- NSF has now frozen all funding for new and continuing awards. This is not good; just how bad it is depends on the definition of "until further notice".
- Here is an open letter from the NSF employees union to the basically-silent-so-far National Science Board, asking for the NSB to support the agency.
- Here is a grass roots SaveNSF website with good information and suggestions for action - please take a look.
- NSF also wants to cap indirect cost rates at 15% for higher ed institutions for new awards. This will almost certainly generate a law suit from the AAU and others.
- Speaking of the AAU, last week there was a hearing in the Massachusetts district court regarding the lawsuits about the DOE setting indirect cost rates to 15% for active and new awards. There had already been a temporary restraining order in place nominally stopping the change; the hearing resulted in that order being extended "until a further order is issued resolving the request for a temporary injunction." (See here, the entry for April 29.)
- In the meantime, the presidential budget request has come out, and if enacted it would be devastating to the science agencies. Proposed cuts include 55% to NSF, 40% to NIH, 33% to USGS, 25% to NOAA, etc. If these cuts went through, we are taking about more than $35B, at a rough eyeball estimate.
- And here is a letter from former NSF directors and NSB chairs to the appropriators in Congress, asking them to ignore that budget request and continue to support government sponsored science and engineering research.
Unsurprisingly, during these times there is a lot of talk about the need for universities to diversify their research portfolios - that is, expanding non-federally-supported ways to continue generating new knowledge, training the next generation of the technically literate workforce, and producing IP and entrepreneurial startup companies. (Let's take it as read that it would be economically and societally desirable to continue these things, for the purposes of this post.)
Philanthropy is great, and foundations do fantastic work in supporting university research, philanthropy can't come close to making up for sharp drawdowns of federal support. The numbers just don't work. The endowment of the Moore Foundation, for example, is around $10B, implying an annual payout of $500M or so, which is great but around 1.4% of the cuts being envisioned.
Industry seems like the only non-governmental possibility that could in principle muster the resources that could make a large-scale difference. Consider the estimated profits (not revenues) of different industrial sectors. The US semiconductor market had revenues last year of around $500B with an annualized net margin of around 17%, giving $85B/yr of profit. US aerospace and defense similarly have an annual profit of around $70B. The financial/banking sector, which has historically benefitted greatly from PhD-trained quants, has an annual net income of $250B. I haven't even listed numbers for the energy and medical sectors, because those are challenging to parse (but large).
All of those industries have been helped greatly by university research, directly and indirectly. It's the source of trained people. It's the source of initial work that is too long-term for corporations to be able to support without short-time-horizon shareholders getting annoyed. It's the source of many startup companies that sometimes grow and other times get gobbled up by bigger fish.
Encouraging greater industrial sponsorship of university research is a key challenge. The value proposition must be made clear to both the companies and universities. The market is unforgiving and exerts pressure to worry about the short term not the long term. Given how Congress is functioning, it does not look like there are going to be changes to the tax code put in place that could incentivize long term investment.
Cracking this and meaningfully growing the scale of industrial support for university research could be enormously impactful. Something to ponder.
8 comments:
We got into the position where government funds the overwhelming majority of research in this country precisely because industry concluded it wasn't a money-making proposition. I obviously don't have to remind you of Bell Labs, or IBM Almaden, or any number of other places that used to do world class basic research and have now stopped. Likewise, DOD labs used to make a much larger impact but have now been shunted to the side in favor of academia, where the labor supply is cheaper.
The irony in all of this is that DOGE (really Project 2025) is trying to use overhead rates as a way to bring the hammer down on academia, but overhead for research at DOE, DOD, and industrial labs is far higher. It's not about wringing efficiency from the system.
Bell Labs, with its government-supported monopoly, was great at funding research until the late 80s. Monopolists (google, microsoft, etc) generally fund research more because they have to look slightly longer term than the average company. But companies (usually medical ones) generally just slightly change taxpayer-funded research in their own labs and then claim their high prices are justified by R&D expenditure. Not holding my breath for them to fill the gap.
The only reason Bell Labs stopped funding stuff was because the government got fed up with AT&T and broke it up https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
It’s interesting to me that in the post-WW2 era, AT&T was able to invest in long term basic research at Bell Labs by virtue of its monopoly on the telecommunications industry.
Today, on the surface at least, it seems that mega corporations like Amazon, Facebook/Meta and Google have comparable or greater dominance in their sectors, so I feel like they should likewise be able to afford long term research investment.
I know that all of these and other companies do indeed already have vibrant research divisions, but I’m curious about how much that can expand. In particular, I’d be interested to know how much AT&T invested in basic research, as a percentage of its total profits / revenues, and what the equivalent investment would be today, adjusted for inflation.
Related to the previous comment, I’d be fascinated to know what the inflation adjusted salaries of the top AT&T executives were during Bell Labs’ heyday, and how they compare to what Bezos, Zuckerberg, or Musk make today. I wonder how many Bell Labs could have been supported from those extra profits.
A way in which industry subsidizes university research is by hiring science PhD degree holders in highly paid positions. This makes the PhD much more desirable and makes it possible to hire graduate students at huge discount (about $50k/year at MIT). This is a huge difference vs what the same guys can get in industrial jobs right after undergrad. These grad students are often the top students in their undergraduate program.
I understand the thinking, but I would advice against trying to replace govt support with industry support.
Even for a political system like in this country (very large amplitude swings as compared to other count), govt support is still more steady than industry support.
Without that overhead what are universities going to do to balance the budget? Borrow until Trump changes his mind? Layoff admin and facilities workers? Downsize?
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