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[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]

 
                 COMPETITIVENESS AND INNOVATION ON THE
                   COMMITTEE'S 50TH ANNIVERSARY WITH
                   BILL GATES, CHAIRMAN OF MICROSOFT

=======================================================================

                                HEARING

                               BEFORE THE

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 12, 2008

                               __________

                           Serial No. 110-84

                               __________

     Printed for the use of the Committee on Science and Technology

     Available via the World Wide Web: http://www.science.house.gov

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                                 ______

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                 HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
MARK UDALL, Colorado                 LAMAR S. SMITH, Texas
DAVID WU, Oregon                     DANA ROHRABACHER, California
BRIAN BAIRD, Washington              ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas                  JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           TOM FEENEY, Florida
LAURA RICHARDSON, California         RANDY NEUGEBAUER, Texas
PAUL KANJORSKI, Pennsylvania         BOB INGLIS, South Carolina
DARLENE HOOLEY, Oregon               DAVID G. REICHERT, Washington
STEVEN R. ROTHMAN, New Jersey        MICHAEL T. MCCAUL, Texas
JIM MATHESON, Utah                   MARIO DIAZ-BALART, Florida
MIKE ROSS, Arkansas                  PHIL GINGREY, Georgia
BEN CHANDLER, Kentucky               BRIAN P. BILBRAY, California
RUSS CARNAHAN, Missouri              ADRIAN SMITH, Nebraska
CHARLIE MELANCON, Louisiana          PAUL C. BROUN, Georgia
BARON P. HILL, Indiana               VACANCY
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio

                            C O N T E N T S

                             March 12, 2008

                                                                   Page
Hearing Charter..................................................     2

                           Opening Statements

Statement by Representative Bart Gordon, Chairman, Committee on 
  Science and Technology, U.S. House of Representatives..........     3
    Written Statement............................................     4

Statement by Representative Ralph M. Hall, Minority Ranking 
  Member, Committee on Science and Technology, U.S. House of 
  Representatives................................................     4

Prepared Statement by Representative Jerry F. Costello, Member, 
  Committee on Science and Technology, U.S. House of 
  Representatives................................................     6

Prepared Statement by Representative Eddie Bernice Johnson, 
  Member, Committee on Science and Technology, U.S. House of 
  Representatives................................................     7

                                Witness:

Mr. William H. Gates, Chairman, Microsoft Corporation; Co-Chair, 
  Bill and Melinda Gates Foundation
    Oral Statement...............................................     9
    Written Statement............................................    11
    Biography....................................................    22

Discussion.......................................................    23

COMPETITIVENESS AND INNOVATION ON THE COMMITTEE'S 50TH ANNIVERSARY WITH 
                   BILL GATES, CHAIRMAN OF MICROSOFT

                              ----------                              

                       WEDNESDAY, MARCH 12, 2008

                  House of Representatives,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Committee met, pursuant to call, at 10:04 a.m., in Room 
2318 of the Rayburn House Office Building, Hon. Bart Gordon 
[Chairman of the Committee] presiding.
                            hearing charter

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                 Competitiveness and Innovation on the

                   Committee's 50th Anniversary With

                   Bill Gates, Chairman of Microsoft

                       wednesday, march 12, 2008
                         10:00 a.m.-12:00 p.m.
                   2318 rayburn house office building

1. Purpose

    This year, the Committee on Science and Technology will celebrate 
its 50th Anniversary. On Wednesday, March 12, 2008, the House Committee 
on Science and Technology will hold a hearing to highlight this 
occasion and receive testimony from Bill Gates, the Chairman of the 
Microsoft Corporation, to discuss our country's technological advances 
over the past 50 years, the current state of our country's 
competitiveness, and a look ahead to the challenges we face.

2. Witness

Mr. William H. Gates, Chairman, Microsoft Corporation

3. Brief Overview

    Following World War II and throughout much of the 20th century, the 
United States became a world leader in science and innovation, and 
economic indicators demonstrated that the United States offered a high 
standard of living to its citizens. In fact, the U.S. economy grew 
substantially, and economists estimate that about half of U.S. economic 
growth was the result of technological innovation.
    In the 1990's however, during a period in which the United States 
was known as the world's lone ``superpower,'' a number of indicators 
suggested that U.S. prosperity was diminishing. In 1990, the United 
States had a trade surplus in high-technology products of $54 billion. 
That surplus turned into a trade deficit of $50 billion by 2004. A 
number of iconic American companies moved assets, jobs, and ownership 
overseas. And American students performed poorly in several 
international assessments of math and science achievement.
    On October 12, 2005, The National Academies released a report on 
Prospering in the Global Economy of the 21st Century entitled Rising 
Above the Gathering Storm: Energizing and Employing America for a 
Brighter Economic Future. The Gathering Storm report quickly became 
influential in promoting a national agenda on innovation and 
competitiveness. Ultimately, recommendations included in the Gathering 
Storm report, as well as some of the suggestions included in the 
President's American Competitiveness Initiative, became the basis for 
legislation signed into law last August--the America COMPETES Act. This 
legislation, authored by this committee, makes a significant commitment 
to our country's future by investing in math and science education and 
federal research.
    In what is likely to be his final congressional testimony before 
devoting the majority of his time to his philanthropic work with the 
Bill and Melinda Gates Foundation, Microsoft Chairman Bill Gates will 
appear before the Science and Technology Committee to share his 
thoughts on efforts needed to further strengthen our country's 
competitiveness in the global marketplace, discuss what policies are 
needed to encourage innovation, and address the role of technology in 
our country's economic growth.
    The Committee looks forward to hearing the unique perspective of 
Mr. Gates, both as Chairman of Microsoft and as Co-Chair of the Bill 
and Melinda Gates Foundation, on strengthening our country's 
competitiveness in the global marketplace. More specifically, the 
Committee expects Mr. Gates to address issues crucial to our country's 
competitiveness including a commitment to math and science education, 
federal investments in research and development, policies that 
encourage innovation, and the role of technology in our economic 
growth.
    Chairman Gordon. This hearing will come to order. Welcome 
all. Welcome to today's hearing entitled Competitiveness and 
Innovation on the Committee's 50th Anniversary With Bill Gates, 
Chairman of Microsoft.
    In November of 1957, as a young boy, as a very young boy, I 
remember looking out into the sky and seeing the blinking red 
dot passing overhead that struck fear into countless Americans. 
The launch of Sputnik and the beginning of the space race began 
a period of unprecedented investment and research in math and 
science education in this country resulting in the development 
of new technologies and the advancement of innovation.
    During the next 50 years, the United States became a world 
leader in science and technology, education, research, and most 
importantly innovation and entrepreneurship. These efforts 
fueled our economy and allowed each generation of Americans to 
inherit a better standard of living than their parents, and as 
the father of a seven-year-old, I fear that our children could 
be the first generation of Americans that do not inherit a 
living standard better than their parents, a reverse of the 
American dream. And let me explain why. Sputnik showed us that 
we were not the world's technological leader. Today, with rapid 
economic and technological advances in other countries, I fear 
we are now on the cusp of another Sputnik moment. I fear that 
our country has coasted on the investment made for the last 50 
years, or as my father would say, we have been eating our seed 
corn.
    Now is the time to act, and I believe this committee has an 
important role to play in helping bring our country back as a 
technological leader in the world. Soon after the launch of 
Sputnik in March of 1958, this committee was established to 
face the challenges presented by the space age. Although the 
threat is different, the challenges today remain the same to 
secure our country's international prominence in the areas of 
innovation and technological development.
    The witness before us today needs little introduction. Bill 
Gates embodies both the American spirit of innovation and the 
theological virtue of charity. He has built arguably the most 
successful technological company in the world and then has 
turned his financial success into a gift for our society. On 
this occasion, the 50th anniversary of this committee, as we 
reflect back on the technological advances of the past and look 
ahead to the challenges facing our country's competitiveness in 
the world, I can think of no other witness better suited and 
well-positioned to help share his insights with this committee.
    As I have said before, I am very pleased of the work done 
by this committee over the past year to develop and shepherd 
through Congress the America COMPETES Act. This legislation was 
a necessary and important first step in making the commitments 
needed to bring our country back to technological prominence, 
and though the passing of the COMPETES Act authorization was a 
great success, now we have to follow up and be sure that it is 
fully funded.
    I look forward to hearing Mr. Gates on other efforts needed 
to rebuild our strength and again lead the world for another 50 
years. It is my hope that we will continue to look for ways to 
embrace the global marketplace and not shy away from the 
challenges we face.
    Before I conclude, I want to quickly acknowledge the 
presence of two Members of the House and past Chairman of the 
Committee, Mr. Bob Walker on the end over there and Sherry 
Boehlert, welcome back. And we have another Chairman, Mr. 
Sensenbrenner, with his canine. There is Mr. Sensenbrenner up 
on the wall there. Jim Sensenbrenner is still a Member of our 
committee. I am pleased that you are able to join us today and 
help us to commemorate this 50th Anniversary of the Committee.
    With that, I would like to now recognize Mr. Hall for his 
opening statement.
    [The prepared statement of Chairman Gordon follows:]

               Prepared Statement of Chairman Bart Gordon

    In November of 1957, as a young boy, I remember looking into the 
sky and seeing the blinking red dot pass overhead that struck fear into 
countless Americans. The launch of Sputnik and the beginning of the 
``space race'' began a period of unprecedented investment in research 
and math and science education in this country, resulting in the 
development of new technologies and the advancement of innovation.
    During the next 50 years, the United States became a world leader 
in science and technology, education and research, and--most 
importantly--innovation. These efforts fueled our economy and allowed 
each generation of Americans to inherit a better standard of living 
than their parents.
    As the father of a seven-year-old daughter, I fear that our 
children will be the first generation of Americans that do not inherit 
a standard of living better than their parents. And let me tell you 
why.
    Sputnik showed us that we were not the world's technological 
leader. Today, with the rapid economic and technological advances of 
other countries, I fear we are now on the cusp of another Sputnik 
moment. I fear that our country has ``coasted'' on the investments we 
made 50 years ago.
    Now is the time to act and I believe this committee has an 
important role to play in helping bring our country back as the 
technological leader in the world.
    Soon after the launch of Sputnik, in March of 1958, this committee 
was established to face the challenges presented by the Space Age. 
Though the threat is different, the challenges today remain the same--
to secure our country's international dominance in the areas of 
innovation and technology development.
    The witness before us today needs little introduction. Bill Gates 
embodies both the American spirit of innovation and the theological 
virtue of charity. He has built arguably the most successful technology 
company in the world and then has turned his financial success into his 
gift to our society.
    On this occasion of the 50th anniversary of this committee, as we 
reflect back on the technological advances of the past and look ahead 
to the challenges facing our country's competitiveness in the world, I 
can think of no other witness better suited and well positioned to help 
share insights with this committee.
    As I have said before, I am proud of the work done by this 
committee over the past year to develop and shepherd through Congress 
the America COMPETES Act. This legislation was a necessary and 
important first step in making the commitments needed to bring our 
country back to technological prominence. And though COMPETES was a 
great success, our work is far from done.
    I look forward to hearing from Mr. Gates on other efforts needed to 
rebuild our strength and again lead the world for another 50 years. It 
is my hope that we will continue to look for ways to embrace the global 
marketplace and not shy away from the challenges we face.
    Before I conclude, I wanted to quickly acknowledge the presence of 
two former Members of the House and past Chairmen of this committee--
Bob Walker and Sherry Boehlert. I am pleased that you were both able to 
join us today and help us commemorate the 50th anniversary of our 
committee.

    Mr. Hall. Mr. Chairman, I thank you, and of course I thank 
you, Mr. Gates, for joining us this morning to celebrate the 
50th anniversary of the Science and Technology Committee, this 
committee, and I want to also take the time to say hello to my 
good friends and former colleagues, Bob Walker and Sherry 
Boehlert and of course our very able Committee Chairman, Mr. 
Sensenbrenner.
    You know, men and women of America have always stepped 
forward when the challenges were great. Henry Ford introduced 
his assembly line innovation with the first Model T's, and men 
like Henry Kaiser picked up on it and perfected production 
techniques during World War II that allowed us to out-produce 
the enemy, producing one cargo ship every 30 days, and one ship 
in a record four days. And when polio stalked our nation and 
iron lungs claimed our children, Jonas Salk appeared.
    We are honored today, Mr. Chairman, with one who graces our 
committee room who beat down the doors that shut out 
imagination and brought about a revolution in communication 
which changed the world. His foundation is now revolutionizing 
an assault on malaria, hunger, ignorance, and illiteracy around 
the world, and let me tell you, we are really honored by your 
presence.
    I think it is important for us to take this time and 
reflect on the Committee's accomplishments over the last half-
a-century as well as explore why scientific enterprise and the 
work of the Committee are just as important to the United 
States today as they were in the Cold War when the Committee 
was created. The Soviet launch of Sputnik on October 4, 1957, 
was a wakeup call to Americans, and I remember the feeling of 
going out to the backyard at night and watching the blinking 
lights slowly cross the Texas sky. Every night that blinking 
light taunted us that America was no longer the most 
technologically advanced country in the world. The message was 
loud and clear that for the first time, the United States had 
to play catch up and catch up we did. In 1958, under the 
leadership of Speaker of the House Sam Rayburn, whose Texas 4th 
District I now gladly represent, the Select Committee on 
Astronautics and Space Exploration was created. Shortly 
thereafter, the Committee created NASA and chartered a 
permanent House Committee on Science and Astronautics, our 
forerunner. About a decade later, the United States landed on 
the Moon, proving without a doubt that America was once again 
the world's technological leader.
    The Science and Technology Committee has come a long way in 
50 years, taking on some of America's biggest challenges, but 
we continue to be challenged. Experts have been churning out 
report after report citing the United States as falling behind 
other countries in the field of science, technology, 
engineering, and mathematics education as well as long-term 
basic research funding. For these reasons, the President and a 
Republican-led Congress made its priority to make the United 
States more economically competitive by promoting American 
innovation and STEM education. We have continued that trend in 
this Congress, and I am proud to be a supporter of the America 
COMPETES Act, which the President signed into law last year and 
which calls for a doubling of basic research funding for 
several agencies within our jurisdiction within a decade.
    America COMPETES has been the Committee's top priority, but 
we played a part in many other important sectors. Research into 
advanced technologies can help prepare first responders, secure 
our borders, and develop safe nanotechnology-based products, 
all the while as Mr. Gates exemplified, improving the economy 
and creating skilled jobs. Science then forms good policy, and 
I am proud to have been a part of the Science and Technology 
Committee for 27 years doing just that. From this seat I have 
seen first-hand America's innovative capabilities, and I know 
we can always do better. America's preeminence in the global 
community depends on what all of us do today, each of us, all 
levels of government. Academia, parents, students, and industry 
have an important role to keep and also to play in keeping 
America competitive and ahead of the innovation curve.
    I look forward to hearing your testimony, Mr. Gates. I 
understand that both Microsoft and the Bill and Melinda Gates 
Foundation are doing wonderful things, particularly with 
regards to STEM education. I am especially eager to hear more 
about the 35 secondary STEM schools and regional resource 
centers you have established across Texas in partnership with 
the Michael and Susan Bell Foundation, the Communities 
Foundation of Texas, the Governor, and the Texas Education 
Agency. I hope you plan to extend some of these terrific 
efforts to reach children in K to 8 grades as well. I would 
suggest that perhaps you might want to take a look at what the 
Martha and Josh Morris Math and Engineering Elementary School 
in my district is accomplishing in this regard to capture the 
attention and imagination of our youth. This committee will be 
holding a field hearing there in May to show how this local 
effort and how well as a partnership such as the ones you 
describe can work and serve as models for the rest of the 
country. Our Chairman will lead that visit.
    Again, welcome. I look forward to hearing from you. I yield 
back my time.
    Chairman Gordon. Thank you, Mr. Hall. I look forward to 
going down and joining you in Texas.
    If there are additional Members that would like to make 
statements, you can--written statements, opening statements can 
be made a part of the record at this point.
    [The prepared statement of Mr. Costello follows:]

         Prepared Statement of Representative Jerry F. Costello

    Mr. Chairman, I would like to thank you for overseeing this budget 
hearing and thank Mr. Gates for coming to testify before the Committee 
today. Your philanthropic work with the Gates Foundation has certainly 
been admirable and I thank you for your dedication to and commitment to 
the global community.
    With the COMPETES bill, the Committee took an important step to 
advance the goal of increasing our nation's competitiveness and 
investing in our children's math and science education. The Committee 
recognizes in order to truly remain competitive for the next fifty 
years as we have over the past half century, we must make a serious 
commitment to invest in research and development. This commitment will 
necessitate a partnership between the State and Federal Government and 
the private sector. Your work at Microsoft and the Gates Foundation is 
an example of exactly that.
    I am concerned, Mr. Chairman, about remaining competitive in a 
global market and securing technology jobs for Americans who have 
invested the time in professional training and degree programs. Too 
often, I hear from constituents in my district who have found 
themselves out of work due to out-sourcing, closing factories, and a 
failing economy.
    I am interested in hearing your thoughts on these issues, Mr. 
Gates, as your experience guiding a company on the cutting edge of 
technology production for thirty years and your more recent position of 
co-chair of your foundation make you an excellent witness for our 
hearing today. Thank you, Mr. Chairman, for my time.

