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[Senate Hearing 109-290]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-290
 
                   INNOVATION IN ENERGY TECHNOLOGIES

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   TO

 CONSIDER OUR NATIONAL CAPACITY FOR PRODUCING TECHNOLOGICAL INNOVATION 
     AND THE IMPORTANCE OF THIS INNOVATION TO OUR GLOBAL ECONOMIC 
 COMPETITIVENESS; AND TO RECEIVE TESTIMONY DESCRIBING THE RESULTS OF A 
         RECENTLY RELEASED NATIONAL ACADEMY OF SCIENCES REPORT

                               __________

                            OCTOBER 18, 2005

                       Printed for the use of the
               Committee on Energy and Natural Resources

                                 _____

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26-253                 WASHINGTON : 2006
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For sale by the Superintendent of Documents, U.S. Government 
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho                JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee           BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
RICHARD M. BURR, North Carolina,     TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida                MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri            DIANNE FEINSTEIN, California
CONRAD BURNS, Montana                MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               JON S. CORZINE, New Jersey
GORDON SMITH, Oregon                 KEN SALAZAR, Colorado
JIM BUNNING, Kentucky

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
                  Bob Simon, Democratic Staff Director
                  Sam Fowler, Democratic Chief Counsel
                Kathryn Clay, Professional Staff Member
                  Jonathan Epstein, Legislative Fellow

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Alexander, Hon. Lamar, U.S. Senator from Tennessee...............     4
Augustine, Norman R., Retired Chairman and CEO, Lockheed Martin 
  Corporation....................................................     9
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     3
Cicerone, Ralph J., President, National Academy of Sciences, and 
  Chair, National Research Council...............................     7
Corzine, Hon. Jon S., U.S. Senator from New Jersey...............     2
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1

                   INNOVATION IN ENERGY TECHNOLOGIES

                              ----------                              

                       TUESDAY, OCTOBER 18, 2005

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 3:35 p.m., in 
room SD-366, Dirksen Senate Office Building, Hon. Pete V. 
Domenici, chairman, presiding.

