPS WAIT IN THE HARBORS TO UNLOAD GRAIN.
9
ALL OF THIS UNDERSCORES WHAT THE REAL CHALLENGE FOR
GORBACHEV WILL BE -- TO CREATE AN ECONOMIC ORDER AND A
POLITICAL SYSTEM THAT WILL SATISFY CONSUMERS AND GIVE REPUBLICS
AN INCENTIVE TO STAY IN THE UNION.
FOR THE INTELLIGENCE COMMUNITY, THE IMMEDIATE TASK IS TO
LOOK AT THE DECREASE IN THE SOVIET AND WARSAW PACT THREAT TO
EUROPE. OVER THE LAST YEAR THE SOVIETS HAVE UNILATERALLY
REDUCED THEIR FORCES IN EASTERN EUROPE, AND BY MID-1991 SOVIET
TROOPS WILL HAVE WITHDRAWN COMPLETELY FROM HUNGARY AND
CZECHOSLOVAKIA.
WE ARE GOING INTO A NEW WORLD OF SECURITY CONCERNS, AND
PRESIDENT BUSH HAS ASKED US TO LOOK AT THE CHANGING NATURE OF
THE THREAT AND TO DETERMINE JUST HOW IT AFFECTS OUR NATIONAL
SECURITY. THE SOVIET UNION REMAINS A NUCLEAR SUPERPOWER, ABLE
TO REACH ALL ITS TARGETS. STRATEGIC FORCES CONTINUE TO BE
MODERNIZED, AND THEIR MILITARY RESEARCH AND DEVELOPMENT
10
PROGRAMS CONTINUE TO RECEIVE GENEROUS FUNDING. UNDERSTANDING
SOVIET INTENTIONS AS WELL AS SOVIET CAPABILITIES WILL REMAIN A
MAJOR INTELLIGENCE PRIORITY.
AND IN THE 1990S, THE SOVIET UNION IS NOT THE ONLY COUNTRY
POSSESSING LETHAL TECHNOLOGY. NATIONS AROUND THE WORLD ARE
BUILDING UP THEIR OWN ARSENALS. THE PROLIFERATION OF NUCLEAR,
CHEMICAL, AND BIOLOGICAL WEAPONS POSE SERIOUS DANGERS TO
REGIONAL STABILITY AND TO THE INTERESTS OF THE UNITED STATES.
THE INTELLIGENCE COMMUNITY HAS BEEN PLAYING A VITAL ROLE IN
PROVIDING OUR POLICYMAKERS WITH INFORMATION ABOUT THE PLANS,
INTENTIONS, AND CAPABILITIES OF COUNTRIES INVOLVED IN
PROLIFERATION. IN FACT, I THINK WE HAVE BEEN WELL AHEAD OF THE
CURVE IN THIS RESPECT. WE HAVE BEEN IN A POSITION TO HELP
IDENTIFY ILLEGAL SHIPMENTS OF PRECURSORS, EQUIPMENT, AND
TECHNICAL ASSISTANCE BETWEEN COUNTRIES.
11
THIS HAS MADE IT POSSIBLE TO IDENTIFY COUNTRIES WE BELIEVE
POSSESS CHEMICAL WEAPONS PROGRAMS. IT HAS ENABLED OUR
GOVERNMENT TO BE ALERT TO ATTEMPTS BY NATIONS TO CIRCUMVENT
INTERNATIONAL LAW AND COMPACTS AND OBTAIN MATERIALS TO PURSUE
THEIR OWN PROGRAMS.
THERE IS A GREAT NEED FOR INTERNATIONAL COOPERATION TO
CONTROL THE SPREAD OF LETHAL TECHNOLOGY. COUNTRIES ARE
AGGRESSIVELY SEEKING TO OBTAIN WHAT THEY NEED BY CLANDESTINE
MEANS, MAKING THE PROCUREMENT PROCESS EXTREMELY COMPLEX. THEY
ARE USING FRONT COMPANIES, FALSIFICATION OF EXPORT DOCUMENTS,
AND MULTIPLE TRANSSHIPMENT POINTS. WE ARE ALSO FINDING THAT
REGULATIONS ARE BEING CIRCUMVENTED BY ORDERING EQUIPMENT OR
MATERIAL THAT IS JUST BELOW THE EXPORT GUIDELINES BUT WHICH, IN
THE AGGREGATE, WOULD BE SUBJECT TO CONTROLS.
IN ITS EFFORTS TO BRING AN END TO CHEMICAL WEAPONS, THE
U.S. GOVERNMENT HAS BEEN VERY ACTIVE IN PROMOTING A GLOBAL BAN
12
ON THESE WEAPONS. PRESIDENT BUSH GAVE THIS BAN MOMENTUM WHEN
HE PROPOSED IT BEFORE THE UNITED NATIONS GENERAL ASSEMBLY LAST
SEPTEMBER. ALSO IN SEPTEMBER, SOVIET FOREIGN MINISTER
SHEVARDNADZE AND SECRETARY OF STATE BAKER SIGNED A MEMORANDUM
OF UNDERSTANDING FOR CHEMICAL WEAPONS DURING THEIR MEETING AT
JACKSON HOLE. THIS M.O.U. ALLOWED FOR THE EXCHANGE OF
INFORMATION ON STOCKPILING AND LOCATION OF CHEMICAL WEAPONS IN
BOTH THE UNITED STATES AND THE SOVIET UNION.
THE M.O.U. WAS ALSO SIGNED AS AN IMPETUS FOR ALL THE
NATIONS WHO HAVE CHEMICAL WEAPONS TO JOIN THE DRIVE FOR A
GLOBAL TREATY. THERE ARE ABOUT 20 NATIONS TODAY WHO ARE
DEVELOPING THESE WEAPONS BUT ONLY A FEW HAVE ACKNOWLEDGED
POSSESSION.
THE U.S. AND THE SOVIET UNION ARE ALSO UNDERTAKING ANOTHER
BILATERAL INITIATIVE. THIS TIME IT IS FOCUSED ON ELIMINATING
ADDITIONAL CW STOCKPILES IN BOTH COUNTRIES. THE OBJECTIVE,
13
AGAIN, WOULD BE BUILDING CONFIDENCE IN A WORLDWIDE TREATY.
BUT EVEN IN THE EVENT SUCH AN ACCORD IS REACHED, THE
MONITORING OF THIS TREATY FOR VERIFICATION -- LARGELY AN
INTELLIGENCE ROLE -- WILL POSE UNIQUE PROBLEMS. MUCH OF THE
TECHNOLOGY THAT IS USED IN THE PRODUCTION OF CHEMICAL AND
BIOLOGICAL WEAPONS HAS DUAL-USE -- IT CAN BE USED IN THE
LEGITIMATE PRODUCTION OF COMMERCIAL GOODS. FOR THAT REASON,
MUCH OF THIS MATERIAL IS NOT DIFFICULT TO OBTAIN AND IT IS MORE
DIFFICULT YET TO ASSESS THE INTENTIONS OF THOSE WHO ARE TRYING
TO ACQUIRE IT.
LET ME TURN TO ANOTHER INTELLIGENCE ISSUE THAT HAS GLOBAL
IMPLICATIONS FOR THE FUTURE.
MUCH OF WHAT IS HAPPENING IN THE WORLD DERIVE FROM ECONOMIC
FORCES THAT INFLUENCE POLITICAL, MILITARY, AND ENVIRONMENTAL
DECISIONS AND ATTITUDES IN A WORLD OF INCREASINGLY INTERRELATED
COUNTRIES. THE ECONOMIC SYSTEMS THAT ARE DESIGNED TO DEAL WITH
14
THIS PHENOMENON INCREASINGLY GENERATE ISSUES OF NATIONAL
SECURITY DIMENSIONS. THE INCREASING INTEGRATION OF THE WORLD'S
FINANCIAL MARKETS, FOR EXAMPLE, IS A REVOLUTIONARY STRUCTURAL
CHANGE IN THE GLOBAL ECONOMY. TRADITIONAL DISTINCTIONS HAVE
BEEN BLURRED BETWEEN DOMESTIC AND INTERNATIONAL MARKETS,
BETWEEN THE DIFFERENT KINDS OF FINANCIAL TRANSACTIONS, AND
BETWEEN WHO IS A MARKET PARTICIPANT AND WHO IS NOT.
THE TRANSFORMATION OF INTERNATIONAL FINANCIAL MARKETS IS
CLEAR WHEN YOU LOOK AT THE NUMBERS: THE NUMBER OF
INTERNATIONAL BANKS IS NOW IN THE HUNDREDS, AND FOREIGN
EXCHANGE TRANSACTIONS EXCEED 300 BILLION DOLLARS PER DAY. ONE
WEEK OF FUNDS TRANSFERRED ON THE INTERNATIONAL MARKET IS LARGER
THAN THE SIZE OF THE THIRD WORLD DEBT.
THIS "GLOBALIZATION" OF FINANCIAL MARKETS HAS CREATED A
HIGHLY FLUID SITUATION IN WHICH POLITICAL AND ECONOMIC
DEVELOPMENTS IN ONE AREA CAN QUICKLY INFLUENCE FINANCIAL
15
DEALINGS AROUND THE GLOBE. AND WITH IT HAS COME THE GREATER
USE OF THE FINANCIAL SYSTEM BY GOVERNMENTS AND GROUPS WHOSE
OBJECTIVES THREATEN OUR NATIONAL SECURITY INTERESTS. NARCOTICS
MONEY LAUNDERING, TERRORIST ACTIVITIES, GRAY ARMS PURCHASES,
AND TECHNOLOGY AND EQUIPMENT NEEDED FOR PROLIFERATION
ACTIVITIES ARE INCREASINGLY FUNDED THROUGH THE WORLD'S
FINANCIAL MARKETS, WHICH OFFER THEM SPEED, EASE, AND ANONYMITY.
AS THE 21ST CENTURY APPROACHES, IT IS CLEAR THAT ECONOMIC
CONSIDERATIONS ARE INCREASINGLY TIED TO NATIONAL SECURITY
ISSUES. THERE IS NOW UNIVERSAL RECOGNITION THAT ECONOMIC
STRENGTH IS KEY TO GLOBAL INFLUENCE AND POWER.
OUR POLICYMAKERS ARE VERY INTERESTED IN THE COMPETITIVENESS
OF THE UNITED STATES IN THE GLOBAL MARKET. IN RECENT YEARS,
JAPAN AND OTHER ECONOMIC COMPETITORS HAVE MADE GREAT STRIDES IN
HIGH-TECH INDUSTRIES IN WHICH THE UNITED STATES HAS LONG HELD
THE LEAD. TELECOMMUNICATIONS AND DATA PROCESSING ARE JUST TWO
16
OF THE AREAS IN WHICH OTHER INDUSTRIALIZED NATIONS HAVE GROWN
INCREASINGLY COMPETITIVE.
IN HIGH TECHNOLOGY AND VIRTUALLY EVERY ECONOMIC AREA, U.S.
POLICYMAKERS ARE LOOKING AT THE STRATEGIES OF OUR ECONOMIC
COMPETITORS AS WELL AS EFFORTS BY FOREIGN GOVERNMENTS TO TARGET
MARKETS AND FINANCE RESEARCH, DEVELOPMENT, AND PRODUCTION.
THEY ARE WORKING THROUGH GATT AND BILATERAL TALKS TO IDENTIFY
PROTECTIONIST MEASURES AND OTHER BARRIERS TO REDUCING TRADE
IMBALANCES. AND INCREASINGLY, THEY ARE RELYING ON INTELLIGENCE
TO ILLUMINATE THE PLAYING FIELD -- AND TO UNDERSTAND THE RULES
OTHER NATIONS ARE PLAYING BY.
THROUGHOUT THE NEXT DECADE, WE WILL CONTINUE TO SEE AN
INCREASED EMPHASIS ON ECONOMIC COMPETITIVENESS AS AN
INTELLIGENCE ISSUE. BUT I WANT TO MAKE THE POINT THAT
ECONOMICS IS NOT A NEW AREA FOR INTELLIGENCE BUT WE ARE TAKING
SIGNIFICANT STEPS IN COLLECTION AND ANALYSIS TO STAY AHEAD OF
17
THE CURVE. WHAT WE ARE SEEING NOW IS A GROWING RECOGNITION
THAT ECONOMIC SECURITY IS PART OF OUR NATIONAL DEFENSE.
AS WE EXAMINE THE ISSUES OF THE 1990S, FLEXIBILITY WILL BE
THE KEY. INTELLIGENCE SUPPORT FOR CURRENT DEVELOPMENTS AND
EVEN CRISIS MANAGEMENT WILL BE CRITICAL. FINITE RESOURCES AND
TECHNOLOGY, INCLUDING OUR PRECIOUS HUMAN RESOURCES, MUST BE
ADAPTED AND APPLIED IN THE MOST EFFECTIVE MANNER TO PROTECT AND
ENHANCE OUR IMMEDIATE NEAR-TERM AND LONG-TERM REQUIREMENTS AS
WE HELP THE POLICYMAKERS REACH WISE DECISIONS BASED ON SOUND
INTELLIGENCE. BOTH THE PRESIDENT AND CONGRESS RECOGNIZE THIS
NEED AND ARE WORKING WITH US TO ENSURE THAT WE HAVE THE MEANS.