    [The prepared statement of Ms. Johnson follows:]

       Prepared Statement of Representative Eddie Bernice Johnson

    Thank you, Mr. Chairman.
    Today's hearing is important to help us better understand how we, 
as a nation, can secure our position as a leader in science and 
technology for the next 50 years and beyond.
    As we celebrate the Science and Technology Committee's 50th 
Anniversary, I am pleased to have Mr. Bill Gates to testify as a world 
renowned innovator in technology and philanthropist in health, 
education, and poverty.
    As other countries challenge the United States to stay at the 
forefront in technology and innovation, I know that it is imperative to 
educate the next generation in the areas of science, technology, 
engineering and mathematics (STEM).
    Through the Bill & Melinda Gates Foundation, Mr. Gates has been 
able to fund the education of many low-income students that would not 
have had the opportunity to attend college otherwise.
    The $38.7 billion Gates Foundation endowment is, and will continue 
to, help young people in need.
    Children will have a fair chance to grow up less burdened by 
disease.
    Students living in poverty will have better access to books, 
stimulating teachers, Internet connections, and other tools to help 
them compete in the global marketplace.
    Many of these students who are minorities and women will go on to 
study in STEM fields. This mission has been a passion of mine over the 
years.
    The Gates Foundation is doing all of these activities, and more.
    The size and scale of it is comparable to federal investments in 
non-defense research and development.
    As a strong supporter of the America COMPETES Act, that serves the 
purpose of strengthening science education and research and improving 
our technology enterprise, I can say that the Microsoft Corporation has 
certainly done its part to keep America competitive in the global 
market.
    With pioneers like Mr. Gates, this nation will continue to make 
technological advances for the next 50 years and longer.
    While we make such advances, it is my desire to see more programs 
like the Bill & Melinda Gates Foundation.
    Bill Gates is a shining example of innovation and humanitarianism 
at its best.
    Again, welcome, Mr. Gates.
    Thank you, Mr. Chairman. I yield back.

    Chairman Gordon. And now, on this occasion, the Committee's 
50th anniversary, I believe it is particularly relevant to 
receive the thoughts and ideas of one of the country's truly 
innovative thinkers.
    After founding Microsoft in 1975, Mr. Gates has built the 
company into one of the world's leading software and 
technological companies. His company's innovations have changed 
the way we work, the way we process information, and the way we 
learn. His vision and his accomplishments are truly what can 
make America an even better country.
    Each of us would be hard pressed to have a day pass that we 
did not use a Microsoft application in the course of our daily 
routine, but more importantly, Bill Gates is uniquely 
positioned to share with the Committee the challenges of 
building a strong, well-educated workforce and the benefits 
that technology can provide. Moreover, Mr. Gates has taken to 
heart the adage from those who much is given, much is expected. 
With the great financial success Mr. Gates has realized, he and 
his wife, Melinda, have undertaken the daunting challenge of 
making our world a better place by using the same 
entrepreneurial spirit and his to conscientiously give away the 
majority of his fortune while encouraging others to similarly 
endow to do the same.
    Again, we are very pleased to have you and look forward to 
your testimony. At this time, I would like to yield to the 
gentleman from Washington, Mr. Baird, for some brief additional 
introductory remarks.
    Mr. Baird. Mr. Gates, I just wanted to, as a proud 
Washingtonian, let you know how much we admire what you have 
done for our State and our world and your leadership on science 
and a committee that is so proud of what you have done and what 
you are doing for the future in the areas just mentioned. 
Welcome to the Science Committee, and thank you for helping us 
to commemorate our 50th anniversary.
    Chairman Gordon. Mr. Gates, I told you we are a bipartisan 
Committee following Sherry Boehlert's good example, and we are 
fortunate to also have a Democrat and Republican from 
Washington State, and Mr. Reichert is recognized for any 
comments.
    Mr. Reichert. There are actually three Republicans in 
Washington State. I have backup.
    Chairman Gordon. On this committee.
    Mr. Reichert. Yes, sir. Thank you, Mr. Chairman, and Mr. 
Gates, thank you so much for being here today. We are excited 
to hear your testimony, and I just want to take a moment to say 
how proud I am to have you here personally as a constituent 
testifying before our committee, and also, I am proud to have 
Microsoft in Washington State and am especially proud to have 
Microsoft in the 8th District which I am privileged to 
represent.
    Through your leadership, Microsoft has remained not only a 
leading innovator but also a beacon for thousands of small 
businesses across the country. That American dream is alive and 
well, and that vision of determination, great success, can come 
from modest beginnings. Microsoft is truly an engine of our 
nation's economic growth, and your company and your 
philanthropy continue to make tremendous contributions to 
Washington State, to our country, and to the global community. 
These are challenging times, and I look forward to hearing your 
perspectives on immigration, math and science, foreign aid, and 
other critical areas we need to improve so that America can 
remain a leader in this increasingly kind of competitive global 
economy.
    I yield back, Mr. Chairman. Thank you.
    Chairman Gordon. Thank you, Mr. Reichert. Let me mention to 
our Members, and I know we don't have a full delegation here 
because they knew we were having votes on the Floor. 
Unfortunately, our bipartisan spirit does not move over or flow 
over to the Floor, so I think we are going to have a little bit 
of a contentious morning. We don't want that to stand in the 
way of this good testimony.
    With Ralph Hall's concurrence, we have some ground rules 
here. One, Mr. Gates has got to leave right at 12:00, and so we 
are going to have to cut off at 12:00. The second thing is what 
I would like for us to do during these votes is to sort of 
alternate. I want to keep the hearing going, and so some of you 
might go down and vote and come back and ask questions, some 
can stay here, but we want to keep the proceedings going. Mr. 
Baird?
    Mr. Baird. Mr. Chairman, in the interest of most of us can 
hear Mr. Gates, is it possible that we pair in a sense? I know 
that we, basically, that we keep even numbers on this side so 
that we don't affect the Floor tally in any way. There are 
eight of us I think on our side of the aisle. You know, 
basically match it up in some way.
    Chairman Gordon. I think folks will want to go vote, but 
what we will try to do is we will ask the staff maybe on each 
side to send half down and ask the other half to stay and then 
reverse. We will do it the best we can, and I am sure that it 
will work out.
    Mr. Hall. Kind of an assembly line.
    Chairman Gordon. Right. We will now begin the questions, 
and the Chairman recognizes himself. Oh, I guess if we have a 
rock star, we should let him rock. So, Mr. Gates, you are now 
recognized.

    STATEMENT OF MR. WILLIAM H. GATES, CHAIRMAN, MICROSOFT 
    CORPORATION; CO-CHAIR, BILL AND MELINDA GATES FOUNDATION

    Mr. Gates. Thank you. It is a privilege to be here. 
Chairman Gordon, Ranking Member Hall, Members of the Committee. 
I am Bill Gates and I am the Chairman of Microsoft. With my 
wife, Melinda, I am also the founder of the Bill and Melinda 
Gates Foundation, and it is an honor to be here to commemorate 
your 50th anniversary.
    During these 50 years, incredible advances in science and 
technology have revolutionized the way people around the world 
communicate, run businesses, find information, and much more. I 
am optimistic that over the decades ahead, information 
technology will continue to transform business productivity and 
have a profound positive impact on our day-to-day lives. It 
will also help us address important global challenges related 
to education, health care, energy, and other issues.
    Many of the key advances of these 50 years were pioneered 
by researchers working in U.S. universities and for U.S. 
companies. United States' preeminence in science and technology 
and this nation's unmatched ability to turn innovation into 
thriving business have long been the engine of job creation and 
the source of our global economic leadership.
    I know we all want the United States to continue to be the 
world's center for innovation, but our position is at risk. 
There are many reasons for this, but two stand out. First, U.S. 
companies face a severe shortfall of scientists and engineers 
with expertise to develop the next generation of breakthroughs. 
Second, we don't invest enough as a nation in the basic 
research needed to derive long-term innovation. If we don't 
reverse these trends, our competitive advantage will erode. Our 
ability to create new high-paying jobs will suffer.
    Addressing these issues will take commitment, leadership, 
and partnership on the part of government, private, and non-
profit sectors. Let me start by saying that business has a 
critical role to play. The private sector must contribute to 
building a workforce that has the skills to innovate and 
compete. That is why Microsoft is committed to improving 
educational quality and encouraging young people to study math 
and science through programs like Partners in Learning which 
has reached more than 80,000 teachers and three million 
students.
    Non-profit organizations also have an important role to 
play. The Bill and Melinda Gates Foundation for its part has 
invested almost $2 billion to help establish or improve nearly 
2,000 U.S. high schools and provided over $1.7 billion for 
college scholarship programs.
    But organizations like these cannot address the issues 
alone. Only government has the resources to effect change on a 
broad scale. If this nation is to continue to be the global 
center of innovation, Congress, the current Administration, and 
the next president must act decisively. It starts with 
education. Today, graduation rates for our high school students 
and their level of achievement in math and science rank at the 
bottom among industrialized nations. Thirty percent of ninth-
graders and nearly half of African-American and Hispanic ninth-
graders do not graduate on time. Fewer than 40 percent of high 
school students graduate ready to attend college.
    As a nation, we must have a fundamental goal that every 
child in the United States should graduate from high school 
prepared for college, career, and life. To achieve this, we 
need metrics that reflect what students learn and the progress 
they make. Touch metrics may be difficult to develop, but they 
provide the essential foundation for deciding which programs 
best improve outcomes in our public schools.
    Better data will also help us identify the most effective 
teachers and adopt better policies for recruiting, training, 
and retaining these teachers for our public schools.
    If the problem of high schools is one of quality, the issue 
at our universities is quantity. Our higher education system 
doesn't produce enough top scientists and engineers to meet the 
need of the U.S. economy. According to the bureau of labor 
statistics, we are adding over 100,000 computer-related jobs 
each year, but only 15,000 students earned Bachelor's degrees 
in computer science and engineering in 2006 and that number 
continues to drop.
    One of the most important steps Congress can take to 
address this problem is to fully fund the America COMPETES Act. 
Introduced by this committee, this Act would significantly 
increase funding for the National Science Foundation's Graduate 
Fellowship and Teacher Training Scholarship Programs. As bad as 
the disparity between supply and demand looks, these numbers 
understate the severity of the problem. Today our university 
computer science and engineering programs include large numbers 
of foreign students. In fact, the Science and Engineering 
Indicators Report showed that 59 percent of doctoral degrees 
and 43 percent of all higher ed degrees in engineering and 
computer science are awarded to temporary residents. But our 
current immigration policies make it increasingly difficult for 
these students to remain in the United States. At a time when 
talent is the key to economic success, it makes no sense to 
educate people in our universities, often subsidized by U.S. 
taxpayers, and then insist that they return home.
    United States' innovation has always been based in part on 
the contribution of foreign-born scientists and researchers. 
For example, a recent survey conducted by several universities 
showed that between 1995 and 2005 firms with at least one 
foreign-born founder created 450,000 new U.S. jobs. Moreover, 
as a recent study shows, for every H-1B holder that technology 
companies hire, five additional jobs are created around that 
person. But as you know, our immigration system makes it very 
difficult for U.S. firms to hire highly skilled foreign 
workers. Last year at Microsoft, we were unable to obtain H-1B 
visas for over a third of our foreign-born candidates. An 
example is the story of Arpit Guglani, a talented young man who 
graduated from the University of Toronto. He graduated in 2006, 
and we offered him a job but he has not been able to obtain an 
H-1B visa for two straight years and we were forced to rescind 
his job offer. He is exactly the type of science and 
engineering graduate that we need to continue to add jobs and 
drive innovation.
    There are a number of steps that Congress and the White 
House should take to address this problem, including extending 
the period that foreign students can work here after 
graduation. Increasing the current cap on H-1B visas, clearing 
a path to permanent residency for high-skilled, foreign-born 
employees, eliminating per-country green card limits, and 
significantly increasing the annual number of green cards.
    I want to emphasize that to address the shortage of 
scientists and engineers we must do both, reform our education 
system and our immigration policies. If we don't, American 
companies simply will not have the talent they need to innovate 
and compete.
    Finally, we must increase our investment in basic 
scientific research. In the past, federally funded research 
helped spark industries that today provide hundreds of 
thousands of jobs. Even though we know that basic research 
drives economic progress, real federal spending on research has 
fallen since 2005. I urge Congress to increase funding for 
basic research by 10 percent annually for the next seven years. 
I fully support Congress' efforts to fund basic research 
through the America COMPETES Act.
    I believe the country is at a crossroads. For decades, 
innovation has been our engine of prosperity. Now, economic 
progress depends more than ever on innovation. Without 
leadership from Congress and the President to implement 
policies like those I have outlined today and the commitment of 
the private sector to do its part, the center of progress can 
shift to other nations that are more committed to the pursuit 
of innovation.
    I want to conclude by again congratulating the Committee on 
its 50th anniversary and to thank you for this opportunity to 
share my perspective. I would be happy to respond to any 
questions you may have on these topics.
    [The prepared statement of Mr. Gates follows:]

                 Prepared Statement of William H. Gates

    Chairman Gordon, Ranking Member Hall, Members of the Committee, my 
name is Bill Gates and I am Chairman of Microsoft Corporation. I am 
also a Co-Chair, with my wife Melinda and my father Bill, Sr., of the 
Bill & Melinda Gates Foundation. It is an honor for me to speak here 
today on the occasion of the Committee's 50th anniversary.
    Today I am here to highlight the gathering threat to U.S. 
preeminence in science and technology innovation, and to propose a 
four-part plan that I believe will help us maintain our position as the 
world's innovation leader.
    During the last 50 years, the world has witnessed truly 
revolutionary advances in science and technology. We as a nation can 
take pride in knowing that American scientists, researchers, and 
entrepreneurs have been at the forefront of many of these advances. Our 
unmatched ability to turn new ideas in science and technology into 
thriving businesses has been the engine of growth and job creation that 
has made our economy among the most dynamic and competitive in the 
world.
    This committee can also take pride in knowing that it is 
responsible for many of the key federal policies that provided the 
foundation for U.S. technology leadership. Through its efforts, the 
Committee has shaped our national approach and guided our investments 
in areas such as space travel, aviation, computing and networking, 
biotechnology, energy, education, and many other fields.
    I share this committee's deep faith in the power and importance of 
technology. Having spent the last 30 years with one of the world's 
leading software companies, I am amazed every day at the potential for 
technology to create new opportunities and improve people's lives. This 
view is shared by the Bill & Melinda Gates Foundation, which focuses on 
finding innovative solutions that can help improve health care and 
education, and reduce poverty.
    As rapidly as science and technology have advanced over the past 50 
years, I believe these advances will pale in comparison to the 
innovations of the next 50 years, or even the next 10 years.
    In many ways, the incredible advances of the past few decades have 
really just laid the foundation for much more profound change in the 
years ahead. There are about a billion PCs in use around the world 
today. The number of people who use cell phones is close to three 
billion. About 300 million people are connected to broadband Internet. 
Software permeates every sector of the economy and almost every aspect 
of our day-to-day lives.
    The implications of these developments are profound. Computing and 
software are increasingly available everywhere: in the office and the 
home; in our cars; in stores, restaurants, and public spaces. In the 
future, we will be able to tap into computing capabilities on an 
increasingly broad range of devices. We will have instant access to all 
of our personal information--and all of the content, information, and 
computing power we want or need--at any time and from any location.
    These changes will have a dramatic impact on business. Not only 
will productivity and efficiency continue to improve, but we are moving 
closer and closer to the time when information systems will have the 
flexibility, intelligence, and self-awareness to adapt automatically as 
business conditions change. These systems will deliver precisely the 
information, services, and applications that employees and customers 
need, when and where they need them.
    These changes will also have a profound impact on the way people 
live--the way we share experiences and communicate with the people we 
care about; the way we preserve memories of past events; the way we 
access entertainment; the way we learn; and how we interact with our 
communities and our governments.
    These advances also have the potential to help us address some of 
the most pressing global challenges that we face today.
    In education, information technology can help us eliminate some of 
the barriers that prevent us from providing a high-quality education to 
everyone; barriers such as lack of access to great educational content 
and relevant curricula, a shortage of effective teachers, and a paucity 
of data that would help us improve student performance.
    My involvement in education initiatives at both Microsoft and at 
the Bill & Melinda Gates Foundation has shown me the great things that 
information technology can do to improve education. One of the 
Foundation's earliest initiatives, which it undertook in partnership 
with Microsoft, was its U.S. Libraries Program. The goal of this 
program was simple: to ensure that every person in the United States 
who could reach a public library would have access to the Internet. 
Today, 99 percent of U.S. public libraries offer free computer and 
Internet services, and some 14 million people regularly use these 
services. In my view, the U.S. Libraries Program is a great example of 
how the public and private sectors can work together to use the power 
of information technology to address important social needs.
    In health care, information technology can reduce the cost of 
health care and help ensure that patients receive the most effective 
care possible. New technologies, such as Microsoft's HealthVault, are 
giving people simple, secure ways to manage their family's health 
information and providing the ability to control who can access that 
information. These technologies put patients at the center of the 
health care system by giving them the tools to create a complete 
picture of their health and allowing them, for the first time, to make 
fully informed treatment decisions.
    The Bill & Melinda Gates Foundation, for its part, has committed 
more than $6 billion to organizations worldwide to promote innovation 
in access to health care, including research to develop new tools to 
fight diseases that cause the greatest amount of illness and death in 
developing countries. For example, the Foundation has provided over 
$250 million to support collaborative research between a not-for-profit 
and the pharmaceutical industry aimed at developing a preventative 
malaria vaccine. Late last year, the Foundation issued a challenge 
grant to Rotary International: if Rotary raises $100 million in the 
fight to eradicate polio, the Foundation will match it, dollar for 
dollar. The Foundation also recently provided funding to support the 
International Medical Corps' mobile clinics and other public health 
efforts in Kenya, and has committed more than $650 million to the 
Global Fund to Fight AIDS, TB, and Malaria. With initiatives like the 
Product Red campaign, the Global Fund is paving the way for business to 
join with government on these issues. These efforts, together with 
those of countless other companies and institutions, hold tremendous 
promise for alleviating existing inequities in global health care.
    Computing and software will also play an increasingly central role 
in scientific research. We are rapidly moving into an era of data-
centric computational science in which researchers across a wide range 
of disciplines routinely use software and computers as essential tools 
for investigation and collaboration. The ability to use computers to 
model complex systems is transforming the way we learn about everything 
from genomics and biosciences to physics and astronomy. In the future, 
scientific computing will play a profoundly important role in advances 
that will help us treat diseases, address climate change, and confront 
many other critical issues.
                               * * * * *
    As I hope these remarks reflect, I am optimistic about the 
potential for technology to help us find new ways to improve people's 
lives and tackle important challenges. I am less optimistic, however, 
that the United States will continue to remain a global leader in 
technology innovation. While America's innovation heritage is 
unparalleled, the evidence is mounting that we are failing to make the 
investments in our young people, our workers, our scientific research 
infrastructure, and our economy that will enable us to retain our 
global innovation leadership.
    In particular, I believe that there are two urgent reasons why we 
should all be deeply concerned that our advantages in science and 
technology innovation are in danger of slipping away.
    First, we face a critical shortfall of skilled scientists and 
engineers who can develop new breakthrough technologies. Second, the 
public and private sectors are no longer investing in basic research 
and development (R&D) at the levels needed to drive long-term 
innovation.
    If the United States truly wants to secure its global leadership in 
technology innovation, we must, as a nation, commit to a strategy for 
innovation excellence--a set of initiatives and policies that will 
provide the foundation for American competitive strength in the years 
ahead. Such a strategy cannot succeed without a serious commitment 
from--and partnership between--both the public and private sectors. It 
will also need to be flexible and dynamic enough to respond to rapid 
changes in the global economy.
    I believe this strategy must place top priority on achieving four 
fundamental goals:

        1.  Strengthening educational opportunities, so that America's 
        students and workers have the skills they need to succeed in 
        the technology- and information-driven economy of today and 
        tomorrow;

        2.  Revamping immigration rules for highly skilled workers, so 
        that U.S. companies can attract and retain the world's best 
        scientific talent;

        3.  Increasing federal funding for basic scientific research, 
        to train the next generation of innovators and provide the raw 
        material for further innovation and development by industry; 
        and

        4.  Providing incentives for private-sector R&D, so that 
        American businesses remain at the forefront in developing new 
        technologies and turning them into new products and services.