          OPENING STATEMENT OF HON. PETE V. DOMENICI, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. Why don't our two witnesses come up, please?
    This will not be our last hearing, but it will be the kick-
off hearing. So we are starting today with Dr. Ralph Cicerone. 
I think I have met you before. Nice to see you again. And Norm 
Augustine.
    Each of us are going to make a statement, because the two 
Senators, the one on my left and the one on my right, have been 
asked to do this. They have both been working on it. I will let 
both of them comment. Normally that does not happen, but we are 
going to do that today.
    I am concerned, as you are and everyone here on this 
committee, about the United States' competitiveness in relation 
to some of the other economies around the world. This committee 
gets involved in those issues as we follow the enormous energy 
and resource requirements of China and India, but many of the 
signals that we have put forth pose a problem. Clearly some of 
them go back, in my case, to the budget days and the Budget 
Committee.
    I worry about the impact of competitiveness on our ability 
to afford many of the social programs that are very 
significant, like Medicare, Medicaid and Social Security. I 
worry about the lack of competitiveness and its effect on the 
balance of trade and the value of the dollar against foreign 
countries and currencies.
    There are areas in which the United States seems to be the 
world leader in research and development, certainly in health 
care and medicine. Those come to my mind right off the bat. 
However, it does seem that our preeminence in the physical 
sciences is simply no longer there.
    It seems that the very complex science issue is difficult 
for our government to manage and to put our arms around. The 
pursuit of scientific knowledge is frequently a wandering path. 
I know of technology developed in the nuclear weapons program 
being used to fight diabetes, for example.
    Government has a hard time managing these sorts of things 
that shift from application to application across programs and 
across agencies, but it does not mean that they should be 
avoided. We do need a major increase and new direction in the 
physical science programs of our country.
    There is a lot in this report that I am especially 
intrigued by. It is a notion of goal-setting to orient our 
efforts, as you have proposed and discussed, by declaring an 
intent to address the Nation's need for affordable, reliable 
energy, which you have not yet recommended. Clearly it seems to 
me that in the past, goals have been terrific promoters and 
pushers of science advancement. You know better than I what 
those are, both of you.
    It is a significant goal and it might well require what you 
have proposed. That is a new investment of about $10 billion 
each year for scholarships and other investments. You have 
indicated a 10 percent increase in basic research funding each 
year for at least 7 years. Some people think that is way out of 
line, but just look at what we have done for far less important 
things, objectives, and goals.
    So I am going to stay on this thought of energy 
independence for the moment. I have never thought that that was 
possible, but I do believe that, if pressed, we could find some 
way to generate all the energy we need. This challenge is ``at 
what cost'' and how the experts will tell us we will get there. 
It is not in the interest of our economy to generate domestic 
energy that imposes higher energy costs which are too hard and 
too high for our economy to be able to compete in the world. So 
the challenges for this goal are real.
    But let us say we can produce all the energy domestically 
and cheaper than we can buy it now. I do not think we are ever 
going to get there unless we do something like you are talking 
about. So, as chairman of this committee, I am very 
enthusiastic.
    I want to close by saying, to you and those who have helped 
you, one of our government's problems is when we got to funding 
medical research, that was an entity, the National Institutes 
of Health. One just started a resolution and said, let us 
double the funding of the National Institutes of Health. Then 
that is passed to each of the institutes. Basic research is not 
funded that way. You both know that. It is anywhere, 
everywhere, not in the right places. Too much in some places. 
But if you try to say, let us double it, we would not know what 
to double. So, it is not going to be easy, and your 
recommendations cross committee lines. But nonetheless, we know 
about it and we ought to move ahead.
    Senator Bingaman, thanks for your work and for your 
suggestions. Would you give us your opening statement? Then 
Senator Alexander, and then we will proceed. Thank you again to 
both of you.
    [The prepared statement of Senator Corzine follows:]
Prepared Statement of Hon. Jon S. Corzine, U.S. Senator From New Jersey
    Mr. Chairman, I first would like to thank you for holding this 
hearing. I also would like to commend Senator Bingaman and Senator 
Alexander, who asked the National Academy of Sciences to compile the 
report are reviewing. They deserve admiration and respect for their 
vision and dedication on this important issue. I also would like to 
thank the members of the Committee on Prospering in the Global Economy 
of the 21st Century. Few other committees have benefited from the 
breadth of expertise exhibited by its members. They have produced a 
report of special significance, and we should all pay careful attention 
to their recommendations.
    The committee identified two challenges that are linked to 
scientific and engineering capability: The creation of high quality 
jobs for Americans and the response to the nation's need for clean, 
affordable, and reliable energy. I will address the latter first. The 
need for America to reduce its dependence on foreign sources of energy 
is inexorably linked with the need for domestic innovation regarding 
our use and consumption of natural resources. I have long been an 
advocate for alternate sources of energy, and I believe that the 
development of such sources can be achieved through domestic 
innovation. We cannot simply drill ourselves out of our dependence on 
foreign oil. A diversification of our energy portfolio, founded in 
scientific innovation, can wean us from our oil addiction. A prime 
example of this innovation can be found in increasing fuel efficiency 
standards. The Energy Bill that recently passed, which I voted against, 
did not include any provisions that would improve automobile fuel 
economy, which could reduce the share of foreign oil that we consume by 
more than ten percent. These programs, which encourage forward looking 
innovation instead of maintaining the status quo, should be pursued 
more vigorously.
    The task of creating high quality jobs for Americans should also be 
considered seriously. Though we currently lead the world in economic 
strength, this lead is not sustainable if we merely stay on the course. 
America's domestic innovation, the bedrock of our economic strength, 
needs to be fortified. The question will require a cohesive and 
deliberate policy, aimed to help the United States achieve prosperity 
in the 21st Century. Such a policy must be multifaceted and farsighted. 
I am heartened that the committee has suggested we strengthen our 
science and engineering education system at all levels. We must educate 
the next generation of scientists and engineers by providing them with 
opportunities and incentives to excel. Cutting the budgets for these 
vital education programs not only hurts the individual student, but 
also hinders the prospects for American technological ingenuity in the 
future. Furthermore, we must continue to support our budding scientists 
at the college and post graduate levels. In 2004, China graduated over 
600,000 engineers, India 350,000, and America about 70,000. In 
addition, 12th graders in the United States recently performed below 
the international average for 21 countries on a test of general 
knowledge of science and math. All of us should pay close attention to 
the disturbing statistics included in this report. Not only do these 
finding highlight the poor overall education of our students, they also 
point to cracks in the long-term sustainability of America's leadership 
in these important fields. Establishing incentives for high school and 
college students to study science and engineering will increase the 
pool of talented scientists for both the private and public sector. 
Increasing the amount and size of scholarships will certainly help this 
effort. One particular program, the Math and Science Partnership 
Initiative, would increase funding for long term professional 
development for the country's teachers and for developing more rigorous 
math and science curricula. I have been a proud supporter of this 
program since the beginning of my tenure in the Senate, and believe 
that such programs will help alleviate the deficiencies we now see in 
the math and science education of America's students.
    I also heartily agree with another tangential conclusion of this 
report; the federal government can actively work with state and local 
governments for educating and stimulating our globally competitive 
workforce. I have been extremely active in ensuring that my state 
remains competitive in the global economy by encouraging high tech 
industries to do business in New Jersey. The foundations of these 
chemical, pharmaceutical, and defense companies are its scientists and 
engineers. We should ensure that we continue to support the homegrown 
innovation of these workers.
    Historians have often called the 20th century ``America's 
Century.'' Indeed, during the last century the U.S. shaped the global 
landscape, leading innovation and ensuring its domestic economic 
prosperity. It will not be easy, but the vision that our elected 
leaders show at the beginning of the 21st century will have momentous 
consequences in the coming years. The report by the National Academies 
should be studied closely and its advice taken seriously in any future 
legislation. I again thank the Chairman and Ranking Member for allowing 
this Committee the chance to hear from these witnesses before us about 
this crucial topic and I look forward to their testimonies.

         STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR 
                        FROM NEW MEXICO

    Senator Bingaman. Yes, thank you, Mr. Chairman. Let me 
thank Senator Alexander for his leadership in getting us 
focused on this issue and thank both of our witnesses and the 
panel members that worked with them. We had a stellar group of 
experts really who came together to reach these conclusions and 
recommendations.
    Obviously, the specific recommendations are extremely 
important and we need to take them to heart and we need to 
implement, but I also think that this report is serving a very 
useful purpose in getting us focused on the important challenge 
we face long-term. I do think that we have a great tendency 
here in official Washington to wake up every morning and read 
the paper to see what we ought to be working on that day, and 
that is sort of the way we set the agenda around this place. We 
see who is saying what and who is attacking whom and then what 
investigations are revealing, and then decide what we ought to 
work on.
    This is a set of issues that are extremely important, 
probably as important as any that we could identify for the 
country. But since they do not fall under the category of being 
on the front page of the paper every day, we do not ever get 
around to them. We always put them off and put them off and 
give them lower priority attention than they deserve.
    So you deserve great credit for getting us focused on these 
issues again and I look forward to your testimony and then to 
additional opportunities, as we go through the next few months, 
to highlight what your recommendations are and hopefully get 
the administration and the Congress to embrace these 
recommendations and actually move out on them.
    Thank you again, Mr. Chairman.
    The Chairman. Thank you, Senator Bingaman.
    Senator Alexander.

