Domestic Policy Council

Office of Science and Technology Policy

February 2006

AMERICAN

COMPETITIVENESS

INITIATIVE
My fellow Americans, 

One of the great engines of our growing economy is our Nation’s capacity to innovate. Through 

America’s investments in science and technology, we have revolutionized our economy and changed the 

world for the better. Groundbreaking ideas generated by innovative minds in the private and public 

sectors have paid enormous dividends—improving the lives and livelihoods of generations of Americans. 

To build on our successes and remain a leader in science and technology, I am pleased to announce the 

American Competitiveness Initiative. The American Competitiveness Initiative commits $5.9 billion in 

FY 2007 to increase investments in research and development, strengthen education, and encourage 

entrepreneurship. Over 10 years, the Initiative commits $50 billion to increase funding for research and 

$86 billion for research and development tax incentives. Federal investment in research and development 

has proved critical to keeping America’s economy strong by generating knowledge and tools upon which 

new technologies are developed. My 2007 Budget requests $137 billion for Federal research and 

development, an increase of more than 50 percent over 2001 levels. Much of this increased Federal 

funding has gone toward biomedical research and advanced security technologies, enabling us to improve 

the health of our citizens and enhance national security. We know that as other countries build their 

economies and become more technologically advanced, America will face a new set of challenges. To 

ensure our continued leadership in the world, I am committed to building on our record of results with 

new investments—especially in the fields of physical sciences and engineering. Advances in these areas 

will generate scientific and technological discoveries for decades to come. 

The bedrock of America’s competitiveness is a well-educated and skilled workforce. Education has 

always been a fundamental part of achieving the American Dream, and the No Child Left Behind Act is 

helping to ensure that every student receives a high-quality education. Accountability and high standards 

are producing positive results in the classroom, and we can do more to provide American students and 

workers with the skills and training needed to compete with the best and brightest around the world. 

Building on our successes, the American Competitiveness Initiative funds increased professional 

development for teachers, attracts new teachers to the classroom, develops research-based curricula, and 

provides access to flexible resources for worker training. 

As we increase investments in research and development, strengthen education, and provide more flexible 

training for workers, we continue to keep taxes low, avoid unnecessary and burdensome regulations, 

promote free and fair trade, maintain the integrity of our markets, and foster entrepreneurship. Over the 

past five years, my Administration has lowered taxes to create more jobs, opened new markets to U.S. 

products and services, created incentives for private sector innovation, and protected intellectual property 

rights. 

America’s economy is strong and getting stronger. My 2007 Budget recognizes the importance of 

innovation to our economic future—fostering and encouraging all the components that make our 

economic engine the envy of the world. In partnership with the private sector, State and local 

governments, and colleges and universities, the American Competitiveness Initiative will promote new 

levels of educational achievement and economic productivity. With the right policies, we will maintain 

America's competitive edge, we will create more jobs, and we will improve the quality of life and 

standard of living for generations to come. 

GEORGE W. BUSH 

THE WHITE HOUSE 

February 2, 2006 
1

“The role of government is not to create wealth; the role of our 

government is to create an environment in which the entrepreneur 

can flourish, in which minds can expand, in which 

technologies can reach new frontiers.”

 – President George W. Bush, May 2001

OVERVIEW 

Keeping our competitive edge in the world economy requires focused policies that lay the 

groundwork for continued leadership in innovation, exploration, and ingenuity. America's 

economic strength and global leadership depend in large measure on our Nation’s ability to 

generate and harness the latest in scientific and technological developments and to apply these 

developments to real world applications. These applications are fueled by: scientific research, 

which produces new ideas and new tools that can become the foundation for tomorrow’s 

products, services, and ways of doing business; a strong education system that equips our 

workforce with the skills necessary to transform those ideas into goods and services that improve 

our lives and provide our Nation with the researchers of the future; and an environment that 

encourages entrepreneurship, risk taking, and innovative thinking. By giving citizens the tools 

necessary to realize their greatest potential, the American Competitiveness Initiative (ACI) will 

help ensure future generations have an even brighter future. 

Sustained scientific advancement and innovation are key to maintaining our competitive edge, 

and are supported by a pattern of related investments and policies, including: 

• Federal investment in cutting-edge basic research whose quality is bolstered by merit 

review and that focuses on fundamental discoveries to produce valuable and marketable 

technologies, processes, and techniques; 

• Federal investment in the tools of science—facilities and instruments that enable 

discovery and development—particularly unique, expensive, or large-scale tools beyond 

the means of a single organization; 

• A system of education through the secondary level that equips each new generation of 

Americans with the educational foundation for future study and inquiry in technical 

subjects and that inspires and sustains their interest; 

• Institutions of higher education that provide American students access to world-class 

education and research opportunities in mathematics, science, engineering, and 

technology; 

• Workforce training systems that provide more workers the opportunity to pursue the 

training and other services necessary to improve their skills and better compete in the 21st

century. 
2

• Immigration policies that will continue to enable the United States to attract the best and 

brightest scientific minds from around the world to work alongside the best and brightest 

American scientists; 

• Private sector investment in research and development that enables the translation of 

fundamental discoveries into the production of useful and marketable technologies, 

processes, and techniques; 

• An efficient system that protects the intellectual property resulting from public and 

private sector investments in research; and 

• A business environment that stimulates and encourages entrepreneurship through free and 

flexible labor, capital, and product markets that rapidly diffuse new productive 

technologies. 

An important element of the American Competitiveness Initiative is Federal investment in 

research and development (R&D). Under President Bush, this investment has increased by more 

than 50 percent to $137 billion—the largest sustained increase since the Apollo space program in 

the early 1960’s. Similarly, President Bush and Congress have provided historic funding 

increases for K-12 education over the last five years and have successfully instituted critical 

policy reforms as a part of the President’s No Child Left Behind Act.

This Administration has 

consistently pursued policies 

and investments that reflect the 

need for a vigorous science and 

technology enterprise, as 

outlined by the National Science 

and Technology Council’s 2004 

report, Science for the 21st

Century, and by the President’s 

2004 plan to inspire A New 

Generation of American 

Innovation. 

Recognizing the critical 

importance of science and technology to America’s long-term competitiveness and building on 

these previous efforts, President Bush introduced the American Competitiveness Initiative, an 

aggressive, long-term approach to keeping America strong and secure by ensuring that the United 

States continues to lead the world in science and technology, in his State of the Union Address on 

January 31, 2006. 

This $5.9 billion ACI includes $1.3 billion in new Federal funding and an additional $4.6 billion 

in R&D tax incentives. Specifically, the ACI: 

• Doubles, over 10 years, funding for innovation-enabling research at key Federal agencies 

that support high-leverage fields of physical science and engineering: the National 

Science Foundation, the Department of Energy’s Office of Science, and the National 

Institute for Standards and Technology within the Department of Commerce; 

American Competitiveness Initiative Goals: 

9 300 grants for schools to implement research-based math 

curricula and interventions 

9 10,000 more scientists, students, post-doctoral fellows, and 

technicians provided opportunities to contribute to the 

innovation enterprise 

9 100,000 highly qualified math and science teachers by 

2015 

9 700,000 advanced placement tests passed by low-income 

students 

9 800,000 workers getting the skills they need for the jobs of 

the 21st century 
3

• Modernizes the Research and Experimentation tax credit by making it permanent and 

working with Congress to update its provisions to encourage additional private sector 

investment in innovation; 

• Strengthens K-12 math and science education by enhancing our understanding of how 

students learn and applying that knowledge to train highly qualified teachers, develop 

effective curricular materials, and improve student learning; 

• Reforms the workforce training system to offer training opportunities to some 800,000 

workers annually, more than tripling the number trained under the current system; 

• Increases our ability to compete for and retain the best and brightest high-skilled workers 

from around the world by supporting comprehensive immigration reform that meets the 

needs of a growing economy, allows honest workers to provide for their families while 

respecting the law, and enhances homeland security by relieving pressure on the borders. 
4

Chart 1: World R&D, 2004. 