I. Strengthening Educational Opportunities

    Like many others, I have deep misgivings about the state of 
education in the United States. Too many of our students fail to 
graduate from high school with the basic skills they will need to 
succeed in the 21st century economy, much less prepared for the rigors 
of college and career. Although our top universities continue to rank 
among the best in the world, too few American students are pursuing 
degrees in science and technology. Compounding this problem is our 
failure to provide sufficient training for those already in the 
workforce.
    This committee, of course, has been a leading advocate for 
expanding educational opportunities for American students and workers 
in the vital areas of science, technology, engineering, and math 
(STEM). The America COMPETES Act, which was drafted by this committee 
and passed by Congress last year, includes provisions to train 
thousands of new STEM teachers and to provide current teachers with 
STEM-related resources through the National Science Foundation's (NSF) 
Noyce Teacher Scholarship Program and Math and Science Partnerships 
Program. America COMPETES authorized expansion of the Noyce Program, an 
important step toward recruiting 10,000 new STEM teachers annually, a 
goal that I have advocated previously. It also authorized competitive 
grants to increase the number of teachers serving high-needs schools 
and to expand access to advanced placement and International 
Baccalaureate programs in these schools.
    These initiatives--and many others this committee has spearheaded--
represent critical strides in the much-needed effort to reform our 
faltering educational system, and I commend you for your vision and 
efforts. At both Microsoft and the Bill & Melinda Gates Foundation, we 
are investing in innovative approaches to broaden and deepen 
educational opportunities, which I will discuss more in a moment.
    But in order to ensure the continued success of our young people 
now and in the future, the public and private sectors must do more.

A. Secondary Education
    The United States today has one of the lowest high school 
graduation rates in the industrialized world. Three out of every 10 
ninth-graders--and nearly half of all African American and Hispanic 
ninth-graders--do not graduate on time.\1\ Of those who do graduate and 
continue on to college, over a quarter must take remedial courses on 
material they should have learned in high school.\2\ In all, fewer than 
40 percent of our high school students graduate ready to attend 
college.\3\
---------------------------------------------------------------------------
    \1\ See Diplomas Count: The Graduation Project, Education Week 
(2007).
    \2\ See National Center for Education Statistics, U.S. Department 
of Education, Remedial Education at Degree-Granting Post-secondary 
Institutions in Fall 2000 (2003).
    \3\ Greene, Jay and Forster, Greg, Public High School Graduation 
and College Readiness Rates in the United States, Education Working 
Paper No 3, Center for Civic Innovation, Manhattan Institute (2003).
---------------------------------------------------------------------------
    Our record on high school math and science education is 
particularly troubling. International tests indicate that U.S. fourth 
graders rank among the top students in the world in science and above 
average in math. By eighth grade, they have moved closer to the middle 
of the pack. By 12th grade, U.S. students score near the bottom of all 
industrialized nations.\4\ As a result, too many U.S. students enter 
college without even the basic skills needed to pursue a degree in 
science and engineering.
---------------------------------------------------------------------------
    \4\ National Center for Education Statistics, U.S. Department of 
Education, Highlights from TIMSS (1999). Note that eighth graders did 
better in the 2003 version of TIMSS, but that version did not test high 
school students.
---------------------------------------------------------------------------
    To better understand and address these problems, the Bill & Melinda 
Gates Foundation has invested over $1.9 billion to help establish 1,124 
new high schools and improve 761 existing high schools. All of these 
schools operate under a common mission: that all students should have 
the opportunity to graduate from high school ready for college, career, 
and life. These schools approach this mission in different ways--some 
are large, many are small, some are organized around academic themes, 
others offer a standard college-preparatory curriculum--but all have 
common elements:

          High Expectations: They set high expectations for all 
        students and engage students with challenging, relevant course 
        work.

          High Levels of Support: They provide personal 
        attention and support in a safe, respectful environment so that 
        students can achieve at the highest levels.

    Through these efforts, we have learned a great deal about what 
works to improve student outcomes, and what doesn't. We also have 
concluded that creating a successful system requires better information 
and greater clarity about the following three sets of questions:

  Do we know how we are doing? Do we have transparent, common 
student performance data as the foundation for measuring impact and 
making decisions?

    No enterprise can be effective if it does not have clear goals and 
a way to measure its progress toward achieving its goals. At both 
Microsoft and the Bill & Melinda Gates Foundation, this approach is our 
lifeblood; it is how we identify our weaknesses and how we improve. 
Education is no different. We must strengthen our ability to measure 
what students are learning, the progress they are making over time, and 
their readiness for college and work. I recognize that developing 
better information in these areas may be difficult, but it is central 
to identifying the most effective means of improving educational 
outcomes in our public schools.
    In recent years, school systems have taken important first steps 
toward greater transparency and accountability in how they assess 
student achievement. Congress and the Administration have supported 
increased funding for state data systems and the development of a new 
State Education Data Center. Now we need to develop data systems that 
can measure student progress over time and expand the scale of these 
systems so they are truly national in scope. We also need better 
student- and teacher-level data so that we can better assess which 
methods--and which teachers--are most effective at improving student 
learning.
    Getting this right is the most critical first step to improving 
U.S. high schools and K-12 education more broadly. We need to use these 
data as the basis for action, adjusting practices based on what we 
actually know about the performance of students--rather than on what we 
may perceive or assume.

  Do we know where we're going? Are we clear about our 
destination--ensuring that every student graduates from high school 
ready to succeed in college, career, and life?

    All 50 states have now adopted standards that define what young 
people should know and be able to do, and all states now measure their 
students' proficiency in core subjects. It is not clear, however, 
whether these standards are aligned with the demands of college and 
work or whether existing assessments accurately measure student 
proficiency. The Bill & Melinda Gates Foundation has supported the 
American Diploma Project Network, in which more than 30 states agreed 
to align their standards to the benchmarks developed by Achieve, Inc., 
a nonpartisan, nonprofit organization that helps states raise academic 
standards, improve assessments, and strengthen accountability. Working 
with the Education Trust, the Thomas B. Fordham Foundation, and leaders 
from higher education and business, Achieve and its partners developed 
benchmarks to reflect what college professors and employers believe new 
students and employees need to know in order to be successful.
    In addition to adopting high school standards that better reflect 
what is takes to be successful in college and work, we need to develop 
better methods for measuring whether students are meeting these 
standards; a better understanding of the systemic changes that are 
required to ensure that all students gain the knowledge and skills that 
are essential for success; and better methods to assess how our own 
standards compare to those of educational systems elsewhere in the 
world. Ultimately, we need to identify a smaller set of clear, high, 
and common state standards that reflect what young people truly need to 
know to be successful in the 21st century, along with a common set of 
measurements to help us understand how well our schools are performing 
in key areas. At the same time, we must allow for the creativity and 
uniqueness that teachers and school communities bring to their work.

  Do we have what we need to get there? Are we providing the 
support, working conditions and incentives necessary for teachers to be 
truly effective?

    We all know that no one is more committed to helping our young 
people succeed than our teachers. Many of us can identify a teacher who 
had a profound impact on our lives. Research tells us that no other 
single factor in the educational system has greater impact on student 
performance. By helping teachers succeed, we can have a dramatic 
positive effect on student achievement.
    We need to ensure that our policies, processes, and systems will 
develop enough talented, dedicated teachers to ensure that every 
student has an effective teacher every year. This will be a massive 
undertaking. Before we take major steps, we need to be very clear about 
how these policies will affect student performance. Here is what we 
know:

          Some teachers consistently generate much larger gains 
        in student achievement than others, even when they are assigned 
        students with similar baseline performance levels. That fact 
        alone is not particularly surprising, but the magnitude of the 
        difference is. In elementary and middle school, for example, 
        being assigned a teacher in the top quartile of effectiveness 
        rather than a teacher in the bottom quartile will result in the 
        math test scores of the average student in the class moving up 
        6-10 percentage points in a single year compared to similar 
        students.\5\
---------------------------------------------------------------------------
    \5\ See Robert Gordon, Thomas Kane & Douglas Staiger, Identifying 
Effective Teachers Using Performance On The Job, Brookings Institution 
(2006). Similar estimates of teacher effects have been reported in 
other papers. See, e.g., Eric Hanushek, Steve Rivkin & John Kain, 
Teachers, Schools and Academic Achievement, 73 Econometrica 2 (2005), 
at 417-458; Daniel Aaronson, Lisa Barrow & William Sander, Teachers and 
Student Achievement in the Chicago Public High Schools, 24 J. Labor 
Econ. 1 (2007), at 95-135.

          Our most needy students are disproportionately taught 
        by less experienced and less effective teachers. Data from Los 
        Angeles suggest that, compared to students in the wealthiest 
        schools, students in the poorest schools were significantly 
        more likely to have a teacher in the bottom quartile of all 
        teachers as measured by teacher impact on student 
        performance.\6\ In addition, the highest-need students are much 
        more likely to be assigned a novice teacher who will gain 
        experience and then move on to a more affluent school. In 
        essence, our highest-need students too often help provide on-
        the-job training for novice teachers while students with fewer 
        needs reap the benefits--thus exacerbating the achievement gap 
        between high- and low-needs students.
---------------------------------------------------------------------------
    \6\ See Gordon et al., supra n. 5.

    We have to find better ways to reward and retain the most effective 
teachers and assign more of them to classes where they are needed the 
most. It should be a given that every child has an effective teacher 
every year of their school career.
    While governments will take the lead in reforming America's public 
education system, the private sector can and must support these 
efforts. At Microsoft, we have a number of education-focused 
initiatives. Through our Partners in Learning program, Microsoft works 
closely with governments and non-governmental organizations throughout 
the world to offer a wide variety of educational resources to teachers 
and schools, including teacher-training programs, software tools, and 
best practices. In the United States, Partners in Learning has reached 
more than 80 thousand teachers and over three million students, and 
actively supports states as they strive to prepare their students for 
careers in the 21st century. In Michigan, for instance, we created 
Career Forward, an online course that in its first year has already 
attracted over 17,000 participating students.
    In 2006, Microsoft, in partnership with the Philadelphia school 
district, opened a School of the Future. This neighborhood public high 
school--built on a standard budget and meeting all state and district 
requirements--offers a technology-based education model that can be 
replicated in other communities. In my view, the School of the Future 
offers an exciting example of what public-private partnerships can 
achieve, even when working within existing financial and regulatory 
constraints. This school has provided strategies that are being adopted 
throughout the district. And in a district where approximately 20 
percent of students are absent from high school every day, the School 
of the Future has achieved over a 90 percent attendance rate.
    The Bill & Melinda Gates Foundation also pursues a partnership 
model to advance educational reform. Let me highlight three examples in 
particular:

          Texas: Beginning in 2005, the Bill & Melinda Gates 
        Foundation partnered with the Communities Foundation of Texas, 
        the Governor of Texas, the Texas Education Agency, and the 
        Michael & Susan Dell Foundation to support the creation of 35 
        STEM schools and six regional resource centers across the 
        state. Already, these efforts have helped attract technology 
        businesses to the Austin area.

          Ohio: The Ohio STEM Learning Network has launched 
        efforts to create a state-wide network of five STEM hubs and 
        schools. Designed from a systems engineering approach, this 
        network will scale to a state-wide system of innovative STEM 
        schools with a $12 million grant from the Bill & Melinda Gates 
        Foundation and with support from a public-private partnership 
        that includes the Battelle Memorial Institute, the Ohio 
        Business Roundtable, the Ohio Department of Education, the Ohio 
        Business Alliance for Higher Education and the Economy, the 
        Cleveland Clinic Foundation, and many other local partners. 
        This project has already attracted over $210 million in public 
        funding and represents unprecedented multi-sector partnerships.

          North Carolina: Governor Easley, the Department of 
        Public Instruction and the New Schools Project launched the 
        Learn and Earn program, designed to improve high schools, 
        better prepare students for college and career, create a 
        seamless curriculum between high school and college, and 
        provide work-based learning experiences for students. The 
        schools, located on two- and four-year college campuses, seek 
        to have all students graduate with two years of college credit 
        or an associate's degree. The goal is to have 75 of these 
        schools in operation statewide by 2008. Forty-two schools have 
        already opened and 30 are scheduled to open in the fall.

    Each of these partnerships incorporates new methods to improve STEM 
education in public high schools. And each is designed to be clear 
about its goals, rigorous and transparent about measuring 
effectiveness, and deliberate in how it develops and retains skilled 
teachers. We hope that these partnerships will point the way to 
policies and approaches that not only better align our public high 
schools with the demands of the 21st century economy, but also provide 
better opportunities for all of our children.

B. Higher Education
    In contrast to our public high schools, America's colleges and 
universities rank among the best in the world. Unfortunately, we are 
not graduating enough students with degrees in the STEM disciplines to 
meet the growing demand from U.S. companies for workers in these areas. 
Without people who have the skills necessary to drive the next wave of 
technology innovation, it will be impossible for the United States to 
retain its global innovation leadership.
    Consider these facts. The U.S. Department of Labor has projected 
that by 2014, there will be more than two million job openings in the 
United States in STEM fields.\7\ Yet the number of American students 
graduating with degrees in these fields is actually declining. Indeed, 
the number of undergraduate engineering degrees awarded in the United 
States fell by about 15 percent between 1985 and 2005.\8\ This decline 
is particularly alarming when we look at educational trends in other 
countries, many of which award a higher percentage of college degrees 
in engineering than does the United States.\9\
---------------------------------------------------------------------------
    \7\ National Science Foundation, National Science Board, Science & 
Engineering Indicators 2008, at Apx. Table 3-7 (2008), available at 
http://www.nsf.gov/statistics/nsb0803/nsb0803.pdf. According to another 
recent study, major U.S. technology companies today average more than 
470 U.S.-based job openings each for skilled workers, while defense 
companies have more than 1,265 job openings each for skilled workers. 
See National Foundation for American Policy, Talent Search: Job 
Openings and the Need for Skilled Labor in the U.S. Economy, at 1 
(2008), available at http://www.nfap.net/pdf/080311talentsrc.pdf
    \8\ Science and Engineering Indicators 2008, supra note 7, at 2-19 
& Apx. Table 2-28.
    \9\ Id. at Apx. Table 2-28.
---------------------------------------------------------------------------
    This is not a new problem. For years, however, the decline in the 
percentage of graduate STEM degrees awarded to American students was 
offset by an increase in the percentage of foreign students obtaining 
these degrees from American universities.\10\ But various factors--
including our immigration policies (which I will address in a moment)--
are making it increasingly difficult for U.S. companies to hire 
foreign-born graduates of our universities. Indeed, according to a 2007 
study, 40 percent of all recent foreign-born doctoral degree recipients 
in the United States intended to leave.\11\
---------------------------------------------------------------------------
    \10\ For example, one recent study concluded that, in 2005, roughly 
43 percent of U.S. higher educational institutions' engineering and 
computer science degree recipients were temporary residents, and that 
temporary residents received 59 percent of the doctoral degrees awarded 
in those fields that year. See Science and Engineering Indicators 2008, 
supra note 7, at Apx. Tables 2-30 & 2-32.
    \11\ See Jacob Funk Kirkegaard, The Accelerating Decline in 
America's High-Skilled Workforce: Implications for Immigration Policy 
(2007), at 23 (citing Aurora (2007) ).
---------------------------------------------------------------------------
    Tackling the shortage of U.S.-born scientists and engineers will 
require determination by government and support by industry. The goal 
should be to ``[d]ouble the number of science, technology, and 
mathematics graduates by 2015.'' \12\
---------------------------------------------------------------------------
    \12\ The Business Roundtable, Tapping America's Potential: The 
Education for Innovation Initiative (2005), available at http://
www.businessroundtable.org/pdf/20050727002TAPStatement.pdf
---------------------------------------------------------------------------
    The Bill & Melinda Gates Foundation, for its part, has invested 
$1.7 billion in college scholarship programs--including the Gates 
Millennium Scholars, The Washington State Achievers Program, and the 
D.C. Achievers Program--which together will help more than 17,000 young 
people attend college. Most of the scholarship recipients are from low-
income families.
    One of the most important steps that Congress can take to address 
this issue is to fully fund the America COMPETES Act. Among other 
things, that Act authorized increases in the NSF's Graduate Fellowship 
Program and the Integrative Graduate Education and Research Traineeship 
program that would provide funding for about 1,000 more STEM graduate 
students than were funded in Fiscal Year 2007. With these increases, 
the NSF will support more than 35,000 STEM graduate students during 
Fiscal Year 2008 and approximately 41,000 during 2009.
    If we want U.S. leadership in science and technology over the next 
50 years to match that of the last 50 years, America's young people 
must come to see that science and technology degrees open the door to a 
wide range of interesting and lucrative career opportunities. If we 
fail to inspire our young people in this way, we simply will be unable 
to compete with technology innovators abroad.