        STATEMENT OF HON. LAMAR ALEXANDER U.S. SENATOR 
                         FROM TENNESSEE

    Senator Alexander. Thanks, Mr. Chairman.
    I am really enormously pleased with what is happening here. 
I am the new kid on the block, and I enjoy being that at my age 
on any block. Senators Domenici and Bingaman have been working 
on this subject a long time. So has Senator Craig. So have many 
other Senators. But I have been working on it outside the 
Senate, and so I am delighted that Senator Domenici has chosen 
to encourage making this a priority of the U.S. Senate, not 
just of our committee, but of our Senate, as we work on it.
    And it is already receiving, Mr. Chairman, more good 
comments among our colleagues than almost anything I have been 
involved in. Senator Mikulski and Senator Bond, for example, 
who have been interested in this subject, came up to me today 
and said, count me in. So I believe there is a consensus among 
the Senators that this is a subject matter that we should make 
a top priority.
    As I have often said, most ideas in Washington fail for 
lack of the idea. What you gentlemen and your colleagues have 
done is given us the idea of what we ought to be doing for the 
next 10 years. If you stop and think of it, Senator Bingaman 
and I last May simply did a very simple thing. We walked over 
to the people who are supposed to know the answer and asked a 
question. The question was: What are the top actions in 
priority order that Federal policymakers could take over the 
next decade to help the United States keep our advantage in 
science and technology?
    Now, we could have sat around the room and Senator Domenici 
would have said, well, let us do this, and I would have said 
that, and Craig would have said that. They might have been good 
ideas, but we are not the ones who ought to know the answer to 
the question.
    And your response has really been remarkable. The fact that 
the National Academies of Engineering, of Sciences, and the 
Institute of Medicine would ask someone of Mr. Augustine's 
stature then to assemble, Mr. Chairman, in a short time, a 
matter of a few weeks, such a distinguished panel of university 
presidents and other academics, Nobel laureates, business 
leaders, government officials, and answer our questions. These 
are 10 things the United States ought to do to keep its secret 
weapon, which is brain power.
    And you reminded us that 85 percent of the increase in our 
incomes in this country of ours has come from science and 
technology. I would like to remind us of how fortunate we are. 
I mean, we are 5 percent of the people in the world, and we 
produce about a third of all the money, compared to the gross 
domestic product. What we are focused on today is the secret 
weapon for our high standard of living and good jobs, and that 
is brain power, and what should we do over the next 10 years 
about brain power.
    Mr. Chairman, I want to put my statement in the record, if 
I may, but I would like to say one or two more things from it, 
just as a matter of example.
    You took our question seriously. And speaking as one 
Senator--and I believe there are many who feel the same way--I 
am going to take your recommendations seriously and work 
through the various committees and with Chairman Domenici and 
others to do our best on them.
    Next, I think it is important to remember that this great 
advantage we have did not happen by accident. We have the best 
universities. We have this array of 36 Federal research 
laboratories. We have had, at least until recently, the best K-
12 system. We poured Federal Government money into all this, 
$22.5 billion for university-based research in science and 
engineering. 60 percent of our college students attend college 
with Federal grants or loans, $52 billion of Federal student 
loans.
    While we have been outsourcing jobs, we have been 
insourcing brains. 572,000 foreign students attend our colleges 
and universities here. Your report addresses that.
    So we have asked the right people, the people who ought to 
know the answer. You have given us the answer and now it is 
down to us.
    I suppose the other thing I would want to say is this. 
Someone says to me, well, where is the money going to come from 
for this? Well, we have a budget of over $2 trillion every 
year. I have made budgets before. They have been a lot smaller. 
I was Governor and I always started by putting the most 
important thing in first, and then everything else, Mr. 
Chairman. You have been a budget chairman for a long time. 
Everything else comes in after that.
    Well, I think if we can have a consensus about what the 
most important things we need to do are to keep this astounding 
standard of living we have, that we ought to say to the 
President, put it in first. And then we will have a restrained 
spending budget over the next few years.
    Now, my hope is not just that Chairman Domenici and Senator 
Bingaman and others of the senior members of the Senate get 
interested in this. I want the President to get interested. It 
is hard for us to organize ourselves around an agenda. We are 
legislators. This really cries out for executive action. I 
would hope that your report would be the subject of the 
President's State of the Union address and the thrust of his 
next 3 years. If he were to do that, I think he would find in 
the U.S. Senate a strong bipartisan core of people who agree 
with that thrust.
    So I thank you very much for your hard work. I look forward 
to working with you on your recommendations, and I thank 
Chairman Domenici for giving this such a good start.
    [The prepared statement of Senator Alexander follows:]
Prepared Statement of Hon. Lamar Alexander, U.S. Senator From Tennessee
    In May, Senator Jeff Bingaman and I, with the encouragement of this 
Committee's Chairman Pete Domenici, asked the National Academies of 
Sciences and Engineering and the Institute of Medicine this question: 
``What are the ten top actions, in priority order, that federal policy 
makers could take over the next decade to help the United States keep 
our advantage in science and technology?''
    To answer the question, the academies assembled a distinguished 
panel of business, government and university leaders headed by Norm 
Augustine, former chair of Lockheed-Martin, that included three Nobel 
Prize winners. They took our question seriously, and I intend to do 
everything within my power to take their recommendations seriously.
    Today, the Energy Committee takes the first step in that response 
by holding this hearing to hear from Mr. Augustine and the academies. 
It will be the first opportunity Congress will have to hear their 
answer to our question.
    This hearing is primarily about brainpower and the relationship of 
brainpower to good American jobs.
    The United States produces almost one third of all the wealth in 
the world (in terms of GDP)--but has only five percent of the world's 
population. We are a fortunate country indeed. The academies explain 
this phenomenon in this way: ``. . . as much as 85 percent of measured 
growth in U.S. income per capita is due to technological change.''
    This technological change is the result, in the report's words, of 
an outpouring ``of well trained people and the steady stream of 
scientific and technological innovations they produce.''
    The United States has taken extraordinary steps to help create this 
outpouring of trained people and new discoveries that have given us 
such a disproportionate share of the world's wealth.
    We have in our country almost all of the world's greatest research 
universities. We have a unique array of 36 federal research 
laboratories. More Americans attend college than in any other country, 
and the colleges they attend are the best in the world. We have had, at 
least until recently, a system of K-12 education unsurpassed in the 
world.
    Government support for all these enterprises has been massive. In 
2001, the federal government spent $22.5 billion for university-based 
research in science and engineering. This year the government will 
provide 60 percent of American students with grants or loans to help 
them attend the college or university of their choice. The federal 
government will spend nearly $17 billion on grants and work-study 
programs and will provide an additional $52 billion in student loans. 
In my last year as governor of Tennessee, half of state dollars and a 
larger proportion of local tax dollars went to support education.
    And our free market environment encouraged innovation and 
enterprise as well as billions of dollars invested in corporate 
research. Finally, to top it off, while we have been outsourcing jobs, 
we have been insourcing brainpower. 572,000 foreign students attend our 
colleges and universities. One half of the students in our graduate 
programs of engineering, science and computing are foreign.
    There are three reasons I put this question to the National 
Academies:
    First, Congress is facing huge budget challenges over the next 
decade as we grapple with restraining the growth of entitlement 
spending. I did not want tight budgets to squeeze out the necessary 
investments in science and technology that create good jobs.
    Second, as the Augustine report details, there are worrisome 
reports from all sides that in the new competitive world marketplace, 
the United States will have to make an even grater effort to keep our 
high standard of living. To put it bluntly, people in India, China, 
Singapore, Finland, and Ireland know very well that since their brains 
work just like ours, that ifbrainpower is the secret weapon to produce 
good jobs, then there is no reason that they can't have a standard of 
living more like ours. They are working to develop better trained 
citizens and create their own stream of discoveries.
    Third, I wanted to ask the question to those who should know the 
answer. Members of Congress are not the best ones to guess what the 
first ten things we should do to keep our scientific and technological 
edge.
    Congress is not efficiently organized to deal with broad 
recommendations such as these. I intend to work with my colleagues to 
see that all of the recommendations in the report are introduced and 
given a fair hearing in the various committees that have jurisdiction.
    But what really should happen is that President Bush should make 
this report the subject of his State of the Union address and the focus 
of his remaining three years in office.
    This challenge cries out for executive leadership. This challenge 
is the real answer to most of our hopes and the solution to most of our 
big problems, from high gasoline prices to the outsourcing of chemical 
industry jobs, from the shortage of engineers to the growing number of 
lower wage jobs, from energy independence to controlling health care 
costs.
    This is the challenge that most Americans wish their government 
would put up front. We have begun the discussion with a bipartisan 
question to the wisest Americans who ought to know the answer. We have 
a remarkable opportunity now to act on the recommendations in the same 
spirit.

