Republicans want to take the ‘D’ out of government ‘R&D’

at 04:39 PM ET, 06/04/2012

Republicans are betting that Solyndra will be President Obama’s kryptonite in 2012, pointing to the $535 million loan guarantee to the now-bankrupt solar panel company as the poster child for wasteful government spending.

But even the fiercest critics of the Solyndra loan insist that there is still a proper role for government in energy innovation. “Let government do what it does best: fund basic research and applied research, to create the next generation of industries,” former Florida governor Jeb Bush told Congress last week. “Then let the market create the solutions.”
GOP presidential candidate Mitt Romney criticized President Obama’s energy policy Thursday in front of the closed Solyndra company headquarters. (Mary Altaffer - AP)

By and large, both parties have been able to agree on that much: Congress has largely spared basic research and development from the chopping block during recent budgets; both houses are even pushing for more funding for agencies such as the National Science Foundation in 2013.

But there are cracks emerging in that bipartisan consensus: House Republicans are becoming increasingly wary of funding energy innovation that support the second half of “R&D”--the development necessary to transform scientific research into technological innovation that ultimately would be used and commercialized outside of the lab. Earlier this spring, the House Appropriations Energy and Water Subcommittee passed a bill for 2013 that would cut funding for energy R&D by 27 percent.

Created in 2007 under the America Competes Act with strong bipartisan support, the Advanced Research Projects Agency-Energy, or ARPA-E, is modeled on the Pentagon’s highly successful DARPA program to help bridge the gap between research findings and the technological prototypes that could apply such breakthroughs to the real world. It’s a phase in innovation known as the “Valley of Death”: the financing gap that can doom promising new technologies before they have a chance.
(SOURCE: BREAKTHROUGH INSTITUTE)

Venture capital and angel investors from the private sector can and do step in. But policymakers for both parties have agreed that the federal government is particularly well suited to fund “high risk, high reward” ideas through ARPA-E--a mission that implicitly acknowledges that failure is naturally part of the process.

ARPA-E’s early investments—ranging from high-powered lithium batteries to low-cost solar panels—have garnered praise from both sides, prompting calls to increase funding. The American Enterprise Institute, Brookings, and the Breakthrough Institute proposed a $1.5 billion annual budget for the agency in a 2010 report. Even the Heritage Foundation suggested a $300 million budget for ARPA-E in 2012, in the same plan in which it proposed to dismantle the entire Department of Energy.

Senate Republicans have similarly risen to ARPA-E’s defense in the face of proposed cuts. “We are now going to have to cut back somewhere… But we want to cut fat, not muscle and bone,” Sen. Lamar Alexander (R-Tenn.) wrote in April 2011. “It is my belief that the work done by ARPA-E and the private-sector innovators will lead us into a world of improved, clean, reliable low-cost energy.”

But after an initial boost of stimulus funding in 2009--which helped tide the agency over into 2010--Congress has significantly pared back funding, and House Republicans want to push it down even further, proposing to cut the $275 million budget in 2012 to $200 million:

Why have House Republicans soured on the program? Many believe the government should only focus on basic scientific research and get out of the “development” phase altogether. Last year, Rep. James Sensenbrenner (R-Wis.) criticized ARPA-E for focusing on “on later-stage technology development and commercialization efforts” for energy innovations. “I do not believe that the government ought to be in the business of picking winners and losers,” he told the New York Times. A House subcommittee also found that firms that received government loans also received private investment, which Republicans saw as proof of government waste.

It’s the same rationale that Republicans have used in recanting their support for clean-energy loan programs in their attack on Solyndra. Such government loans are aimed at helping new technologies overcome the second “Valley of Death” from prototype to full-scale commercialization.

Republican presidential candidate Mitt Romney, for example, supported such loans when he was governor of Massachusetts, personally delivering a $1.5 million check in 2003 to Konarka, a solar panel company that just went bankrupt. But on the campaign trail, he has attacked the $535 million Solyndra loan as “crony capitalism” that gambled with taxpayers’ money to enrich Obama’s allies. By contrast, he has shared Obama’s call for more government spending on basic scientific research.

In both cases — the attacks on Solyndra and the House ARPA-E budget-cutting — Republicans essentially want to narrow the role of government. Basic research is still kosher. But aggressive government forays into development should be discouraged.

 
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