C. Lifelong Learning
    Governments at all levels are rightly focused on promoting job 
growth and skills training, encouraging the development of local 
industry, and enhancing their global competitiveness. But meeting these 
objectives is a long-term effort that cannot be accomplished by 
government alone. The private sector shares responsibility for 
providing continuing education to enhance skills and improve employment 
prospects for our citizens.
    Information technology workers now account for a significant 
percentage of the U.S. labor force. The U.S. Department of Labor 
projects that, by 2014, nearly one-third of new jobs will be in the 
fields of computer systems design and services, and that one-sixth will 
be in the information sector.\13\ The success of many business 
enterprises will depend on the degree to which the available pool of 
workers possesses the right combination of science, technology, and 
engineering skills.
---------------------------------------------------------------------------
    \13\ Daniel Hecker, Occupational Employment Projections to 2014, 
Monthly Labor Review (2005), at 72, available at http://www.bls.gov/
opub/mlr/2005/11/art5full.pdf
---------------------------------------------------------------------------
    During the last decade, Microsoft has launched a wide range of 
commercial and philanthropic programs aimed at providing IT skills 
training to U.S. workers. Our commercial offerings include IT skills 
training and certification in cooperation with hundreds of commercial 
partners, and the Microsoft IT Academy, which provides online IT 
training programs and other resources to accredited educational 
institutions across the United States.
    Through our flagship digital inclusion programs--Partners in 
Learning and Microsoft's Unlimited Potential Community Technology 
Skills Program--we provide technology access and training to all types 
of learners, no matter where they happen to be on the continuum of IT 
skills and knowledge. We offer skills training for school children, for 
teachers who need to learn how to incorporate technology as part of 
their classroom instruction, and for community learners.
    In 2006, Microsoft joined with the U.S. Department of Labor to 
provide $3.5 million in cash and software to 20 of the Department's 
One-Stop Career Centers, which are located throughout the country. We 
also donated our innovative Digital Literacy curriculum to those 
Centers. We have similar partnerships with the Boys and Girls Clubs and 
the National Urban League.
    Although IT skills are in high demand, it can often be difficult 
for qualified job seekers with limited experience to connect with 
potential employers. To address this challenge, Microsoft recently 
launched the Students to Business (S2B) program, which is designed to 
help companies connect with and hire talented university or post-
graduate students for jobs or internships in the technology industry. 
Through the S2B program, Microsoft collaborates with universities and 
businesses to provide students with specialized IT training and 
internship opportunities and helps match qualified job candidates with 
open positions at thousands of Microsoft partner companies so that 
students are able to find the right job for their IT capabilities. 
Microsoft S2B also helps match students to internships. Because IT 
professionals who have had one or more internships as students tend to 
secure better jobs when they enter the workforce, the S2B program 
provides IT students with a range of opportunities to build their 
experience and strengthen their resumes.
    All of these steps are important, but to achieve the kind of wide-
ranging changes that are necessary, government and business must work 
together. As a nation, our goal should be to ensure that ultimately 
every job seeker, every displaced worker, and every individual in the 
U.S. workforce has access to the education and training they need to 
succeed in the knowledge economy. This means embracing the concept of 
``lifelong learning'' as part of the normal career path of American 
workers, so everyone in the workforce can use new technologies and meet 
new challenges.

II.  Revamping Immigration Rules for Highly Skilled Workers

    The second set of policies that we must consider if we are going to 
address the shortage of scientists and engineers centers on our 
immigration rules for highly-skilled workers. Today, knowledge and 
expertise are the essential raw materials that companies and countries 
need in order to be competitive. We live in an economy that depends on 
the ability of innovative companies to attract and retain the very best 
talent, regardless of nationality or citizenship. Unfortunately, the 
U.S. immigration system makes attracting and retaining high-skilled 
immigrants exceptionally challenging for U.S. firms.
    Congress's failure to pass high-skilled immigration reform has 
exacerbated an already grave situation. For example, the current base 
cap of 65,000 H-1B visas is arbitrarily set and bears no relation to 
the U.S. economy's demand for skilled professionals. For fiscal year 
2007, the supply ran out more than four months before that fiscal year 
even began.\14\ For fiscal year 2008, the supply of H-1B visas ran out 
on April 2, 2007, the first day that petitions could be filed and six 
months before the visas would even be issued.\15\ Nearly half of those 
who sought a visa on that day did not receive one.\16\
---------------------------------------------------------------------------
    \14\ United States Citizenship and Immigration Services Press 
Release, USCIS Reaches H-1B Cap (June 1, 2006) (indicating that the H-
1B cap for FY 2007 was reached on May 26, 2006), available at http://
www.uscis.gov/files/pressrelease/FY07H1Bcap-060106PR.pdf
    \15\ United States Citizenship and Immigration Services Press 
Release, USCIS Reaches FY 2008 H-1B Cap (Apr. 3, 2007) (indicating that 
more H-1B petitions were filed on April 2, 2007--the first day on which 
petitions could be filed that year--than there were H-1B numbers 
available under the cap), available at http://www.uscis.gov/files/
pressrelease/H1BFY08Cap040307.pdf
    \16\ United States Citizenship and Immigration Services Press 
Release, USCIS Updates Count of FY 2008 H-1B Cap Filings (Apr. 10, 
2007) (stating that USCIS had received approximately 120,000 H-1B 
petitions subject to the cap as soon as petitions could be filed, and 
that those petitions would be subjected to a lottery to determine which 
65,000 would be accepted and adjudicated), available at http://
www.uscis.gov/files/pressrelease/H1Bfy08CapUpdate041007.pdf
---------------------------------------------------------------------------
    This situation has caused a serious disruption in the flow of 
talented STEM graduates to U.S. companies. Because an H-1B petition 
generally can be filed only for a person who holds a degree, when May/
June 2007 graduates received their degrees, the visa cap for fiscal 
year 2008 had already been reached. Accordingly, U.S. firms will be 
unable to hire those graduates on an H-1B visa until the beginning of 
fiscal year 2009, or October 2008.
    As a result, many U.S. firms, including Microsoft, have been forced 
to locate staff in countries that welcome skilled foreign workers to do 
work that could otherwise have been done in the United States, if it 
were not for our counterproductive immigration policies. Last year, for 
example, Microsoft was unable to obtain H-1B visas for one-third of the 
highly qualified foreign-born job candidates that we wanted to hire.
    If we increase the number of H-1B visas that are available to U.S. 
companies, employment of U.S. nationals would likely grow as well. For 
instance, Microsoft has found that for every H-1B hire we make, we add 
on average four additional employees to support them in various 
capacities. Our experience is not unique. A recent study of technology 
companies in the S&P 500 found that, for every H-1B visa requested, 
these leading U.S. technology companies increased their overall 
employment by five workers.\17\
---------------------------------------------------------------------------
    \17\ National Foundation for American Policy, H-1B Visas and Job 
Creation (2008), available at http://www.nfap.com/pdf/080311h1b.pdf
---------------------------------------------------------------------------
    Moreover, the simple fact is that highly skilled foreign-born 
workers make enormous contributions to our economy. A recent survey by 
Duke University and the University of California-Berkeley found that 
one quarter of all start-up U.S. engineering and technology firms 
established between 1995 and 2005 had at least one foreign-born 
founder.\18\ By 2005, these companies produced $52 billion in sales and 
employed 450,000 workers.\19\
---------------------------------------------------------------------------
    \18\ Vivek Wadhwa et al., America's New Immigrant Entrepreneurs 
(2007), available at http://memp.pratt.duke.edu/downloads/
americas-new-immigrant-entrepreneurs.pd
f
    \19\ Id.
---------------------------------------------------------------------------
    The United States will find it far more difficult to maintain its 
competitive edge over the next 50 years if it excludes those who are 
able and willing to help us compete. Other nations are benefiting from 
our misguided policies. They are revising their immigration policies to 
attract highly talented students and professionals who would otherwise 
study, live, and work in the United States for at least part of their 
careers. To address this problem, I urge Congress to take the following 
steps.
    First, we need to encourage the best students from abroad to enroll 
in our colleges and universities and, if they wish, to remain in the 
United States when their studies are completed. One interim step that 
could be taken would be to extend so-called Optional Practical Training 
(OPT), the period of employment that foreign students are permitted in 
connection with their degree program. Students are currently allowed a 
maximum of 12 months in OPT before they must change their immigration 
status to continue working in the United States. Extending OPT from 12 
to 29 months would help to alleviate the crisis employers are facing 
due to the current H-1B visa shortage. This only requires action by the 
Executive Branch, and Congress and this committee should strongly urge 
the Department of Homeland Security to take such action immediately.
    Second, Congress should create a streamlined path to permanent 
resident status for highly-skilled workers. Rather than allowing 
highly-skilled, well-trained innovators to remain for only a very 
limited period, we should encourage a greater number to become 
permanent U.S. residents so that they can help drive innovation and 
economic growth alongside America's native-born talent. While some 
foreign students will undoubtedly choose to return home after 
graduation, it is extremely counterproductive to prevent them from 
remaining here to contribute their talents and expertise to our 
economic success if that is what they would like to do.
    Third, Congress should increase the cap on visas. The current cap 
is so low that it virtually assures that highly skilled foreign 
graduates will leave the United States and work elsewhere after 
graduation. By increasing the number of visas granted each year, 
Congress can help U.S. industry meet its near-term need for qualified 
workers even as we build up our long-term capability to supply these 
workers domestically through education reform.
    Ultimately, however, if we are to align our immigration policy with 
global realities and ensure our place as the world's leading innovator, 
Congress must make additional changes to our employment-based 
immigration system.
    The current system caps employment-based visas--or ``green 
cards''--at 140,000 per fiscal year. Because that number includes 
spouses and children of applicants, the actual number of visas 
available for workers is far fewer than 140,000. Moreover, the number 
of green cards issued to nationals of any one country cannot exceed 
seven percent of the total number of visas issued in a given fiscal 
year. These two factors have caused multi-year backlogs for thousands 
of highly skilled individuals and are having a chilling effect on 
America's ability to attract and retain great talent.
    I urge Congress to pass legislation that does away with per-country 
limits and significantly increases the number of green cards available 
in any fiscal year. Failure to do so will add to the already years-long 
wait for green cards and only encourage talented foreign nationals who 
are already contributing to innovation in U.S. companies to leave and 
take their talents elsewhere. Innovation is the engine of job growth; 
if we discourage innovation here at home, economic growth will decline, 
resulting in fewer jobs for American workers.
    I want to emphasize that the shortage of scientists and engineers 
is so acute that we must do both: reform our education system and 
reform our immigration policies. This is not an either/or proposition. 
If we do not do both, U.S. companies simply will not have the talent 
they need to innovate and compete.

III.  Increasing Federal Funding for Basic Scientific Research

    Another fundamental goal of a strategy for innovation excellence 
should be to increase federal funding for basic scientific research. 
Federally funded research supports the education of the next generation 
of scientists and engineers, those who will largely determine whether 
the United States remains innovative and globally competitive. 
Federally funded research also provides the raw material that U.S. 
companies transform into commercially successful products. Thanks to 
the Bayh-Dole Act and related legislation, universities and other 
recipients of federal research funds have strong incentives to ensure 
that the results of their research do not just end up sitting on a 
shelf, but instead are licensed to industry under terms that promote 
the development of useful new products.
    Countless products and technologies that we take for granted today 
had their origins in research conducted with federal funds. Government 
support was critical, for instance, to the development of public-key 
encryption technology, which became the foundation for most e-mail 
applications, digital certificates, and virtual private network 
software, as well as non-Internet technologies such as ATMs and credit 
card machines. Research initially conducted by NASA has been applied to 
improve the safety and effectiveness of angioplasties and breast cancer 
detection. Funding from the NSF led to the development of Magnetic 
Resonance Imaging. And of course, the Internet itself has its genesis 
in ARPANET, a project of the Defense Department's Advanced Research 
Projects Agency. There are many other examples.
    The leaders of U.S. scientific institutions recognize the 
importance of federal funding for basic scientific research. As NSF 
Director Arden Bement has noted, ``[m]ore than a dozen major studies 
have now concluded that a substantial increase in federal funding for 
basic scientific research is critical to ensure the preeminence of 
America's scientific and technological enterprise.'' \20\
---------------------------------------------------------------------------
    \20\ National Science Foundation Press Release, National Science 
Foundation Requests $6.85 Billion for Fiscal Year 2009, (Feb. 4, 2008), 
available at http://www.nsf.gov/news/
news-summ.jsp?cntn-id=111084&govDel=USNSF-
51
---------------------------------------------------------------------------
    Unfortunately, federal research spending has been stagnant or 
shrinking over the past several decades. According to the Task Force on 
the Future of American Innovation, ``[a]s a share of GDP, the U.S. 
federal investment in both physical sciences and engineering research 
has dropped by half since 1970. In inflation-adjusted dollars, federal 
funding for physical sciences research has been flat for two decades. . 
..'' \21\ This stagnation in spending comes at a time when other 
governments, such as in China and the EU, are increasing their public 
investments in R&D.
---------------------------------------------------------------------------
    \21\ Task Force on the Future of American Innovation, Measuring the 
Moment: Innovation, National Security, and Economic Competitiveness, at 
9 (2006), available at http://futureofinnovation.org/PDF/BII-FINAL-
HighRes-11-14-06-nocover.pdf
---------------------------------------------------------------------------
    Passage of the America COMPETES Act potentially represents a 
welcome reversal of this trend, and again I support this committee's 
call to Congress to fully fund America COMPETES. Many important 
programs are at risk if this Act is not fully funded. For example, the 
Act extends funding for two important NIST initiatives--the 
Manufacturing Extension Partnership and the Technology Innovation 
Program, both of which have proven track records of producing return on 
investment and creating jobs. I also urge Congress to establish a 
mechanism to measure and report on the Administration's progress on 
implementing the initiatives established or funded by America COMPETES.
    As a nation, our goal should be to increase funding for basic 
scientific research by 10 percent annually over the next seven years. 
We also need to ensure that the private sector has greater visibility 
into the status and progress of federally funded research projects so 
that companies can collaborate more effectively with universities and 
other publicly funded researchers.

IV. Providing Incentives for Private-Sector R&D

    The fourth critical element of a strategy for innovation excellence 
should be to strengthen incentives for private-sector R&D. Private 
companies are often in the best position to engage in the kinds of 
applied research and development that yield useful new products. Yet 
the inevitable pressure on companies to generate profits and maximize 
shareholder value may deter them from investing heavily in R&D, 
particularly since these investments are often viewed as riskier than 
other investments.
    While understandable, the reluctance of U.S. companies to invest 
more heavily in R&D is deeply troubling. If one looks at the personal 
computer industry, for instance, much of the foundational work for the 
industry was done in the private sector, at venerable institutions such 
as Bell Labs and Xerox PARC. Companies today, however, often seem less 
willing to invest heavily in R&D--or at least seem to focus most of 
their spending on development and relatively little on true research.
    If the United States is to remain a leading innovation economy, 
U.S. industry must invest more in R&D. To spur this needed investment, 
Congress should reinstitute the R&D tax credit, which expired last 
year, and make that tax credit permanent. Doing so would help convince 
American businesses that longer-term R&D investments--especially those 
that might take years before they generate any profits--are worthwhile.
    I appreciate the importance of such R&D incentives through my work 
at Microsoft. Last year, Microsoft invested over $7 billion in R&D. The 
R&D tax credit provides an important incentive to encourage Microsoft--
like thousands of other U.S. companies--to increase our R&D investment 
in the United States. The credit is a positive stimulus to U.S. 
investment, innovation, wage growth, consumption, and exports--all 
contributing to a stronger economy and a higher standard of living. As 
other countries recognize the long-term value of private-sector R&D and 
offer permanent and generous incentives to attract R&D projects, it is 
vital that the United States renews its commitment to U.S.-based R&D by 
enacting a seamless, permanent R&D tax credit.

Conclusion

    I believe this country stands at a crossroads. For decades, 
innovation has been the engine of prosperity in this country. Now, 
economic progress depends more than ever on innovation. And the 
potential for technology innovation to improve lives has never been 
greater. If we do not implement policies like those I have outlined 
today, the center of progress will shift to other nations that are more 
committed to the pursuit of technical excellence. If we make the right 
choices, the United States can remain the global innovation leader that 
it is today.
    These four policy prescriptions--strengthening educational 
opportunities, revamping immigration rules for highly skilled workers, 
increasing federal funding for basic scientific research, and providing 
incentives for private-sector R&D--should in my view be top priorities 
as Congress and the Administration consider how to maintain the 
Nation's leadership in science, technology, and innovation.
    I want to conclude by again congratulating this committee on its 
50th anniversary and commending the Committee for its tremendous 
efforts to advance the state of science and technology innovation in 
America. I am convinced that the U.S. IT industry--like many other 
innovative American industries--would not be the global leader it is 
today without the initiatives this committee helped design and 
implement.
    Thank you for the opportunity to share my perspective on these 
issues with you this morning. I'd be happy to respond to any questions 
you may have on these topics.