    The Chairman. Thank you.
    Now we are going to proceed. I just want to say, Senator, 
you never are without--I will put it another way. You always 
shoot for the moon, and that is good. Your ideas about where we 
ought to go are terrific. Maybe we can.
    Senator Alexander. My grandfather used to say, Mr. 
Chairman--he was a railroad engineer. He said, aim for the top. 
There is more room there.
    [Laughter.]
    The Chairman. All right. Which of you wants to go first? Go 
ahead.

STATEMENT OF RALPH J. CICERONE, PRESIDENT, NATIONAL ACADEMY OF 
         SCIENCES, AND CHAIR, NATIONAL RESEARCH COUNCIL

    Mr. Cicerone. Thank you. I am Ralph Cicerone, president of 
the National Academy of Sciences. The National Academy of 
Sciences was chartered by Congress in 1863 and President 
Lincoln signed that charter. I also serve as chairperson of the 
National Research Council. Together with the National Academy 
of Engineering and the Institute of Medicine, we comprise the 
National Academies. We are private, nonprofit, and independent 
organizations and we respond to requests for independent and 
objective studies on challenging subjects involving science, 
technology, and medicine. Most of our work is by request of the 
Federal Government.
    We are honored to undertake the task that is going to be 
reported to you today. It was directed to us, as Senator 
Alexander just recounted, by himself and Senator Bingaman, with 
strong endorsements by Representatives Sherwood Boehlert and 
Bart Gordon of the House Science Committee.
    Usually we work through committees of experts in our 
studies of the National Academies and the National Research 
Council, experts who serve without pay. That is the case again 
with the report that you are about to hear summarized today 
from our Committee on Prospering in the Global Economy of the 
21st Century. This committee is unusually distinguished. It is 
comprised of very, very busy men and women who are, 
individually and as a group, very extraordinary Americans. The 
group consists of several corporate CEO's, university 
presidents, three Nobel Prize winners, several past 
Presidential appointees, and distinguished teachers. The 
chairman of the committee is here with us today, Mr. Norman 
Augustine.
    By way of background, Mr. Augustine was chairman of the 
board and CEO of Lockheed Martin earlier in his career. He was 
an Under Secretary of the Army and an Assistant Director of 
Defense for Research and Engineering of the United States. He 
is former chairman of the American Red Cross, former chairman 
of the Defense Science Board. He now serves on the Council of 
the President of the United States' Advisors on Science and 
Technology, and he is a winner of the National Medal of 
Technology. He is also an elected member of the National 
Academy of Engineering. And he had a good cast to help him. In 
just a moment, he will provide an overview of the report.
    The committee worked over a very short period of time 
during which they analyzed data from a wide variety of sources, 
made their own observations, and read the views of and 
interacted with many other experts from all walks of life 
during the summer just past, and it was a short part of the 
summer. And then they responded to criticisms and suggestions 
from anonymous reviewers whom we at the Academy selected.
    In looking over the data in this report, I think that each 
one of us would be taken by the variety of indicators that they 
have drawn from. There may be no one indicator that convinces 
you completely, but when you add them all together, I think the 
committee has come up with a rather compelling argument and 
case.
    I would like to add just one more observation to all of the 
indicators that they summarized in this thick report. Namely, 
we at the National Academies asked 21 people to serve on this 
committee, to drop what they were doing in August, and work 
hard on this task because of the deadline and the time scale on 
which Senator Alexander and Senator Bingaman asked for 
recommendations on actions that the Federal Government might 
usefully take when the two Senators walked over and talked with 
us. You will notice that we ended up with 20 members on this 
committee. In other words, 20 out of 21 accepted under those 
conditions. That level of acceptance of our invitations by 
highly accomplished people, dropping all other commitments, 
personal, corporate, and otherwise, was truly amazing. It is a 
measure of the dedication to the task and their willingness to 
work, once again, on behalf of the country.
    So if I may, Mr. Chairman, I could turn it over to Mr. 
Augustine now who will discuss the report.
    The Chairman. Thank you very much, Doctor.
    Mr. Augustine.