LAST SUMMER BEFORE THE MAJOR CHANGES OF THE LAST SIX
MONTHS -- I CREATED A NEW OFFICE UNDER A DEPUTY DIRECTOR TO
COORDINATE OUR STRATEGY FOR IDENTIFYING AND COPING WITH
CHANGING REQUIREMENTS FOR INTELLIGENCE IN A CHANGING WORLD.
ALL OF OUR SENIOR MANAGERS ARE INVOLVED. INTELLIGENCE
18
COLLECTION WILL NOT CONTINUE TO HAVE VALUE, UNLESS IT IS
TIMELY, USEFUL, AND OBJECTIVE.
THIS STRATEGIC PLANNING WILL REACH INTO ALL LEVELS OF THE
INTELLIGENCE BUSINESS AND WILL BRING TOGETHER THOSE WHO
IDENTIFY THE ISSUES WITH THOSE WHO ARE ASKED TO COLLECT THE
INFORMATION. IT WILL ALSO HELP US IDENTIFY WHAT THE KEY ISSUES
ARE LIKELY TO BE IN THE 1990S, NOT ONLY WITHIN OUR OWN
ORGANIZATION BUT FOR THE POLICY COMMUNITY.
WE HAVE , FOR INSTANCE, ALREADY BROUGHT PEOPLE TOGETHER IN
A TASK FORCE ON INTERNATIONAL ECONOMICS AND ANOTHER ON
PROLIFERATION -- THE TWO TOPICS I SPOKE TO YOU ABOUT TODAY.
WE HAVE ALSO BEEN MOVING TO COMBINE EXPERTISE FROM
THROUGHOUT THE INTELLIGENCE COMMUNITY TO ADDRESS COMMUNITY
ISSUES. THE CENTERS WE HAVE ESTABLISHED IN COUNTERTERRORISM,
COUNTERINTELLIGENCE, AND COUNTERNARCOTICS ARE INTELLIGENCE
COMMUNITY CENTERS AND COMBINE THE ANALYTICAL AND OPERATIONAL
19
EXPERIENCE OF A NUMBER OF DIFFERENT AGENCIES, BROUGHT TOGETHER
TO ADDRESS A KEY CONCERN.
WE HAVE A SAYING THAT WORLD CONDITIONS ARE MOST DANGEROUS
WHEN THEY ARE LEAST PREDICTABLE. THAT IS WHAT INTELLIGENCE IS
ALL ABOUT. WE WILL NOT ALWAYS KNOW. WE WILL NOT ALWAYS
PREDICT CORRECTLY. SOMETIMES OUR ANTAGONISTS DO NOT KNOW THEIR
OWN INTENTIONS. BUT TO THE EXTENT WE CAN APPLY OUR EXPERTISE
IN COLLECTION AND ANALYSIS -- TO THE EXTENT WE CAN APPLY OUR
RESOURCES ON THE EARTH, IN THE SEA, AND IN THE SKY -- TO
DETECTING AND UNDERSTANDING CHANGE, WE WILL REDUCE THAT DANGER
AND HELP TO MAKE THIS A BETTER AND SAFER WORLD.
I WONDER WHAT MY GRANDAUGHTER WILL BE ABLE TO TELL HER
CHILD ABOUT WHAT HAPPENED AFTER THE WALL CAME DOWN. THESE ARE
MOMENTOUS TIMES. I HOPE HISTORY WILL RECORD THAT WE WERE EQUAL
TO THE CHALLENGES AND THAT WE DID INDEED STAY AHEAD OF THE
CURVE.
20
TESTIMONY OF THE HONORABLE
D. ALLAN BROMLEY
DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY
EXECUTIVE OFFICE OF THE PRESIDENT
BEFORE THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
WASHINGTON, D. C.
Wednesday, May 23, 1990 -
TESTIMONY OF THE HONORABLE D. ALLAN BROMLEY
DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY
EXECUTIVE OFFICE OF THE PRESIDENT
BEFORE THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
WASHINGTON, D. C.
Wednesday, May 23, 1990
Mr. Chairman, I am pleased to have this opportunity to appear before your
committee to discuss this Administration's views on U.S. industrial competitiveness
and the Administration's policy regarding technology and competitiveness. The whole
issue of the competitiveness of our national industrial base is of paramount concern
to me, as it is to many others in the Administration and our respected associates in
Congress. There are few issues more important for us to address jointly than U.S.
economic competitiveness. On any number of occasions, I have stated clearly my
intentions to work cooperatively with Congress on such matters.
There is general agreement today that global competitiveness and national
security are tightly interwoven in that our national defense posture depends on our
continuing economic vitality. We are in an era when international economic
competition poses a formidable challenge, and the Administration is taking a number
of actions to respond to that challenge. We, in this Administration, believe it is
essential that we recognize and use the strengths of our economic system more
effectively to remain competitive while at the same time refraining from actions that
might distort our basic system of free enterprise which is our ultimate strength.
One of our greatest strengths is our infrastructure for research and
development. We have a culture that prizes innovation, a university system superior
to all others, an open and hospitable society that attracts the best scientific minds
and inventive talents of the world, a business climate that encourages innovative
enterprises, and a financial system that provides the opportunity for such new
enterprises to grow quickly into major businesses. Historically, private industry in
this country has proved itself the best in the world at converting the results of basic
research into commercially successful products. Thus, it is not surprising that our
technology base is the strongest in the world. We lead wherever innovative technology
is more critical than production efficiency.
Important as the role of technology may be, however, a successful national
strategy in industrial competitiveness cannot be based on it alone. Our strength in
technology has not prevented a steady erosion in our market share in many
industries. As each segment of these businesses matures, the advantage quickly shifts
from the innovator to the efficient producer. Many people would argue that the
Japanese are the most efficient producers in the world today. Many factors have
contributed to Japan's success as a producer, but none is more important than its
persistently high rate of investment. Nor is Japan the only example where a high
rate of capital investment pays off. The U.S. is also being seriously challenged in the
high technology sectors by ascendent Pacific Rim countries and by a rejuvenated
Europe. However, with its proven human resources and successful tradition in
manufacturing, the U.S. can meet this challenge. But, to do so, all elements of our
society must be willing to recognize that while we possess many strengths and assets,
problems do exist, and that we must, and can, mobilize our resources and solve them.
Many analyses imply that our problems in competitiveness reside entirely in
the areas of manufacturing and process. They don't. They may show up in these
areas, but they originate in much deeper structural problems that are not going to be
easily resolved. Some of the weaknesses--some perceived and some real-of the U.S.
system in international competition would include:
The cost of capital in the United States is higher than for our major
competitors, and there is an emphasis on short-term returns on
investments;
There is a reduced willingness to take technological risks, especially in
large corporations and in the financial community;
Other countries are outperforming the United States in transforming
research discoveries into high-quality products and into processes for
designing, manufacturing, marketing, and distributing these products;
Our international trade policy does not require reciprocity in market
access or government treatment of private companies between the U.S.
and its primary foreign competitors;
The quality of the technical workforce is declining in terms of education,
training, and the flexibility to adapt to technological change;
O
There is a lingering wariness of antitrust measures that inhibits
company-to-company cooperation, as well as a negative attitude in some
U.S. corporations toward technologies developed elsewhere; and
The coupling between federal laboratories and industry is weak,
particularly with small- and mid-sized companies that could benefit most
from federal assistance, and too often, an attitude of mutual distrust
exists that inhibits any effective cooperation between industry and
government.
As you can tell from this partial list, there will be no facile, short-term
solutions to our competitiveness challenge. The problems are multifaceted and
complex. If these problems are to be solved, actions must be taken on many fronts
2
involving all components of our society. For the Federal Government, the challenge is
to develop and exercise intelligent and visionary leadership emphasizing the long-term
economic vitality of the nation.
Incentives for the Private Sector
The Federal Government faces a wide range of options in moving to bolster our .
economic competitiveness that do not necessarily fall into the stark categories of
massive government subsidies of favored industries on the one hand and a total
"hands off" approach by the Federal Government on the other. At OSTP, we strongly
believe that the real choices lie in another direction, and we have been working within
the Administration to promote some of these options.
First and foremost, on the broadest level the government has the responsibility
to foster a macroeconomic climate that makes it possible for industry to invest in the
technology development and manufacturing processes that it needs to remain
competitive. This means bringing down the federal budget deficit and reducing the
cost of capital. This has been a top priority of the Bush Administration and remains
so today.
Fiscal and monetary policies can be used in other ways to encourage private
R&D investment. For example, the Bush Administration is working to reduce the
capital gains tax and make permanent and enhance the tax credit for research and
experimentation. Appropriate taxing policies for investments in equipment and
instrumentation can also provide important incentives for our industries.
A more favorable legal environment is another important factor. The Bush
Administration, for example, has recently proposed changing antitrust laws to allow
companies to enter more easily into joint production ventures and to abolish punitive
damage awards which increase, immeasurably, the financial risk to companies
entering into such ventures. These collaborations, from R&D through joint
precompetitive ventures, provide a means for companies to share risk and pool
resources, and they are common in other countries. Ironically, they are also common
between U.S. firms and foreign firms. But this country has been slow in adjusting to
the new reality that we are now competing in a global marketplace, and new
mechanisms need to be found that allow companies and the Federal Government to
work together to better meet this competition.
Similar legal changes can be made in patent law, where better international
protection of intellectual property will allow more benefits to be recovered from R&D
investments made in the United States. Government regulation can shape not only a
company's domestic markets, but also its international markets through the degree of
harmonization between regulations here and abroad.
3
Education and Training
The second area where the Federal Government is a major player is education
and training. We need to strengthen our entire educational process to ensure that
those entering the workplace will have the necessary knowledge, comprehension, and
problem solving skills for the highly technical content of the daily living and working
environment of the future. We also need to ensure that industry will have a plentiful
supply of talent at all levels. Critical among industry concerns is the anticipated
shortfall of scientists, engineers, and technicians.
The President's Education Summit was intended to catalyze a national
consensus on improving education, including science and mathematics education. One
of the national goals that emerged from this summit states that: "By the year 2000,
U.S. students will be first in the world in science and mathematics achievement."
Achieving such a goal will require a broad-based approach involving business,
academia, educational organizations, and state and local governments.
The Federal Government, itself, must assume an effective and appropriate role in
supporting the states, localities, and universities as they improve science and
technology education. In this effort, a particular emphasis must be placed on
improving our educational capabilities related to manufacturing technology. The
Administration's current budget proposal to Congress for fiscal year 1991 would result
in direct expenditures of over $1.5 billion for science and mathematics education
activities in five Federal agencies. These programs are in addition to the training
provided to thousands of graduate students supported through Federal competitive
R&D grants programs.
Federal R&D Responsibilities
Investments in research and development (R&D) provide both direct and
indirect productivity benefits for society. R&D yields new knowledge, processes,
technologies and products that, over the long term, result in economic growth and
improved quality of life for all Americans.
Traditionally, the Federal Government has supported R&D for two reasons:
first, to meet its own direct needs where it is the principal consumer such as
defense and civil space related R&D; and, second, to meet broader national needs
such as new and better means of providing health care, agricultural productivity, and
pollution clean-up.
In the first case where the Federal Government is the ultimate consumer for
the R&D results, funding levels and decisions are made on the basis of Government
objectives, needs, and requirements. However, the Government relies principally on
the private sector to undertake the development process and encourages these
activities to be managed in such a way to optimize commercial applications of the
R&D as well.
4
The second category of R&D requires Federal support either in the interests of
the public welfare or because the private sector is without sufficient incentives to
capture enough of the benefits to make private R&D investments worthwhile. Federal
support for basic research, especially at universities, is the prototypical, essential
investment in the Nation's scientific and technological future, including its future
scientists and engineers. This Administration has proposed increasing support for
basic research by $1 billion, or 8 percent, to over $12 billion in FY 1991. Indeed, the
Administration's budget proposes to allocate a total of over $71 billion for all R&D,
including basic research and research facilities in FY 1991, an increase of $4.5 billion
or 7 percent over FY 1990 levels. Within this total, civilian R&D would increase by
12 percent and defense related R&D would increase by 4 percent.
In particular, of the approximately $15 billion proposed for civilian applied
research and development support, over $1.5 billion would be allocated to developing
advanced technologies such as robotics, high performance computing, and
semiconductor technologies. On the defense side, the Department of Defense
technology base budget proposal including the DARPA budget ($1.1 billion) but
excluding SDI funding, requests nearly $5.6 billion for fundamental basic, applied and
developmental research that underpins our future defense systems. The major areas
of defense funding include high definition display technology, manufacturing and
materials technology, artificial neural network technology, and support for
SEMATECH which focuses on electronics technologies. Thus, it is clear that the
Federal Government currently supports a great deal of technology development; and it
should also be recognized that previous Federal R&D investments have been very
successful in developing technologies required for defense, space, and other important
civilian applications related to agriculture, health, and aeronautics.
This Administration believes the federal government should continue to
participate with the private sector in developing generic, enabling technologies that
are important in both governmental and commercial applications. These technologies
have a wide variety of commercial applications; however, no single company can
capture enough of their benefits to justify investing an adequate amount of R&D in
them. The rationale for investing in these enabling technologies is essentially the
same as that for investing basic research: individual companies cannot bear the cost
and risk of such investments alone. Examples include certain materials technologies
(such as superconductivity), information technologies (such as high performance
computing), and biotechnologies (such as scaled-up bioprocesses).