                     Biography of William H. Gates

    William (Bill) H. Gates is Chairman of Microsoft Corporation, the 
worldwide leader in software, services and solutions that help people 
and businesses realize their full potential. Microsoft had revenues of 
$51.12 billion for the fiscal year ending June 2007, and employs more 
than 78,000 people in 105 countries and regions.
    On June 15, 2006, Microsoft announced that effective July 2008 
Gates will transition out of a day-to-day role in the company to spend 
more time on his global health and education work at the Bill & Melinda 
Gates Foundation. After July 2008, Gates will continue to serve as 
Microsoft's Chairman and an advisor on key development projects. The 
two-year transition process is to ensure that there is a smooth and 
orderly transfer of Gates' daily responsibilities. Effective June 2006, 
Ray Ozzie has assumed Gates' previous title as Chief Software Architect 
and is working side by side with Gates on all technical architecture 
and product oversight responsibilities at Microsoft. Craig Mundie has 
assumed the new title of Chief Research and Strategy Officer at 
Microsoft and is working closely with Gates to assume his 
responsibility for the company's research and incubation efforts.
    Born on October 28, 1955, Gates grew up in Seattle with his two 
sisters. Their father, William H. Gates II, is a Seattle attorney. 
Their late mother, Mary Gates, was a school teacher, University of 
Washington regent, and Chairwoman of United Way International.
    Gates attended public elementary school and the private Lakeside 
School. There, he discovered his interest in software and began 
programming computers at age 13.
    In 1973, Gates entered Harvard University as a freshman, where he 
lived down the hall from Steve Ballmer, now Microsoft's Chief Executive 
Officer. While at Harvard, Gates developed a version of the programming 
language BASIC for the first microcomputer--the MITS Altair.
    In his junior year, Gates left Harvard to devote his energies to 
Microsoft, a company he had begun in 1975 with his childhood friend 
Paul Allen. Guided by a belief that the computer would be a valuable 
tool on every office desktop and in every home, they began developing 
software for personal computers. Gates' foresight and his vision for 
personal computing have been central to the success of Microsoft and 
the software industry.
    Under Gates' leadership, Microsoft's mission has been to 
continually advance and improve software technology, and to make it 
easier, more cost-effective and more enjoyable for people to use 
computers. The company is committed to a long-term view, reflected in 
its investment of approximately $7.1 billion on research and 
development in the 2007 fiscal year.
    In 1999, Gates wrote Business @ the Speed of Thought, a book that 
shows how computer technology can solve business problems in 
fundamentally new ways. The book was published in 25 languages and is 
available in more than 60 countries. Business @ the Speed of Thought 
has received wide critical acclaim, and was listed on the best-seller 
lists of the New York Times, USA Today, the Wall Street Journal and 
Amazon.com. Gates' previous book, The Road Ahead, published in 1995, 
held the No. 1 spot on the New York Times' bestseller list for seven 
weeks.
    Gates has donated the proceeds of both books to non-profit 
organizations that support the use of technology in education and 
skills development.
    In addition to his love of computers and software, Gates founded 
Corbis, which is developing one of the world's largest resources of 
visual information--a comprehensive digital archive of art and 
photography from public and private collections around the globe. He is 
also a member of the board of directors of Berkshire Hathaway Inc., 
which invests in companies engaged in diverse business activities.
    Philanthropy is also important to Gates. He and his wife, Melinda, 
have endowed a foundation with more than $28.8 billion (as of January 
2005) to support philanthropic initiatives in the areas of global 
health and learning, with the hope that in the 21st century, advances 
in these critical areas will be available for all people. The Bill and 
Melinda Gates Foundation has committed more than $3.6 billion to 
organizations working in global health; more than $2 billion to improve 
learning opportunities, including the Gates Library Initiative to bring 
computers, Internet access and training to public libraries in low-
income communities in the United States and Canada; more than $477 
million to community projects in the Pacific Northwest; and more than 
$488 million to special projects and annual giving campaigns.
    Gates was married on Jan. 1, 1994, to Melinda French Gates. They 
have three children. Gates is an avid reader, and enjoys playing golf 
and bridge.

