Innovation and Sustainable Growth

President Discusses Innovation and Sustainable Growth
at Hudson Valley Community College

SEPTEMBER 21, 2009

President Obama outlined a new report titled, "A Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs" in a speech at Hudson Valley Community College in Troy, N.Y. The President said his strategy aims to foster new jobs and businesses "by laying the groundwork and the ground rules" for unleashing innovation in the United States. The three-pronged plan entails investing in building blocks of innovation, policies to spur and promote entrepreneurship, and federal backing of emerging markets such as clean energy, smart grid, and healthcare technology that are deemed national priorities. "As we emerge from this current economic crisis, our great challenge will be to ensure that we don’t just drift into the future," he said.

The strategy's three prongs are:

Invest in the Building Blocks of American Innovation - We must first ensure that our economy is given all the necessary tools for successful innovation, from investments in research and development to the human, physical, and technological capital needed to perform that research and transfer those innovations.

Promote Competitive Markets that Spur Productive Entrepreneurship - It is imperative to create a national environment ripe for entrepreneurship and risk taking that allows U.S. companies to be internationally competitive in a global exchange of ideas and innovation. Through competitive markets, innovations diffuse and scale appropriately across industries and globally.

Catalyze Breakthroughs for National Priorities - There are certain sectors of exceptional national importance where the market is unlikely to produce the desirable outcomes on its own. These include developing alternative energy sources, reducing costs and improving lives with health IT, and manufacturing advanced vehicles. In these industries where markets may fail on their own, government can be part of the solution.

Transcript of President's Remarks:

Now, you may ask, why are we here at Hudson Valley? We're here because this is a place where anyone with the desire to take their career to a new level or start a new career altogether has the opportunity to pursue that dream. This is a place where people of all ages and backgrounds -- even in the face of obstacles, even in the face of very difficult personal challenges -- can take a chance on a brighter future for themselves and for their family.

I was just talking to the Mayor of Troy, who was -- we were in a room, and he was saying how he had studied calculus in the room where we were taking a picture. And I had to inform him I didn’t take calculus. (Laughter.) But he was testimony, he was an example of what you can do because of an institution like this.

And I know that here in Troy, you want and need that chance after so many years of hard times. Communities like this one were once the heart of America’s manufacturing strength. But over the last few decades, you’ve borne the brunt of a changing economy which has seen many manufacturing plants close in the face of global competition. So while all of America has been gripped by the current economic crisis, folks in Troy and upstate New York have been dealing with what amounts to almost a permanent recession for years: an economic downturn that's driven more and more young people from their hometowns.

I also know that while a lot of people have come here promising better news, that news has been hard to come by, despite the determined efforts of leaders who are here today and many who are not. Part of the reason is that while people in this city work hard to meet their responsibilities, I have to confess that some in Washington haven’t always lived up to theirs.

For too long, as old divisions and special interests reigned, Washington has shown neither the inclination, nor the ability, to tackle our toughest challenges. Meanwhile, businesses were saddled with ever-rising health care costs; the economy was weakened by ever-growing dependence on foreign oil; our investment in cutting-edge research declined; our schools fell further short; growth focused on short-term gains and fueled by debt and reckless risk, which led to a cycle of precipitous booms and painful busts.

And meanwhile, too many in Washington stood by and let it happen. Now, after so many years of failing to act, there are those who now suggest that there's really not much the government can or should do to make a difference; that what we’ve seen in places like Troy is inevitable; that somehow, the parts of our country that helped us lead in the last century don’t have what it takes to help us lead in this one. And I'm here to tell you that that is just flat out wrong. What we have here in this community is talented people, entrepreneurs, world-class learning institutions. (Applause.) The ingredients are right here for growth and success and a better future.

These young people are testimony to it. You are proving that right here in the Hudson Valley. Students here are training full time while working part time at GE Energy in Schenectady, becoming a new generation of American leaders in a new generation of American manufacturing. IBM is partnered with the University at Albany; their partnership in nanotechnology is helping students train in the industries in which America has the potential to lead. Rensselaer is partnering not only with this institution but with businesses throughout the Tech Valley. And early next year, Hudson Valley Community College’s state-of-the-art TEC-SMART training facility is set to open side-by-side with Global Foundry’s coming state-of-the-art semiconductor plant. (Applause.)

So we know that Upstate New York can succeed, just like we know that there are pockets in the Midwest that used to be hubs of manufacturing -- they're now retooling; they're reinventing themselves. We know that can happen. We know that in the global economy -- where there's no room for error and there's certainly no room for wasted potential -- America needs you to succeed.

