The reduction in federal funding for scientific research could lead to long -term economic damage equivalent to a major recession, according to a new study by researchers from the American University.
In recent months, the Trump administration has sought to cancel or freeze billions of subsidies to scientists from Columbia, Harvard and other universities, and has decided to greatly reduce funding for university medical centers and other institutions. Deeper cuts could be on the way. As of this week, the White House should offer a sharp discretion of discretionary expenses, including research and development, within the framework of the annual budget process.
Economists warn That such cuts could undermine American competitiveness in fields such as the development of vaccines, artificial intelligence and quantum IT, and could slow down the growth of income and long -term productivity. The private sector cannot fully replace the dollars of the government, they support, because basic research is too risky and takes too long to be paid to attract sufficient private investments.
THE studyBy a team of economists from the American University Institute for Macroeconomic and Policy Analysis, is among the first efforts to quantify the risks posed by Trump’s cuts. Because the complete extent of the administration’s plans is not yet clear, the researchers have studied a range of scenarios.
Even the lightest approach – a 25% reduction in public support for research and development – would be correlated to a drop in economic production.
The American gross domestic product, adjusted for inflation, would be 3.8% smaller in the long term – a drop in magnitude similar to that of the great recession, which ended in 2009. The drop in production would be much more progressive than this slowdown, which takes place over the years rather than months. But it would also be more lasting. Reductions of scientific research would bleed innovation, leading to slower productivity growth and, therefore, down the permanent economic production.
“It will be a decline forever,” said Ignacio González, one of the study authors. “The American economy will be smaller.”
A smaller economy also means less income for the government. Consequently, although the reduction in investments can save short -term money, it could leave the federal budget in the worst term in the longer term. Researchers estimate that a 25% reduction in research funding would reduce government income by 4.3% in the long term.
Larger financing cuts would have even greater effects. A reduction of 50% of funding would reduce gross domestic product by almost 7.6%, researchers estimate and a drop of 75% would reduce 11.3% – a greater drop than in any recession since the Great Depression.
These estimates may seem extreme, but they are consistent with other research. A recent newspaper Published by the Federal Reserve Bank of Dallas found that government investments in research and development represented at least one fifth of American productivity growth since the Second World War.
“If you look at a long time, a large part of our increase in living standards seem to come from public investment in scientific research,” said Andrew Fieldhouse, Texas A&M economist and author of Dallas Fed Study. “The rate of return is very high.”
The political leaders of the previous eras seemed to recognize this gain. In Another recent studyMr. Fieldhouse noted that previous efforts to reduce the federal budget have greatly spared investments in non-defense research and development.
In recent weeks, scientists and higher education leaders have attempted to reach support for the public and the congress for continuous federal funding. Tuesday, Science Coalition, a group of universities of public and private research, published a report On the role of federal funding in promoting economic growth. The report has highlighted examples of private companies from university research supported by the government.
“Research that occurs in a university, it does not only stay within these walls – it has a training effect,” said Abigail Robbins, president of the coalition. “It is not a blue or red problem. It transcends this. “