In a speech to the American Electronics Association in March, President Bush
pointed to the importance of these technologies. He said, "This Administration is
committed to working with you in the critical precompetitive development stage where
the basic discoveries are converted into generic technologies that support both our
economic competitiveness and our national security. Here again we can help to level
the international playing field on which you compete."
5
Transfer of Federally Funded Technology
Technology development by the federal government is one contributor to our
international competitiveness, but of course it is far from the only one. Even the
other federal actions I mentioned earlier cannot guarantee our international industrial
standing. Only industry itself, can do that. However, technology transfer from our
Federal laboratories to the private sector, particularly to small and medium sized
businesses, can also make a contribution to our economic growth.
Technology transfer has become part of the international vocabulary; but that
label is fundamentally misleading. It suggests that a specific technology can be
identified, isolated and packaged at one place; e.g., where it was developed--then
transferred to an entirely different place where it can be unpackaged, implemented
and exploited in an entirely different environment. Nothing could be farther from the
truth.
Technology is only transferred from, by and to adequately trained persons and
it is essential that our technology transfer system have an adequate base of trained
personnel prepared to move with the technology, and to accept and implement it at
the receiving end.
The United States has created and nurtured the finest research and
development establishment in the world through its combination of government,
university and industrial laboratory systems. The Federal Government's laboratories,
in particular, embrace an astonishing breadth and depth of the best science and
technology to be found. This base of knowledge represents one of our most valuable
national assets. However, a technology base is unlike many other assets: it must be
put to use in order to be valuable. This Administration believes the Government
must make R&D activities at Federally-supported laboratories more relevant and
accessible to the private sector, and, that such efforts should be guided by the
potential users.
The Federal Government has a relatively poor track record where it has
invested in civilian technology without close involvement at the outset from potential
users. If U.S. industry wants government assistance and is willing to co-invest, there
is some hope for success. But if industry does not perceive the need, or, is not
interested, there is little point in the government's engaging in technology push. That
is a lesson we have learned from past history [and we should try to avoid similar
mistakes in the future.] Thus, in order for industry-government cooperation--that we
have been talking about for years--to become a reality, we need articulate and
statesmanlike leadership from industry to set appropriate objectives for the
cooperative endeavors of industry-Federal Laboratory-university consortia.
The Federal government, in turn, will actively promote and encourage the
formation of industry-Federal and industry-Federal-university consortia as well as
facilitate the access by U.S. industry to Federal Laboratories within the broad,
flexible Federal guidelines established by previous legislation and will develop
6
mechanisms to expedite the diffusion of the results of Federally supported R&D to
industry, including active licensing of inventions and removing barriers to commercial
development and marketing of Federally developed computer software.
Technology transfer is, and will continue to be, an integral part of every
Federal laboratory's mission regardless of the specific research projects undertaken.
Many Federal research programs are undertaken primarily to meet Federal program
needs, not to develop technology, per se. However, Federal laws and policies now in
place make it the responsibility of every Federal technology manager--defense or
civilian-to consider the commercial ramifications of the work they are supporting and
to try to encourage its commercial potential. Obviously, some research has more
technology development/transfer potential than others. Examples include research to
promote alternative sources of energy, biomedical research, space exploration, robotics,
superconductivity, and semiconductor research.
A particular example of a mission-oriented technology transfer initiative is the
Department of Energy's (DOE) Precision Manufacturing Technology (PMT) Program.
This program will transfer back to U.S. industry modern technological methods and
skills for precision fabrication of discreet parts made from metals and advanced
materials. In return, DOE will then have the ability to procure from U.S. sources
products requiring such advanced technologies for manufacture.
Each of the Federal agencies also has a variety of directed initiatives in
mission areas already underway and are planning others. For example, today we have
roughly 200 active cooperative research and development agreements between the
Federal laboratories and private companies which indicates that the companies
involved believe in the potential commercial viability of the technology they are co-
developing. We are also beginning to see some remarkable collaborative
arrangements: the $11 million DuPont/Hewlett-Packard/Los Alamos National
Laboratory joint venture in high temperature superconducting materials and
applications, in which the two companies are investing over $7 million, is a good
illustration of these new arrangements. Another unusual joint research effort is the
Biotechnology Research and Development Consortia involving the University of
Illinois, a U.S. Department of Agriculture laboratory, the State of Illinois, and six
different U.S. companies.
Other Federal programs are explicitly designed and undertaken with private
sector interests clearly in mind. A number of these are managed by the National
Institute of Standards and Technology (NIST) which has a mission to support
programs serving business and industry. NIST research programs with substantial
civilian technology development/transfer potential include a measurements, reference
data, standards research and services program as well as a new Advanced Technology
Program aimed at assisting business in developing precompetitive, generic
technologies; and an Advanced Manufacturing Program intended to increase the
dissemination of new manufacturing technologies within industry, particularly small
business.
7
NIST's measurement and standards program is particularly valuable to the
nation's high technology businesses because they rely for commercial success on the
existence of a common technological infrastructure which includes test methods,
measurements, evaluated data, and standards of execution and performance. The
fundamental research conducted by NIST in collaboration with industry provides this
reference base.
The high technology industry's requirements for new measurements and
standards, however, are changing at an ever increasing pace so that there now no
longer only exists industry without adequate measurements and standards, but there
also exists entirely new technologies for which there is no standards base at all.
Without these common national standards, U.S. firms will continue to struggle to
compete with foreign firms that are producing high quality products embodying new
technology at competitive prices. The Federal government should, therefore, manage
the measurements and standards process of the National Institute for Standards and
Technology in such a way as to promote the integration of a new technological
infrastructure with the existing U.S. industrial infrastructure. Then, our high
technology industries can compete more effectively in the international arena.
State Activities
Technology outreach and technology transfer initiatives at the state and
regional levels are playing an increasingly important, cost-effective role in helping U.S.
businesses--especially small businesses--regain their competitive edge. Unlike the
Federal Government, the states can pick specific industries to support, based on their
own histories, policies, and local goals. These state activities take a variety of forms,
including direct technology transfer programs, university-based research programs,
R&D grant programs, research parks, financial assistance programs, technical and
managerial services, incubator facilities, R&D tax incentives, and worker training
assistance.
The Federal Government should be aware of these-activities and should assist
and encourage states to develop programs that take into account the individual state
characteristics. Federal programs in such areas as education, training, the national
infrastructure, and regional generic technology centers should, where appropriate,
leverage state initiatives in a timely way to optimize their effectiveness.
The Federal Government should also bring together state, private, and
academic elements to solve problems and take advantage of opportunities where they
occur. In some instances, this will require funding (often matching) and other
services for problems and opportunities that transcend state boundaries. And, finally,
the Federal Government should provide a focus for information from the highly
successful local programs that could be transferred to areas in other states that need
to initiate similar activities.
8
Currently, there are three major Federal programs, implemented through the
Department of Commerce that interact directly with state and local technology
initiatives. The Boehlert-Rockefeller Extension Program provides technical assistance
to state technology outreach programs throughout the U.S. to help small and medium-
sized businesses identify, access, and apply appropriate Federal technology to the
solution of their technological problems.
The new Advanced Technology Program (ATP) will assist U.S. businesses in
accelerating the early to mid-stage development of generic technologies that have the
potential to modernize manufacturing or to commercialize more rapidly significant
new scientific discoveries. It will aide and leverage companies entering into contracts,
cooperative research agreements and joint ventures, and, when appropriate, help
involve specific Federal laboratories in such agreements.
The Regional Manufacturing Technology Centers (MTC) program is designed
as a technology transfer operation designed to breakdown the barriers faced by small
and medium-sized manufacturers in adopting new technology by working with
individual local manufacturers, community colleges, and technical institutes to
determine individual technology needs, develop technology upgrade plans and train the
local workforce in the use of these new manufacturing tools and methods.
Finally, the Department of Commerce is currently developing a plan to make
available through its Clearinghouse on State and Local Initiatives in Productivity,
Technology and Innovation all information it has obtained on the various state and
local initiatives relating to technology. Future plans involve a more efficient and
wide-spread collection and dissemination of such information as well as more efficient
means for interested parties to access this data base.
This completes my prepared statement. However, I would like to reemphasize
that I believe investing in new technologies is a necessary, but not a sufficient
condition for achieving international industrial competitiveness. As we get further
into developing effective policies and programs for technology advancement in this
nation, we should frequently remind ourselves of that fact. I believe we must all keep
in mind other factors economic, educational, fiscal regulatory, and cultural that
we must influence at the same time if we are to maintain our current position in
world markets as well as return, in the not too distant future, to the more dominant
position that this nation has enjoyed for so many years.
At the risk of repeating myself, I want to reiterate that the challenge for the
Federal Government at this time is to develop, stimulate, and exercise intelligent and
visionary leadership that emphasizes long-range U.S. economic vitality over special
interests. And, above all, by its words and actions, the Federal Government must
make clear to all, and particularly to the U.S. industrial community, that the issue of
U.S. industrial competitiveness is among the very highest of its priorities for the
1990's.
ORAL STATEMENT OF THE HONORABLE
D. ALLAN BROMLEY
DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY
EXECUTIVE OFFICE OF THE PRESIDENT
BEFORE THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
WASHINGTON, D. C.
May 23, 1990
Mr. Chairman, I am pleased to have this opportunity
to appear before your committee to discuss this
Administration's views on U.S. industrial competitiveness
and the Administration's policy regarding technology and
competitiveness. The whole issue of the competitiveness
of our national industrial base is of paramount concern to
the Administration as well as to you in Congress. There
are few issues more important for us to address jointly
than U.S. economic competitiveness.
There is general agreement today that global
competitiveness and national security are tightly
interwoven in that our national defense posture depends
on our continuing economic vitality. We are in an era
when international economic competition poses a
formidable challenge, and the Administration is taking a
number of positive actions to respond to that challenge.
We, in this Administration, believe that it is essential that
all the actions the Federal Government takes, recognize
and use the strengths of our economic system more
effectively to remain competitive while at the same time
refraining from actions that might distort our basic system
of free enterprise which is our ultimate strength.
2
One of our greatest strengths is our infrastructure
for research and development. We have a culture that
prizes innovation, a university system superior to all
others, an open and hospitable society that attracts the
best scientific minds and inventive talents of the world, a
business climate that encourages innovative enterprises,
and a financial system that provides the opportunity for
such new enterprises to grow quickly into major
businesses. Thus, it is not surprising that our technology
base is the strongest in the world. U.S. companies lead
wherever innovative technology and a fast response time
is the critical feature of business success.
3
Important as the role of technology may be,
however, a successful national strategy in industrial
competitiveness cannot be based on it alone. Our
strength in technology has not prevented a steady
erosion in our market share in many industries. As each
segment of these businesses matures, the advantage
quickly shifts from the innovator to the efficient producer.
Many people would argue that the Japanese are the most
efficient producers in the world today. Many factors have
contributed to Japan's success as a producer, but none
is more important than its persistently high rate of capital
investment.
4
Many analyses imply that our problems in
competitiveness reside entirely in the areas of
manufacturing and process. I do not believe they do.
They may show up in these areas, but they originate in
much deeper structural problems that are not going to be
easily resolved. To mention a few weaknesses of the
U.S. system in international competition:
The cost of capital in the United States is
higher than for our major competitors due to
low investments and high Federal budget
deficits;
There is an emphasis on short-term returns on
investments by U.S. firms and a reduced
willingness to take technological risks,
especially in large corporations and in the
financial community;
5
The quality of the technical workforce is
declining in terms of education, training, and
the flexibility to adapt to technological change;
There is a lingering wariness of company-to-
company cooperation brought about by
antitrust legislation, as well as a negative
attitude in some U.S. corporations toward
technologies developed elsewhere.
6
As you can tell from this partial list, there will be no
facile, short-term solutions to our competitiveness
challenge. The problems are multifaceted and complex.
If these problems are to be solved, actions must be taken
on many fronts involving all components of our society.
For the Federal Government, the challenge is to develop
and exercise intelligent and visionary leadership
emphasizing the long-term economic vitality of the nation.
My prepared statement covers a number of the
activities that the Bush Administration has supported over
the past 16 months which we believe can enhance U.S.
economic competitiveness. I will not go through them all
today - except to say that they cover the spectrum of
activities usually associated with an appropriate role of
the Federal Government in technology areas.
7
The Federal Government faces a wide range of
options in moving to bolster our economic
competitiveness that do not necessarily fall into the stark
categories of massive government subsidies of favored
industries on the one hand and a total "hands off"
approach by the Federal Government on the other. This
Administration strongly believes that the real choices lie
in other directions.
8
First and foremost, on the broadest level the
government has the responsibility to foster a
macroeconomic climate that makes it possible for industry
to invest in the technology development and
manufacturing processes that it needs to remain
competitive. I have called this "Incentives for the Private
Sector". This means bringing down the federal budget
deficit and reducing the cost of capital. This has been a
top priority of the Bush Administration and remains so
today.
Fiscal policies can be used in other ways to
encourage private R&D investment. For example, the
Bush Administration is working to reduce the capital
gains tax and make permanent and enhance the tax
credit for research and experimentation. In my statement
I have detailed for you all of the other areas in which this
Administration is trying to work with Congress and our
trading partners to provide the economic climate in which
U.S. industries will thrive.