  STATEMENT OF NORMAN R. AUGUSTINE, RETIRED CHAIRMAN AND CEO, 
                  LOCKHEED MARTIN CORPORATION

    Mr. Augustine. Mr. Chairman and members of the committee, 
thank you very much for the invitation to describe for you our 
report. Mr. Chairman, with the committee's permission, I would 
like to submit a formal statement for the record and then 
briefly summarize it now.
    The Chairman. Your statement will be made a part of the 
record.
    Mr. Augustine. As you have heard, our committee had 20 
members. I think I can safely say that we all feel deep concern 
and that we also are all extremely excited about the 
opportunity that we have to deal with the problems we believe 
we face. Our work, of course, was conducted in response to 
Senators Alexander and Bingaman's suggestions.
    The thrust of our findings is really quite straightforward. 
It is that individual prosperity of Americans in the future 
will depend very heavily on their having access to quality 
jobs, and our collective prosperity will depend upon having the 
tax revenues that are underpinned by Americans having quality 
jobs. And those collective concerns would include providing 
national defense, providing health care, and so forth.
    But there has been a change that has taken place in terms 
of providing quality jobs. That change is attributable largely 
to new technologies. I refer specifically to the fact that in 
the information arena, the cost of providing 
telecommunications, of processing, and of storage has become 
almost free. The implication of this that jobs that used to 
require people to be in close physical proximity to one another 
no longer require that. That means that jobs are now open to 
candidates from around the world, and these are not just jobs 
at the so-called lower end of the employment spectrum, but they 
are jobs throughout the spectrum.
    The change is that job seekers in America no longer have to 
compete only with their neighbors, but they have to compete 
with highly qualified people from around the world. They 
compete in a labor market where we are at a distinct 
disadvantage. I recently traveled to Vietnam where you can hire 
20 assembly workers for the cost of the U.S. minimum wage. I 
was recently in India, where you can hire 11 engineers for the 
cost of one engineer in this country. They are fine engineers. 
And so if we are to compete, we have to compete on some other 
grounds, and that ground, as you have suggested, Mr. Chairman, 
and your colleagues, has to be our ability to compete, our 
ability to have knowledge that is fresh and new.
    Very few jobs are what one might call ``safe.'' I would 
cite just a few interesting examples. In many hospitals in this 
country, if one has a CT-scan, there is a very good chance it 
will be read by a physician in India.
    Similarly, very near to where we are now sitting, there is 
an office building that the receptionist, who greets you at the 
door and controls access to that building, appears on a flat 
screen display on the wall. She is actually located in 
Pakistan.
    If you call to find out where your lost suitcase is, as I 
had to do last week, the call center you talk to in this case 
was in India. They are now teaching people in India at call 
centers to speak with a midwestern accent.
    Those are just a few of many examples I could cite.
    Tom Friedman in ``The World is Flat'', an extremely 
perceptive book, has pointed out that globalization has 
accidentally made people from Bangalore, Beijing, and Bethesda 
next door neighbors. When it comes to competing for jobs, that 
is certainly true since jobs are now just a mouse click away.
    But is this not good that other nations are prospering? And 
the view of our committee is absolutely yes, it is very good. 
It probably portends a safer world. It suggests that American 
consumers will be able to buy products at less cost and 
American suppliers will be able to have a larger market to sell 
their goods and services.
    But the problem is that, as with most change, there are 
likely to be winners and likely to be losers, and our goal is 
to be sure that America is among the winners when it comes to 
seeking jobs.
    There is an enigma that, as you have pointed out, America 
is prospering today, but the reason we are prospering is 
largely because of investments made in the past. Many of those 
investments were in the area of science and technology, which 
underpins much of the opportunities and innovation. There will 
be no sudden warning in this case, no 9/11, no Sputnik, no 
Pearl Harbor. We will see a gradual erosion, and if we are to 
compete for jobs, we need to excel in innovation to offset the 
labor cost disadvantage we endure.
    The indicators are not good frankly. We have been living, 
to a very large degree and to our very good fortune, off of 
foreign-born talent. 38 percent of the Ph.D.'s in science and 
engineering in America's work force today were foreign-born. 59 
percent of the Ph.D.'s granted by American universities today 
go to foreign students, and increasingly, those students are 
going back home because of the great opportunities that are 
offered in other countries.
    In a recent international test of mathematics, conducted 
with U.S. high school freshmen, the U.S. students, ranked among 
other countries in the world, finished in 29th place.
    As another example, chemical companies closed 70 plants in 
the United States in 2004. They have announced their intention 
to close 40 more. In the world, there are 120 new chemical 
plants being built, with a value of each of more than $1 
billion. Of those, 50 are in China; one is in the United 
States.
    U.S. companies spend more now on litigation expenses than 
they spend on research and development. Once one has lost the 
lead in R&D, it is very difficult to recover.
    Our committee has produced four recommendations that are 
very broad, but we also have produced 20 very specific 
implementing actions. We refer to them as ``go do's.'' They 
focus heavily on the creation of jobs and on energy, and I can 
elaborate on that during the question period, if you wish.
    Basically our recommendations are to fix the K-12 science 
and technology education process; to provide more money for 
research and the physical sciences, mathematics, engineering, 
and computer science; to provide more students studying those 
fields in undergraduate and graduate school; and to create an 
environment in America that is world-class in terms of 