Reprinted with permission by R&D Magazine/Reed Business Information 

LEADING THE WORLD IN INNOVATION 

Scientific and Technological Foundations of Economic Growth 

 

During the past five years, the U.S. economy has shown remarkable vitality and resilience. 

The current economic expansion is steady and strong, with GDP growing at an annual rate of 

over 3.5 percent for three years. After-tax incomes are rising, household net worth is at an alltime high, and the unemployment rate is low. Meanwhile, inflation remains in check, and we 

have had extraordinary and 

sustained productivity growth—

averaging a 3.4 percent annual 

rate for the past half-decade. 

 The American economy today 

is the envy of the world. 

 

Our prosperity is no accident. 

It is the product of risk-takers, 

innovators, and visionaries. We 

owe our global leadership in 

large measure to our willingness 

to build an economy and culture 

that welcomes and encourages 

innovation and flexible, open 

markets. By increasing U.S. 

innovation capacity through the 

bolstering of our world-class 

R&D enterprise and through 

investments in our education 

and information infrastructure, 

we have achieved new 

discoveries and breakthroughs that drive productivity, grow the economy, and solve important 

societal problems. 

 

Research pays off for our economy. It leads to breakthroughs that inspire new products and have 

spawned entire industries. In fact, economists estimate that as much as half of post-World War II 

economic growth is due to R&D-fueled technological progress. Today’s revolutionary 

technologies and many of our most popular consumer products have roots deep in basic and 

applied research. Long before there were computers or the Internet, scientists were unlocking the 

secrets of lasers, semiconductors, and magnetic materials upon which today’s advanced 

applications were built. This enterprise was fueled in large part by Federal investment in basic 

research that was necessary but not necessarily profitable for the private sector to undertake over 

the long term. 
5

Chart 2: Federal R&D Spending, 1949-2007.* 

Federal R&D Spending

(Outlays in billions, constant 2000 dollars)

0

20

40

60

80

100

120

194919531957196119651969197319771981198519891993199720012005

*President's 2007 Budget

Conduct of Federal R&D

*2007

*Outlays in billions of constant 2000 dollars. Does not include 

funding for facilities and equipment.

 

Global Science and Technology: 

Status and Outlook 

By nearly every relevant metric, 

the U.S. leads the world in 

science and technology. With 

only about five percent of the 

world’s population, the U.S. 

employs nearly one-third of all 

scientists and engineers and 

accounts for approximately onethird of global R&D spending 

(U.S. R&D spending of over $300 

billion is as much as the rest of 

the G-8 nations combined). Chart 

1 illustrates that, even after 

adjusting for population and size 

of the economy, the U.S. is 

among the world leaders in R&D spending and the number of scientists and engineers. 

President Bush’s FY07 Budget brings the total Federal R&D investment to a record $137 billion, 

an increase of more than 50 percent over the 2001 level. The conduct of Federal R&D, 

historically measured in constant dollar outlays, is also at a record high level in inflation-adjusted 

terms (Chart 2). Funding for basic research alone has increased over 32 percent from 2001-2007. 

More importantly, R&D funding increases since 2001 reversed a decade-long trend of flat or 

declining Federal investment in scientific research and development. 

While the U.S. is supporting science at unprecedented levels, the rest of the world is not standing 

still. Following the successful U.S. model, many countries are working hard to build their own 

innovation capacity by pouring resources into their scientific and technological infrastructure. 

This competitive drive is a positive development for the world—accelerating worldwide 

economic growth and trade, contributing to greater peace and stability, and raising the standard of 

living for many people. But because of these trends, science, technology, and innovation now 

move at a faster pace, and the ability of foreign nations to compete with America in the 

increasingly integrated global economy is much greater. 

 

The enhanced innovation capacity of our economic competitors makes it increasingly important 

to make our own economy more flexible and responsive. This will require us to pursue progrowth economic policies—policies that have been an ongoing priority of the Bush 

Administration. It also requires a long-term vision to strengthen Federal support for the Nation’s 

innovation enterprise. As a result, President Bush has called for the integrated package of 

investments and policies in the ACI. 
6

A NEW GENERATION OF AMERICAN INNOVATION 

President Bush has long believed that government must work to strengthen the environment for 

innovation and that giving workers the best technology and training will help ensure that the American 

economy remains the most flexible, advanced, and productive in the world. Since 2001, the 

Administration has focused on three principles: creating a business climate that allows innovators to 

pursue their ideas (through policies on taxes, trade, IP/patents, tort system, etc.); cultivating high-skilled 

workers (through education, job training, and immigration policies); and supporting the advanced 

infrastructure needed to support innovation (through investments in R&D, broadband, etc.). 

In April 2004, the President announced A New Generation of American Innovation—a series of specific 

measures to inspire innovation and technology development in energy, health care, and information 

technology. Specifically, the policies intend to help: 

• Provide a Cleaner and More Secure Energy Future through Hydrogen Fuel Technology. As 

part of his commitment to request $1.2 billion over five years in research funding to bring hydrogen 

and fuel cell technology from the laboratory to the showroom, the President announced that DoE 

plans to fund hydrogen research and demonstration projects totaling $350 million ($575 million 

with private cost share) to overcome key obstacles on the path to the hydrogen economy.

• Transform Health Care through Health Information Technology. President Bush believes that 

innovations in electronic medical records and the secure exchange of medical information will help 

transform health care in America and improve the relationship between doctors and patients. 

Accordingly, the President set an ambitious goal of assuring that most Americans have electronic 

health records within the next 10 years. To achieve the President’s 10-year goal, the Administration 

is taking steps to urge coordinated public and private sector efforts that will accelerate broader 

adoption of health information technologies. 

• Promote Innovation and Economic Security through Broadband Technology. The President 

has called for universal, affordable access to broadband technology by 2007 and wants to ensure 

Americans have plenty of technology choices when it comes to purchasing broadband. The 

Administration has implemented a wide range of policies to promote new technologies, eliminate 

access taxes, reduce regulatory barriers, and increase spectrum availability in order to make 

broadband more affordable and available. The Administration’s policies are working—between 

2001 and 2005 broadband penetration has increased 440 percent, from 7 million lines to 38 million 

lines. 
7

STRENGTHENING INNOVATION CAPACITY 

THROUGH INTELLECTUAL PROPERTY REFORMS 

In the United States, intellectual property-intensive industries—the 

biotechnology and information technology sectors, for example—account 

for over half of all U.S. exports, represent 40 percent of our economic 

growth, and employ 18 million Americans whose wages are 40-percent 

higher than the U.S. average. A recent study valued U.S. intellectual 

property at approximately $5 trillion—or about half of U.S. GDP. The 

U.S. Patent and Trademark Office (USPTO) has launched a vigorous 

reform effort aimed at enabling the Office to examine patent and 

trademark applications in a more timely manner, without compromising 

quality. 