9
The second area where the Federal Government is a
major player is "Education and Training". As we have
discussed many times, the U.S. needs to strengthen our
entire educational process to ensure that those entering
the workplace will have the necessary knowledge,
comprehension, and problem solving skills for the highly
technical content of the daily living and working
environment of the future. Achieving such a goal will
require a broad-based approach involving business,
academia, educational organizations, and state and local
governments.
The Administration's current budget proposal to
Congress for fiscal year 1991 would result in direct
expenditures of over $1.5 billion for science and
mathematics education activities in five Federal agencies.
These programs are in addition to the training provided to
thousands of graduate students supported through
Federal competitive R&D grants programs.
10
Clearly, "Federal R&D support" plays a major role in
economic competitiveness. Investments in research and
development (R&D) provide both direct and indirect
productivity benefits for society. R&D yields new
knowledge, processes, technologies and products that,
over the long term, result in economic growth and
improved quality of life for all Americans.
Traditionally, the Federal Government has supported
R&D for two reasons: first, to meet its own direct needs --
where it is the principal consumer - such as defense and
civilian space related R&D. Funding levels and decisions
are made on the basis of Government objectives, needs,
and requirements. However, the Government relies
principally on the private sector to undertake the
development process and encourages these activities to
be managed in such a way to optimize commercial
applications of the R&D as well.
11
The second category of R&D requires Federal
support in the interests of the public welfare where the
private sector is without sufficient incentives to capture
enough of the benefits to make private R&D investments
justifiable. Federal support for basic research, especially
at universities, is the prototypical, essential investment in
the Nation's scientific and technological future, including
its future scientists and engineers. This Administration
has proposed increasing support for basic research by $1
billion, or 8 percent, to over $12 billion in FY 1991.
Indeed, the Administration's budget proposes to allocate
a total of over $71 billion for all R&D, including basic
research and research facilities in FY 1991, an increase of
$4.5 billion or 7 percent over FY 1990 levels. Within this
total, civilian R&D would increase by 12 percent and
defense related R&D would increase by 4 percent.
12
In particular, of the approximately $15 billion
proposed for civilian applied research and development
support, a significant percentage -- in the billions -- would
be allocated to developing advanced technologies such
as energy technologies, robotics, high performance
computing, and other technologies. On the defense side,
the Department of Defense technology base budget
proposal including the DARPA budget ($1.1 billion) but
excluding SDI funding, requests nearly $5.6 billion for
fundamental basic, applied and developmental research
that underpins our future defense systems. The major
high technology areas of defense funding include high
definition display technology, manufacturing and materials
technology, artificial neural network technology, and
support for SEMATECH which focuses on semiconductor
13
technologies. Thus, it is clear that the Federal
Government currently supports a great deal of technology
development; and it should also be recognized that
previous Federal R&D investments have been very
successful in developing technologies required for
defense, space, and other important civilian applications
related to agriculture, health, and aeronautics.
This Administration believes the federal government
should also continue to participate with the private sector
in developing generic, enabling technologies that are
important in both governmental and commercial
applications. President Bush pointed out to the American
Electronics Association in March, "This Administration is
committed to working with you in the critical
precompetitive development stage where the basic
discoveries are converted into generic technologies that
support both our economic competitiveness and our
national security. Here again we can help to level the
international playing field on which you compete."
14
The rationale for investing in these enabling
technologies is essentially the same as that for investing
basic research: individual companies cannot bear the
cost and risk of such investments alone. Examples
include certain materials technologies (such as
superconductivity), information technologies (such as high
performance computing), and biotechnologies (such as
scaled-up bioprocesses).
The "Transfer of Federally Funded Technology" to
industry can also help make U.S. firms more economically
competitive. Technology transfer has become part of the
international vocabulary; but that label is fundamentally
misleading. It suggests that a specific technology can be
identified, isolated and packaged at one place;
e.g., where it was developed - then transferred to an
entirely different place where it can be unpackaged,
implemented and exploited in an entirely different
environment. Nothing could be farther from the truth.
15
Technology is only transferred from, by and to
adequately trained persons and it is essential that our
technology transfer system have an adequate base of
trained personnel prepared to move with the technology,
and to accept and implement it at the receiving end.
This Administration believes the Government must
make R&D activities at Federally-supported laboratories
more relevant and accessible to the private sector,
particularly through collaborative agreements. We also
believe that all such efforts should be guided by the
potential users.
16
If industry does not perceive the need, or, indeed is
not interested in co-investing with the government, there
is little point in the government's engaging in technology
push. That is a lesson we have learned from past
history. Thus, in order for industry-government
cooperation -- that we have been talking about for years
- to become a reality, we need industry to set
appropriate objectives for the cooperative endeavors of
industry-Federal Laboratory-university consortia that would
be profitable for them to engage in.
17
The Federal government, in turn, will actively
promote and encourage the formation of industry-Federal
and industry-Federal-university consortia as well as
facilitate the access by U.S. industry to Federal
Laboratories within the broad, flexible Federal guidelines
established by previous legislation and will develop
mechanisms to expedite the diffusion of the results of
Federally supported R&D to industry, including active
licensing of inventions, and removing barriers to
commercial development and marketing of Federally
developed computer software.
18
Each of the Federal agencies also has a variety of
directed initiatives in mission areas already underway and
are planning others. For example, today we have roughly
200 active cooperative research and development
agreements between the Federal laboratories and private
companies which indicates that the companies involved
believe in the potential commercial viability of the
technology they are co-developing. We are also
beginning to see some remarkable collaborative
arrangements: the $11 million DuPont/Hewlett-
Packard/Los Alamos National Laboratory joint venture in
high temperature superconducting materials and
applications, in which the two companies are investing
over $7 million, is a good illustration of these new
arrangements.
19
Other Federal programs are explicitly designed and
undertaken with private sector interests clearly in mind.
A number of these are managed by the National Institute
of Standards and Technology (NIST) which has a mission
to support programs serving business and industry.
NIST research programs with substantial civilian
technology development/transfer potential include a
measurements, reference data, standards research and
services program. NIST's measurement and standards
program is particularly valuable to the nation's high
technology businesses because they rely for commercial
success on the existence of a common technological
infrastructure which includes test methods,
measurements, evaluated data, and standards of
execution and performance. The fundamental research
conducted by NIST in collaboration with industry provides
this reference base.
20
The final area where the Federal government can
make a contribution involves "State Activities".
Technology outreach and technology transfer initiatives at
the state and regional levels are playing an increasingly
important, cost-effective role in helping U.S. businesses --
especially small businesses - -- regain their competitive
edge. These state activities take a variety of forms,
including direct technology transfer programs, university-
based research programs, R&D grant programs, research
parks, financial assistance programs, technical and
managerial services, incubator facilities, R&D tax
incentives, and worker training assistance.
21
The Federal Government should be aware of these
activities and should, where appropriate, leverage state
initiatives in a timely way to optimize their effectiveness.
The Federal Government should also provide a focus for
information from the highly successful local programs that
could be transferred to areas in other states that need to
initiate similar activities.
Currently, there are three major Federal programs
implemented through the Department of Commerce that
interact directly with state and local technology initiatives.
The Boehlert-Rockefeller Extension Program provides
technical assistance to state technology outreach
programs throughout the U.S. to help small and medium-
sized businesses identify, access, and apply appropriate
Federal technology to the solution of their technological
problems.
22
The new Advanced Technology Program (ATP) will
assist U.S. businesses in accelerating the early to mid-
stage development of generic technologies that have the
potential to modernize manufacturing or to commercialize
more rapidly significant new scientific discoveries. It will
aid and leverage companies entering into contracts,
cooperative research agreements and joint ventures, and,
when appropriate, help involve specific Federal
laboratories in such agreements.
23
Finally, the Department of Commerce's Regional
Manufacturing Technology Centers (MTC) program which
you are very familiar with Mr. Chairman, is designed as a
technology transfer operation designed to breakdown the
barriers faced by small and medium-sized manufacturers
in adopting new technology by working with individual
local manufacturers, community colleges, and technical
institutes to determine individual technology needs,
develop technology upgrade plans and train the local
workforce in the use of these new manufacturing tools
and methods.
24
This completes my prepared statement. However, I
would like to reemphasize that I believe investing in new
technologies is a necessary, but not a sufficient condition
for achieving international industrial competitiveness. As
we get further into developing effective policies and
programs for technology advancement in this nation, we
should frequently remind ourselves of that fact. I believe
we must all keep in mind other factors - economic,
educational, fiscal regulatory, and cultural -- that we must
influence at the same time if we are to maintain our
current position in world markets.
25
At the risk of repeating myself, I want to reiterate
that the challenge for the Federal Government at this time
is to develop, stimulate, and exercise intelligent and
visionary leadership that emphasizes long-range U.S.
economic vitality over special interests. And, above all,
by its words and actions, the Federal Government must
make clear to all, and particularly to the U.S. industrial
community, that the issue of U.S. industrial
competitiveness is among the very highest of its priorities
for the 1990's.
26
SUPPORT FOR BIOMEDICAL RESEARCH: A FEDERAL PERSPECTIVE
D. ALLAN BROMLEY
Assistant to the President for Science and Technology
Executive Office of the President
Forum on Supporting Biomedical Research:
Near-Term Problems and Options for Action
National Academy of Sciences-Institute of Medicine
Washington, D.C.
June 27, 1990
1
Three years ago was the hundredth anniversary of the National Institutes of
Health, and a couple of the books published to celebrate that event paint a
remarkable picture of how far the biomedical sciences have come in the past century.
A little over a hundred years ago, the leading cause of death in the United States was
tuberculosis. Children and adults routinely developed typhoid fever, dysentery,
cholera, and a host of other illnesses. Of all the people born in the United States, a
quarter were dead by the age of 25, and about half had died by the age of 50.
Today, fully 97 percent of all people live past- their 25th birthday, and over 90
percent live to be more than 50. We also live healthier lives, because many of the
diseases that afflicted our parents and grandparents have been eliminated, both
through better sanitation and nutrition and through biomedical research. Science and
technology have caused a large number of changes in human society, but I don't think
any is so profound or as underappreciated -- as this gift of longer and healthier
lives.
I fully believe that we will see changes in health care over the next 30 to 40
years that are as dramatic as the changes that have occurred over the past century.
We may not gain all that much more in life span, but we will make great progress
toward the conquest of the large number of illnesses and injuries that continue to
take a heavy toll on human health and well-being. Many advances will emerge from
clinical investigations of the kind that have proven so successful in the past. But an
increasing number of advances will emerge directly from basic research, from
investigations of the structure and functioning of living things at the most
fundamental levels.
If these advances are to occur expeditiously and if they are to occur in the
United States - this country must have a healthy and stable biomedical research
system. I do not believe that the system can be called healthy today. There is much
good news about the NIH budget: it doubled in current dollars from 1982 to 1990,
and increased approximately 40 percent in purchasing power. During that time, the
2
total number of research project grants increased from 15,500 to 20,300, and the
average size of those grants likewise increased.
Yet the signs of stress on the system are everywhere. Research teams are
breaking up, established investigators are losing funding, young people are being
scared away from careers in biomedical research, and calls for change -- as evidenced
by meetings like this one are increasing. I know what a field in stress looks like,
because many of the same things happened in physics in the early 1970s -- even as I
was engaged in a survey of the field for the National Research Council - and it took
a number of years for the field to recover.
NATURE AND SOURCE OF THE PROBLEM
Harold Varmus has already done a fine job of laying out the dimensions and
roots of the problem. But there are a couple of things that I want to add to that
analysis. First, the problems that have befallen individual investigators are not
limited to NIH. At NSF, the success rate for research proposals fell below 30 percent
in fiscal year 1988, a year before it happened at NIH. For some directorates or
institutes, or for some groups of applicants such as young applicants the success
rate is appreciably smaller.
These low success rates could not be coming at a worst time for the research
enterprise. We are sending a message to young researchers that they are not wanted
and are driving them from these fields, even though in a few years they will be
wanted a great deal. By the mid-1990s the number of young investigators coming
through the educational pipeline is expected to drop, as college-age populations
continue to decline. But at about that same time, the demand for young Ph.D.'s is
going to swell, as the generation of Ph.D.'s trained during the 1960s reaches
retirement and as undergraduate enrollments begin to turn around. Several analyses
have predicted that severe shortages of scientists and engineers will develop by the
turn of the century, and the actions we take today will do much to lessen or
exacerbate those shortages.
3
As Harold Varmus has explained, there are several interacting reasons for the
low award rates of the last few years. One reason in particular has drawn
considerable attention the extension of grant durations in the mid-1980s. In my
opinion, that change was sorely needed. Several years ago, as part of a report done
by the White House Science Council on the Health of U.S. Colleges and Universities,
we found that young faculty members in many of our first rank colleges and
universities were spending an average of 30 percent of their time either applying for
grants or justifying what they had done with their grants. It was an inordinate time
to spend away from research, and I commend NIH for taking steps to reduce it.
The problem with extending grants is that it creates an out-year mortgage that
tends to reduce the pool of money available for new and competing proposals. This
mortgage becomes especially significant if the growth rate of funding slows, as has
happened at NIH in the past few years. The pressures will eventually ease, as a new
equilibrium is established with a longer grant duration. But in the meantime
adjustments must be made, and they can be very painful.