                               Discussion

    Chairman Gordon. Thank you, Mr. Gates, and I now yield 
myself five minutes. I went the other day to a roll-out with 
OECD on a report called the PISA report on education 15-year-
olds and mainly the EU countries and the United States. As 
usual, we do very poorly there. And I was trying to find some 
common denominators. Really, it was Finland that almost 
overhauled their whole education system a few years ago which 
has also overhauled their whole standard of living and improved 
it on a national basis. And I was trying to get common 
denominators, you know, what are the things they do; and they 
really emphasized that they want to have national standards but 
they want to have a contract in essence with the students, the 
parents, and the student to work in whatever is the best way to 
get there. So it wasn't just one common road.
    Let me say to those folks, I know there were a lot of 
people who couldn't get in today, and Mr. Gates shortened his 
testimony, but his full testimony is going to be on our 
website, www.science.house.gov, which is an award-winning 
website. You can find links to a lot of other things. But I 
think that it really will be beneficial if you want to read his 
full scholarly work. You will learn a lot more than what was 
just said here.
    Now, in your statement, when you talked about secondary 
education, you talked about transparency, you talked about 
having student performance data as formation of measures for 
impact and making decisions and also developing that national 
scope. I want to see if you can help me get through this is 
that our teachers now are concerned that they have these 
national tests, that they are having to teach to the test and 
other things are falling off the table. From what you have seen 
and studied and around the world, how do we best combine those 
standards so you can measure teachers, students, and their 
success versus the problem of just teaching to the test?
    Mr. Gates. The tests largely are about fundamental skills, 
math skills and reading skills, and these are exactly the 
qualifications that employers are interested in people having. 
And if you look at the other nations that do well on PISA, they 
are very serious about viewing tests as the metric and then 
looking at individual teachers, at schools, at systems based on 
how those test results are coming about.
    The United States in PISA were among the best at the 
fourth-grade level, and were in the middle at the eighth-grade. 
It is only by senior year that we drop to the bottom of those 
results. And so clearly in the high school period, there is 
some level of rigor that exists in these other nations' systems 
that isn't as strong in our systems, the background of the 
teachers, and comparing techniques. And so we would say that 
data that looks at these results and learning from that data is 
of great importance. In fact, there is funding for these data 
systems that are part of the America COMPETES. You know, we are 
gathering more data as a country. That is a great thing. Now, 
there is a tendency when that data doesn't come out well to 
say, okay, whose problem is it and even a temptation to say, if 
the data are so bad, let us stop testing because it is really 
depressing to keep looking at these numbers. In fact, the 
amount of investment required to fix those numbers is very 
high, and it is a tough problem. Where do you get at the local, 
State, and federal level the resources to do those things? But 
you know, I don't think that reducing the availability of the 
data and understanding that data really is the right way to go.
    Chairman Gordon. When you mentioned depressing, I think 
what is most depressing about that is our students in the 
elementary level come out pretty well. Then at the middle 
school, not quite as well, and then it starts to fall off the 
table in high school. I think what we are talking about is not 
trying to produce a lot of elite Ph.D.s but rather those folks, 
whether high school graduate or junior college or college 
graduate that can work at that higher technological level, and 
as we looked into it, what we found was that on the middle 
school level, 63 percent of the math teachers have neither a 
certification to teach math or do they have a degree in it. 
Ninety-three percent of the physical science teachers have 
neither certification nor degree. So it is hard to be able to 
teach something that you don't have that core background, as 
good a teacher as you might be. And that is one of the things 
we want to try to do in COMPETES. I am from Tennessee, the home 
of country music, and we say that the song all starts with the 
words, and I think school all starts with teachers and we are 
going to try to get better educated teachers.
    As I looked over your resume, I got a little bit of a head 
start but we are somewhat contemporaries in terms of age, and 
you think of Bill Gates as sort of a measuring stick not too 
many people measure up too well. So I was trying to look at 
common measures here. I noticed that you are a billionaire, and 
I am not. I noticed that I am a college graduate, and you are 
not. But I also noticed that we both have seven-year-old 
daughters, and I suspect you are a little bit obsessed as I am 
in making sure that she gets the best education so that she can 
be able to compete in, as we were growing up sort of a national 
world but very much an international world now. This is a 
little personal question that I suspect other folks would like 
to know. Outside of good schools, good parenting, in terms of 
hardware and software, what are those items now that you would 
recommend for us that want to help our seven-year-olds and 
older children to be able to adapt to this new technology in 
this new world?
    Mr. Gates. In some ways, I envy kids who are growing up 
today to the degree they are encouraged and get a chance to use 
the new tools. The ability to pursue your curiosity is really 
phenomenal today, and when I was growing up, you know, the best 
you could do was read the World Book alphabetical, which was 
not very enticing. Today, if you have access to the Internet 
online, which either at home or through local libraries through 
a program that Microsoft and my foundation was very involved 
in, most kids do have some way of getting access. The breadth 
of information is out there, whether it is things like 
Wikipedia, Encarta, and now the greatest teachers being 
videotaped, and so you can go off and watch courses. Even as an 
adult now I can go up and I just watched an MIT course that was 
quite phenomenal in terms of updating me on some science 
advances. So my kids are out on the Internet, and my son and 
daughters often ask questions that my answer is, hey, let us go 
study that and learn about the stars or whatever it is they are 
curious about, whereas when I grew up my parents had to say 
they didn't know the answer and it wasn't easily at hand.
    So there is a huge advantage in having the Internet widely 
accessible that people should take advantage of.
    Chairman Gordon. And I think we have to recognize if we 
don't, somebody else is somewhere else.
    Mr. Gates. That's right. This is a global tool. It is good 
and absolute that they are able to educate people as well. We 
always have to think there is, you know, improving the whole 
pool of the world's knowledge and innovation and then making 
sure the United States gets its share of it. But those are both 
valuable things, and I would say the one that is most at risk 
is our relative share.
    Chairman Gordon. Which means first to market, and that is 
R&D. Thank you, Mr. Gates. Mr. Hall is recognized.
    Mr. Hall. Thank you, Mr. Chairman. Mr. Gates, you mentioned 
engineers, and with China and India graduating record numbers 
of engineers with skills, I guess the question I really want to 
ask is what skills are going to be required by the future U.S. 
science and engineering workforce in order for them to compete 
with foreign scientists and engineers? And in asking that, I 
have to ask you how you recommend we change our education 
system, if you do so recommend, to produce graduates with the 
skills necessary to fit the new competitive environment and the 
evolving needs of industry. And my final question on that is 
whether or not Microsoft employs scientists and engineers from 
foreign universities, primarily China or India, and if so, what 
is the quality of these engineers versus those graduated in the 
United States. And you can take any or all of those or none of 
them.
    Mr. Gates. The United States' preeminence today is still 
very, very strong, that is, if you in science and engineering 
looked at what are the top 20 universities in the world, 
anywhere from 15 to 19 of those, people would probably agree 
are U.S. universities. So the quality of our top schools and 
their engineering and computer science departments is very, 
very high. Now, over time, other countries see that, and they 
are trying to match that. You know, in China there is one 
university, Ching Wa, that is nearly as good as the best U.S. 
universities. But still, if you look at the raw number of 
engineers being graduated, that would overstate the current 
status. For the very top engineers, the U.S. universities still 
have the strong position. But as I have said, the majority of 
the students in the computer science department, are foreign-
born. And so we educate them. We provide the world's very best 
education and the research, funding, and various things are a 
major factor there; and then those are the students who are not 
allowed to stay and work in the country because of the limits 
we have, and that is where we create jobs around them. So the 
U.S. universities are still the best, and the kind of funding 
that the government has provided really is a huge part of that.
    Also, the ability of the U.S. universities to work in 
collaboration with business. That is a practice, whether it is 
information technology or biology, the United States has been a 
leader in. The Bayh-Dole Act that incentivizes universities to 
get their research out into the marketplace, that has been a 
fantastic thing that has given these university-business 
collaborations. And so, the preference of a company like 
Microsoft is very much to take these graduates of U.S. 
institutions and hire them and employ them here in the United 
States because all of the complementary jobs, management, 
testing, the various things, we can find the best candidates 
here in the country, but unfortunately, the jobs are going to 
go where the engineering talent is, and the other jobs around 
it will follow where that engineering talent is.
    In terms of improving the high schools, both Microsoft and 
my foundation have been involved in this. There are a number of 
new high schools that have as a theme science and technology to 
kind of have projects to get kids enthused about those topics. 
Overall we see the numbers dropping and the numbers of women 
and minorities are also very low in these fields, despite a lot 
of good effort that is being put into that. So we think it is 
at the high school level that you can develop a fascination and 
understanding of these topics to make them far more engaging. 
And we are seeing good results in a number of these schools 
which are mostly charter schools but taking a different 
approach to education. We think we can get a lot more people to 
stay in science and technology.
    Mr. Hall. And then in quality we are there but in quantity 
we are not?
    Mr. Gates. Well, if the quality is the quality of the 
graduates of our top universities, we are number one by a lot 
still. If you take the broader picture of the quality of all 
our high school graduates, that is where this PISA study comes 
in and says that broad number, the United States does not 
measure up very well. But the people who get the best public 
school education and some of the people who get a private 
school education, those people go into these top universities, 
you know, about 40 percent of the computer science departments 
are U.S.-born students, and they come out and they are the 
best. They are the most attractive. Those graduates are the 
most attractive.
    So we have a piece that absolutely is still the best.
    Mr. Hall. And if we educate them, we ought to try to keep 
them?
    Mr. Gates. Absolutely. All of those people graduating from 
these top universities are going to get job offers of high-
paying jobs in many, many different countries. So they have a 
choice where they end up being employed.
    Mr. Hall. Well, we have not done too well with our 
immigration situation in general, so we will try to do a little 
better with the quality of our education.
    I yield back. Thank you.
    Chairman Gordon. Thank you, Mr. Hall. Our university system 
was or is the magnet for the best and brightest around the 
world. They would come in and besides our home grown, we would 
bring in the best for that innovation and jobs were created. 
Unfortunately, we are not quite the magnet--there are 
alternatives now, and hopefully we can get back to bringing the 
best and brightest and keeping them and helping them to produce 
jobs in this country.
    Mr. Baird, the Chairman of our subcommittee that oversees 
the National Science Foundation is recognized.
    Mr. Baird. Thank you, Mr. Chairman. Mr. Gates, thank you 
for your comments. I just want to follow up on two issues. One, 
thank you for your recognition of the Chairman's America 
COMPETES Act. I want you to know that that will set a budget 
today that allows for precisely the kind of expansion that you 
have called for. The Democratic budget allows for a substantial 
expansion for science and math research and education, and we 
hope our friends on the appropriations side can support that 
effort as well.
    I also share your concern about how difficult it can be to 
bring international scholars here for either work or education 
purposes to the extent that our Research and Education 
Subcommittee can. We have already had two hearings on this 
general topic, and we will do everything we can to try to 
facilitate that arrival of scholars and the retention of 
scholars who have trained here.
    Given your technical expertise, I would like to ask you a 
broad question about a technical issue. One of the great merits 
of technology is that it changes so fast that it brings us 
better and better things, but it also creates a problem with 
legacy information, and I am particularly interested in the 
issue of Open XML and the broader question about standards and 
your belief about how things like Open XML and international 
standards for the Internet, the pros and cons of those, and 
where you see those heading.
    Mr. Gates. Well, thank you. That is an important area 
because we are building up more and more records that you want 
to be able to access and understand, and you want to be able to 
preserve those records over a period of time. In fact, these 
digital archives will cover a lot of people's activities, and 
you know, parents will be able to go back and get essays from 
children, or researchers will be able to go back and get the 
data from different experiments; and even libraries, a lot of 
their collections will be in this digital format, and you will 
want to be able to access that.
    Microsoft is very engaged in the standards process. There 
is a new standard that we put in front of the International 
Standards Organization called Open XML, and it uses XML in a 
way that means that anybody using our software or other 
software that meets the standard will be able to access it out 
into the future. So it is very important to us that Open XML 
become an ISO standard so that families and researchers and 
archivists world-wide will be able to access information from 
the past and use it to interact in the future. And it is by 
mining data like this that I think a lot of the advances in 
understanding how education is best done or understanding what 
should be done in the medical field, so it is both an important 
thing for innovation and an important thing for citizens to 
have access to information.
    Mr. Baird. I appreciate that. I actually have believe it or 
not some old five and one-half-inch floppy disks in the CPM 
format which if I ever achieve anything of note some poor 
librarian is going to have to go and find an old CPM machine 
and dig out my great works from back then, which will not be 
hard because there will be very few. But I think your point is 
well-taken, and I applaud Microsoft for its leadership in this 
area and the whole issue of standards.
    One of the issues on H-1B is I want to particularly want to 
compliment your company on is I hear from constituents, hey, 
wait a second, why are we doing more to let folks 
internationally train, either stay or come into our country. 
Shouldn't we be doing more to educate our own people? Microsoft 
has really been a leader of that. Schools throughout this 
country have benefited from Microsoft's leadership. One of the 
thoughts that I have kicked around a little bit, is there a way 
we should--I know there is a small fee for an H-1B visa, and 
that goes back to the education system. But is there a way we 
should actually ask companies to put maybe a little more skin 
in the game if you will through internships or other things? In 
other words, if you are applying for an H-1B position to come 
to your company, then your company must demonstrate--not yours 
per se but one's company because you have already done it, but 
many companies I don't think have followed the example of 
Microsoft. What are the pros and cons of that and how might we 
do that?
    Mr. Gates. Well, certainly the importance of being able to 
retain and hire these world top engineers is super-important, 
and the fact that there is this limit, you know, I can't 
overstate the impact that has not only on the decision on the 
people who are educated here to stay here, but also on their 
decision to even come to the United States in the first place. 
You know, if you want to say, ``Okay, how do we compete with 
Asian countries?'' The fact that their smartest people often 
want to come here has been a huge advantage to us and in a 
sense, we are kind of throwing that away. You know, to be 
honest, if there was a way that we could get the freedom to 
hire these people that set a threshold for the companies 
involved to be concretely be involved in giving back to 
education, you know, I think that would be acceptable as long 
as it is concrete and it really solves the problem that we are 
all facing here. I think that even without that though it is a 
total win-win situation for the economy and job creation to not 
force these people to be employed outside the United States. We 
actually, partly because of the current immigration policies, 
created an office up in Vancouver, Canada, because that 
government, like virtually every government other than the 
United States, recognizes that competing for talent and 
encouraging talent, particularly talent educated in a country, 
getting them to stay, that that is very, very important. And so 
just, you know, across the border you have quite a contrast in 
terms of how high-skilled workers are treated.
    Mr. Baird. I appreciate that. I think the hard part and we 
need to impress upon this Congress and the Administration, is 
the urgency of this matter for our competitiveness. Thank you.
    Chairman Gordon. Thank you, Dr. Baird. Mr. Rohrabacher, I 
am not picking on you, but I want to remind our Members that 
Mr. Hall and I agreed that Mr. Gates can leave at 12:00. So we 
are going to try to keep everybody to five minutes. Again, not 
picking on you, so I recognize you----
    Mr. Rohrabacher. I noticed the rule was just employed at 
this moment.
    Mr. Gates. I will try to be more succinct.
    Mr. Rohrabacher. Thank you very much, and again, thank you 
for coming here to help us celebrate this 50th anniversary. I 
have been on this committee 20 years and been a very proud 
Member of this committee for 20 years, and this is the most 
bipartisan committee that you will find in the United States 
Congress, although I am not the most bipartisan guy that you 
will meet in the United States Congress.
    A couple things that I have learned over these last 20 
years is that when the fundamentals of the economics of a 
solution are wrong, sort of like programming a computer, if the 
fundamental programming is wrong, in the end there is going to 
be problems. You have to go to the fundamentals. And just to be 
frank, I think some of the things you are suggesting are not 
going to the fundamentals but instead I think they are going 
way after the programming problems. For example, in education, 
let me note that the hearings we had on education were very 
enlightening for me, but what I learned seemed to be different 
than what my other members learned and that was that math and 
engineering and science teachers have no difference in pay in 
our public education schools than do basket weaving and English 
literature teachers. Do you believe that we need to pay our 
science and mathematics teachers more money in order to attract 
higher quality people to be science and mathematics teachers?
    Mr. Gates. I definitely think that you want to set high 
standards and those standards should be based on how well you 
do for the students, which we need to come up with ways of 
measuring that that people view as very, very reliable.
    Mr. Rohrabacher. Because I have only got five minutes, I 
may, if I can, just go directly to the issue. Should science 
and math teachers be paid more than other teachers in order to 
attract higher quality people in a public education to those 
parts of the education system?
    Mr. Gates. If you are measuring these teachers' ability to 
really improve the students' capabilities and selecting for 
those people who do it, you will find that there is a supply 
shortage, and because of that supply shortage, you will 
probably have to pay this group somewhat more. And there are 
various experimental----
    Mr. Rohrabacher. So you do believe that if you pay more 
money, you actually will attract more people to a profession 
and get more of it?
    Mr. Gates. If you tie it to an ability to really look at 
the improvement that they drive. The effect is----
    Mr. Rohrabacher. Well, also if you improve the basket 
weaver teachers, it is less important than if we improve the 
science and mathematics. Now, let us relate that directly to 
the other issue that you brought up today which is immigration. 
Let me just note that if we bring in more people from the 
outside, realizing that we are bringing the most talented 
people from other countries, will it not hurt those countries 
and will it also not depress the wages in our own country that 
people like yourself would have to pay your employees in order 
to get quality people or in order to train people within the 
society of our own society?
    Mr. Gates. No.
    Mr. Rohrabacher. It wouldn't? Okay.
    Mr. Gates. These top people are going to be hired. It is 
just a question of what country they do their work in.
    Mr. Rohrabacher. We are really not talking about top people 
here. You know, the bottom line----
    Mr. Gates. These salaries are not----
    Mr. Rohrabacher.--line is there is a lot of other people in 
this society rather than just the top people. It is the B and C 
students that fight for our country and kept it free so that 
people like yourself would have the opportunity that you have 
had. Those people, whether or not they get displaced by the top 
people from another country is not our goal. Our goal isn't to 
replace the job of the B students with A students from India--
--
    Mr. Gates. That is right.
    Mr. Rohrabacher.--and the B students deserve to have good 
jobs and high-paying jobs.
    Mr. Gates. That is right, and what I have said here is that 
when we bring in these world-class engineers, we create jobs 
around them. And if we don't--the B and C students are the ones 
who get those jobs around these top engineers. And if these top 
engineers are forced to work, say, in India, we will hire the B 
and C students from India to work around them.
    Mr. Rohrabacher. But according to Business Week, we have 
over 150,000 computer programmers have lost their job in this 
country since the year 2000. Now, my reading of all of this is 
that there are plenty of people out there to hire but people 
want to have the top quality people from India and China and 
elsewhere and they are willing to let these 150,000 American 
computer programmers just go unemployed.
    Mr. Gates. Actually, Business Week doesn't do surveys. I 
think you are referring to a quote in Business Week from an 
Urban Institute study----
    Mr. Rohrabacher. That is what I said, according to Business 
Week.
    Mr. Gates. Well, they quote. It is not according to 
Business Week.
    Mr. Rohrabacher. Okay.
    Mr. Gates. There was a study that a group at Urban 
Institute did----
    Mr. Rohrabacher. Okay.
    Mr. Gates.--that was deeply flawed in terms of how it 
defined what an engineer is. When we say that these jobs are 
going begging, we are in business every day. We are not kidding 
about it. These jobs are going begging, and the result is that 
in a competitive economy----
    Mr. Rohrabacher. You would have to raise wages.
    Mr. Gates. No, no, we just----
    Mr. Rohrabacher. It is like every time the jobs are going 
begging, you raise wages. Now, in a----
    Mr. Gates. No, we----
    Mr. Rohrabacher. Okay.
    Mr. Gates. It is not an issue of raising wages, these jobs 
are very, very, very high-paying jobs.
    Mr. Rohrabacher. Okay. There are a lot of----
    Mr. Gates. We are hiring as many of these people as we can.
    Mr. Rohrabacher. Let me give you a one example----
    Chairman Gordon. Mr. Rohrabacher, if I could.
    Mr. Rohrabacher. Yes.
    Chairman Gordon. If you don't mind, we will finish this on 
the second round.
    Mr. Rohrabacher. I am one of the guys who helped Kosovo 
become independent, I am on the Foreign Relations Committee, 
having their hearing there. Maybe at the reception tonight 
which you are going to be at, maybe we can continue this 
discussion.
    Chairman Gordon. I am sure he is excited to know you will 
be there. Thank you, Mr. Rohrabacher, and Ms. Giffords, one of 
our new Members from Arizona. And I will warn you, somehow she 
is going to work Arizona into her question. I don't know how it 
is going to be, but that is what will happen. Ms. Giffords is 
recognized.
    Mr. Hall. And this witness won't forget Rohrabacher.
    Ms. Giffords. Thank you, Mr. Chairman. Thank you, Mr. 
Gates, for coming before our committee today.
    The first question I have is one that I struggle with 
serving as a new Member on the Science Committee, a new Member 
coming from the great State of Arizona, about I hear my 
colleagues and I had a chance to face these portraits of former 
Chairmen. Several of the portraits that face me have images of 
the Shuttle program or the space program. I happen to be 
married to an astronaut which also makes NASA and the issue of 
the space race that we had with the Russians more relevant 
probably than most people. But even today's testimony when I 
hear the Chairman and also Ranking Member Hall talk about what 
it was like to look up into the sky and see Sputnik or to 
listen to the words of Neil Armstrong walking on the Moon, it 
moved people in a way that I don't think has any comparable 
type of experience in today's world.
    I know what we did here as Americans was something unique, 
and I know that it generated a new generation of engineers and 
scientists and mathematicians, kids that were so inspired. So 
my question to you, Mr. Gates, is what today is comparable? I 
believe it is energy, but sometimes I don't see that transition 
going to kids in terms of kids being excited about solar 
technology, new ways of moving vehicles around, heating and 
cooling our homes; but you know, you have a chance to work with 
a lot of kids, you work in a lot of different countries. What 
is going to be that thing that is really going to make relevant 
a lot of the STEM education focus that we are talking about?
    Mr. Gates. Well, I would think that the direct use of 
advanced technology and the chance to participate in making 
breakthroughs in those technologies is in some ways more 
evident today than ever in the past. You know, if we look at 
the frontiers of science that we have today, teaching computers 
to see, teaching them to hear, the kind of modeling of the 
world that is very important for all the energy challenges we 
face or the kind of software that we need to make in health 
breakthroughs, you know, I think that it is more exciting even 
now that you can say here is what you are learning that will 