So as we emerge from this current economic crisis, our great challenge will be to ensure that we don't just drift into the future, accepting less for our children, accepting less for America. We have to choose instead what past generations have done: to shape a brighter future through hard work and innovation. That's how we'll not only recover, but that's how we'll also build stronger than before: strong enough to compete in the global economy; strong enough to avoid the cycles of boom and bust that have wreaked so much havoc; strong enough to create and support the jobs of the future in the industries of the future.

So today, my administration is releasing our strategy to foster new jobs, new businesses, and new industries by laying the groundwork and the ground rules to best tap our innovative potential. This work began with the recovery plan that we passed several months ago, which devoted well over $100 billion to innovation, from high-tech classrooms to health information technology, from more efficient homes to more fuel-efficient cars, from building a smart electricity grid to laying down high-speed rail.

But our efforts don't end there. For this strategy is about far more than just recovery -- it's about sustained growth and widely shared prosperity. And it's rooted in a simple idea: that if government does its modest part, there's no stopping the most powerful and generative economic force that the world has ever known, and that is the American people.

Our strategy begin where innovation so often does: in the classroom and in the laboratory -- and in the networks that connect them to the broader economy. These are the building blocks of innovation: education, infrastructure, research.

We know that the nations that out-educate us today will out-compete us tomorrow. The ability of new industries to thrive depends on workers with the knowledge and the know-how to contribute in those fields. Unfortunately, today, our primary and secondary schools continue to trail many of our competitors, especially in the key areas of math and science. Hundreds of thousands of high school graduates who are prepared for college don't go to four-year or two-year schools because it's just too expensive; they run out of money. And roughly 40 percent of students who start college don't complete college. So all along that education pipeline, too many people -- too many of our young talented people -- are slipping through the cracks. It's not only heartbreaking for those students; it's a loss for our economy and our country.

I know that for a long time politicians have spoken of training -- of job training as a silver bullet, of college as a cure-all. It's not. I don't want to pretend that it is. We know that. But we also know that in the coming years, jobs requiring at least an associate's degree are projected to grow twice as fast as jobs requiring no college experience. Think about that -- twice as fast. We will not fill those jobs, or keep those jobs here in America, without graduating more students, including millions more students from community colleges.

That's why I've asked Dr. Biden to travel the country promoting the opportunities that community colleges offer. That's why I'm grateful that Senator Chuck Schumer, who couldn't be here today, has shown tremendous leadership on this issue. And that's why I've set this ambitious goal: By 2020, America will once again have the highest proportion of college graduates in the world. (Applause.) We used to be number one. We should be number one again. (Applause.)

Now, to achieve this goal, we're going to need motivated students, motivated families, motivated communities, local leaders who are doing their part, state leaders who are doing their part. But the federal government has its part to do, as well.

So to reach this goal we've increased Pell Grants and created a simplified $2,500 tax credit for college tuition. We've made student aid applications less complicated and ensured that that aid is not based on the income of a job that you've lost. I hear too much from folks who say, I can't get any student aid because they're still looking at my income taxes when I had a job as opposed to my situation right now.

We've also passed a new G.I. Bill of Rights to help soldiers coming home from Iraq and Afghanistan begin a new life in a new economy. (Applause.) And the recovery plan has helped close state budget shortfalls -- I think the Governor will testify -- because those shortfalls put enormous pressure on public universities and community colleges, while also we've made historic investments in elementary and secondary schools. So we're helping states get through some very tough times without having to drastically cut back on the critical education infrastructure that's going to be so important.

Now, finally, through the American Graduation Initiative that I’ve proposed, we're going to reform and strengthen community colleges to help an additional 5 million Americans earn degrees and certificates in the next decade -- (applause) -- because a new generation of innovations depends on a new generation of innovators.

And just last week, the House of Representatives passed a bill that will go a long way to reform the student loan system so that college is more affordable for more people. Right now, the federal government provides a subsidy to banks to get them to lend money to students. The thing is the federal government also guarantees the loans in case the students don’t repay. So we're subsidizing banks to take on the risk of giving loans to students, even though taxpayers are absorbing the risk anyway. That doesn't make much sense. It costs us more than $80 billion. If we just cut out the middle-man -- the banks -- and lent directly to the students, the federal government would save that money and we could use it for what's actually important -- helping students afford and succeed in college. (Applause.)