There are a few other statistical points I would like to make, because they
greatly influence how we view the situation. One is that -- while it is true that the
number of grant applications has increased, rising about 30 percent over the past 10
years -- trends within the community may be inflating that number. For one thing,
part of the growth in the number of grant applications has been due to submissions
of amended applications. The resubmission rate has increased from a historical rate
of about 8 percent to 30 to 35 percent.
Also, the number of multiple applications submitted by investigators has gone
up. Currently about 10 to 12 percent of researchers are submitting more than one
application in a fiscal year, compared to a historical rate of about 3 percent. In the
NSF, for example, a very recent analysis shows that among those whose projects have
gained support that is, have been successful in the case of one proposal -- the
average number of proposals submitted to NSF by the same investigator was 1.9.
Moreover, on average these individuals had a success rate not of 100 percent, as you
might think, but rather 150 percent. Multiple proposals pay and also distort the
statistics.
4
Current practice also raises troubling questions about the ability of the peer
review system to choose among research projects. When study sections approve 95
percent or more of the applications, whereas the corresponding figure only a few years
ago was less than 70 percent, it is not entirely a reflection of changing quality of the
proposals; rather, it may also reflect the difficulty of getting grants and an attempt
on the part of the reviewers to tilt the balance toward the investigator. This is well-
meant, but in the long run it is counterproductive.
A new interagency group under the Federal Coordinating Council for Science,
Engineering, and Technology has been established to consider some of these issues. It
is named the Working Group on the Structure of the Support of Science and is
chaired by James Hayes of NSF. Its initial task is that of obtaining reliable
statistical data and evolving more effective indices for policy purposes than the
currently used "success rates," which for many reasons, some of which I have just
noted, are open to manipulation. If we are to address what I still believe to be a
very important problem in responsible and realistic fashion, it is essential that we
have such information for the major support-granting agencies such as NIH and NSF.
With all this said, let me emphasize again that I am fully aware of the level of
pain that now exists in the community. It is very real; it is understandable, and both
I and the Bush Administration are committed to responding in positive and concrete
fashion to it. The statistics may complicate the picture, but they do not change the
overall situation: the budget for biomedical research has not grown as rapidly as the
number and the cost of meritorious projects competing for funds. A significant
amount of excellent science is not being funded.
INVESTMENTS IN RESEARCH AND DEVELOPMENT
The most immediate solution to the problem is clearly a higher level of federal
support, and the prospects for that support are not as grim as the current budget
situation might suggest. But there are also broader structural changes I will return
to these in a moment that may influence future support for biomedical research.
5
First, regarding funding: I have said many times that individual investigators
and small groups of investigators are the heart and backbone of American science.
This opinion is widely shared in the Bush Administration. The problems of the
individual investigator are going to be taken very seriously as we work on the
preparation of the fiscal year 1992 budget. We see it as our responsibility to ensure
that this fundamental strength is not undermined nor allowed to erode.
In general, there is a growing recognition in the Administration and in
Congress that we are underinvesting as a nation in our science and technology base.
The United States now spends about 1.8 percent of its GNP on nondefense research
and development. West Germany spends about 2.6 percent, and Japan spends about
2.8 percent. Support for research and development is one of the most important
investments we can make in our national future, and if we do not make those
investments, we place both our future economic prosperity and our national well-being
at risk.
This is a message that the President's Council of Advisors on Science and
Technology has brought directly to the President and his top advisors. In the area of
biomedical funding, both Daniel Nathans and Bernadine Healy are members of
PCAST, and they have made a strong case for increased support for biomedical
research.
THE NEED FOR ADVOCACY
But of course the efforts of the Executive Branch are just one part of the
overall funding process. As I have reminded many groups this spring, the President
proposes, but the Congress disposes. There is a great deal of pressure on the
Congress for a limited pool of funds, as there is on the White House. So unless
Congress can be convinced to respond to the President's request in the 1991 budget,
we will find ourselves with significantly less funding than has been requested. We will
then face the very difficult problem of allocating the reduced funds among areas that
6
may have very vocal, effective constituencies far more vocal and effective than the
constituency represented by the biomedical research community.
You and the five million other scientists and engineers in this country have a
responsibility to make the case for research and development directly to Congress. It
is no longer enough for those of us who have spent most of our careers in science
and technology to expect, perhaps subliminally, that sooner or later someone in
Washington is going to recognize that what we're doing is so worthwhile that they will
support it. It won't happen.
The biomedical community has for a number of years joined into groups to
address these issues, and I commend those actions, because that is an important way
to get things done in Washington. But you should not forget that the most effective
way to get your point across to anyone in government is to contact that person
directly. Massive letter writing campaigns using form letters do not have a significant
impact. But carefully prepared, well-thought-out, personal letters -- letters that
deserve a reply can make a real difference, particularly when they focus on matters
of national concern rather than the specific desires of the writer.
STRUCTURAL CHANGES IN BIOMEDICAL SCIENCE
We must also keep in mind that there are changes going on in biomedical
research that may influence the way that the system is supported. One of the most
important of these changes involves the role of industry. In 1979, industry funded 29
percent of all health research and development. By last year, that percentage had
risen to 45 percent. Employment growth for biomedical scientists has been growing
twice as fast in industry as in universities, and in the immediate future most new
positions in biomedical science will be located in industry rather than academia.
Furthermore, in a survey of biotechnology firms conducted by the NRC's Office
of Science and Engineering Personnel, it was found that four out of five firms plan to
maintain or increase current levels of hiring, particularly for people with postdoctoral
7
training. Moreover, more firms surveyed reported having problems hiring scientists
this year than last.
Industry is going to continue to play a larger role in biomedical research and
development. We must prepare students for that option -- not just for pursuing
careers in academic research. This also argues for more cooperative ventures between
industry and universities, to prepare students for academic or industrial careers and
to increase funding for academic research. Under Jim Wyngaarden's leadership,
nearly 150 cooperative research and development agreements were put into place
between NIH researchers and private industry, and Jim expects this number to grow.
This broader involvement of industry is representative of a number of long-
term trends in biomedical research, and these trends require careful analysis.
Because of the one-year appropriations cycle in Congress -- and more broadly because
of the relatively short time horizons in government -- long-range planning has never
been a major component of federal activities. But this long-range planning is
desperately needed.
There are many important questions that need to be answered.
0 NIH already represents 40 percent of the federal budget for nondefense
R&D and accounts for half of all federal support for basic and applied research in
this nation's colleges and universities. In the absence of greatly increased funding,
how can NIH justify a larger share of the pie?
0 Are we training enough biomedical scientists to meet the future needs of
both academia and industry?
0 How can we manage to upgrade the facilities and major equipment needed
for biomedical research without cutting into support for research?
0 How can we recruit young scientists when their mentors are worried about
future research funding?
0
Will increased federal investment in any particular aspect of biomedical
research shift nonfederal support away from those areas?
0
How can we convey to Congress and to the public the great additional
potential of biomedical research to improve human health and well-being?
8
I understand that a committee of the Institute of Medicine chaired by Floyd
Bloom has been looking into many of these questions, and that the committee's report
is now in review. Several other activities bearing on this subject are also under way.
The Office of Technology Assessment is working on a large study of basic research in
the 1990s, including biomedical research, which should appear early next year. The
FCCSET Working Group on the Structure of Scientific Support should also produce a
valuable analysis.
Finally, there are the proceedings of this forum. I very much look forward to
your discussions today and to the conclusions you draw. Alicia Dustira is working on
these subjects in my office; I encourage you to get in touch with her if you have
specific materials that you think would be of use to us.
TESTIMONY OF D. ALLAN BROMLEY
CHAIRMAN, NATIONAL CRITICAL MATERIALS COUNCIL
BEFORE THE HOUSE COMMITTEE ON SCIENCE, SPACE AND TECHNOLOGY
SUBCOMMITTEE ON TRANSPORTATION, AVIATION AND MATERIALS
JUNE 26, 1990
National Critical Materials Council's work agenda
It is a pleasure to be with you today to testify on our plans for the National Critical
Materials Council (NCMC) in the coming year. First, however, I must point out that we
have not had a meeting of the Council yet. We have scheduled an initial meeting for July
9, 1990. The slowness in forming the Council is not an indication that materials issues
are viewed as a low priority by the Administration. The new, larger role that has been
given to my office, namely that of Assistant to the President for Science and Technology,
requires increased responsibility in many areas. The Council will be an integral part of
the Administration's increased focus on science and technology, particularly with its role
in materials science and engineering policy and related activities.
I am pleased to chair the Council because I believe this will help us to better coordinate
activities on materials with the Federal Coordinating Council for Science Engineering and
Technology (FCCSET), which I also chair. Therefore, in addition to the specific mission
of NCMC as it relates to the enabling legislation, I want to discuss the role of NCMC in
relation to FCCSET and the enhanced coordination of Federal materials research
programs that this will promote.
1
There are three general areas that are of concern to the NCMC: The first area is critical
materials, the second is advanced materials, and the third is superconductivity. The
responsibilities of NCMC in the first two areas are detailed in the Critical Materials Act
of 1984. The responsibilities of NCMC in Superconductivity are detailed in the Omnibus
Trade and Competitiveness Act of 1988. I will describe a general program for each of
the three areas.
Critical Materials
The examination of critical materials is an area of key importance in the dynamic setting
of today's world. By critical materials I mean the conventional metals and other
materials that have played such an important role in the defense and industrial base of
this country. These include such metals as chromium, platinum, manganese, and cobalt;
as well as the large-volume metals so important to the economy such as copper and
aluminum.
In 1988, NCMC produced a Critical Materials Report. We will review and update that
report. However, we do not think that it is a wise use of our resources, at this time, to
repeat that entire report. Rather, it is better to chose specific topics of focus in the area
of critical materials than to examine the whole broad field. The Bureau of Mines has
ample information on all aspects of the field. We will work with the Bureau to fill in
specific gaps in analysis that they may have identified, and provide for cross-agency
coordination of critical materials issues. Possible topics could include: the impact of new
clean air regulations on demand for precious metals used as automobile catalysts and the
2
possible impact of the reauthorization of the Resource Conservation and Recovery Act
(RCRA) on the recycling of materials. We anticipate that recycling of materials will
become increasingly important, and that it has the potential to increase the efficiency of
production operations, and reduce the total volume of solid wastes that need to be sent
to landfills and other disposal sites.
Advanced Materials
Advanced materials constitute the cutting edge of materials technology. They tend to be
low-volume, high value-added materials. Many advanced materials are created for niches
in the defense and aerospace industries where government's role is obviously prominent.
We will review the Advanced Materials Program Plan that was produced by the previous
Council in 1989 and determine the areas meriting particular emphasis. This review is
especially important in light of the seminal 1989 study by the National Research Council,
Materials Science and Engineering for the 1990's: Maintaining Competitiveness in the
Age of Materials. I have asked that the regional meetings, which are an outgrowth of this
report, consider recommendations for specific actions that can be taken to bolster
materials science and engineering (MS&E) at a national level. Specifically, materials
synthesis and processing has been identified as a key area of materials science and
engineering needing increased attention. We anticipate that this will be one area of focus
for the Council.
Recent reports by the Department of Defense and the Department of Commerce on
critical technologies have included advanced materials. For this reason, the Council will
3
be providing an input to the OSTP report on critical technologies which will use the DoD
and DoC reports as a starting point. While we still lead the world in basic research for
many advanced materials technologies, many experts in the field acknowledge that many
products are not commercialized quickly enough to compete in the global marketplace.
The Council will examine the issues that pertain to advanced materials and attempt to
identify actions to help create a better environment for materials commercialization. For
example, one area that comes to mind is the setting of standards for the testing of
composite materials and parts. However, we are moving more slowly than our
European and Japanese counterparts in developing testing standards for the industry.
Facilitating the development of standards is a legitimate role for government, so we need
to work with industrial groups to promote leadership in this area.
Superconductivity
As you know, superconducting materials in particular have captured the public's
imagination. This is due to the discovery in 1986 of a new class of ceramic
superconducting materials that lose electrical resistance at relatively high temperatures.
The Council has been given the responsibility of staffing and coordinating the National
Commission on Superconductivity. The Commission had their first meeting in October
of last year. Since then they have met several times in order to produce a report and
recommendations to the President and Congress. The work of the Commission will be
finished sometime later this summer. I anticipate that the report of the Commission will
4
be a significant and influential contribution on superconductivity, and I believe that this
Committee will find it to be of considerable interest. The Council will help coordinate
any needed updates of the Commission's report.
As was the case last year, the Council will also work with OSTP in updating the National
Action Plan on Advanced Superconductivity Research and Development. This update will
be a primary function of the Superconductivity Subcommittee of the Committee on
Materials (COMAT), which is part of our FCCSET structure.
Coordination with FCCSET
As noted earlier, I also have the privilege of chairing the Federal Coordinating Council
for Science Engineering and Technology (FCCSET). By orchestrating the efforts of the
NCMC and FCCSET we hope to achieve a level of coordination that will strengthen the
materials program of the Federal government.