help you make an energy breakthrough. You know, you just look 
at one group. If you take blind people--historically, you only 
had access to a few books that many years after they were 
available they were put into Braille. Today because of speech 
synthesis and capabilities that we built into our software, 
blind people can browse the Internet and have the same access 
to information that you have. And to me, you know, there are 
just dozens of examples like that where technologies empower 
people to work in new ways, and in some ways it is less 
abstract even than going to the Moon. You can go and meet those 
people and talk about how their life was changed. Or you can 
look at diseases that we haven't yet conquered and see what 
impact that is having, and clearly by advances in biology and 
information technology are absolutely the reason why we can be 
optimistic that in the next generation whether it is the 
diseases of the poor countries or the diseases that are 
prevalent here, we are very likely to have breakthroughs for 
virtually all of those things.
    Now given that I think there are so many reasons that that 
would draw people into science, I have to admit it is a 
surprise to me how few students choose to pursue the fields.
    Ms. Giffords. To follow up, Mr. Chairman, Mr. Gates, the 
high-tech industry in my State of Arizona depends a lot on our 
ability to recruit and train scientists and mathematicians. In 
terms of exports in the high-tech field, it totaled about 
almost $9 billion in 2006 which was an increase of almost $2 
billion from 2005. We have a lot of high-tech clusters, 
particularly in southern Arizona; and you know, I am personally 
working on the H-1B visa reform because I think that is really 
the key. I think the University of Arizona, Arizona State 
University, Northern Arizona University, we are not producing 
those students. So I ask you because you mentioned in your 
earlier testimony, aggressively, what can our country do to 
compete with other specific nations around the world to make 
sure that we can retain these students who want to come here, 
who are the best and the brightest from wherever they come 
from, and have them be part of this work that we are dedicating 
ourselves to?
    Mr. Gates. Well, there are some things in terms of the 
process that they go through and the uncertainties of the 
process that are daunting to them, but at the end of the day, 
by far, the key thing right now they are being told they cannot 
stay and work here, that is, the backlog on green cards is 
longer than ever, the H-1B visa thing was by far the worst this 
year where in the first day they were all gone. So anybody who 
graduated in June couldn't even be part of the process because 
they didn't have their degree and you have to have your degree 
to get into the pool. I will say that this is an issue that the 
technology industry has a very strong consensus, very clear 
message on. So if you take an employer like Intel who is very 
present in Arizona, they depend at the top of their research 
activity on having the very best scientists. And they are a 
very good example like Microsoft where if they get those, they 
create the manufacturing plants and things that reach out and 
drive fairly substantial numbers that it is easier for them to 
cite those activities here in the United States.
    Chairman Gordon. Thank you, Ms. Giffords. And now our 
resident physicist, Dr. Vern Ehlers is recognized.
    Mr. Ehlers. Thank you, Mr. Chairman. Also I would just like 
to comment. Don't feel too sorry for Arizona. Most of the 
wealthy people in Michigan have moved down to Arizona, and 
clearly we need more help than they do.
    First of all, before I get into my questions, I want to 
thank you for more or less loaning Ms. Stonesifer to the 
Smithsonian Board. She has done yeoman work. You know we have 
had some problems there, and she has done more than any other 
person that I know of in trying to straighten out this problem. 
She is a real gem. I was very sorry to hear that she is leaving 
here for the Foundation. But she is just a marvelous person, 
and I am sure she has served you well there, too.
    I spent most of my life in education. I spent a great deal 
of my life, over 40 years now, trying to improve math and 
science education in this country, both before I got here and 
after I got here. And I very much appreciate your comments 
about scientists and engineers serving as role models. In all 
my speeches to scientific and engineering groups I encourage 
them to visit their nearest school, volunteer to speak to the 
classes, even better, volunteer to take students on a field 
trip through their own laboratories, their workplace, or if 
they are civil engineers, the nearest bridge they are building, 
things like that.
    A hundred years ago, students learned these things on the 
farm. Today they come to school without a lot of practical 
experience, and your comments were right on. The more we can 
get the engineering and scientific communities to interact with 
the students the better. I always enjoy it when I am invited to 
speak to high schools. Most of the students don't know much 
about my background. When I tell them I am a nerd, there is 
some disbelief there until I show them my plastic pocket 
protector, but I also tell them that in high school they have a 
very important choice to make and that choice will determine 
whether they some day will be a nerd in the workplace or 
working for a nerd. And they have to make the choice between 
being one or working for one. That really just tends to wake 
them up a bit to why they should study science in high school.
    I totally agree with the comments you have made, and I hope 
that through your foundation, and you do marvelous work in your 
foundation, that through your foundation we can work together 
on this problem in our elementary and secondary schools. Your 
comments were right on about PISA and what happens there. 
Somehow we have to get the picture changed in America. I find 
it fascinating, for example, that in surveys of parents, 
parents will say, ``Yes, we need better math and science in the 
schools.'' When you ask them about their school that their kids 
are in, they say, ``Oh, our school is fine.'' They just don't 
recognize the depth of the problem. And I would appreciate any 
comments you might have about how we can do a better job of 
waking up America, both the parents and the school boards. The 
teachers in my experience, and I have worked with a lot of 
teachers, I never blame them. They have not had the proper 
education in science or math and have not been taught how to 
teach it properly, but they are very eager to do it and very 
eager to do it well. So here I have concentrated my efforts on 
professional development programs. I would be interested in 
ideas you might have about other ways that either business and 
government together or just government can actively get 
involved with this problem and helping the teachers in 
meaningful ways to help them become better math and science 
teachers.
    Mr. Gates. I think the most stunning data I have seen in 
many years related to education are how the huge difference in 
the very best teachers versus the teachers who don't do as 
well, and the willingness to look at that data and say, okay, 
what is it that those teachers were doing very well, you know, 
what techniques are they practicing versus the other students, 
and some of the assumption that, you know, about okay, it is 
the ones that are certified are going to do better or the ones 
that have been there a long time. Some of those, as you really 
get into the data, you know, some of those assumptions don't 
play out and you really look, okay, what are those differences.
    So I think gathering the data and really looking at who is 
doing well and seeing that students who are far behind, if they 
are lucky enough to have good teachers, they can be brought all 
the way up to be well-above average. The difference of having a 
good teacher is very, very dramatic, and yet, in terms of 
figuring out what those things are and investing in them and 
using data to drive that, I would say we are way behind other 
countries in being able to do that.
    One other comment about Patty Stonesifer, and I appreciate 
your comment, she has done a fantastic job with the Foundation. 
Fortunately she will stay involved in some special initiatives, 
although she will step down after 11 years of being CEO, but 
we'll still have some of her efforts on that.
    Mr. Ehlers. And I appreciate that, and I certainly hope 
your foundation will continue its efforts in math and science 
education as well because government is by its very nature 
limited in what it can do. It can't coerce, it can entice. 
Foundations can do a much better job of coercion.
    Mr. Gates. Our biggest partnerships have been where you get 
one person who is really taking responsibility for improving 
the education system like the Mayor of New York said, okay, he 
will base his record on that or the Mayor of Chicago where you 
have a clear level of responsibility that the right tradeoffs 
are being made. Those are some of the systems where the 
willingness to make tough changes is taking place, and we are 
seeing very, very good results in that type of structure.
    Chairman Gordon. Thank you. Dr. McNerney is recognized for 
five minutes.
    Mr. McNerney. Thank you, Mr. Chairman. You will be glad to 
know that your Members are getting exercise this morning 
running back and forth.
    Thank you, Mr. Gates, for appearing this morning. I want to 
say that I appreciate your innovation, its effect on our nation 
and the world and your generosity both with education and with 
health. One of the things I really am concerned about how to 
inspire the next generation. What do you think the feds should 
do? I mean, some earlier Members talked about the Russian 
satellite and Ms. Giffords asked about the next big thing. What 
do you think we can do as a fed to actually inspire kids to 
take advantage of what education is being offered?
    Mr. Gates. I think with regard to the kids is to have 
teachers who, you know, have proven that they can make the 
subject engaging. You know, that is where you see the big 
difference, you know, does the subject really come to life in a 
very strong way. As you get up to our university systems, there 
the right things are happening, that is, these universities 
compete for talent vigorously with each other, they compete for 
federal research funding, they compete for students; and that 
is why the vibrancy of these top universities has really been 
incredible and such a big asset.
    You don't have--in terms of measurement and that kind of 
competition, you don't have it in other levels of the system. 
And you know, so one of the tools that has been used in many 
states is charter type approaches where you can experiment and 
give teachers some more freedom in terms of how they do things 
and try out new approaches, and you know, that is really a lot 
of where the innovation is coming from, is those new types of 
schools. Still, I am amazed at how the numbers of science and 
engineering are going down, and that is not true in Asia. The 
numbers are going up in Asia, and they are going down 
everywhere else. There is no rich country, assuming you take 
Korea out of the picture that--Europe and the U.S. are 
experiencing the same phenomena of less and less students going 
into science and technology. So there is no simple government--
given the variety of policies that are used, there is no simple 
policy thing that explains that decline.
    Mr. McNerney. I think there has to be some sort of social 
transformation in terms of the way we view engineering and 
science. Anything you can do to help us inspire that generation 
would be very deeply appreciated. I am especially interested in 
your foundation's work to establish STEM education at the 
secondary level. Could you describe the curricula at these 
schools, in particular, what subjects the STEM differs from 
normal schools?
    Mr. Gates. Yeah, there are two things there. One is to take 
curriculum in normal schools and try and make it more 
approachable, and the other is then to actually have specific 
schools that are designed from the beginning to have STEM 
excellence. So there are a number of things. There is a program 
in Ohio, a program in Texas, a lot of these charter schools in 
different cities where they really thematically decide that 
they are going to bring the students into science by using 
projects and that the traditional boundaries of biology is 
different than chemistry is different than math, that they 
break across those boundaries to take some project activity to 
make it clear to the student why they should learn a little bit 
of math or a little bit of chemistry or biology to be able to 
achieve something very interesting. And in the best of these 
schools, the number of kids including women and minorities who 
show an interest in math and science, is more than double what 
we have in the traditional public schools. So there is some 
good data that says by changing the curriculum, you can start 
to take the drop-off in interest which is very pronounced at 
the high-school level and stem that to some degree. Now, there 
is further drop-off when you get up into the university, and 
there are some universities where we are looking at how they do 
the curriculum, and I would say it is the same theme. It is 
more project-based and cutting across the boundaries that have 
existed between the different science subject areas.
    Mr. McNerney. Thank you. I yield back.
    Chairman Gordon. Thank you, Dr. McNerney. And now we turn 
to Dr. Bartlett. You are recognized for five minutes.
    Mr. Bartlett. Thank you very much. In the education area, 
our society faces two huge challenges which you mention. One is 
the quality of education in our K through 12. As you know, our 
third-graders score about even with third-graders around the 
industrialized world, but the longer kids stay in our schools, 
the poorer they do. And so when they graduate from high school, 
they are at the bottom or near the bottom of any industrialized 
nation. And the other huge challenge we face is the challenge 
of getting more of our best and brightest to go into careers in 
science, math, and engineering. Increasingly as I talk to 
audiences and ask our kids what degrees they are going to 
pursue, they are pursuing what I tell them are potentially 
destructive pursuits. They are becoming lawyers and political 
scientists. We have got enough of both of each of those, thank 
you. I think, sir, that both of these maladies are the symptoms 
of a common disease, and that is that as a society gets what it 
appreciates. Our society just does not appreciate academic 
achievement, and as a society, we do not appreciate scientists, 
mathematicians, and engineers. I will believe that this culture 
is changing, and it needs to change, sir. Despite of the best 
efforts of organizations like yours, the culture really needs 
to change, and I will believe it is changing when the White 
House invites academic achievers and scientists, 
mathematicians, and engineers and slobbers all over them the 
way they do entertainers and sports figures. What can we do, 
sir, to change the culture out there?
    Mr. Gates. I still think there is a strong element in the 
culture of this country that is very positive towards science 
and innovators. You know, if you look at the interest in Steve 
Jobs, the work he has done or the work that the guys creating 
Google have done or the work that I and my colleagues have 
done. There is a fascination with science and engineering, and 
you know, certainly the opportunities are pretty vivid. You 
know, even young people get a chance to play around with a 
Windows PC or the different technology advances that have been 
created. So I am not sure that we fail on that front. Yet 
somehow along the way, particularly for women and minorities, 
these science jobs just don't seem as interesting. And there is 
a lot of outreach we do to bring kids in and show them, you 
know, that these are very social jobs, they are very 
interesting jobs that the next several decades will be the most 
interesting. So there is a component of it even knowing that 
the curriculum should be a lot better. There is a component of 
it that is surprising to me. And we did see that during the 
late '90s we had an increase of people going in what some 
people call the Internet bubble, and then as that went away, 
the number of applicants went down quite a bit. If we smooth it 
out and ignore that bulge there, there is a decline that has 
continued. But if you look at the figures going only back to 
2001, you get an even worse impression because there was an 
uptick right before that and then that dropped off a bit. You 
know, maybe some of all the bright minds that are going into 
finance will now go into science and engineering with, you 
know, their bubble perhaps not being as big as it was in the 
past.
    There is an element of this that I do find, you know, 
mysterious because I do think our culture still values 
innovation. Every student understands about the potential for 
breakthroughs in health and breakthroughs in energy and 
breakthroughs in information technology, and so, you know, it 
is surprising that these departments are not overcrowded.
    Mr. Bartlett. You mentioned half or more in all of these 
departments are foreign-born students.
    Mr. Gates. That is right. If anything, the departments go 
overboard to try and keep that number low, but as they are 
bringing in the very best students, they end up with typically 
about 60 percent foreign-born in the top departments.
    Mr. Bartlett. During the decade that we spent putting a man 
on the moon, the imagination of the American people was 
captured and our young people were inspired to go into careers 
in science, math, and engineering. I remember a cartoon that 
showed a red-headed, freckled-faced, buck-toothed kid and he 
said six months ago he couldn't even spell engineer and now I 
are one. What do we need to do to capture the imagination of 
our people again to inspire our young people to go into those 
careers like then?
    Mr. Gates. I think we need to celebrate the achievements 
that we have had. I mean, we are the envy of the world in terms 
of the science that has been done here. We are still far ahead. 
The relative share that we have is going down, but we are in a 
position of great strength. And the magic that we have had that 
other countries haven't achieved is a balance between private 
industry and the universities and funding basic research in the 
universities and then allowing the formation of companies, lots 
of which fail but some of which succeed spectacularly, to be 
well-rewarded, and well-thought of in this country. That idea 
of entrepreneurialism, starting new companies, having new 
venture capital, we are still the envy of the world. Having 
these incredible university departments that need NSF funding 
and various other government science-type funding to stay 
strong, you know, that is a magic formula that others are on 
the way to duplicating, but it is not something that can be 
done overnight.
    And so if we renew our commitment to these things, whether 
it is research funding or the role models, letting the smartest 
people who want to come to this country continue to come here--
there is no era in science where you would say that at least a 
third of what got done got done by foreign-born scientists from 
the creation of medical breakthroughs or the transistor or 
various things. Just think through in your mind who the great 
scientists are and you will realize in many cases, over half 
are foreign-born. So our willingness to let those scientists in 
has been an incredible thing. So I would say that one thing 
that is unique in this era is this idea that it is 
controversial to let smart people come to the country and stay 
and work here. That is really novel. There is no time in our 
history where we have been turning those people away.
    Chairman Gordon. Thank you, Mr. Gates. Dr. Bartlett, your 
time has expired. Mr. Gates, for your information, this 
committee agrees with you in getting the bump in math and 
science in terms of minorities and women. We have passed a 
number of initiatives that do that. We want to continue, and 
that is the best way to grow I think new home grown. Ms. 
Richardson from California is recognized for five minutes.
    Ms. Richardson. Yes, thank you, Mr. Chairman. Good morning, 
Mr. Gates. I am in kind of a unique position in that I have 
only been in Congress about five months, so I am what they call 
a freshman, a newbie here. But I had an opportunity to work for 
Xerox Corporation for about 14 years, and I attribute a lot of 
the way I have been able to approach legislation to that. So I 
admire all the work that you have done.
    I have a couple comments and one question. One, it is noted 
in our information here, your U.S. Libraries Program which I 
commend you for, however, I will tell you district I represent 
in California is Watts, Compton, Long Beach, some very 
challenging communities, and often times we have long waits in 
the library and all of that. And I would say that if we really 
want to reach out to all children, would you be interested in 
maybe considering expanding such a program to our parks? And 
the reason why I say that is a lot of kids tend to go to the 
library. They might be doing their homework or doing some 
research work, but if we want to encourage children to learn 
the innovative aspect side, the exciting side of science and 
engineering, I think that is really a missed opportunity, 
particularly in some of our under-served communities where you 
have some of these facilities and there is absolutely no 
resources there for children. So I wanted to get your thoughts 
on that.
    Mr. Gates. You are saying the parks?
    Ms. Richardson. Yes, parks and recreation.
    Mr. Gates. Well, I think we shouldn't miss any opportunity 
to expose kids to these things. What was done in the libraries, 
it is so impactful that the resources should be made available 
so that kids aren't waiting in line. Access to the Internet 
with a modern personal computer was added to one of the things 
you could think of having at the library. When Microsoft and 
the Foundation started that program, 25 percent of libraries 
had computers; and by the time we were done granting over 
60,000 machines to 11,000 libraries, we got it up to over 95 
percent. The goal is to make it so that any kid could go into 
the library and not have to wait too long. Funding for 
libraries and this kind of technologies often falls off the 
radar screen because libraries are locally funded, and even in 
that budget process, they don't get the attention that they 
deserve. That is a program that has had a huge effect.
    There are things going on to expand it into other community 
centers like Boys and Girls Clubs, and you know, to the degree 
that you have got indoor facilities in the parks, that is 
another perfectly great place that you might have some of the 
equipment and the chance for people to get exposed. So I agree 
with you that we should be creative about finding the places 
where we can create the capacity there.
    I also say, you know, Xerox traditionally did a lot of 
great research that Microsoft and many other companies 
benefited from that, and that is why things like R&D tax 
credits and things that encourage R&D have been great. You 
know, Xerox certainly did its fair share of great R&D 
contribution.
    Ms. Richardson. So, sir, I am just simply suggesting that 
as you go into your second career here that you consider the 
department of parks and recs as well.
    Mr. Gates. Okay.
    Ms. Richardson. My second question to you is regarding 
scholarships. You know, there has been much effort of us saying 
for a student, for example, who decides to go into nursing or 
teaching, that we would consider having a program that would 
provide a full scholarship for those students. Have you had 
much thought about if we were to provide full scholarships to 
students who made a commitment to work in the science and 
engineering field or math, what would you think as a CEO and 
joining other CEOs to make a commitment to help fund such a 
program to provide full scholarships for students who would 
make a two-year, four-year, five-year, whatever commitment 
might be required to engage them to really take on these 
positions?
    Mr. Gates. The Federal Government plays a very strong role 
in terms of helping students be able to afford going to 
universities. The Foundation also has a very significant 
program that is focused on minorities that funds both their 
undergraduate education and then their graduate education if 
they are in a number of these areas related to science, and 
today we have 14,000 students, all minority students, receiving 
those scholarships. So I do think when it comes to women and 
minorities that it is pretty important to have scholarship 
money available to increase the numbers and particularly if 
they saw more scholarship money in these fields, it might be 
the thing that would make the difference.
    I would say overall that in terms of the total numbers in 
the field, it is partly the attractiveness of the field, you 
know, the motivation to go into the field. We also have to work 
on that. So scholarships I think can be helpful, but you know, 
I am not sure that alone would drive the kind of shift in 
attractiveness that we need to see here. I do think it can make 
a big difference in terms of the minority and women percentages 
in these fields.
    Chairman Gordon. Thank you, Ms. Richardson, if it is----
    Ms. Richardson. If I could have a follow-up question?
    Chairman Gordon. Certainly.
    Ms. Richardson. Sir, though, specifically what I am saying 
is it has been said that due to the visa situation, you know, 
corporations, you are spending money on recruitment costs, 
legal costs, administrative costs, et cetera. I would venture 
to say if corporations were willing to put that money into full 
scholarships to ensure that students who came out, they would 
have to have a commitment. It is very similar, for example, 
with the military and other positions. You know, yes, 
excitement is a part of it but pay is also another excitement; 
and I think if students had a guarantee that if I completed 
four years, got a degree, that I would be able to guarantee 
that I could get a job at X company. So I am not necessarily 
referring to just your foundation alone but your thoughts as a 
CEO. Do you think other innovative companies would be 
interested in joining you in making a greater focus in that 
area?
    Mr. Gates. Yeah, okay, but I think broadly, you can't help 
the number of people going into the field but anyone who 
graduates from the top universities with a computer science 
degree has five job offers. Now, the 60 percent that are 
foreign born can't accept their U.S. job offers. But there is 
just no shortage of jobs being offered to these top students in 
the field of computer science. They are, you know, highly, 
highly sought after. So I think in terms of aggregate numbers, 
the United States, to get its relative share, the big lever is 
not saying that the foreign-born students have to leave the 
country. As you get to the broader things, particularly 
minority and women, that is where I think some of these 
scholarship things can come in.
    I don't think we have an issue where people get degrees in 
these fields and then they leave the field. So, you know, they 
would stay in the field so it is not like asking them to work 
in a rural area or you know, volunteer to be a teacher where 
you may need a commitment in order to make sure you are 
achieving your goal. People who are educated in these areas 
then once they graduate from college from these areas, they 
tend to stay in the areas. The drop-off is further down the 
line. Once we get them into the workforce, then we have no 
issue about them staying in the area.
    Chairman Gordon. The gentlelady's time has expired. Ms. 
Biggert is recognized.
    Ms. Biggert. Thank you, Mr. Chairman, and thank you, Mr. 
Gates, for being here because I agree with you on just about 
every point that you have made in your testimony, especially 
with respect to making the R&D tax credit permanent, 
strengthening the science, math, and technology education, and 
increasing the funds for basic research. I want to turn to just 
a little different issue.
    Free trade agreements, such as NAFTA, have been the subject 
of much public debate as of late. Some Members of Congress, 
even some presidential candidates, believe that free trade 
agreements threaten U.S. jobs, domestic manufacturing, and U.S. 