A critical component of this strategy has been reforming USPTO’s fee 

structure and implementing new strategic initiatives to improve the 

quality and efficiency of the patent and trademark examination process. 

The President has also requested that USPTO have full access to its fee 

collections in the 2005 through 2007 budgets. These reforms have helped 

USPTO increase its annual spending authority by over 60 percent since 

2001. In other efforts to strengthen intellectual property protections, the 

Administration has insisted on including updated intellectual property 

protections in trade agreements such as CAFTA-DR (the U.S.-Central 

America-Dominican Republic Free Trade Agreement), and the 

Administration-wide Strategy Targeting Organized Piracy (STOP)

initiative is pursuing aggressive IP protection both domestically and 

overseas.

AMERICAN COMPETITIVENESS INITIATIVE 

RESEARCH 

The centerpiece of the American Competitiveness Initiative is President Bush's strong 

commitment to double investment over 10 years in key Federal agencies that support basic 

research programs in the physical sciences and engineering. 

Physical sciences and engineering include high-leverage areas of research that develop and 

advance knowledge and 

technologies that are used by 

scientists in nearly every other 

field. President Bush plans to 

double, over 10 years, 

investments in innovationenabling physical science and 

engineering research at the 

National Science Foundation 

(NSF), the Department of 

Energy’s Office of Science 

(DoE SC), and the Department 

of Commerce’s National 

Institute of Standards and 

Technology (NIST) core 

activities. In addition to the 

doubling efforts at these three 

agencies, the President’s FY 

2007 Budget also makes other 

similarly high-leverage 

programs a significant priority, 

such as basic and applied 

research at the Department of 

Defense (DoD). 

In 2007, the ACI proposes 

overall funding increases for 

NSF, DoE SC, and NIST of $910 million, or 9.3 percent, above FY 2006 (Figure 1). To achieve 

doubling within ten years, overall annual increases for these ACI research agencies will average 

roughly 7 percent. This amounts to a total of $50 billion in new investments in high-leverage, 

innovation-enabling fundamental research that will underpin and complement shorter-term 

research performed by the private sector. 

Past research has spawned such technologies as personal computers, the Internet, fiber optics, bar 

codes, medical imaging devices, balloon catheters, hearing aids, laser eye surgery, air bags, and 

global positioning devices and satellite telecommunications systems. And in every case, research 

funding at NSF, DoE SC, or NIST core (consisting of NIST lab research and construction 

accounts), has been essential to proceed to the point at which the private sector recognizes a 

potentially marketable product and invests in its development. These agencies make research 

decisions based on systematic planning and merit-review allocation processes designed to 
8

IMPACT OF BASIC RESEARCH ON INNOVATION

Micro Hard Drive Storage

Li-ion Battery

LCD Display

DRAM Cache

Signal Compression

1988: “giant 

magnetoresistive

effect” (GMR) is 

discovered, 

creating the field 

of spintronics

Basic research 

foundation: DOE 

funding for thinfilm metallic 

multilayers

1990: 

development of 

the lithium-ion 

battery.

Basic research 

foundation: DOE 

funding for 

Electrochemistry

1988: Thin film 

transistor LCD 

displays emerge.

Basic research 

foundation: NIH, 

NSF, DoD fund 

liquid crystal 

research

1960-70s: Very 

Large Scale 

Integration (VLSI) 

system and 

circuit design 

pioneered.

Basic research 

foundation: IBM, 

DARPA funding

1965: The “Fast 

Fourier transform”

revolutionizes the 

field of signal 

processing.

Basic research 

foundation: Army 

Research Office 

funding

The development of MP3 technologies illustrates the unexpected 

benefits of basic research. In 1965, a hand-sized storage and playback 

device that would hold 15,000 recorded songs was the stuff of science 

fiction. Even simple hand-held calculators were rare and expensive at 

that time. Research funded by the Department of Defense, the National 

Science Foundation, the National Institutes of Health, the Department 

of Energy, and the National Institute of Standards and Technology 

contributed to the breakthrough technologies of magnetic storage 

drives, lithium-ion batteries, and the liquid crystal display, which came 

together in the development of MP3 devices. The device itself is 

innovative, but it built upon a broad platform of component 

technologies, each derived from fundamental studies in physical 

science, mathematics, and engineering.

identify and support the most promising ideas and the teams most likely to succeed in carrying 

them out. As a result of these processes, grants and in-house research from these agencies have a 

strong track record of leading to scientific publications, patents, and eventually to new products 

and technologies. 

Because the sciences—and especially their applications—are interconnected, research in physical 

science and engineering provides tools and technologies for all other fields. Ultimately, of 

course, everything is made of atoms and their sub-components. As such, basic techniques for the 

imaging, manipulation, 

and simulation of matter 

at the atomic scale are of 

value for applications in 

every field. To use the 

information in the human 

genome, for example, it is 

necessary to understand 

the functions of the 

proteins whose blueprints 

are encoded in DNA, a 

feat that is enabled by 

tools that visualize the 

immensely complex 

structure of these building 

blocks of life. And those 

tools—bright x-ray 

sources and powerful 

computation, for 

example—are products of 

physical science and 

engineering. Important 

opportunities for 

improving these powerful 

tools exist today, and 

sustained leadership in 

science and technology 

for innovation demands 

that we seize them. 
9

Figure 1: ACI Research Funding, 2007-2016.

American Competitiveness Initiative Research: FY 2007- FY 2016

0

2

4

6

8

10

12

14

16

18

20

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Fiscal Year

Billions of dollars

Total

NIST Core

DOE SC

NSF

ACI Research

$9.75 billion

$19.49 billion

$10.66 billion

FY 2006 

Funding ACI Research FY 2007 ACI Research FY 2016 

 (billions of 

dollars) 

(billions of 

dollars) 

% increase (billions of 

dollars) 

% increase over 

FY06 

NSF $5.58 $6.02 7.8 $11.161

 100.0 

DoE SC $3.60 $4.10 14.0 $7.191

 100.0 

NIST Core2 $0.573

 $0.54 -5.84 $1.141 100.0 

TOTAL $9.75 $10.66 9.3 $19.49 100.0 

1

 ACI doubles total research fund; individual agency allocations remain to be determined. 

2

 NIST core consists of NIST lab research and construction accounts. 

3

 The 2006 enacted level for NIST core includes $137 million in earmarks. 

4Represents a 24 percent increase after accounting for earmarks. 