That's what the bill -- I want to emphasize this just because every once in a while you may not know what your members of Congress are doing for you. These three guys right here are standing up for young people. We need senators to do the same. (Applause.) The bill that they voted on -- the bill that I proposed -- here's what it does: It takes the $80 billion the banks currently get and uses it to make Pell Grants larger. It uses those funds to focus on innovative efforts to help students not only go to college but to graduate. And just as important, these savings will allow us to make the largest investment ever in the most underappreciated asset in our education system, and that is community colleges like Hudson Valley, which are so essential for the future of our young people. (Applause.) So we hope to improve on this bill in the Senate and go even further on behalf of students.

Ending this unwarranted subsidy for the big banks is a no-brainer for folks everywhere -- except some folks in Washington. In fact, they're already seeing -- we're already seeing special interests rallying to save this giveaway. And the large banks -- many who have benefited from taxpayer bailouts during the financial crisis -- are lobbying to keep this easy money flowing. That's exactly the kind of special-interest effort that has succeeded before, and we can't allow it to succeed this time. This is exactly the kind of waste that leaves people wary of government, leaves our country straddled with trillions of dollars of deficits and debt with little to show for it.

And that's why I went to Washington, to change that kind of stuff. (Applause.) And I look forward to winning this fight in the Senate, just as we won it in the House, and signing this bill into law. (Applause.)

Now, another key to strengthening education, entrepreneurship, and innovation in communities like Troy is to harness the full power of the Internet, and that means faster and more widely available broadband, as well as rules to ensure that we preserve the fairness and openness that led to the flourishing of the Internet in the first place. So today, FCC Chairman Julius Genachowski is announcing a set of principles to preserve an open Internet in which all Americans can participate and benefit. And I'm pleased that he's taking that step. (Applause.) That's an important role that we can play, laying the ground rules to spur innovation. That's the role of government -- to provide investment that spurs innovation and also to set up common-sense ground rules to ensure that there's a level playing field for all comers who seek to contribute their innovations.

And we have to think about the networks we need today, but also the networks we need tomorrow. That's why I've proposed grants through the National Science Foundation and through the Defense Advanced Research Projects Agency -- or DARPA -- which helped develop the Internet, to explore the next communications breakthroughs, whatever they may be. That's why I've appointed the first-ever chief technology officer, charged with looking at ways technology can spur innovations that help government do a better and more efficient job.

We also have to strengthen our commitment to research, including basic research, which has been badly neglected for decades. (Applause.) That's always been one of the secrets of America's success -- putting more and more money into research to create the next great inventions, the great technologies that will then spur further economic growth.

The fact is, though, basic research doesn't always pay off immediately. It may not pay off for years. When it does, the rewards are often broadly shared, enjoyed by those who bore it -- costs but also by those who didn't pay a dime for that basic research.

That's why the private sector generally under-invests in basic science. That's why the public sector must invest instead. While the risks may be large, so are the rewards for our economy and our society. I mean, understand it was basic research in the photoelectric effect that would one day lead to solar panels. It was basic research in physics that would eventually produce the CAT scan. The calculations of today's GPS satellites, they're based on basic research -- equations Einstein put on paper more than a century ago. Nobody knew they'd lead to GPS, but they understood that as we advance our knowledge, that is what is going to help advance our societies.

When we fail to invest in research, we fail to invest in the future. Yet, since the peak of the space race in the 1960s, our national commitment to research and development has steadily fallen as a share of our national income. That's why I set a goal of putting a full 3 percent of our Gross Domestic Product, our national income, into research and development, surpassing the commitment we made when President Kennedy challenged this nation to send a man to the moon. (Applause.)

Towards this goal, the Recovery Act has helped achieve the largest increase in basic research in history. This month the National Institutes of Health will award more than a billion dollars in research grants through the Recovery Act focused on what we can learn from the mapping of the human genome in order to treat diseases that affect millions of Americans, from cancer to heart disease. I also want to urge Congress to fully fund the Defense Advanced Research Projects Agency, or DARPA, because since its creation it has been the source of cutting-edge breakthroughs from that early Internet to stealth technology.

So as we invest in the building blocks of innovation, from the classroom to the laboratory, it's also essential that we have competitive and vibrant markets that promote innovation, as well. Education and research help foster new ideas, but it takes fair and free markets to turn those ideas into industries.

My budget finally makes the research and experimentation tax credit permanent. This is a tax credit that helps companies afford the often high costs of developing new ideas, new technologies, new products -- which means new jobs. And this tax incentive returns two dollars to the economy for every one dollar we spend. Time and again, I’ve heard from leaders -- from Silicon Valley to the Tech Valley -- about how important it is. I’ve also proposed reducing to zero the capital gains tax for investments in small or startup businesses, because small businesses are innovative businesses; they produce 13 times more patents per employee than large companies do. (Applause.)