friendliness for innovators and for innovation.
    Mr. Chairman and members of the committee, I thank you on 
behalf of my 19 colleagues, and on behalf of the National 
Academies, and the two of us would be very happy to answer any 
questions you might have.
    [The prepared statement of Mr. Augustine follows:]
 Prepared Statement of Norman R. Augustine, Retired Chairman and Chief 
Executive Officer, Lockheed Martin Corporation; and Chair, Committee on 
  Prospering in the Global Economy of the 21st Century, Committee on 
Science, Engineering, and Public Policy, Division on Policy and Global 
               Affairs, The National Academies of Science
    Mr. Chairman and members of the Committee: Thank you for this 
opportunity to appear before you on behalf of the National Academies' 
Committee on Prospering in the Global Economy of the 21st Century. As 
you know, our effort was sponsored by the National Academy of Sciences, 
National Academy of Engineering and Institute of Medicine (collectively 
known as the National Academies). The National Academies were chartered 
by Congress in 1863 to advise the government on matters of science and 
technology.
    The study had as its origin a conversation which took place at the 
National Academies with Senator Lamar Alexander several months ago. As 
a result of that discussion, the Academies were requested by Senator 
Alexander and Senator Jeff Bingaman, members of the Senate Committee on 
Energy and Natural Resources, to conduct an assessment of America's 
ability to compete and prosper in the 21st century--and to propose 
appropriate actions to enhance the likelihood of success in that 
endeavor. This request was endorsed by the House Committee on Science.
    To respond to that request the Academies assembled twenty 
individuals with diverse backgrounds, including university presidents, 
CEOs, Nobel Laureates and former presidential appointees. The result of 
our committee's work was examined by over forty highly qualified 
reviewers who were also designated by the Academies. In undertaking our 
assignment we considered the results of a number of prior studies which 
were conducted on various aspects of America's future prosperity. We 
also gathered sixty subject-matter experts with whom we consulted for a 
weekend here in Washington and who provided recommendations related to 
their fields of specialty.
    It is the unanimous view of our committee that America today faces 
a serious and intensifying challenge with regard to its future 
competitiveness and standard of living. Further, we appear to be on a 
losing path. We are here today hoping both to elevate the nation's 
awareness of this developing situation and to propose constructive 
solutions.
    The thrust of our findings is straightforward. The standard of 
living of Americans in the years ahead will depend to a very large 
degree on the quality of the jobs that they are able to hold. Without 
quality jobs our citizens will not have the purchasing power to support 
the standard of living which they seek, and to which many have become 
accustomed; tax revenues will not be generated to provide for strong 
national security and healthcare; and the lack of a vibrant domestic 
consumer market will provide a disincentive for either U.S. or foreign 
companies to invest in jobs in America.
    What has brought about the current situation? The answer is that 
the prosperity equation has a new ingredient, an ingredient that some 
have referred to as ``The Death of Distance''. In the last century, 
breakthroughs in aviation created the opportunity to move people and 
goods rapidly and efficiently over very great distances. Bill Gates has 
referred to aviation as the ``World Wide Web of the twentieth 
century''. In the early part of the present century, we are approaching 
the point where the communication, storage and processing of 
information are nearly free. That is, we can now move not only physical 
items efficiently over great distances, we can also transport 
information in large volumes and at little cost.
    The consequences of these developments are profound. Soon, only 
those jobs that require near-physical contact among the parties to a 
transaction will not be opened for competition from job seekers around 
the world. Further, with the end of the Cold War and the evaporation of 
many of the political barriers that previously existed throughout the 
world, nearly three billion new, highly motivated, often well educated, 
new capitalists entered the job market.
    Suddenly, Americans find themselves in competition for their jobs 
not just with their neighbors but with individuals around the world. 
The impact of this was initially felt in manufacturing, but soon 
extended to the development of software and the conduct of design 
activities. Next to be affected were administrative and support 
services. Today, ``high end'' jobs, such as professional services, 
research and management, are impacted. In short, few jobs seem 
``safe'':

   U.S. companies each morning receive software that was 
        written in India overnight in time to be tested in the U.S. and 
        returned to India for further production that same evening--
        making the 24-hour workday a practicality.
   Back-offices of U.S. firms operate in such places as Costa 
        Rica, Ireland and Switzerland.
   Drawings for American architectural firms are produced in 
        Brazil.
   U.S. firm's call centers are based in India--where employees 
        are now being taught to speak with a mid-western accent.
   U.S. hospitals have x-rays and CAT scans read by 
        radiologists in Australia and India.
   At some McDonald's drive-in windows orders are transmitted 
        to a processing center a thousand miles away (currently in the 
        U.S.), where they are processed and returned to the worker who 
        actually prepares the order.
   Accounting firms in the U.S. have clients tax returns 
        prepared by experts in India.
   Visitors to an office not far from the White House are 
        greeted by a receptionist on a flat screen display who controls 
        access to the building and arranges contacts--she is in 
        Pakistan.
   Surgeons sit on the opposite side of the operating room and 
        control robots which perform the procedures. It is not a huge 
        leap of imagination to have highly-specialized, world-class 
        surgeons located not just across the operating room but across 
        the ocean.