ACI RESEARCH AGENCIES

The National Science Foundation (NSF) is the primary source of support for university and 

academic research in the physical sciences, funding potentially transformative basic research in 

areas such as nanotechnology, advanced networking and information technology, physics, 

chemistry, materials science, mathematics, and engineering. It is well regarded for management 

of funding through a competitive, peer-reviewed process. The NSF funding derived from the 

ACI initiative is expected to support as many as 500 more research grants in 2007 and provide 

opportunities for upwards of 6,400 additional scientists, students, post-doctoral fellows, and 

technicians to contribute to the innovation enterprise. 
10

OVERCOMING TECHNOLOGICAL BARRIERS TO THE 

HYDROGEN ECONOMY 

The "hydrogen economy" would use domestic sources of energy to create hydrogen gas, which in 

turn could be used as a transportation fuel. Other possibilities include using hydrogen-bearing fuels 

such as alcohol or natural gas as potentially economical and long-lasting sources of electrical power 

for portable electronics such as cell phones and laptop computers, or even for powering buildings 

that are remote from power lines. 

Many technical and economic hurdles remain before these technologies can be made widely 

available. Reducing costs, improving efficiencies, and making the technology reliable enough for 

everyday use will all be important. If these technical goals are achieved, the broad use of hydrogen 

as a fuel may prove to have environmental advantages as well. The Department of Energy is 

leading the President’s Hydrogen Fuel Initiative to achieve these goals. 

NIST research helps support this developing technology in many ways. Projects currently under 

way at NIST are providing measurements, data, and technologies needed to develop and test the 

performance of hydrogen-based power sources and to improve the efficiency of hydrogen 

production methods. 

A new imaging facility at the NIST Center for 

Neutron Research provides a rare portal for 

visualizing water and hydrogen transport in fuel 

cells. Neutrons reveal how water forms and moves 

while a fuel cell is operating. Mastering the 

combined challenge of managing incoming 

humidity, proper hydration of fuel cell membranes, 

and the handling of water byproducts is essential to 

the development of fuel cells that are practical for 

automotive and residential applications as well as 

portable devices.

The Department of Energy's Office of Science (DoE SC) supports scientific studies and 

infrastructure for a wide range of R&D related to economically significant innovations including 

high-end computing and advanced networking, nanotechnology, biotechnology, energy sources, 

and other materials science research. It is the principal supporter of world-class Federal research 

facilities, providing scientists with the necessary tools to advance scientific understanding for 

innovation and discovery. In addition to making possible support for approximately 2,600 more 

researchers in FY 2007 than in FY 2006, the ACI provides for the construction of a number of 

cutting-edge scientific research tools with direct implications for economically relevant R&D, 

including the world's most powerful civilian supercomputer and an x-ray light source user facility 

with world-leading capabilities to study materials, chemicals, and biological matter at the scale of 

an individual atom. Additional DoE SC facilities supported by the ACI include: completion of 

the Centers for Integrated Nanotechnology and Functional Nanomaterials; support for domestic 

fusion facilities underpinning the future ITER nuclear fusion project; and maximum capacity 

operation of the full suite of major x-ray light source and neutron research facilities. 

The Department of Commerce’s National Institute of Standards and Technology (NIST) is a 

high-leverage Federal research agency that performs high-impact basic research and supports the 

successful technical translation and everyday use of economically significant innovations such as 

© Robert Rathe (Source: NIST.gov)
11

new materials and processes; electronics, information technologies, and advanced computing 

processes; advanced manufacturing integration, biotechnologies, and new energy sources such as 

hydrogen; and nanotechnology. NIST also plays a critical role in supporting standardsdevelopment activities that are used by the private sector and government agencies. In FY 2007, 

NIST will seek to focus 3,900 scientists and engineers from government, industry, and 

universities—an increase of 600 researchers over FY 2006—on meeting the Nation’s most urgent 

measurement science and standards needs to speed innovation and improve U.S. competitiveness.

In addition to the high-leverage research in NSF, DoE SC, and NIST core, other Federal agencies 

fund important research that makes valuable contributions toward the goals of the ACI. One 

example is the Department of Defense (DoD), which provides strong support for the physical 

sciences and engineering, including projects with both commercial and military applications 

(“dual-use” technologies). Past DoD research has resulted in revolutionary technological 

capabilities such as radar, digital computers, wireless mobile communications, lasers, fiber optics, 

composite materials, the Internet (and other “packet switched” networks), and satellite 

navigation. The President’s FY 2007 Budget includes $5.9 billion for DoD basic and applied 

research, $440 million, or eight percent, more than requested in the FY 2006 Budget. (The 

Defense Advanced Research Projects Agency (DARPA) shares in these programs, as well as 

some more advanced technology development projects beyond research.) Although the FY 2007 

DoD research budget is less than the enacted FY 2006 level, that is only the case due to the 

removal of hundreds of millions of dollars in annual earmarks. 

Maximizing the Effectiveness of ACI Research 

The ACI enhances basic research programs in priority agencies that employ best practices for 

identifying and funding the most promising research ideas. Careful planning, strong technical 

advisory mechanisms, and systematic merit-based peer review are acknowledged methods for 

optimizing research success. The idea is not to introduce entirely new government programs, but 

to increase fundamental research capacity in response to growing numbers of outstanding and 

novel proposals from the Nation's technical community. It is imperative for the optimal 

disposition of research funds to uphold these principles in the Federal budget and appropriations 

process. Earmarking—the assignment of science funding through the legislative process for use 

by a specific organization or project—is rarely the most effective use of taxpayer funds. In the 

case of science programs, the practice signals to potential researchers that there are acceptable 

alternatives to creating quality research proposals for merit-based consideration, including the use 

of political influence or appeals to parochial interests. The rapidly growing level of legislatively 

directed research funds undermines America's research productivity. The Administration 

commends Congress for having taken measures to protect NSF and the National Institutes of 

Health from this practice. To maximize the effectiveness of ACI research, the President 

encourages the Congress and the academic community to resist securing research and facilities 

funding through earmarks, particularly in the ACI agencies. 
12

 

GOALS FOR ACI RESEARCH

 

While expected new innovations are impossible to predict with specificity, certain capabilities 

and technology platforms can be anticipated as a result of the ACI: 

• World-class capability and capacity in nanofabrication and nanomanufacturing that will 

help transform current laboratory science into a broad range of new industrial 

applications for virtually every sector of commerce, including telecommunications, 

computing, electronics, health care, and national security (NSF, DoE, NIST) 

• Chemical, biological, optical, and electronic materials breakthroughs critical to cuttingedge research in nanotechnology, biotechnology, alternative energy, and the hydrogen 

economy through essential infrastructure such as the National Synchrotron Light 

Source II and the NIST Center for Neutron Research (DoE, NIST)

• World-leading high-end computing capability (at the petascale) and capacity, coupled 

with advanced networking, to enable scientific advancement through modeling and 

simulation at unprecedented scale and complexity across a broad range of scientific 

disciplines and important to areas such as intelligent manufacturing, accurate weather and 

climate prediction, and design of safe and effective pharmaceuticals (NSF, DoE) 

• Overcoming technological barriers to the practical use of quantum information 

processing to revolutionize fields of secure communications, as well as quantum 

mechanics simulations used in physics, chemistry, biology, and materials science (DoE, 

NIST, NSF)

• Overcoming technological barriers to efficient and economic use of hydrogen, nuclear, 

and solar energy through new basic research approaches in materials science (DoE, NSF, 

NIST) 

• Addressing gaps and needs in cyber security and information assurance to protect our ITdependent economy from both deliberate and unintentional disruption, and to lead the 

world in intellectual property protection and control (NSF, NIST) 