Let me briefly review the recent changes in the FCCSET structure. One of my major
initiatives as Assistant to the President for Science and Technology is to revitalize and
reorganize the FCCSET structure. I am very pleased and encouraged by the response
and support of those Cabinet Secretaries and heads of independent agencies who are
giving FCCSET their personal attention. We are proposing seven umbrella committees
which will comprise the basic structure of FCCSET -- linking the full FCCSET council
to the working level committees such as COMAT. Tom Murrin, Deputy Secretary of the
Department of Commerce, chairs the Committee on Technology and Industry where
5
COMAT will reside. Dr. William Phillips, the OSTP Associate Director of Industrial
Technology, is the OSTP representative to this umbrella committee. Dr. Phillips has an
extensive background in materials and will provide valuable expertise in this area.
COMAT is embarking on a cross-cutting analysis of Federal research efforts in materials.
We anticipate that this analysis will provide valuable information to decision-makers inside
and outside the Government as to the deployment of resources in the pursuit of materials
R&D.
The President's Council of Advisors on Science and Technology (PCAST)
In February of 1990 the Administration announced the appointment of the President's
Council of Advisors on Science and Technology (PCAST), comprised of very distinguished
scientists and engineers from the private sector. This is the first Presidential scientific
advisory group in many years to provide high-level advice on a wide range of important
issues. It reflects the commitment to further strengthen Federal science and technology
policy and a recognition that advances in science and technology contribute in a major
way to increased economic competitiveness. Some members have expertise in the
materials science field and, where appropriate, their thoughts will be a contribution to our
deliberations within the Government.
Providing the Proper Environment
The most important role that government can perform is providing the proper
environment for the development of advanced materials technologies. This is
6
accomplished by supporting a vital basic research infrastructure, facilitating development
of generic, enabling technologies where appropriate, and allowing the market to function
efficiently when these technologies reach the commercial stage. As regards the
conventional critical materials, we have to make sure that we safeguard the natural
environment at the same time we ensure the strategic interests of the United States.
Conclusion
In conclusion, I know that I speak for the rest of the Council members when I say that
we look forward to working with Congress in the areas of critical and advanced materials.
Perhaps we will not always agree on what are the best policies to pursue; however, I am
sure that we share a mutual interest in working together in a non-partisan manner to help
to ensure the health of our Nation in critical materials and their related technologies.
7
New Jersey
9th District
FOR IMMEDIATE RELEASE:
FRIDAY, JUNE 22, 1990
CONTACT: RICK FROST
202-225-5061
TORRICELLI CALLS HEARING, QUESTIONS THE ADMINISTRATION'S COMMITMENT
TO ADVANCED MATERIALS POLICY
WASHINGTON, D.C. Fantastic new materials that could revolutionize
automobile engine design, allow construction of lifelike artificial
limbs, enable aircraft to withstand the intense heat of hypersonic
flight, and produce the next generation of super-fast computer chips
have failed to impress the Bush Administration, according to Rep.
Robert Torricelli (D-NJ).
Torricelli, Chairman of the Transportation, Aviation and Materials
Subcommittee, will chair an oversight hearing on the President's
National Critical Materials Council on Tuesday, June 26, 2-5 p.m., in
2325 Rayburn House Office Building.
"Despite a tremendous challenge to this country's technological
leadership, the resulting threat to our national security, and
blistering competition from Japan and Germany, the Bush Administration
has failed to pay even the slightest attention to developing an
overall policy for this country on critical materials," Torricelli
said.
Torricelli has called the President's Science Advisor, Dr. Allan
Bromley, to testify before his subcommittee on the Administration's
failure to adopt a long-term strategy for promoting the research and
development of critical materials.
Critical materials include advanced ceramics used in superconductors
and advanced, featherweight, composite materials that have proven
stronger than steel.
"Congress created the National Critical Materials Council in 1984
specifically to set a course for policy on critical materials,"
Torricelli said. "Yet the Reagan and Bush Administrations have turned
away from the future in their rush to avoid anything that might
resemble a coherent, thoughtful and effective industrial policy. In
the meantime, our foreign competitors are rapidly moving to push
forward the boundaries of science and use their discoveries to
commercial advantage."
The list of tech
ies advanced due to critical materials includes
the outer skin for the National Aerospace Plane, magnets and
superconducting wire for the Superconducting Supercollider, advanced,
high-heat, automobile engines that can burn fuel with fantastic
efficiency, and an entire new generation of computer chips.
The Subcommittee on Transportation, Aviation and Materials is one of
seven subcommittees of the Committee on Science, Space and Technology.
Rep. Robert Roe (D-NJ) is the committee chairman. Rep. Tom Lewis
(R-FL) is the Transportation subcommittee's ranking Republican.
A witness list appears on the reverse side of this release.
TESTIMONY OF
D. ALLAN BROMLEY
Director, Office of Science and Technology Policy,
Executive Office of the President
before
the Subcommittee on Transportation, Aviation and Materials
of the House Committee on Science, Space and Technology
on
the National Action Plan for Superconductivity Research
and Development
Washington, D.C.
February 21, 1990
1
Mr. Chairman, it is a pleasure to be here to testify on the National Action
Plan on Superconductivity Research and Development. The Plan, which was publicly
released in December 1989, was prepared with the help of staffs of the National
Critical Materials Council (NCMC) and the OSTP Committee on Materials (COMAT)
as well as the help of other experts. It is based on the precept that the United States
must maintain its position at the forefront of superconductivity R&D and be ready to
translate basic scientific knowledge into viable applications.
While the Plan is a formal response to a legislative requirement, its
preparation also reflects the tremendous promise of superconductivity.
Superconductivity already has important commercial applications, and with certain
breakthroughs it could become an enabling technology leading to a wide range of new
products. In general, superconductivity is one of a number of critical technologies in
which the United States has a vital stake in remaining on the cutting edge of R&D.
THE PROMISE OF SUPERCONDUCTIVITY
Before proceeding with a discussion of the Action Plan, it would be useful to
discuss briefly the current R&D as well as commercial status of superconductivity and
its promise for the future.
Superconductivity was discovered in 1911 when a Dutch physicist observed that
the electrical resistance of a mercury rod dropped virtually to zero when it was cooled
to 4.2 degrees above absolute zero (4.2 degrees Kelvin or 4.2 K). Over the next 75
years, researchers gradually found or fabricated materials with higher critical
temperatures (the temperature below which a material becomes superconducting).
However, by 1985 the highest known critical temperature was still only 23 K. It is a
well-established rule of thumb that for reliable operation, superconductors should be
used at less than 75 percent of their critical temperatures. Therefore, low
temperature superconductors (LTS) have to be cooled well below 20 K, which requires
complex cooling systems generally based on liquid helium or liquid hydrogen.
Despite these limitations, a number of companies have developed commercial
applications for low temperature superconductivity, particularly in nuclear magnetic
resonance imaging (NMRI), particle accelerators and electronic instrumentation. As
of 1987, annual sales of superconducting devices, worldwide, amounted to about $400
million; of this amount, NMRI devices and electronic instrumentation each accounted
for roughly $150 million.
The Superconducting Super Collider (SSC) will be a large-scale user of state-
of-the-art low temperature superconducting magnets. The facility, with a 54-mile
circumference, will require over 10,000 magnets containing some 2,000 tons of actual
superconductors costing roughly $320 million.
Commercial development of low temperature superconductivity continues,
despite the relatively long history of R&D in this area. Future commercialization,
while it will probably not be rapid in any given year, will nonetheless be a steady and
continuing process. I am convinced that the future result of this cumulative process
will be quite impressive.
2
For example, superconductivity will very possibly find eventual applications in
computers, where zero resistance of conductors could significantly increase computer
speeds and increase the packing density on a semiconductor chip. The ever shrinking
size of electronic microcircuitry and the corresponding need for increased current B
densities and signal speeds are inexorably leading to ever more serious heat removal
problems and strongly suggest an important future role for superconductivity in
computers. Other possible applications for superconductors that have been studied
include underground electrical transmission cables, electrical energy storage,
magnetically levitated trains, and ship propulsion systems.
HIGH TEMPERATURE SUPERCONDUCTORS
In January 1986, two researchers at the IBM laboratory in Zurich, Switzerland,
reported that they had found a ceramic material with a critical temperature above 30
K. Within the next two years, materials containing either bismuth or thallium were
fabricated with critical temperatures above 100 K.
The discovery of high temperature superconductivity (HTS) was one of the
greatest surprises in several decades of modern physics. These materials have critical
temperatures above the temperature of liquid nitrogen (77 K), thereby significantly
increasing potential commercial applications in cases where refrigeration is an
important factor in cost or ease of use. Liquid nitrogen costs about $0.22 per gallon
in the United States as compared to about $5.50 per gallon for liquid helium.
Before the discovery of high temperature superconductors, critical temperatures
had increased more or less linearly with time. Extrapolation of the 75-year history of
superconductivity would have suggested a critical temperature of 90 K would not be
attained until something like the year 2190!
We are still at a very early stage in understanding high temperature
superconductivity and in determining its technological possibilities. Rapid technical
progress and unexpected breakthroughs can continue to be anticipated. The
applications of the new superconductors are likely to be similar to those for low
temperature superconductors, at least initially. But in the long term, the most
important applications may be those that cannot yet be foreseen.
Two critical challenges posed by the new superconducting ceramic materials are
achieving high electrical current densities without losing the superconducting
properties and developing superconducting ceramics flexible enough in a mechanical
sense to fabricate into wires and other shapes for widespread commercial applications.
Progress on these challenges is occurring at many institutions in industry,
academia, and the national laboratory system. Last fall, for example, an AT&T Bell
Laboratory research team reported gains of 100-fold in electrical current densities
after irradiating samples with neutrons. Perhaps even more significantly, researchers
in another Bell Laboratory team produced bulk superconducting samples that could
carry almost ten times as much current as the best bulk materials made by earlier
standard methods. Both results represent breakthroughs on one of the major
problems of high temperature superconductivity, although it is too early to predict the
commercial outcome of this research.
3
Another example of recent significant R&D results is the indication that HTS
materials, operated at liquid helium temperatures, may offer superior performance
over conventional low-temperature superconductors for a variety of applications. A
bismuth oxide superconductor was fabricated by Oak Ridge National Laboratory in*
collaboration with the American Superconductor Corporation and tested at liquid
helium temperature. This superconductor carried higher maximum currents at high
magnetic fields than can niobium-tin, the best of the conventional low temperature
superconducting materials.
The lesson to be drawn from these and other recent developments is that any
successful R&D plan must be sufficiently flexible to incorporate fast-breaking R&D
results, both advances and setbacks. We must continue to expect the unexpected.
The best strategic approach is to try to visualize what the broad commercial needs
and applications might reasonably be 5, 10 and 20 years hence and conduct long-term
R&D in broad areas that address those needs. For example, work on thin films is
almost certain to have applications in electronics and other areas, but we cannot at
present be certain what some of the specific applications will be.
Such an R&D plan is somewhat similar to constructing a new highway system.
It is impossible to predict which specific new businesses and industries will be
attracted by the highway system or at what rate of development, but it is certain that
new businesses will result.
OVERVIEW OF THE PLAN
As you know, our OSTP Action Plan was prepared in response to the National
Superconductivity and Competitiveness Act of 1988. This legislation specifies that the
Plan include the following:
0
goals and priorities for superconductivity R&D;
0
a recommended programmatic and budget crosscut by individual
departments and agencies; and
0
proposals for participation by industry and academia.
The legislation also calls for subsequent annual reports setting forth and
evaluating the progress of the Action Plan. These reports will also include "a
description of the amount of funds expended in the previous year by all Federal
departments and agencies connected with superconductivity." A budget crosscut for
current federal R&D in superconductivity is included with this statement and will be
discussed below.
The basic strategic approach in the Plan is that of continuing at present to
encourage a broad-based interagency federal R&D program incorporating a large
number of alternatives and approaches. This strategic approach recognizes that we
are still at an early stage in the R&D process--particularly with high temperature
superconductors--and thus that it is much too early to narrow our focus. The
detailed mechanisms of superconductivity in polycrystalline ceramics, for example, are
only just beginning to be understood. Further progress toward answering such
4
fundamental questions is presently the limiting factor in determining the potential
applications for high temperature superconductors.
Such an approach is, over the near-to intermediate-term, the most efficient and
sure way to increase our knowledge. It is also worth noting that research programs
in superconductivity have been continually revised in the last few years to take
advantage of new R&D results. At a somewhat later stage, as superconductivity is
better understood, it is appropriate to progressively focus and prioritize R&D with a
view to future commercial applications.
I believe that the National Action Plan that you have before you is thus in
accord with the "state of the art" of superconductivity. I wish to emphasize, however,
that R&D planning is a continuing process. This is particularly the case in a field
such as high temperature superconductivity with rapid changes to be expected.
ANNUAL REPORTS TO CONGRESS
The Congressionally directed annual reports on the progress of the Plan will
provide a means of updating and refining the Plan and will reflect ongoing scientific
and technical progress in the field. As our knowledge base becomes more extensive,
our planning will inevitably shift from an emphasis on basic research to additional
emphasis on technology development with a view to specific future commercial and
national security applications.
The annual reports to Congress will include the following:
o
an updated funding crosscut for agency superconductivity programs; and
0
an ongoing and updated assessment of the strategic goals, technical
programs and potential applications described in the Plan, including any
R&D breakthroughs (or roadblocks) and their possible impact on
achievable applications.