    As Tom Friedman concluded it in The World is Flat, globalization 
has ``accidentally made Beijing, Bangalore and Bethesda next door 
neighbors''. And the neighborhood is one wherein candidates for many 
jobs which currently reside in the U.S. are now just a ``mouse-click'' 
away.
    How will America compete in this rough and tumble global 
environment that is approaching faster than many had expected? The 
answer appears to be, ``not very well''--unless we do a number of 
things differently from the way we have been doing them in the past.
    Why do we reach this conclusion? One need only examine the 
principal ingredients of competitiveness to discern that not only is 
the world flat, but in fact it may be tipping against us.
    One major element of competitiveness is, of course, the cost of 
labor. I recently traveled to Vietnam, where the wrap rate for low-
skilled workers is about twenty-five cents per hour, about one-
twentieth of the U.S. minimum wage. And the problem is not confined to 
the so-called ``lower-end'' of the employment spectrum. For example, 
five qualified chemists can be hired in India for the cost of just one 
in America. Given such enormous disadvantages in labor cost, we cannot 
be satisfied merely to match other economies in those other areas where 
we do enjoy strength; rather we must excel . . . markedly.
    The existence of a vibrant domestic market for products and 
services is another important factor in determining our nation's 
competitiveness, since such a market helps attract business to our 
shores. But here, too, there are warning signs: Goldman Sachs analysts 
project that within about a decade, fully 80% of the world's middle-
income consumers will live in nations outside the currently 
industrialized world.
    The availability of financial capital has in the past represented a 
significant competitive advantage for America. But the mobility of 
financial capital is legion, as evidenced by the willingness of U.S. 
firms to move factories to Mexico, Vietnam and China if a competitive 
advantage can be derived by doing so. Capital, as we have observed, 
crosses geopolitical borders at the speed of light.
    Human capital--the quality of our work force--is a particularly 
important factor in our competitiveness. Our public school system 
comprises the foundation of this asset. But as it exists today, that 
system compares, in the aggregate, abysmally with those of other 
developed--and even developing nations . . . particularly in the fields 
which underpin most innovation: science, mathematics and technology.
    Of the utmost importance to competitiveness is the availability of 
knowledge capital--``ideas''. And once again, scientific research and 
engineering applications are crucial. But knowledge capital, like 
financial capital, is highly mobile. There is one major difference: 
being first-to-market, by virtue of access to new knowledge, can be 
immensely valuable, even if by only a few months. Craig Barrett, a 
member of our committee and Chairman of Intel, points out that ninety 
percent of the products his company delivers on December 31st did not 
even exist on January 1st of that same year. Such is the dependence of 
hi-tech firms on being at the leading edge of scientific and 
technological progress.
    There are of course many other factors influencing our nation's 
competitiveness. These include patent processes, tax policy and 
overhead costs--such as healthcare, regulation and litigation--all of 
which tend to work against us today. On the other hand, America's 
version of the Free Enterprise System has proven to be a powerful 
asset, with its inherent aggressiveness and discipline in introducing 
new ideas and flushing out the obsolescent. But others have now 
recognized these virtues and are seeking to emulate our system.
    But is it not a good thing that others are prospering? Our 
committee's answer to that question is a resounding ``yes''. Broadly 
based prosperity can make the world more stable and safer for all; it 
can make less costly products available for American consumers; it can 
provide new customers for the products we produce here. Yet it is 
inevitable that there will be relative winners and relative losers--and 
as the world prospers, we should seek to assure that America does not 
fall behind in the race.
    The enigma is that in spite of all these factors, America seems to 
be doing quite well just now. Our nation has the highest R&D investment 
intensity in the world. We have indisputably the finest research 
universities in the world. California alone has more venture capital 
than any nation in the world other than the United States. Two million 
jobs were created in America in the past year alone, and citizens of 
other nations continue to invest their savings in America at a 
remarkable rate. Total household net worth is now approaching $50 
trillion.
    The reason for this prosperity is that we are reaping the benefits 
of past investments--many of them in the fields of science and 
technology. But the early indicators of future prosperity are generally 
heading in the wrong direction. Consider the following:

   For the cost of one engineer in the United States, a company 
        can hire eleven in India.
   America has been depending heavily on foreign-born talent. 
        Thirty-eight percent of the scientists and engineers in America 
        holding doctorates were born abroad. Yet, when asked in the 
        spring of 2005, what are the most attractive places in the 
        world in which to live, respondents in only one of the 
        countries polled indicated the U.S.A.
   Chemical companies closed seventy facilities in the U.S. in 
        2004, and have tagged forty more for shutdown. Of 120 new 
        chemical plants being built around the world with price tags of 
        $1 billion or more, one is in the U.S. Fifty are in China.
   In 1997 China had fewer than fifty research centers managed 
        by multinational corporations. By 2004 there were over six-
        hundred.
   Two years from now, for the first time, the most capable 
        high-energy particle accelerator on earth will reside outside 
        the United States.
   The United States today is a net importer of high technology 
        products. The U.S. share of global high tech exports has fallen 
        in the last two decades from 30% to 17%, while America's trade 
        balance in high tech manufactured goods shifted from a positive 
        $33B in 1990 to a negative $24B in 2004.
   In a recent international test involving mathematical 
        understanding, U.S. students finished in 27th place among the 
        nations participating.
   About two-thirds of the students studying chemistry and 
        physics in U.S. high schools are taught by teachers with no 
        major or certificate in the subject. In the case of math taught 
        in grades five through twelve, the fraction is one-half. Many 
        such students are being taught math by graduates in physical 
        education.
   In one recent period, low-wage employers like Wal-Mart (now 
        the nation's largest employer) and McDonald's created 44% of 
        all new jobs. High-wage employers created only 29%.
   In 2003 foreign students earned 59% of the engineering 
        doctorates awarded in U.S. universities.
   In 2003 only three American companies ranked among the top 
        ten recipients of patents granted by the U.S. Patent Office.
   In Germany, 36% of undergraduates receive their degrees in 
        science and engineering. In China, the corresponding figure is 
        59%, and in Japan it is 66%. In the U.S., the share is 32%. In 
        the case of engineering, the U.S. share is 5%, as compared with 
        50% in China.
   The United States is said to have over ten million illegal 
        immigrants, but the number of legal visas set-aside annually 
        for ``highly qualified foreign workers'' was recently dropped 
        from 195,000 per year down to 65,000.
   In 2001 (the most recent year for which data are available), 
        U.S. industry spent more on tort litigation and related costs 
        than on research and development.

