You've probably heard that how you spend and save your money speaks much more loudly than the words that come out of your mouth. I think you can say the same thing about current US President Donald Trump. Most everyone already knows that President Trump loves to make his opinions known. However, set aside the rhetorical bombast for a moment and look at how he and his Administration believe we should spend your tax dollars. While you may wish to judge what he says, and how he says it, possibly the more important thing to consider is how he wants to spend your money.
Republicans historically have the reputation for being fiscally prudent, or at least attempting to be on paper. Well, based upon the President' proposed budget, that went out the window! The overall budget proposal is $ 4.75 trillion, a record. Based upon expected tax receipts, if we spend that amount, we'll add about $ 1 trillion (with a "T") to the national debt. As a quick reminder, one trillion is equivalent to 1,000 billion. So much for traditional Republican fiscal rectitude!
You might think, if we're going to spend like there's no tomorrow – and spending a trillion dollars more than you will take in sounds very much like that to me – you'd think there'd be something for everybody. Well, there almost is.
Which gets to the second way the proposed budget speaks so loudly. While overall expending will continue to grow significantly, the Trump budget envisions cutting non-defense research and development by $ 10 billion. Defense research and development will grow nicely – from $ 55.8 billion to $ 59.5 billion – so if you're doing research and development for the military, you're probably going to be just fine, maybe even excited!
Unfortunately, your PhD brethren who do non-defense research may have a problem. The budget calls for a cut of 9% to funding for the National Science Foundation. For the Energy Department, the proposed cut is 17%. These pale in comparison with a proposed cut of 47% in research and development at the Environmental Protection Agency.
All of which means that President Trump not only says he doesn't believe in climate change, and doesn't seem to think alternative energy is very important, he backs his skepticism up by cutting the very research budgets that could best address climate change.
You may say, we've got bigger priorities. By his proposed budget, the President is saying that defense is one of them. Part of his budget is a healthy increase in defense spending, including research and development spending on the military and defense.
If the Federal government is going to spend money, one of the very best things it can do is to fund research and development, especially basic research. Like me, you may think the Federal government is already spending way too much money. While I think that's true, I make something of an exception for research and development. That's because it tends to provide tremendous benefits to society as a whole. As an example, we've all hugely benefitted from the research and development associated with the effort to land a man on the moon in the 1960's and 1970's. Not only that, but Federal spending on research and development brought us the Internet, as well as things such as magnetic resonance imaging (MRI) technology. It's highly likely you have benefitted from these. Marc Kastner, the Donner Professor of Physics at MIT and President of the Science Philanthropy Alliance, has noted, "With complete unpredictability, basic science research sometimes gives us a gift of new technology that changes the world."
Trump's proposed budget follows a trend that's gone on for quite a while. Back around 1968 the US spent about 10% of the Federal budget on basic research. Today it's only about 4%. Of course, the total budget has grown tremendously over the past 50 years, so we're still spending large amounts on research and development.
If research and development is valuable, how should we be spending the money? Obviously, on truly important things. The causes of climate change, as well as how to deal with it, certainly seem to me like subjects that deserve lots of research and development money. Trump has told us that he doesn't believe in climate change, and doesn't believe we need to worry about it. His budget makes the message very clear.
If like me you believe that spending research and development dollars on the causes of climate change, as well as ways to mitigate it, is important, it's some very discouraging news. The good news, however, is that this is merely a proposed budget. The 535 lawmakers in Congress actually decide what the budget will be.
While the proposed budget is quite disappointing, it's important to note that the members of Congress could make some very modest tweaks to this that could have huge impacts of climate change research and development. In fact, a group of 114 lawmakers is pushing to get more money for clean energy research and development.
Part of the proposal of these 114 lawmakers is to include $111 million in funding for Energy Innovation Hubs. The hubs were first created about five years ago during the Obama Administration. The idea is to encourage research that could then be spun off and licensed to for-profit enterprises.
Could the budget manage to handle this additional line item? To put this in perspective, imagine that the entire Federal budget was $ 1,000. If so, the funding for the Energy Innovation Hubs would be the grand total of 2.36 pennies! Just one of the Air Force's F-35 stealth jets costs $ 89.2 million, almost the entire proposed budget for the hubs.
The 114 lawmakers also want to fund the Joint Center for Energy Storage Research. Why is this so important? It's because grid storage is essential to making renewable energy the backbone of the electric grid. After all, solar only works while the sun is shining; sometimes the wind doesn't blow much, or at all; and sometimes, rivers slow to a veritable trickle, meaning that hydropower isn't always effective. Renewable energy is now highly cost competitive, but utilities around the world are still reticent to go "all in" on renewables because of the storage problem. If we're going to make a giant switch to renewable energy, we'll need to have a robust energy storage system.