Some of the more visible technical goals of the Plan to be tracked in the
annual reports will include such topics as the following:
0
Progress on performance characteristics of superconducting materials
(e.g., increases in critical temperature and critical current density);
0
Development of new superconducting materials with desirable properties;
0
Development of high-quality HTS thin films capable of supporting
adequate current densities with low surface resistance and low
background noise for future use in planar sensors and electronics
applications; and
o
Demonstration of a reproducible controlled process for the production of
HTS bulk materials.
Progress on these and other technical goals will be reported annually. The
intended outcome of this multiyear process is an evolving R&D program coordinated
with industry and academia that addresses the critical technical and theoretical
5
hurdles required for broad-based commercialization of superconductivity 5, 10 and 20
years hence.
SUPERCONDUCTIVITY BUDGET
A budget crosscut was submitted for superconductivity as part of the
President's FY 1991 budget request to Congress. Together with superconductivity,
estimates for total federal funding in 1991 were provided for semiconductors, high
performance computing, advanced imaging technologies and robotics. All of these
technologies have great promise for the future.
The attached table provides a breakdown of funding by agency, with a further
division into the categories of high and low temperature superconductivity. The totals
in this table differ slightly from those in the President's FY 1991 budget request,
because they reflect more recent agency estimates. These estimates are subsumed
within larger appropriation requests and may change somewhat over time as agency
plans are updated.
The DOE figures can be somewhat misleading, since the 1991 superconductivity
request does not include magnet R&D for the Superconducting Super Collider,
reflecting completion of that effort within the superconductivity program. In order to
make 1991 comparable with 1990, about $18 million would need to be added to the
1991 funding in the LTS category. With this comparability adjustment, total funding
for superconductivity R&D in DOE for 1991, in constant dollars, is at a slightly
higher level than it was in 1990.
Total 1991 funding for all agencies, however, shows a somewhat greater
emphasis on high temperature superconductivity, which is 9 percent above that of
1990 in current dollars.
As is routinely the case, outyear funding estimates are not included in the
Administration's budget request for any of the above technology crosscuts, including
superconductivity. The Administration's intention, however, is to provide a stable
multiyear base program for basic research in superconductivity, a requirement for
continued rapid progress on the fundamental knowledge base.
While a detailed discussion of agency programs is provided in the Plan, major
efforts in the agency programs include the following:
0
In the Department of Energy, work supporting agency missions in fusion,
accelerators and energy storage, generation and transmission.
0
In the Department of Defense, work supporting sensors, electronics, thin
films, naval propulsion and power generation. In 1991 or 1992, the
Navy plans to run tests of refrigeration of passive electronic components
in space using radiative cooling.
0
In the National Science Foundation, fundamental research into the
theory, experimental properties, structure and the synthesis and
processing of HTS materials.
o
In the National Aeronautics and Space Administration, work supporting
communications, spectroscopy, power transmission and magnetic energy
storage.
6
0
In the National Institute of Standards and Technology, work supporting
measurement and determination of superconductor properties.
INDUSTRIAL AND ACADEMIC PARTICIPATION
Business and academia have important roles in the Action Plan. The Plan
recommends the formation of industry-university-government laboratory consortia
focusing on superconductivity, a recommendation also made by the Committee to
Advise the President on Superconductivity chaired by Ralph Gomory. In addition,
both the National Critical Materials Council and the new President's Council of
Advisors on Science and Technology (PCAST) will provide vehicles for industrial and
academic input on superconductivity. In the case of PCAST, such input will be
obtained largely through working groups reporting to PCAST, with members drawn
primarily from the private sector.
OSTP activities in superconductivity will be an integral part of the broader
technology policy of this Administration. This policy recognizes that a strong
manufacturing sector is a prerequisite for our future national well-being. The nation
needs a better working relationship between government and industry and an
improved climate for the formation of private sector R&D consortia. The
sophistication and capital-intensive nature of modern technology require new ways of
increasing cooperation between government and industry and of fostering
communication on long-term technology goals.
Good examples of the increasing emphasis on government-industry cooperation
are the Superconductivity Pilot Centers in the Department of Energy laboratories at
Los Alamos and Argonne and the High Temperature Materials Laboratory at Oak
Ridge. These R&D projects provide for cost sharing, collaborative R&D agreements,
joint publications and broad industry participation. In effect, the technology is not
transferred to industry but is rather developed jointly between laboratory and industry
and is then carried back to companies by their participating scientists and engineers.
The first cooperative agreement under the Pilot Center Program was signed in
December 1988. To date, 24 cooperative agreements have been signed. Ownership of
intellectual property is negotiated for each contract. As an example of such
agreements, Oak Ridge and Westinghouse signed an agreement aimed at increasing
the current carrying capacity of certain high temperature superconductors. Planned
funding in 1991 for the pilot centers is $15 million, up from $6 million in 1989 and
1990.
JAPANESE APPROACH ON SUPERCONDUCTIVITY
The Japanese also are very interested in superconductivity. I recently spoke
with Professor Mildred Dresselhaus of the Massachusetts Institute of Technology, who
chaired a just-completed study on high temperature superconductivity in Japan, and
with Professor Shoji Tanaka of the University of Tokyo, who heads a national effort
in this area. The Japanese superconductivity R&D effort provides an excellent
example of how government, business and industry cooperate in Japan. It is worth
7
taking some time here to discuss how the Japanese are proceeding with
superconductivity (and indeed with other technologies that they view as critical),
although I am certainly not advocating that we attempt to copy, in any blind fashion,
the Japanese approach:
0
First, the Japanese government targeted superconductivity--as well as
other technology areas--for special attention. Once targeted, the
Japanese government develops cooperation, from the top down, among
industry, academia and the government. In superconductivity research,
for example, broadly stated, long-range goals are to prepare for
commercial use of superconductors in large-scale applications in
transportation and the generation and use of electrical power.
0
Once targeted, a long-term commitment is made of both money and
people, even if results are slow in coming or do not come at all. Japan
bets on the long haul. That long time horizon is, in my opinion, crucial.
Those involved are assured that if they continue an aggressive drive
toward the stated long-range goals, they will continue to be supported.
0
This general policy leadership on the part of the Japanese government
strongly encourages industry and academia to assign their best people
and support in developing the basic technology. Once the technology is
available, however, the participants separate, use this basic technology as
they think best and compete with one another and with the rest of the
world. It should be noted that the great majority of the investment
capital involved comes from the Japanese private sector.
0
Finally, the Japanese focus on what in this country might be called
"super technicians." These are people with bachelors and masters
degrees who become extraordinarily expert at what they do. They are a
critical link between basic research and manufacturing. The Japanese
system also puts basic researchers and development engineers into close
working proximity. Experts and the "super technicians" in both
manufacturing and materials areas work as part of a superconductivity
group so that from the very outset their concerns and expertise are part
of the process.
In summary, Japan appears to be putting basic researchers, engineers, product
developers and manufacturing and materials experts in groups, stirring briskly, and
then assuring steady long-term support in pursuit of broadly defined national goals.
We cannot and should not attempt to simply copy elements of the Japanese approach.
However, we should pay close attention to what they are doing and be sufficiently
flexible to incorporate some of the best features of their approach while capitalizing
on our own strengths.
In particular, I believe that we, like the Japanese, need to internalize a long-
term perspective in the economic life of our nation. Such a perspective would do
more than anything else to assure U.S. leadership in superconductivity and in other
8
areas on the cutting edge of technology. Needless to say, these issues extend beyond
the specific topic of superconductivity. In the area of budgeting, for example, stability
and long-term commitment generally are far more effective than a cyclical approach.
Patient, low-cost capital availability is also extremely important.
In conclusion, superconductivity--and particularly high temperature
superconductivity--is an area with an exciting and open-ended future. More generally,
the broad field of materials science and engineering, which includes superconductivity,
is an area of rapidly growing importance to our modern industrial civilization.
Increasingly, materials can literally be designed at the atomic level to produce
desirable properties in the resulting product. The area of superconductivity is an
excellent illustration of these concepts. The continuing involvement of OSTP in
superconductivity will be part of an increasing involvement of this agency in the
vitally important areas of materials and critical technologies.
SUPERCONDUCTIVITY BUDGETS
BY AGENCIES FOR FY90 ESTIMATED
AND FY91 PROPOSED
(MILLIONS OF CURRENT DOLLARS)
FY 1990
FY 1991
AGENCIES
ESTIMATE
PROPOSED
DOE
LTS
79.3
61.11
HTS
34.1
43.3
TOTAL
113.4
104.4
DOD
LTS
13.2
13.2
HTS
61.8
61.8
TOTAL
75.0
75.0
NSF
LTS
3.0
3.0
HTS
25.8
27.3
TOTAL
28.8
30.3
NASA
LTS
2.0
2.0
HTS
5.9
5.9
TOTAL
7.9
7.9
NIST
LTS
.5
.5
HTS
2.8
4.7
TOTAL
3.3
5.2
ALL AGENCIES
LTS
98.0
79.82
HTS
130.4
143.0³
TOTAL
228.4
222.84
1 Reflects decrease of $17.9 million for SSC magnet R&D.
2 0% change from FY 1990 after correction for SSC.
3 9% increase from FY 1990.
4
Agency total supersedes estimates for FY 1991 of $215.4 M.
STATEMENT
BY
D. ALLAN BROMLEY,
ASSISTANT TO THE PRESIDENT FOR SCIENCE AND TECHNOLOGY, AND
DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY
BEFORE THE
COMMITTEE ON ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ON
S. 324
NATIONAL ENERGY POLICY ACT OF 1990
WASHINGTON, D. C.
APRIL 5, 1990
Final
4/4/90 430
STATEMENT
by
D. Allan Bromley,
Assistant to the President for Science and Technology, and
Director, Office of Science and Technology Policy
before the
Committee on Energy and Natural Resources
United States Senate
on
S. 324
National Energy Policy Act of 1990
April 5, 1990
Thank you for the opportunity to present the views of the White House
Office of Science and Technology Policy (OSTP) on S. 324, the National
Energy Policy Act of 1990. OSTP and the entire Administration share
the committee's conviction that our national energy policy must be based
on sound environmental, economic, and technical considerations.
However, we believe that mechanisms now in place offer a significantly
better chance of developing and implementing such policy than do the
measures in the Act. The Administration, therefore, opposes enactment
of S.324.
SCIENTIFIC UNCERTAINTIES REGARDING GLOBAL CLIMATE
CHANGE
There is no question that human beings have significantly altered the
composition of the atmosphere by burning fossil fuels, cutting down
forests to greatly expand agriculture, and producing industrial chemicals
such as chlorofluorocarbons. Over the past two centuries, the amount of
carbon dioxide in the atmosphere has risen 25 percent. The level of
atmospheric methane, a potent greenhouse gas generated by agricultural
and industrial practices, has more than doubled.
Although scientists have predicted since the end of the nineteenth
century that increases in atmospheric carbon dioxide would increase the
temperature of the planet, our understanding of the relationship between
greenhouse gases and global climate change remains imprecise and
inadequate. The scientific challenge is great, and our inability to
separate human impact from natural variability and the uncertainties
surrounding temperature records compounds the problem. Nevertheless,
few scientists would argue with the contention that if we continue to load
the atmosphere with greenhouse gases, we will eventually experience some
degree of warming.
Our general understanding of radiative forcing mechanisms in the
atmosphere leaves unanswered the critical questions regarding how much
warming will occur, the timing of any warming, impacts on sea level,
rainfall and soil moisture, and the regional effects created by all of these
factors. Those who are following the literature know that new, and
sometimes conflicting results on the predictions for future global changes
appear almost on a daily basis.
It is also important to recognize that developing an improved
understanding of geophysical climate processes is only the first step in
developing appropriate policies. Estimates of the human and social
consequences stemming from actions that might be taken to curtail
greenhouse emission, as well as those stemming from predictions on
future warming and ancillary changes associated with it, must then be
developed and used as the basis for policy formulation. Science and
economics research aimed at developing necessary estimates and insights
is a top priority for the Administration.
Our scientific research is making significant progress. Nonetheless, the
state of the science remains highly uncertain. In fact, several recent
studies suggest a move to more moderate predictions of the extent of
global climate change and its potential impacts. For example:
0
In January of this year, a National Academy of Sciences
panel concluded that current climate change models predict
a global warming closer to 2 degrees Celsius over the next
fifty years, not the previous range of 1.5 degrees to 4.5
degrees Celsius.
0
In December 1989, the American Geophysical Union revised
earlier estimates of rise in sea level of between 20 and 120
2
inches by the year 2100 to a new estimate of between 0 and
30 inches.
0
Recently U.K. scientists have introduced a better
representation of cloud processes in their global climate
change model. The new estimate of warming for a
doubling of CO2 dropped to 1.9 degrees Celsius, down from
the previous estimate of 5.2 degree Celsius.
0
In January of this year, NOAA reported new results from
its global climate model, using more realistic ocean
simulations. This model now predicts that even with a
doubling of the current CO2 levels there would not be
warming in the Southern Hemisphere. Indeed, projections
indicate some areas of the globe will be cooler.
Given this level of uncertainty in predictions about global climate
change, it is clear we need to continue the aggressive research program
being supported by various Federal agencies to understand more fully
the ramifications of increased greenhouse gas emissions in the
atmosphere and potential impacts that could be caused by global climate
change. In the meantime, we should embark, on measures to reduce
greenhouse gas emission only if those measures also serve other policy
objectives. That is precisely what the Administration has done.