competitiveness, and other Members believe that free trade 
agreements simply open foreign markets to U.S. goods and 
services by bringing down the tariff barriers on U.S. exports 
which leads to job creation, encourage companies to remain in 
the United States, and actually improve U.S. competitiveness. 
And just yesterday in the Chicago--Magazine the CEO of 
Caterpillar said curtailing U.S. free trade policies would be 
cataclysmically bad for the Nation's economy and would derail 
Caterpillar's ambitious sales outlook in the coming years.
    So I would appreciate your opinion, how critical to job 
creation in our nation's competitiveness are free trade, free 
trade agreements, and the opening of foreign markets to the 
U.S. goods and services?
    Mr. Gates. Microsoft is a gigantic net exporter, that is, 
we get the majority of our sales outside the United States, and 
we do the vast majority of all of our work inside the United 
States. And so the openness of markets is actually absolutely 
critical to us in terms of the people we employ. And we are 
expanding our employment in the United States at a very rapid 
rate. The only limit on that is this supply of engineers. If 
the free trade system were not to continue to expand, then that 
would have a very serious effect on Microsoft and other 
businesses that are engaged in international trade. So you 
know, I am very concerned that people not think that free trade 
agreements on balance are a bad thing for this country. In my 
opinion, they are a very, very good thing for this country, and 
you know, I think we need to explain that to the voters because 
you know the biggest winner in the free trade system has been 
the United States and the companies that have been able to lead 
in having much bigger markets than ever before.
    Ms. Biggert. Thank you. And then going back to the R&D tax 
credit, do you have any other ideas or suggestions for the 
private sector incentives to encourage research and 
development?
    Mr. Gates. Well, economists have always known that 
companies have a hard time capturing the full benefit to 
society of the research work they have done, and so that is why 
some basic research needs to be funded by the government, that 
is why having a clear incentive system through patents where 
you are rewarded for the breakthroughs that you make, and some 
tax policies that give an extra incentive for doing research 
and development makes sense. And we see many countries putting 
big investments in making sure that this takes place.
    Some of the trends in terms of research in the United 
States are a bit scary. We are still, compared to other 
countries, in the lead on this, and Microsoft is spending over 
$7 billion in R&D in the next year. We are one of the biggest 
R&D spenders, and we speak very openly about what a great 
investment that has been for us, even the risky research part 
of it and the way we have formed great relationships with the 
top universities so that we are helping to fund their work and 
to the degree they make breakthroughs, we are simply one way 
that they can make sure it gets out there.
    Ms. Biggert. If I might ask then as far as you have 
mentioned the laws in your testimony and providing universities 
and other recipients federal funds, but I think that these laws 
have been very successful, except maybe not so much in the case 
of energy and energy technologies, and I wonder if you have any 
suggestions for us to help to move new advanced energy 
technologies out of the lab and into the market. Maybe your 
foundation will take up the issue of energy.
    Mr. Gates. Well, the energy is a very exciting area, and 
there is starting to be a shift of a lot of bright people 
working on the energy field. There are some aspects of energy 
that you need that are so difficult and so long-term, you can't 
expect the private sector by itself to totally solve the 
problem. If you look at new approaches to nuclear, if you look 
at something like geothermal, some of these areas the private 
sector is not going to step in. We are in a fairly ironic 
situation right now with respect to the incentives. Many of the 
incentives are only short-term in nature. If you want big 
breakthroughs, the last thing you want is a short-term 
incentive. And so the way that some things are subsidized right 
now are probably not the most efficient use of dollars to cause 
these energy changes to take place, and that is a very urgent 
thing. I think we can get across the various possibilities of 
where a breakthrough can take place. The United States can do a 
much better job spreading out the energy research dollars.
    Ms. Biggert. Thank you. I yield back.
    Chairman Gordon. The gentlelady's time has expired. Mr. 
Gates, one common denominator today has been talking about 
additional funding of R&D, so we are going to let you have a 
chance to talk directly with one of the check writers now, Mr. 
Rothman, a Member of the Appropriations Committee from New 
Jersey is recognized for five minutes.
    Mr. Rothman. Fortunately, it is not a personal checkbook. 
Those projects wouldn't go very far. I happen to serve on the 
Committee that writes the checks with the taxpayers' money.
    Firstly, thank you, Mr. Gates, for being here. Secondly, 
thank you for creating a great American company. And finally, 
thank you for your work and your wife's work in the Foundation 
and being so conscientious in your philanthropy. You are a role 
model for anybody who has done reasonably well and for the rest 
of us as well.
    For better or worse, Mr. Gates, it appears that the H-1B 
visa debate is part of the whole immigration debate in America, 
and so I would be interested in your thoughts as to whether, 
for example, there should be any limits on the numbers of H-1B 
visas issued or permanent resident status granted, any limits 
at all. And I am being a little bit facetious but I would love 
to just plumb the depths of your thinking on this, do we give 
them an IQ test before we cut them off and what about 
immigration limits as a whole? Do you have views for example as 
to whether there should be any quotas for anyone who wants to 
come into the United States from any country regardless of 
their IQ or educational achievement?
    Mr. Gates. Well, first in terms of writing checks, you 
know, I have personally written over $5 billion of tax checks 
to the United States Government. So maybe that is one of the 
sources of----
    Mr. Rothman. I am glad you could afford to pay the tax.
    Mr. Gates.--revenue but I don't begrudge it in any way. I 
am glad you are all working hard to make sure it is well-spent.
    In terms of the H-1B visa issue, the key focus that 
Microsoft has here is on highly skilled people, and we are 
talking about jobs that, you know, the starting salary is if 
you include benefits over $100,000 a year. And the policy that 
Canada for example has says that if a company is offering 
somebody a job at that type of salary level, then they will 
facilitate the person coming into the country. I would also 
suggest that if somebody is educated in a U.S. university that 
because of the research funding that comes out of the 
government, you know, you have basically subsidized that 
education. I think that there should be a direct path to 
permanent residency for----
    Mr. Rothman. I don't have much time.
    Mr. Gates. Sorry.
    Mr. Rothman. On my question though, sir, should there be 
any limits on H-1B visas and should there be limits on 
immigration from any country regardless of IQ or educational 
achievement by the applicant?
    Mr. Gates. The position Microsoft takes is really focused 
on a very highly qualified set of people, but the numbers in 
total wouldn't make a huge difference in terms of the overall 
immigration thing. And so Microsoft doesn't take a position on 
the broad issue. On the broad issue, you know, I happen to 
think that immigration has been a great thing for the country 
and that if you look at lots of rich countries, they are facing 
overall population declines. This country is one of the few 
that because of immigration, the population will grow. I don't 
know what it would be like if you didn't have limits. There may 
need to be limits. I am not an expert on that.
    Mr. Rothman. Forgive me. I apologize. I have one more 
question.
    Mr. Gates. Yeah, go ahead.
    Mr. Rothman. I am a father of a bunch of teenagers, and I 
have to ask this question. I know that there is a different 
kind of socialization that occurs now on the web and with 
computers, and I understand the arguments about the value of 
them and there are great advances in that regard. Are there any 
cautionary tales for us from you--you are a father as well--
about how best to get the best out of the Internet yet not have 
sacrificed something that is human or makes us human or 
enhances the best of our humanness?
    Mr. Gates. Whenever new technologies come along, parents 
have a legitimate concern about how it is being used and the 
Internet would be high on the list there. My oldest is 11, so 
we haven't quite gotten into the toughest years in terms of 
having, you know, Facebook accounts and spending massive 
amounts of time instant messaging. But I am sure that is ahead. 
We have tended to keep our computers at home out in the open so 
that as the kids are doing things on the computer they know we 
are going to be walking by at any point, and by doing it that 
way we have avoided having to have much in the way of hard 
limits, either in terms of time or specific things. We are just 
all involved in seeing what is going on and talking about what 
those things are.
    There definitely are things where parents need to stay 
involved in understanding how their kids are spending their 
time, including their time on the Internet. There are some 
amazing things out there in terms of courses and material, but 
I also think that there can be misuses in terms of how 
information is shared and how the kid is prioritizing their 
time. That is why I am going to always have an awareness of 
what my kids are doing using these tools.
    Mr. Rothman. Thank you, sir.
    Chairman Gordon. The gentleman's time has expired. Mr. 
Gates, you are my test pilot. I hope your 11 year-old--you can 
figure it out there so you can tell us what to do with our 
seven-year-old when that time comes. Mr. Reichert from 
Washington State is recognized for five minutes.
    Mr. Reichert. Thank you, Mr. Chairman. One of the problems 
with being one of the last Members to ask a question is that a 
lot of the questions have already been asked. So I have a 
couple of follow-up questions, one, a follow-up to Ms. 
Biggert's question about the importance of the global economy, 
and our global markets that we compete in. What impact does our 
corporate tax rate have on American companies as they compete 
across the world?
    Mr. Gates. It is important to look at how our tax policies 
are influencing corporate behavior. In the case of Microsoft, 
to the degree we can hire engineers here, and we can still hire 
a lot, not enough, you know, over all on balance, we prefer to 
do our R&D here and that is despite the fact that there is very 
attractive tax advantages that are being offered in other 
places, that is, even though the taxes are higher here, they 
are still within the range of what is reasonable given the 
other benefits that are provided. On tax policy, R&D tax credit 
would be a very top priority to make sure that other countries 
aren't getting ahead of us too much in terms of the generosity 
they provide in that area.
    So tax policy does make a difference, but you know, 
companies will--you won't immediately just go to a place that 
is more advantageous. You will make a comparison. The United 
States still has a lot of things that are very much in its 
favor.
    Mr. Reichert. Here may also be another follow-up question 
that I think has been touched on lightly as I bounced in and 
out of the hearing here. But you stated in your testimony the 
public and private sectors are no longer investing in basic 
research and development to the levels needed to drive long-
term innovation. Why is the private sector no longer investing 
at the levels that it should be in your opinion?
    Mr. Gates. Well, some of the investment that came out of 
the private sector came out of what I call the semiprivate 
sector, that is, AT&T through Bell Laboratories was a highly 
regulated business; and one of the things they sort of did in 
return was do a lot of research that they weren't receiving 
direct economic return for but it was one of their great 
contributions to the country and to the world, and as they 
became a more typical private company as it was broken up into 
various pieces, the liberty they had to take profits and fund 
research largely went away. So the net R&D spending coming out 
the antecedents of what was the Bell system, is quite a bit 
less than it was in the past. There are also cases of companies 
like Xerox who weren't quite as adept at taking their research 
work and themselves benefiting from it by productizing it the 
way that they had expected. And so that was a cautionary tale. 
And in fact, when Microsoft 15 years ago started really going 
into this peer research area, we wanted to make sure we were 
going to not only benefit society but also be able to get those 
products out. You know, I can say that that has worked 
extremely well for us and we are a big advocate when talking 
with private companies that there are ways of running a 
research budget that means that you get very, very high returns 
from that work. You know, just last week we had Tech Fest where 
our researchers show their work and all our engineers go and 
look at it, and that is really the most fun thing during the 
entire year is to see that new research work.
    So there are methods, best practices, that the private 
sector needs to spread that will build the confidence that 
those investments are well worth making.
    Mr. Reichert. And you are one of those companies that have 
succeeded at that, and you are sharing your thoughts, ideas, 
and experience. Are there other companies doing the same thing, 
sharing that information with others?
    Mr. Gates. Yes, well, another sector that has been 
incredibly R&D intensive is the drug industry, and you know, 
they are of course facing some challenges in terms of the 
number of breakthrough new advances they have made. So now they 
are looking at the cost of R&D for their new products as being 
very, very high. And so hopefully we will get into a period 
that other advances and the encouragement they are giving will 
get them back into increasing their R&D budget. But if you look 
at the various sectors, a sector that has been huge which is 
that sector, that is at risk now because of a variety of things 
that don't make it look as attractive to them.
    Chairman Gordon. The gentleman's time has expired. Mr. 
Neugebauer is acquiescing, and I am sure Mr. Hall will agree, 
what I would like to do is ask the next questioners to try to 
limit themselves to one question, so take your best shot so 
that everybody can be able to participate today.
    Mr. Carnahan from Missouri is recognized for one question 
or statement.
    Mr. Carnahan. Thank you again for being here on this 50th 
anniversary of the Committee. You really outlined well in your 
remarks talking about the last 50 years and the revolutionary 
advances that have been made and how we have built on those so 
well. I would like you to look ahead at the next 50 years when 
we have the 100th anniversary of this committee and our 
grandkids or kids being born today are sitting on this 
committee. What do you think are going to be some of the most 
profound changes in the way we live and work and how technology 
is going to affect that?
    Mr. Gates. Well, 50 years is a long period of time in the 
world of technology, particularly given that we have an 
accelerating rate of innovation. So it is not just that we will 
take what we have done in the last 50 years and do the same. 
The world at large will do far more. And so you would find me 
quite optimistic that the breakthroughs that will allow us to 
have energy that is both cheaper and environmentally friendly, 
that those breakthroughs will come; and in fact, there are many 
approaches that already we can see there is a good chance that 
the advances will be there. Information technology, the ability 
to have computers that are very easy to work with and almost so 
pervasive we take them for granted would be quite phenomenal. 
The breakthroughs in diseases, you know, even in the next 20 
years I would expect breakthroughs for the major killers around 
the world.
    So, you know, this is an amazing time, the kind of spirit 
that got this committee started, people like Vanover Bush who 
talked about the endless frontier. I wouldn't go back and 
change anything that he wrote when he talked about the advances 
and how government encouraging science will be at the center of 
those. Fifty years from now the United States may not have the 
same relative share of innovation it has today, but with the 
right policies, we can have the leading share, even if you go 
out into a long timeframe like that, which is pretty phenomenal 
given that we have five percent of the world's population that, 
you know, we have, however you measure it, over 50 percent of 
the innovation that has taken place. I think if we renew our 
strengths that that same time of preeminent position is not 
impossible for us to maintain.
    Chairman Gordon. Thank you, Mr. Carnahan. I suspect that 
the new 50 years will be 10 years, and many of us on this 
committee will be here and if we are going to be successful, we 
need to do our part. Mr. Hall has assured us that he will be 
here. Dr. Gingrey, you are recognized.
    Mr. Gingrey. Mr. Gates, thank you so much for being with 
us, and in the information that we receive from the Committee 
basically said that you were going to be here this morning to 
share your thoughts on efforts needed to further strengthen our 
country's competitiveness in the global marketplace. You spent 
the last hour-and-a-half I think doing a pretty good job of 
that, but I have concerns, and the entire Committee does about 
the lack of STEM education in our country. You see when you 
read a local newspaper, as I often do, I am a former public 
school board chairman in Marietta, Georgia, and every year they 
have the star students of all the high schools that have the 
best scores on the SAT and their respective teacher that they 
give most of the credit to. But when you look at those names, 
and we are talking about in maybe 30 high schools in that area, 
you see a lot of Asian and Indian names. And it seems like 
every year it is more and more, a greater percentage; and 
obviously, youngsters that look like me are not as I did going 
onto Georgia Tech and majoring in chemistry and pure science 
and becoming one of our great engineers working on the space 
program or whatever. So I have some real concerns about that. I 
don't know what to do about it, but maybe you can share your 
thoughts on that particular point.
    But let me just cut right to the chase by asking this 
question regarding H-1B visas because we talked about that a 
lot this morning. Do you believe that an increase in the H-1B 
visa program, more, a greater number of them, increase in the 
volume then of foreign labor in STEM fields could have the 
unintended consequence of deterring American students in those 
same fields from pursuing STEM education and then ultimately 
getting those highly skilled jobs because that is exactly what 
the problem is as I see it. My friend from New Jersey brought 
that up in a more broad way in regard to overall immigration 
quotas. But we are talking now about H-1B and also the J-1 visa 
program when we bring college students from Serbia to play 
basketball or from Sweden to play tennis so that our college 
teams can win the NCAA championships and you cut out the little 
kids that look like me that have been taking tennis lessons all 
those years and are just one little step below in our ability 
level. So this is a real concern, if we expand this program so 
much, then do our youngsters say, you know, we don't have a 
grasp at the golden ring. Thank you.
    Mr. Gates. Our youngsters are competing with these 
students, even if we turn them away from this country, that is, 
no policy related to H-1B will impact the percentage of foreign 
labor that works in computer science. All it will affect is 
what portion of that is done in the United States and where the 
surrounding jobs are created. So if the goal is to have a 
series of medals or awards that are just about the best in the 
United States, yes, you know, shut down immigration. You should 
have shut it down in 1900. I mean, immigrant families have been 
achieving very well in this country for a long, long, long 
time. That has always been a controversial thing, but computer 
science is not a game played only in the United States. It is 
not like a local competition. It is more like the Olympics 
where at the end of the day you are going to compete with the 
best in the world, and the question is, you know, is that 
happening in the United States.
    Chairman Gordon. Thank you. Mr. Chandler is recognized for 
one question.
    Mr. Chandler. Thank you, Mr. Chairman. Mr. Gates, thank you 
for taking these incoming missiles. Also thank you very much 
for what you do and have done for our schools and what you are 
doing in particular for our high schools. I am a little bit 
ahead of both you and our Chairman. I have a 14-year-old 
daughter who is a freshman in high school, and I can tell you 
the issues are already there for me. So I will let you know.
    Mr. Gates. Great.
    Mr. Chandler. I have got a bill that calls for significant 
federal investment in the infrastructure, first the physical 
plants of our schools in this country, but also calls for 
significant investment in technology infrastructure and in 
training for technology. I would like to get your idea on where 
we need to go in that area. Do you have a sense of how much 
investment we need to make in our schools in this country in 
those areas and do you believe that the government needs to 
make a much more significant investment? Thank you.
    Mr. Gates. Computers in schools and technology training, 
that is going up at a pretty rapid rate. And there are 
certainly some best practices that more funding would help 
spread more rapidly, and we are involved in a so-called School 
of the Future where a group in Philadelphia came to Microsoft 
and asked about some ideas of how technology could be used. And 
what they did was quite impressive. You know, we were just 
there in terms of providing advice, but I know a number of high 
schools around the country are looking at some of those same 
things. When you get a chance to do new infrastructure, you can 
do something quite spectacular as a result of that.
    In terms of requirements in high school, you know, there is 
already a lot of controversy over a push that really is one of 
the foundations behind that that encourages states to move away 
from simply asking for two years of math to move up to three or 
four years of math. There actually has been good progress in 
that regard, and that is another contrast you will see between 
the United States and these countries that score well on the 
PISA exam is that all the ones that do well require four years 
of mathematics as part of the high school education. Some of 
the States push back on that because of the shortage of 
teachers and that then comes back into these issues of how do 
you measure teachers and particularly for the math and science 
shortage, how do you alleviate that problem that is coming 
along.
    So I do think funding the teachers to get trained on 
technology and technology in the schools is a very important 
thing. I don't think we at this point need to add specific 
requirements for technology training because I think if we 
train the teachers the right way, they will be bringing that in 
to all the different subject matter that they teach.
    Chairman Gordon. The gentleman's time has expired. One more 
nervous father. Mr. McCaul is recognized for what I am sorry to 
say will be our last question to meet our agreement.
    Mr. McCaul. Thank you, Mr. Gates, for being here. I have 
five kids, three are triplets and they are six years old. It is 
great to have you here. Michael Dell is actually one of my 
constituents, probably my most famous constituent. I know you 
are good friends. Thank you for the work you do in education 
with him in his foundation. I also represent UT. I got a tour 
of the Pickle Center where the largest supercomputer was 
unveiled about two weeks ago through an NSF grant. So it is 
extraordinary technology.
    I just wanted to focus on two areas I know we covered to 
some extent, but when I see the students at the University of 
Texas building the computer chips and other things, then when I 
found out after we invest and train in them we lose them and 
they go back to where they came from, usually China or Asia and 
work for our competitor. That seems to be a failed policy in my 
view, and that is one reason why I have cosponsored raising the 
cap on H-1B visas. We are looking at a bill to issue green 
cards to Ph.D.s, graduates with a Ph.D. Obviously, we would 
like to have more home-grown talent, but we are losing that as 
you have talked about. If you could, and this is a broad 
question, but in terms of prioritizing federal funding, that is 
what we have to do. We have limited federal dollars. Where do 
we need to be really focusing that money, both from an 
education standpoint and R&D standpoint?
    Mr. Gates. Yeah, I appreciate your points on H-1B and your 
support on those issues. I just really highlight how urgent 
this issue is, whether it is short-term relief or long-term 
relief. This is making a big difference in terms of where jobs 
are created. And if you want to grow the pie, you know, how 
many taxpayer dollars to have, these are the types of people 
and jobs that really do add to that and ideally allow the 
virtual cycle, the government funds the universities, the 
universities train the great people that go out into companies 
and get money back to you that in some form gets to those 
universities. That is that magic cycle that we have had. I was 
just in Austin a couple weeks ago visiting and seeing the great 
work they do there, including some particularly good things to 
encourage Hispanics to come into computer science where they 
have done amongst the best.
    Where do federal dollars have the biggest impact? I do 
think the NSF budget. It is not actually a very gigantic 
budget, but those dollars are very impactful and so if COMPETES 
was appropriated over these next seven years, we would get as a 
country a very good return on the increase that goes into that 
amount of money. I often think if you said, okay, take 
something like energy. So you fund you know currently using 
something that is not economic and so you subsidize it versus 
fund research to make it, and it won't be overnight but to make 
it over time economic, the benefit is so dramatically in favor 
of funding the research to make it economic versus subsidizing 
the consumption of the thing that is not economic. I mean, you 
could take you know, not even a huge percentage of those 
dollars and get some I think impactful research funding.
    So the theme that research is where it is at and that has 
been successful for the United States, you looked at health and 
the exploding health costs, how do you deal with that, 
research. You look at energy and the challenges there, and you 
come back to research. And fortunately the ability to funnel it 
through the universities that spend it very well, particularly 
if they have these talented people from all over the world 
engaged in their activities, that is I think the clearest use 
of federal dollars.
    Chairman Gordon. Regretfully I have to say that the 
gentleman's time has expired. Let me also apologize to those 
Members that did not have a chance to directly ask a question 
today, but the record will continue to be open for statements 
or questions that you might like to have. I thank Mr. Gates, we 
very much appreciate you being here. I think your concluding 
statement is a summary for all of us, and that is, if you look 
at the major issues today before us, whether it is 
competitiveness, health, energy independence, we have to have a 
technological bump. You know, more of the same is not enough. 
Incremental change is not enough. We are going to have to 
invest in R&D and get that bump.
    Thank you for being here, and this hearing is closed.
    Mr. Gates. Thank you.
    [Whereupon, at 12:05 p.m., the Committee was adjourned.]

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