Battery storage is getting much better, making electric vehicles quite economic. The same thing is starting to happen with grid storage, but a lot more work is needed. The Joint Center could play a very important role in energy storage.
Moore's Law has transformed the information technology industry. The fact that the number of transistors has more or less doubled every 18 to 24 months over the past 50 years has hugely transformed society. Imagine if research could create a veritable Moore's Law for energy storage? Imagine large scale storage of electric energy such that renewables could become the true backbone?
Ice hockey legend Wayne Gretzky famously said, "You miss 100% of the shots you don't take." To the extent we don't undertake lots of initiatives to improve energy storage, as well as other technologies to generate renewable energy, we'll never know what we might have achieved. Reducing or defunding these programs is equivalent to not taking Gretzky's additional shots.
It would be one thing if these programs were the equivalent of trying to finance World War 2, or landing a man on the moon, but they clearly are not. Yet while they do not share the funding demands of major wars (literal or figurative ones), they could create huge technological breakthroughs that would profoundly affect the world. After all, the Internet is the result of a US government research and development effort. So, of course, are weather satellites, GPS, and nuclear power plants. Relatively small portions of the Federal budget devoted to research and development have resulted in some incredible technology.
Of course, logical arguments sometimes fall on deaf ears. Even though such research and development funding makes a great deal of sense, it still may not get passed. So what happens then?
The good news is that even if the Trump Administration has its way and guts research and development related to climate change and clean energy, there are still ways to get lots of high quality research and development done. It just might have to get done a different way.
One alternative way is to get funding from major US foundations and endowments. For example, nine US universities have a combined endowment of over $ 215 billion. Then there are the Gates, Ford, and Getty Foundations, which collectively have over $ 60 billion. Interestingly, included in the list of the 20 largest endowments/foundations is the National Rural Utilities Cooperative. With nearly $ 20 billion, this is the sixth largest endowment/foundation in the country. Do you think rural utilities have an interest in climate change and renewables research? Absolutely!
If climate change is such a pressing problem – and in my mind, it definitely is – why can't we somehow get these twenty largest endowments collectively to create an endowment of $ 20 billion for climate change and renewable energy research? They could take that $ 20 billion and distribute $ 1 billion/year without invading principal. That $ 1 billion could more than fund the Energy Innovation Hubs and the Joint Center for Energy Storage Research. It would be an amount far larger than the Federal government has proposed spending, even during the Obama Administration. Now these endowments and foundations might be reticent to fund lots of basic research, but there's still plenty of need for applied research, especially the kind that could result in products and services to deal with the problem.
Please understand, I think the Federal budget should still include a bunch of funding for this type of research, but why not get a bunch from these endowments, too? Not only that, but if the Trump Administration somehow succeeds in reducing R&D for things such as climate change, why not turn to these major endowments as an alternative?
In fact, they should be considering these types of investments irrespective of what the Federal government does. That's because such funding, as suggested above, if properly spent, should produce a body of highly useful research that could become the basis for a lot of new products and services. These could then be licensed to for-profit enterprises. Most every one of these major endowments allocates money – often 5 to 10% of the endowment – to what are called "alternative investments". Research and development in alternative energy and climate change could become highly remunerative for these endowments. If these endowments collectively have over $ 200 billion, let's get them to put a significant chunk into R&D for climate change?
Even if they don't allocate a significant portion for basic research, their investment advisors should consider allocating a portion of the endowment to investments in alternative energy, much as entities such as Breakthrough Energy Ventures has done.
Which gets back to the idea of putting your money where your mouth is. You can't help but hear the message that there's a huge potential climate disaster looming. If you sincerely believe that, why wouldn't you want to put your money where your mouth is? The billionaires behind Breakthrough Energy Ventures, to their credit, are doing that. How about all these major endowments?
There are other sources of funding for alternative energy research and development. They need to be tapped, too.
No doubt, how one spends money speaks much more loudly than one's words and good intentions. By the budget it has produced, the Trump Administration has shown that it doesn't think much of climate change and alternative energy. Too bad for all of us. However, as I've noted here, Congress can still do something about this. Moreover, even if Congress does not, or somehow cannot, there are other potential sources.
There's a funding problem here, but also a huge new opportunity. Let's hope that funding sources other than the Federal government see the potential and act accordingly