ADMINISTRATION ACTIONS FOR ENERGY AND THE
ENVIRONMENT
I would like to now summarize several initiatives undertaken by the
Administration that address some of the objectives of S.324. Then I will
describe our recent progress toward establishing a comprehensive
research program in the areas of energy and global climate change, as
well as mechanisms - both national and international -- that we have
developed for formulating informed policy decisions and for
implementing these decisions. These actions, in my view, constitute an
effective response to the goals that we all share.
The Administration considers it imperative that we continue to develop,
in cooperation with the Congress, a well-designed program for research
into the effects of greenhouse gas emissions on climate. We must also
evaluate the economic and policy aspects of potential responses. Such a
program will provide the foundation essential for the development of a
3
rational national energy policy that is economically and environmentally
responsible.
I would also wish to emphasize the Administration's position that,
pending the resolution of the significant scientific uncertainties
surrounding climate change processes and their human and social
impacts and concerns regarding economic and social dislocations
stemming from efforts to limit fossil fuel use, our immediate focus
should be on those actions that will reduce greenhouse gas emissions,
but which can be fully justified for other reasons. For example, we have
a commitment to phase out manufacturing and use of CFC's by the year
2000, ahead of the requirements of the current Montreal Protocol,
provided safe substitutes exist - these constitute 25 percent of our
current greenhouse gas emissions. The Clean Air legislation currently
under debate in the Congress will also provide substantial reduction in
the emission of some of the greenhouse gases. A strong commitment to
energy conservation is to be a major component of the Department of
Energy's National Energy Strategy; and as an initial step in putting this
strategy forward, the Department of Energy has already announced a
series of conservation and renewable energy initiatives that are included
in the President's FY 1991 budget request.
Turning from sources of these emissions to sinks, the Department of
Agriculture's tree planting initiative (the planting of a billion trees on
private land across America - trees that could eventually absorb 13
million tons of carbon, annually) presented in the President's FY 1991
Budget, and our continued diplomatic discussions with countries such as
Brazil aimed at protecting the remaining tropical forests, are key parts
of our immediate response to this potential problem.
The Administration has already taken a number of additional steps that
will enhance our understanding of, and response to, the potential effects
of global climate change.
The President proposed in his FY 1991 Budget that funding for the
U.S. Global Change Research Program be increased 57 percent over
FY 1990, to $1.03 billion in FY 1991. The proposed funding would
significantly expand research, data gathering, and modeling activities
through a carefully balanced mix of ground-based and space-based
research.
4
An underlying theme in all of the Administration's activities relative to
potential climate change is that the strategy must be scientifically-based
and technically and economically sound. It must also be dynamic --
responsive to new knowledge and ideas, and to global, environmental and
international changes. A report on the wide ranging public hearings
that represent a step in the process of formulating the National Energy
Strategy, for example, has just been released.
FEDERAL RESEARCH POLICY AND COORDINATION
The Office of Science and Technology Policy is charged with reviewing
and coordinating Federal R&D that cuts across the missions of more
than one Federal agency, and with providing advice to the President on
issues of science and technology policy that affect national and
international policy. As Assistant to the President for Science and
Technology and Director of OSTP, I chair two complementary councils --
one federal, FCCSET and one private sector, PCAST -- that provide
information and advice. In addition, I chair working groups of the
Economic Policy Council and the Domestic Policy Council related to
science and technology issues. These groups, whose functioning I shall
now describe, will accomplish the objectives -- and many more besides --
of the coordinating council proposed in S.324. Thus, the organizational
changes proposed in S.324, I believe, are unnecessary. The
establishment of a coordinating council proposed in S.324 would be
duplicative and would not add significantly to the existing mechanisms.
S.324 also sets out specific R&D criteria that the propsed coordinating
council is required to use as the basis for preparing "management plans"
for the conduct of R&D in certain identified technologies. We do not
believe the overly prescriptive nature of such an approach will be
successful. The proposed approach does not adequately include the
participation of the private sector technology developers and technology
users. Most observers of R&D policy have found that successful
government R&D occurs most frequently when the users or ultimate
manufacturers of the technology are involved in the planning, conduct
and testing of the applied technologies. S.324 does not provide adequate
mechanisms for this critical private sector involvement.
Federal Coordinating Council for Science and Technology
The Federal Coordinating Council for Science, Engineering, and
Technology (FCCSET) was originally established in 1976 by Public Law
5
94-282, the National Science and Technology Policy Organization and
Priorities Act, which also established the Office of Science and
Technology Policy.
FCCSET is charged with providing more effective planning, coordination
and administration of federal scientific and technological programs.
This includes identifying research and development needs, and
developing and reviewing in close cooperation with the Office of
Management and Budget federal budget plans in cross-cutting areas of
science and technology.
Research on global change is supported by a number of federal agencies
and constitutes an exemplary case of common effort on a science policy
issue. OSTP's coordinating function in global change research has been
carried out largely through the Committee on Earth Sciences (CES),
which is one of the committees under FCCSET.
The CES in turn has two subcommittees that deal with global change,
the Working Group on Global Change, chaired by Robert Corell of the
National Science Foundation, and a new Working Group on Adaptation
and Mitigation Technologies, headed by John Knauss of the National
Oceanic and Atmospheric Administration.
I would like to submit for the record a copy of the document "Our
Changing Planet: The FY 1991 U.S. Global Change Research Program,"
which was developed by the CES Working Group on Global Change and
which formed the basis for the President's FY 1991 budget request in
this area.
The CES has integrated the efforts of the federal agencies conducting
research on global change into the U.S. Global Change Research
Program (USGCRP). The goal of the program is to reduce key scientific
uncertainties and to develop more reliable scientific predictions upon
which sound policy strategies and responses can be based. The CES
expects to update the research plan annually and to change priorities as
research results are obtained and as nonfederal groups provide input
into the research process.
Among the many interesting and important science questions that need
to be investigated, I would mention, in particular, the reliability of
general circulation models, the earth's climatic history, the role of
6
clouds, oceanic influences on the atmosphere and climate, the hydrologic
cycle, and changes in ecosystems.
This existing interagency coordinating mechanism is far preferable to the
establishment of the committee directed in S.324, composed of directors
of national laboratories who, after all, are contractors to the Department
of Energy. In fact, the Committee on Earth Sciences, has done an
excellent job in coordinating global change R&D. Having established an
interagency process that works, it would be a mistake to replace it with
a new mechanism which places contractors on an equal footing with
cabinet agencies.
The President's Council of Advisors on Science and Technology
The President's Council of Advisors on Science and Technology (PCAST)
was established by Executive Order of the President on January 19,
1990. The Council, which I chair, reports directly to the President and
consists of 12 distinguished scientists and engineers from academia,
industry, and other nonfederal institutions. This council provides an
important ingredient that is missing from the FCCSET process -- views
from outside the federal sector.
PCAST has already met twice with the President and his senior advisors.
One of the topics discussed was global climate change, and I shall
request PCAST to form a panel on environmental science and global
change. This panel, with its private sector perspective, will complement
the advice we receive from the CES subcommittee of FCCSET. The fact
that I chair both FCCSET and PCAST insures good communications
between the two groups.
The Domestic Policy Council Working Group on Global Change
President Bush also has asked me to chair a Cabinet-level Working
Group on Global Change under the White House Domestic Policy
Council. The Working Group provides Cabinet-level coordination on
global change issues and is an important source of advice for the
President.
The Working Group, when established last October, called immediately
for three specific studies: (1) an analysis of economic costs of global
change and responses to it, (2) an analysis of private sector concerns,
activities, and issues on global change, and (3) legal precedents for
international agreements and conventions on the environment.
7
Preliminary drafts of these reports have been presented to the Working
Group for use in their deliberations. In addition, the Working Group
has set up a number of briefings by top experts on the scientific,
economic, environmental, and industrial aspects of global change.
Economic Policy Council Working Group on Science and Technology
Late last month an Economic Policy Council Working Group on Science
and Technology was established to assist in formulation, coordination
and implementation of Administration policies involving science and
technology. The Working Group will also develop science and technology
issues related to domestic and social policy for consideration by the
Domestic Policy Council.
I will chair this Working Group, and members will include White House
officials and senior representatives from all federal agencies and
departments with substantial involvement in scientific and technological
issues. This Working Group will analyze the scientific and technological
components of economic and domestic policy issues.
INTERNATIONAL RESEARCH AND POLICY-MAKING MECHANISMS
Global climate change affects all nations and thus requires international
study and cooperation. Within the international scientific community
are a variety of informal mechanisms for planning science programs.
Often these informal mechanisms are used to plan the detailed scientific
elements of a more formal program, several elements of which are
outlined below.
Conference on Science and Economics Research Related to Global
Change
The President has asked me, together with the Chairman of the Council
of Economic Advisers and the Chairman of the Council on
Environmental Quality, to organize a White House meeting of the three
senior officials in science, economics, and the environment from a
number of countries. This White House Conference on Science and
Economics Research Related to Global Change will take place in
Washington, D.C. on April 17-18, 1990.
8
The conference will be devoted to science and economics research issues
relevant to policy on global change, including climate. The Conference
is designed to address important next steps that substantially enhance
and broaden international understanding of science and economics
research issues, and to frame initial steps toward a strategy for
implementing joint international science and economics research efforts.
It seeks for the first time to join research issues central to both the
science and the economics related to global change.
Intergovernmental Panel on Climate Change
The U.S. government was instrumental in establishing and continues to
support the work of the Intergovernmental Panel on Climate Change
(IPCC), which is sponsored by the United Nations and the World
Meteorological Organization. The three working groups of the IPCC,
which are studying the scientific aspects of global change, impacts, and
response and mitigation strategies, respectively, met here in Washington
recently to prepare their reports. The final papers of the working
groups will be presented to the full IPCC in August, shortly before the
Second World Climate Conference in October.
In an address to the IPCC Plenary Session here in Washington,
President Bush commended their activities and reaffirmed the United
States' strong commitment to the IPCC process. He said, "We consider
it vital that the community of nations be drawn together in an orderly,
disciplined, rational way to review the history of our global environment,
to assess the potential for future climate change, and to develop effective
programs."
The IPCC process is designed to provide input to an International
Framework Convention on global warming. At the Malta summit last
December, President Bush proposed that the United States offer a venue
for the first negotiating session for this Framework Convention, and he
reiterated that offer at the IPCC meeting.
CONCLUSION
A National Energy Strategy is currently being developed by the
Administration that will respect the environment, meet our nation's
needs for energy, and not damage our economy or international
competitive position. The Administration has already taken specific
actions to begin dealing with the potential problem of global change by
9
taking the initiative on CFCs and Clean Air legislation that will have
the effect of limiting greenhouse gas emissions. A vigorous structure of
coordinating and advisory councils on global change is already in place
and is functioning well.
Title I of the Act would unnecessarily duplicate, and thus complicate
and hinder, aspects of both the National Energy Strategy planning
process and the Executive branch committee structure we have just
revitalized. I would have to oppose, in particular, formation of the
proposed Federal Energy-Environmental Coordinating Council. More
generally, I have a concern with requirements that would set goals or
targets before we have reached agreement on how to evaluate total fuel
cycle costs. Certainly, we should not do so unilaterally. These
requirements could constrain our technical options, weaken our economy
and threaten our competitive position with little environmental gain.
The White House Conference later this month will begin to provide a
basis for more considered actions.
Title II addresses energy efficiency. Increased efficiency and
conservation are being closely considered in the formulation of the
National Energy Strategy. The removal of market barriers to increased
efficiency is relatively noncontroversial. Other steps to raise efficiency
must be evaluated in light of their other impacts and benefits. The
contribution of increased efficiency to lowering greenhouse gas emissions
is clearly relevant. Our greenhouse gas emissions goals must ultimately
be set with reference to the social and economic consequences of the
actions required to attain them and those that would arise in a scenario
where no such goals were adopted.
If significant greenhouse emission limitation over a relatively short time
frame is ultimately judged to be desirable, increased efficiency alone will
not suffice. In my considered opinion, massive fuel switching in our
generation of electrical energy, greatly increased reliance on nuclear
energy as well as other actions will be required. Consequently, to
prepare for this possible policy direction, any long-term national energy
plan should include research on advanced inherently-safe reactor
concepts. These critical elements are missing from the Act. These very
issues, however, are being addressed in a comprehensive fashion in the
development of the National Energy Strategy and in the
Intergovernmental Panel on Climate Change process.
10
Title III, in addressing energy research initiatives, would impose in
several instances, detailed micromanagement that could be harmful to
our development of an effective National Energy Strategy. I will defer to
the Department of Energy for specific comments on individual
technologies, many of which can play vitally important niche roles, but
would again note my concern - expressed above - that research
continue, with high priority, on advanced reactor concepts.
In summary, the Administration shares the Committee's commitment to
address global climate change issues in a comprehensive manner based
on sound environmental, economic and technical considerations. We
believe, however, that the mechanisms currently in place are more than
adequate to achieve this objective and we oppose the bill because many
of its provisions are unnecessary, duplicative and overly prescriptive.
That concludes my prepared testimony. I would be happy to answer
questions from the committee.
11