• Improvement of sensor and detection capabilities that will result in world-leading 

automation and control technologies with a broad range of applications important to areas 

such as national security, health care, energy, and manufacturing (NSF) 

• Development of manufacturing standards for the supply chain to advance and accelerate 

the development and integration of more efficient production practices (NIST) 

• Enhanced response to international standards challenges, which impact U.S. 

competitiveness and limit export opportunities for American businesses by acting as 

technical barriers to trade (NIST) 

• Accelerated work on advanced standards for new technologies (NIST) 

• Advances in materials science and engineering to develop technologies and standards for 

improving structural performance during hazardous events such as earthquakes and 

hurricanes (NIST, NSF) 

• Improving capacity, maintenance, and operations of DoE and NIST labs 
13

R&D TAX INCENTIVES 

As part of the American 

Competitiveness Initiative, the 

President continues to support—

for the sixth straight year—

making the Research and 

Experimentation (R&E) Federal 

tax credit permanent. While 

temporary extensions of the credit 

have been enacted in recent years, 

a permanent R&E credit would 

enable companies to have 

certainty in their tax planning and 

therefore be bold in their R&D 

investment strategy. The 

President is also committed to 

working with Congress to 

simplify and modernize the credit 

to make it even more effective 

and efficient at encouraging 

private sector innovation. 

 

With an overall R&D effort of 

over $200 billion, the private 

sector accounts for approximately 

two-thirds of all U.S. R&D 

spending. Tax policy is used to 

encourage this research because 

corporate-funded R&D targets 

commercial opportunities, helping 

to turn knowledge and ideas 

generated as a result of basic and 

applied research into products and 

processes that businesses and 

consumers demand. The R&E tax 

credit helps to increase this 

spending by reducing the effective 

cost of R&D investments to 

businesses. Economic evidence 

suggests that the credit has a 

significant positive impact on 

private sector research activity. A 

recent study found that the current 

tax credit is claimed by over “15,000 firms that operate in every industry and all 50 states and employ 

millions of Americans.” 

 

USING TECHNOLOGY TO POWER OUR ECONOMY 

FORWARD 

Reliable and affordable supplies of energy are critical to maintaining an 

American economy that is competitive in the global marketplace. The recent 

high costs of energy, particularly for crude oil, refined gasoline, and diesel fuels, 

have raised the costs associated with producing and transporting goods and 

services to market. Higher product costs mean less savings, job creation, and 

prosperity. To address these high fuel costs, President Bush is taking steps to 

develop alternatives to crude oil for transportation. His 2007 budget will increase 

research funding for production of cellulosic ethanol from agricultural wastes, 

helping the farm economy with a new product while increasing America's energy 

security. He is also promoting technologies to enable greater fuel efficiency 

through sensible reforms to the Corporate Average Fuel Economy (CAFE) 

program and through tax incentives for efficient hybrid and clean diesel vehicles 

contained in the energy bill he signed into law in August 2005. For the long 

term, the President's Hydrogen Fuel Initiative seeks to develop a new generation 

of hydrogen vehicles that will eventually eliminate our dependence on foreign 

oil, improving our energy security. 

In addition, the President will act to address the high cost of natural gas, which is 

straining home heating budgets and leading some industrial firms to relocate 

overseas where energy costs are lower. Over the past decade, natural gas has 

been the fuel of choice for new power plants, resulting in increasingly high 

demand for natural gas with very little new supply. To address the fundamentals 

driving higher natural gas prices, the President is proposing policies that will 

diversify the fuels we use in our electric power sector by encouraging new 

investments in clean coal technology, nuclear power, and renewable energy 

sources. His 2007 budget supports cutting-edge investments in clean coal and 

carbon sequestration to enable continued use of our plentiful domestic coal 

resources with fewer environmental impacts. The President will propose 

visionary new efforts to recycle spent nuclear fuel, allowing for a rapid expansion 

of nuclear power around the world, while addressing concerns over proliferation 

risk and lack of current nuclear waste storage. And renewable energy 

technologies offer the prospect of homes and buildings that can one day generate 

more power than they consume, using solar photovoltaic technologies integrated 

into the building itself. By reducing future demand for natural gas, these 

resources -- coal, nuclear, and renewables -- will help reduce prices for 

consumers, keep high-paying manufacturing and industrial jobs here in America, 

and reduce the need for future imports of natural gas by pipeline or by tanker. 

Lower energy prices and secure energy resources will mean a growing and 

prosperous American economy, one that will vigorously compete in the 

technology-driven world of tomorrow. 
14

However, the effectiveness of the current credit has been limited in part because of its complexity, antiquated 

formula, and ongoing uncertainties associated with its renewal (it expired for the 12th time on December 31, 

2005). Making the credit permanent, which is estimated to cost $4.6 billion in FY 2007 and $86.4 billion over 

ten years (Table 1), will eliminate problems associated with its temporary nature. In addition, the 

Administration will work with Congress to make appropriate changes to the credit to simplify and modernize it 

in order to increase incentives for businesses to invest in research and development over the long term. 

 

Table 1: Budgetary cost of making the R&E tax credit permanent, FY 2007 – FY 2016 (in billions of dollars).

Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

Cost 4.6 5.9 6.9 7.7 8.3 9.0 9.7 10.5 11.4 12.3 86.4
15

LEADING THE WORLD IN TALENT AND 

CREATIVITY 

Education is the gateway to opportunity and the foundation of a knowledge-based, innovation-driven 

economy. For the U.S. to maintain its global economic leadership, we must ensure a continuous supply 

of highly trained mathematicians, scientists, engineers, technicians, and scientific support staff as well as 

a scientifically, technically, and numerically literate population. The American Competitiveness Initiative 

proposes $380 million in new Federal support to build on the President’s commitment to strengthen our 

Nation’s education system. By improving the quality of math, science, and technological education in our 

K-12 schools, thus engaging every child in rigorous courses that teach important analytical, technical, and 

problem-solving skills, we will prepare our citizens to compete more effectively in the global 

marketplace. 

No Child Left Behind 

The President’s No Child Left Behind Act (NCLB), passed by a bipartisan majority in Congress and 

signed into law on January 8, 2002, ended decades of low expectations and excuses for poor performance. 

NCLB requires the presence of highly qualified teachers in every classroom and the use of research-based 

instruction to optimize student learning. NCLB also requires annual student assessment in reading and 

mathematics through the early grades and once in high school to detect deficiencies early and offer 

needed remediation. This landmark piece of legislation has reformed public education to ensure that 

every child has access to a high-quality education and the opportunity to develop the skills necessary to 

become a productive citizen in the 21st century. 

Since taking office in 

2001, President Bush 

has provided 

unprecedented 

funding increases for 

a number of priority 

education programs. 

For example, funding 

for Title I, which 

provides financial 

support for Local 

Educational Agencies 

with the highest 

percentages of 

children from lowincome families, 

increased by over 45 

percent between fiscal 

years 2001 and 2006. 

Additionally, funding 

for targeted programs 

aimed at increasing achievement in reading, such as Reading First, has increased by over 300 percent. 