Now, these tax incentives will spur entrepreneurship. But there are other important steps to foster markets that value and promote risk-takers and idea-makers who've always been the center of our success. That's why it's essential that we enforce trade laws and work with our trading partners to open up markets abroad; that we reform and strengthen our intellectual property system; that we sustain our advantage as a place that draws and welcomes the brightest minds from all over the world; and that we unlock sources of credit and capital which have been in short supply as a result of the financial crisis.

Now, there are some other fundamental barriers to innovation and economic growth that we're going to have to tackle in order to ensure American leadership, and prosperity continues into the 21st century. For as a nation we face enormous challenges, from ending our dependence on foreign oil to finally producing -- providing all Americans with quality, affordable health care. We've got to attack these challenges to create a climate for innovation. And innovation can then be an important part of how we meet these challenges.

So let me give you an example -- health care costs. They leave our small businesses at a disadvantage when competing with our large businesses, and they leave our large businesses at a disadvantage when competing around the world. We will never know the enormity of the costs of our economy to the countless Americans unable to become entrepreneurs, to start a small business, to follow their dreams, because they’re afraid of losing their health insurance. So to lead in the global economy, we must pass health insurance reform -- (applause) -- that brings down costs and provides more security for people who have insurance, and offers options to people who don't have health insurance. (Applause.) Health insurance reform will be good for business, and especially good for small business -- especially good for small business.

Now, in the meantime, the recovery plan that we passed earlier this year has begun to modernize our health system. So innovation can also help drive down the cost for everybody. We are taking long-overdue steps to computerize America’s health records. And this is going to reduce the waste and errors that cost billions of dollars and thousands of lives -– while protecting patients’ privacy. And it’s important to note, as well, that the records that are held -- each of us having our own medical records in digital form -- holds the potential of offering patients the chance to be more active participants in the prevention and treatment of illness. And health IT, health information technology, if implemented effectively, has the potential to unlock so many unanticipated benefits because it provides patterns of data that we don't yet collect but could reveal discoveries that we can't predict in terms of how to cure illnesses.

The same thing is true when it comes to energy. No area will need innovation more than in the development of new ways to produce and use and save energy. And you understand that here at Hudson Valley. I firmly believe that the nation that leads the clean energy economy will be the nation that leads the global economy. (Applause.)

And that's why we're doubling our capacity to generate renewable energy, building a stronger and smarter electric grid. And I was meeting some young people who are being trained right here so that they're going to be working on creating this smart grid.

We're investing in technologies to power a new generation of clean-energy vehicles. We've helped reach an agreement to raise fuel economy standards. And for the first time in history, we passed a bill to create a system of clean energy incentives which will help make renewable energy a profitable kind of energy in America, while helping to end our dependence on oil and protect our planet for future generations. This bill has passed the House. We're now working to pass legislation through the Senate. It is time to get this done. (Applause.) We have to lead on energy. We can't be lagging behind. (Applause.)

So that's an overview of our strategy. All these pieces fit together. It's a strategy that's essential for our recovery today, but more importantly, for our prosperity tomorrow. It's a strategy rooted in a deep and abiding faith in the ability of this country to rise to any challenge -- because that's our history. We're a people with a seemingly limitless supply of ingenuity and daring and talent. And at its best, our government has harnessed those qualities without getting in the way.

That's what led to the building of the Erie Canal, which then helped put cities like Troy on the map; that linked east and west and allowed commerce and competition to flow freely between. That's what led a pretty good inventor and a pretty good businessman named Thomas Edison to come to Schenectady and open what is today a thriving mom-and-pop operation known as General Electric. (Applause.)

A former senator from New York, Robert Kennedy, once told us, "The future is not a gift. It is an achievement." It was not an accident, not a gift, that America led the 20th century. It was the result of hard work and discipline and sacrifice, and ambition that served a common purpose. So it must be in the 21st century. Future success is no guarantee. As Americans we always have to remember that our leadership is not an inheritance; it is a responsibility.

So from biotechnology to nanotechnology, from the development of new forms of energy to research into treatments of ancient diseases, there is so much potential to change our world and improve our lives -- while creating countless jobs all across America. The question is if we are ready to embrace that potential, if we're ready to lead the way once more.

I think we're ready. I've seen it all across America. This generation, generation of young people sitting here, they have an unparalleled opportunity. We are called upon to help them seize that opportunity. That's what you're doing here at Hudson Valley Community College. That's what I intend to make sure that we do in Washington. That's what we will do as a nation.

Thank you very much, everybody. God bless you. God bless the United States of America. Thank you.