In addition to yearly assessments administered by states to evaluate the Adequate Yearly Progress (AYP) 

of students, schools, and districts, a series of nationally administered assessments provide a snapshot view 

Title I Funding

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

YEAR

$ In Billions

Title I Funding

Chart 3: Title I provides financial assistance through State Education Agencies to Local 

Education Agencies and public schools with high numbers or percentages of low-income 

children. 
16

of the Nation’s collective education performance and progress. The National Assessment of Educational 

Progress (NAEP), also called the Nation’s Report Card, measures student achievement in reading and 

mathematics, among other academic subjects, at various grade levels. This year’s promising NAEP 

results show improvements across the board in mathematics and in fourth-grade reading, with African 

American and Hispanic students posting all-time high scores in a number of areas. These data 

demonstrate the positive impact NCLB has had on students—an accomplishment for which students, 

teachers, and parents should be commended. However, much is still to be done to improve U.S. student 

performance relative to the rest of the world. 

As important as the early years are to building a strong foundation in mathematics and reading, rigorous 

high school preparation can make the difference between success and failure as a student moves on to 

college or the workplace. In order to build upon the success we have seen in the early grades, President 

Bush has proposed extending key aspects of NCLB to include the high school years. Expanding 

accountability and high expectations to high schools is the first step to ensuring an education system that 

prepares the Nation’s students for the jobs of the 21st century. The President’s High School Reform 

Initiative will: 

• Provide grants through State educational agencies to local educational agencies for targeted, 

proven interventions that increase the achievement of high school students, eliminate the 

achievement gap, and prepare all students to graduate with the knowledge and skills they need to 

enter college or the workforce; and 

• Require testing in two additional high school grades to inform schools of the efficacy of their 

curriculum and identify students in need of additional help. 

AMERICAN COMPETITIVENESS INITIATIVE: EDUCATION

Although we have seen great progress in student performance in reading and mathematics as a result of 

NCLB and expect to see similar results at the high school level under the President’s High School Reform 

Initiative, a number of gaps must be addressed if U.S. students are to realize their full potential. President 

Bush’s American Competitiveness Initiative seeks to fill these gaps and produce results by establishing a 

number of new and expanded programs, including: 

• Advanced Placement/International Baccalaureate (AP/IB) Program to expand access of lowincome students to rigorous course work by training 70,000 additional teachers to lead AP/IB 

math and science courses and to increase the number of AP/IB math and science tests passed by 

low-income students to 700,000 from 230,000; 

• Adjunct Teacher Corps to encourage up to 30,000 math and science professionals to become 

adjunct high school teachers. 

• A National Math Panel to evaluate empirically the effectiveness of various approaches to 

teaching math and science and to create a research base to improve instructional methods and 

materials; 

• Math Now for Elementary School Students program to promote promising and researched-based 

practices in mathematics instruction and to prepare students for more rigorous math courses in 

middle and high school; 

• Math Now for Middle School Students to diagnose and remedy the deficiencies of students who 

lack math proficiency and to provide proven methods of intensive and systematic instruction 

aligned with the goals of NCLB; 

• Evaluation of Federal Science, Technology, Engineering, and Math (STEM) education programs

across agencies to determine which are effective in meeting their stated goals; and 
17

• Include Science Assessments in NCLB accountability to ensure children are learning the necessary 

content and skills to be successful in the 21st century workforce. 

PRESIDENT’S ACI INITIATIVE FY 2007 Budget Request 

AP/IB $122 million 

Adjunct Teacher Corps $25 million 

National Math Panel $10 million 

Math Now for Elementary School Students $125 million 

Math Now for Middle School Students $125 million 

Evaluation of Federal STEM programs $5 million 

Training and Recruiting Highly Qualified Teachers 

Fundamental to improving student learning and achievement is the presence of highly qualified teachers 

in every classroom. Teachers must have mastery of content and instructional methods to be effective 

educators and mentors, yet recent data published as part of the 2003 Trends in International Mathematics 

and Science Survey indicate that, at the elementary grade level, less than eight percent of students are 

taught by teachers with a major or specialization in mathematics or science. The statistics improve 

somewhat at the 8th grade level, where 48 percent of students are taught by teachers who majored in 

mathematics and 15% by teachers who majored in science, but still a significant majority of children are 

being taught math and science by teachers who lack significant training in the subjects they teach. NCLB 

requires teachers to be highly qualified and provides funding through the Improving Teacher Quality 

State Grants, which can be used to address a variety of challenges for schools and districts, including 

teacher preparation and qualifications of new teachers, recruitment and hiring, and professional 

development. Further investment in high-quality professional development that increases teachers’ 

content knowledge is necessary to ensure students get access to more rigorous curriculum. 

While a number of Federal programs are focused on recruiting more college math and science majors into 

teaching careers, the lag time in education means that it will take years to fill our math and science 

classrooms with highly qualified math and science teachers. Yet there is an untapped resource among 

current and retiring science and mathematics professionals who have both content mastery and the 

practical experience to serve as effective teachers and positive role models for students who are interested 

in science or mathematics careers. While many scientists and engineers express an interest in teaching, 

traditional teacher certification programs are seen by many scientists and mathematicians as an 

unnecessary and unacceptable barrier to becoming a classroom teacher. Being a good practitioner of 

mathematics or science does not necessarily make one a good teacher of those subjects, but anecdotal 

evidence does suggest that math and science majors and professionals are more likely to transition to 

careers in teaching if their teacher certification recognizes the training and experience they possess in 

their field. 

To meet these challenges, the American Competitiveness Initiative proposes a two-step approach that 

provides professional development for current teachers and attracts new teachers to the classroom: 

The Advanced Placement Incentive Program expands the Administration’s current commitment to the 

Advanced Placement/International Baccalaureate (AP/IB) programs by increasing funding to $122 

million ($90 million over fiscal year 2006 appropriations) with a specific emphasis on math and science. 

This program targets districts with a high concentration of low-income students by offering incentives and 

training to teachers to become highly qualified instructors of AP/IB math and science courses, while also 

subsidizing AP/IB testing fees for lower income students. The Department of Education would require 
18

applicants to offer incentives, such as salary increments or bonuses, to teachers to become qualified to 

teach AP/IB courses in mathematics, science, and critical foreign languages by completing training 

provided or recognized by the College Board or the International Baccalaureate Organization, or the 

equivalent, and to teachers who increase 

the number of students passing AP/IB 

tests in those subjects. The Administration 

calls on States and the private sector to 

match, dollar-for-dollar, the Federal 

Government’s investment in this program 

to meet the five-year goal of training 

70,000 new teachers and increasing the 

number of students achieving passing 

AP/IB scores to 700,000. 

In addition to funding professional 

development opportunities for current 

teachers, the American Competitiveness 

Initiative also provides funds to 

establish an Adjunct Teacher Corps

program. Through this program, the 

Department of Education will support 

partnerships between school districts and 

public or private organizations that 

encourage and prepare science, 

mathematics, and engineering 

professionals to teach specific high school 

math, science, and technology courses as 

adjunct teachers. This initiative would tap 

the skills of well-qualified individuals 

who reside outside of the public education 

system to meet specialized needs in 

secondary schools. The goal of this $25 million investment, matched by States and the private sector, is 

to have a 30,000 member Adjunct Teacher corps by 2015. 

Research-Based Teaching Materials and Methods

A pillar of NCLB is its requirement that schools utilize research-based curricula and proven methods to 

raise student achievement. Thanks largely to the efforts of the National Reading Panel, established by 

Congress in 1997, we have made great progress in understanding how children learn to read and in 

developing research-based diagnostic tools, teaching materials, and “best practices” that improve reading 

instruction. A report issued by the Panel helped shape several promising Administration initiatives, 

including the Reading First and the Striving Readers programs. Both of these programs are designed to 

help schools and school districts improve reading achievement through proven methods of instruction. 

We do not have a similarly strong research base in the area of math education. There is little empirical 

research on how children learn mathematics, and a thorough review of existing mathematics curricula by 

the Department of Education’s What Works Clearinghouse shows that few mathematics curricula are 

either research-based or proven effective as a result of rigorous independent evaluation. 

Building on the successful model of the National Reading Panel and subsequent Reading programs, the 

American Competitiveness Initiative provides funding for several important programs aimed at 

SUPPORTING TEACHER 

PROFESSIONAL DEVELOPMENT 

Research confirms that teachers are the single most important factor 

in raising student achievement. The Department of Education’s 

Teacher-to-Teacher Initiative was created by teachers for teachers 

and provides access to free professional development activities and 

keeps teachers informed of new policies and the best practices vital 

to their craft. 

The initiative engages the Nation’s best teachers and principals to 

share strategies for raising student achievement through a variety of 

resources that highlight real-world examples of how teachers 

translate education research into practice that works in the 

classroom. The initiative offers help through free online digital 

workshops, an eLearning website, and teacher-to-teacher 

workshops held in cities across the country. 

The initiative has helped more than 200,000 teachers learn effective 

strategies for raising student achievement, including training 

approximately 4,500 teachers at 18 workshops since 2004. The 

Department is expanding this initiative by partnering with TechNet, 

a group of technology companies, to create urban teacher 

workshops focusing on math, science, and technology. The goal is 

to enhance teachers’ content knowledge so they can motivate 

students to pursue math and science in school and better prepare 

students for careers in those fields. 
19

discovering how students learn math, how best to prepare teachers in these disciplines, and what materials 

are most effective in raising student achievement and preparing students early on for more rigorous 

coursework in high school and beyond. 

The National Math Panel 

Similar to the National Reading Panel, the National Math Panel will bring together experts in 

mathematics, cognitive science, and education to review the current literature and identify important 

research findings as well as gaps in our current knowledge. They will work to fill these research gaps and 

conduct a comprehensive assessment of existing programs so that they can establish principles for 

effective math instruction. 

The Math Now Programs 

As research advances our understanding of how students learn and the National Math Panel identifies 

principles for effective teaching, it is imperative that other teams of mathematicians and educators be 

prepared to translate these research findings into practical solutions for teachers. The Math Now

programs will put effective tools into the hands of teachers so that students begin to benefit from our 

improved understanding of learning and cognition. 

Math Now for Elementary Students will lay the groundwork for establishing a strong foundation in 

math. This program will enable teachers to access proven methods, materials, and practices that will 

provide students with a solid foundation for more rigorous math coursework in middle and high school. 

Math Now for Middle School Students will build on the successes of the elementary school programs 

and will provide more sophisticated diagnostic tools and remediation strategies for students who have 

notable deficiencies. This program will promote research-based interventions involving intensive and 

systematic instruction with the goal of proficiency in algebra for middle-school students. 

Evaluating the Impact of Government-Wide Investments in Math and Science Education

While the Department of Education has the primary mission at the Federal level of improving U.S. K-12 

education, a number of Federal agencies sponsor programs aimed at generating student interest in science 

and technology, developing innovative curricular materials, providing teacher preparation and 

professional development opportunities, and increasing the general public’s understanding of various 

scientific efforts and issues. Although there are a large number of existing Federal programs that support 

both formal and informal math and science education and outreach, these programs are quite fragmented 

across the government and few have been evaluated for their efficacy in improving student learning. 

For this reason, the American Competitiveness Initiative will provide $5 million for the purpose of 

establishing a comprehensive evaluation program that will review past, current, and future federally 

funded programs to determine what works in preparing teachers and educating students in math and 

science and how well these programs are aligned with the goals of NCLB. To the extent possible, this 

evaluation program will incorporate the accountability principles of NCLB and will look to empirical 

indicators of enhanced student performance as a result of student or teacher participation in these 

government-sponsored education programs. Funds will be used to assess the quality of program 

evaluations, to design and carry out evaluations of programs that have not been evaluated, and to develop 

guidelines for future program evaluations. 
20

STEM EDUCATION AND WORKFORCE TRAINING AT 

THE NATIONAL SCIENCE FOUNDATION 

The National Science Foundation administers over 48 programs designed 

to improve science, technology, engineering, and mathematics (STEM) 

instructional materials and methods, teacher preparation and professional 

development, student performance and interest, and the recruitment to and 

retention of students in STEM majors and graduate programs. These 

education and workforce programs serve the full range of individuals, 

from preschool students to post-doctoral fellows, as well as seasoned 

professionals who seek to update their skills or transition to new areas. 

Among these programs is the Advanced Technological Education (ATE) 

program, funded in FY 2007 for $46 million, which supports partnerships 

between community colleges, local industries (who also make substantial 

contributions toward the partnerships), secondary schools, and four-year 

institutions to train skilled technicians of all ages for careers in the everchanging high-technology workplace. In addition, ATE partner 

institutions develop strong linkages through joint advisory teams, shared 

personnel, and formal articulation agreements that allow students to 

transition easily – and transfer credits – from high school to community 

college to four-year institution. 

An example of a successful ATE Regional Center is the Southwest Center 

for Microsystems Education (SCME) in Albuquerque, New Mexico. This 

Center is led by Albuquerque Vocational Technical Institute in partnership 

with Sandia National Laboratories, the University of New Mexico, 

Maricopa Advanced Technology Education Center in Semiconductor 

Manufacturing, the Micro and Nanotechnology Commercialization 

Education Foundation, Intel, and Texas Instruments, among others. It 

provides the Microsystems industry with workforce development models, 

materials, skills standards, and opportunities for communities creating 

Microsystems technology clusters. A bi-national alliance with two-year 

technological universities in Mexico is also being fostered by the United 

States-Mexico Foundation for Science with Albuquerque Technical 

Vocational Institute to train Mexican faculty in Micro Electrical 

Mechanical Systems Technology. 

Including Science Assessments in NCLB 

Currently, NCLB requires every State to develop and administer science assessments once in each of 

three grade spans by the 2007-08 school year. However, NCLB does not require these assessments in the 

accountability system. Including science assessments in the accountability system will illustrate the 

importance of science as part of a student’s education and ensure students are learning the content 

knowledge necessary to prepare them for the jobs of the 21st century.

Encouraging Students to Major in STEM Fields 

Through NCLB, it is President 

Bush’s goal to enable every child to 

leave high school fully prepared to 

enter college or the workforce. 

Over the past two decades, 

enrollment in U.S. institutions of 

higher education rose from 12.6 

million students in 1983 to 15.7 

million in 2001. Over that same 

period, the number of entering 

freshman who declared their intent 

to study science and engineering 

(S&E), as well as the percentage of 

S&E degrees conferred, remained 

steady at about one-third of all 

degrees. Within certain fields, such 

as engineering and the physical 

sciences, however, there have been 

slight declines in enrollment and 

degree completion, while in other 

S&E fields, such as the social and 

behavioral, life, and computer 

sciences, degree completion rates 

have increased. Among those who 

graduate with S&E bachelor’s 

degrees, the retention rate of those 

who go into S&E graduate 

education or careers has declined to 

28 percent. It is important that our 

country maintain an adequate flow 

of well-trained STEM workers, and 

for that reason President Bush 

supports a number of programs 

across the Federal government that 

seek to increase access to college 

and to recruit and retain students in 

STEM majors at the undergraduate and graduate levels. 
21

To make a college degree more affordable, the President has provided the largest increase in Pell grant 

funding in the history of the program and has increased by one million the number of students receiving 

this assistance. In particular, the President supports recent Congressional action to establish the American 

Competitiveness Grants program, which provides supplemental grants to low-income college freshman 

and sophomores who completed a rigorous high school curriculum and maintain at least a 3.0 GPA in 

college, and juniors and seniors who major in math, science, and critical foreign languages. This new 

grant program builds on proposals included in President Bush’s 2006 Budget request, including the 

President’s proposal to provide enhanced Pell Grants to students who pursue rigorous coursework in high 

school and the Presidential Math and Science Scholars Fund. As passed in the Deficit Reduction Act, the 

American Competitiveness Grants will provide a total of $4.5 billion in grant aid to students through the 

2010-2011 academic year, including $790 million in the upcoming 2006-2007 academic year and $850 

million in 2007-2008. 

AMERICAN COMPETITIVENESS INITIATIVE: WORKFORCE TRAINING

Education, training, and retraining provide individuals with better career options, opportunities for 

promotion, and the ability to contribute to the U.S. innovation enterprise. According to the Bureau of 

Labor Statistics, 26 of the 30 fastest growing job categories require some type of post high school 

education or training. 

Data show that earnings 

increase and 

unemployment decreases 

with educational 

achievement and skills 

attainment. Moreover, a 

recent survey of 

American manufacturers 

revealed that over 80 

percent of respondents 

were facing a shortage of 

qualified workers overall, 

and over 90 percent of 

respondents were facing a 

moderate to severe 

shortage of qualified, 

skilled production 

employees. 

U.S. colleges and 

universities provide 

world-class educational opportunities for those who seek a post-secondary degree. Many individuals, 

however, opt for post-secondary skills training that lead to an industry-recognized license, certificate, or 

credential. In addition, many fields require workers to update their skills continually or to retrain on 

newer technologies through certification programs and technical training classes or workshops. Training 

and development programs are critical to maintaining a skilled workforce capable of making efficient use 

of cutting-edge technologies, and greater access to these programs is critically important for individual 

workers as well as for America’s competitiveness. 

A COMMITMENT TO COMMUNITY COLLEGES 

Community colleges make great training providers because they are affordable, 

accessible, and perhaps most important, adaptable. Community colleges are able 

to track changing local labor conditions and partner with local employers to 

provide training geared toward the jobs that are in demand. 

One of the hallmarks of a strong economy is labor market flexibility. When 

workers can move relatively freely from job to job and place to place following 

the rhythms of the marketplace, businesses have the workers they need to do the 

job and workers have opportunities for career advancement. Community 

colleges, as flexible training providers, help make the U.S. workforce and the 

U.S. economy more competitive. 

In his 2004 State of the Union address, the President proposed “increasing our 

support for America's fine community colleges, so they can...train workers for 

industries that are creating the most new jobs.” 

This commitment has been supported by $125 million in 2005 and 2006 for 

the Community-based Job Training Grants program to provide training for 

100,000 workers. The President's Fiscal Year 2007 budget supports these efforts 

with a $150 million request, which would provide training for 160,000 workers. 
22

Yet Federal workforce programs, as currently designed, are an inefficient means to meet the needs of the 

21st Century American workforce. Too much money is currently spent on competing bureaucracies and 

the sometimes cumbersome service delivery infrastructure, and not enough on meaningful education and 

skills training that leads to job growth and economic prosperity. In general, infrastructure and overhead 

costs are estimated to consume one third of all Federal training dollars, which amounts to approximately 

$1.2 to $1.5 billion annually. 

Several states, including Idaho, Montana, and Indiana, have recognized the need to spend more dollars on 

worker education and skills training and fewer dollars on overhead and administration and are working to 

consolidate and streamline their workforce training programs. These States anticipate savings on the 

order of $1 to $2 million each through these efforts, much of which can be passed on to provide more 

training opportunities for more individuals. However, these States, as well as all other States, could 

provide additional educational and training opportunities through a new approach to job training in 

America. 

The 2007 Budget introduces an important initiative, Career Advancement Accounts (CAA). CAAs will 

be self-managed accounts of up to $3,000 available to workers entering the workforce or transitioning 

between jobs, or incumbent workers in need of new skills to remain employed or move up the career 

ladder. The CAAs will give workers the resources they need to increase their skills and compete for the 

jobs of the 21st century economy. The CAA initiative also provides flexibility for Governors and States to 

design service delivery systems that best serve their citizens. 

These accounts will: 

3⁄4 Empower individuals by significantly increasing workers' choices in the job training and 

employment services they need to get back to work. Workers will have the resources to take the 

longer-term training that leads to higher-paying jobs. 

3⁄4 Increase training opportunities by eliminating duplicative training and employment programs and 

unnecessary overhead. The CAA initiative will offer training opportunities to some 800,000 

people annually, more than tripling the number trained under the current system. 

3⁄4 Increase flexibility by allowing individuals to use their accounts for training and other services to 

help them advance their careers. 

AMERICAN COMPETITIVENESS INITIATIVE: IMMIGRATION

President Bush has established a goal to better prepare U.S. students and workers to succeed in the 21st

century workforce. The President also recognizes that enabling the world's most talented and hardestworking individuals to put their skills to work for America will increase our entrepreneurship and our 

international competitiveness, and will net many high-paying jobs for all Americans. The United States 

benefits from our ability to attract and retain needed immigrant and non-immigrant students and workers, 

and it is important that America remains competitive in attracting talented foreign nationals. President 

Bush has a comprehensive plan for immigration reform that meets the needs of a growing economy, 

allows workers to provide for their families while respecting the law, and enhances homeland security by 

securing and relieving pressure on the borders. 
23

CONCLUSION 

In the years to come, the United States will face increased economic competition from a number of 

countries around the world. We will have to work harder to maintain our competitive edge. By laying 

the foundation today for expanded scientific and technological excellence, we will continue to lead the 

world tomorrow in inquiry, invention, and innovation. The greatest asset of our Nation is the potential of 

the American people. America is founded on the belief that every life is precious and holds unique 

promise. By investing in people, helping them reach their full potential, and rewarding their creativity, 

we will unleash the natural creativity and ingenuity of the human mind, create new jobs, train workers to 

fill them, and make our Nation and the world a safer, cleaner, and better place to live. The American 

Competitiveness Initiative provides our Nation with the tools to better educate our children, to train our 

workforce, and to push the boundaries of our scientific and technological capabilities now and in the 

future.