    As important as jobs are, the impact of these circumstances on our 
nation's security could be even more profound. In the view of the 
bipartisan Hart-Rudman Commission on National Security, `` . . . the 
inadequacies of our system of research and education pose a greater 
threat to U.S. national security over the next quarter century than any 
potential conventional war that we might imagine.''
    The good news is that there are things we can do to assure that 
America does in fact share in the prosperity that science and 
technology are bringing the world. In this regard, our committee has 
made four broad recommendations as the basis of a prosperity 
initiative--and offers 20 specific actions to make these 
recommendations a reality. They include:

   ``Ten Thousand Teachers, Ten Million Minds''--which 
        addresses America's K-12 education system. We recommend that 
        America's talent pool in science, math and technology be 
        increased by vastly improving K-12 education. Among the 
        specific steps we propose are:

     Recruitment of 10,000 new science and math teachers each 
            year through the award of competitive scholarships in math, 
            science and engineering that lead to a bachelor's degree 
            accompanied by a teaching certificate--and a 5-year 
            commitment to teach in a public school.
     Strengthening the skills of 250,000 current teachers 
            through funded training and education in part-time master's 
            programs, summer institutes and Advanced Placement training 
            programs.
     Increasing the number of students who take Advanced 
            Placement science and mathematics courses.

   ``Sowing the Seeds''--which addresses America's research 
        base. We recommend strengthening the nation's traditional 
        commitment to long-term basic research through:

     Increasing federal investment in research by 10% per year 
            over the next seven years, with primary attention devoted 
            to the physical sciences, engineering, mathematics, and 
            information sciences--without disinvesting in the health 
            and biological sciences.
     Providing research grants to early career researchers
     Instituting a National Coordination Office for Research 
            Infrastructure to oversee the investment of an additional 
            $500M per year for five years for advanced research 
            facilities and equipment.
     Allocating at least 8% of the existing budgets of federal 
            research agencies to discretionary funding under the 
            control of local laboratory directors.
     Creation of an Advanced Research Projects Agency--Energy 
            (ARPA-E), modeled after DARPA in the Department of Defense, 
            reporting to the Department of Energy Undersecretary for 
            Science. The purpose is to support the conduct of out-of-
            the-box, transformational, generic, energy research by 
            universities, industry and government laboratories.
     Establish a Presidential Innovation Award to recognize and 
            stimulate scientific and engineering advances in the 
            national interest.

   ``Best and Brightest''--which addresses higher education. In 
        this area we recommend:

     Establishing 25,000 competitive science, mathematics, 
            engineering, and technology undergraduate scholarships and 
            5,000 graduate fellowships in areas of national need for 
            U.S. citizens pursuing study at U.S. universities.
     Providing a federal tax credit to employers to encourage 
            their support of continuing education.
     Providing a one-year automatic visa extension to 
            international students who receive a science or engineering 
            doctorate at a U.S. university, and providing automatic 
            work permits and expedited residence status if these 
            students are offered employment in the U.S.
     Instituting a skill-based, preferential immigration 
            option.
     Reforming the current system of ``deemed exports'' so that 
            international students and researchers have access to 
            necessary non-classified information and research equipment 
            while studying and working in the U.S.

   ``Incentives for Innovation''--in which we address the 
        innovation environment itself. We recommend:

     Enhancements to intellectual property protection, such as 
            the adoption of a first-to-file system.
     Increasing the R&D tax credit from the current 20% to 40%, 
            and making the credit permanent.
     Providing permanent tax incentives for US-based innovation 
            so that the United States is one of the most attractive 
            places in the world for long-term innovation-related 
            investments.
     Ensuring ubiquitous broadband Internet access to enable 
            U.S. firms and researchers to operate at the state of the 
            art in this important technology.

    It should be noted that we are not confronting a so-called 
``typical'' crisis, in the sense that there is no 9/11, Sputnik or 
Pearl Harbor to alert us as a nation. Our situation is more akin to 
that of the proverbial frog being slowly boiled. Nonetheless, while our 
committee believes the problem we confront is both real and serious, 
the good news is that we may well have time to do something about it--
if we start now.
    Americans, with only 5% of the world's population but with nearly 
30% of the world's wealth, tend to believe that scientific and 
technological leadership and the high standard of living it underpins 
is somehow the natural state of affairs. But such good fortune is not a 
birthright. If we wish our children and grandchildren to enjoy the 
standard of living most Americans have come to expect, there is only 
one answer: We must get out and compete.
    I would like to close my remarks with a perceptive and very 
relevant poem. It was written by Richard Hodgetts, and eloquently 
summarizes the essence of innovation in the highly competitive, global 
environment. The poem goes as follows:

              Every morning in Africa a gazelle wakes up.

             It knows it must outrun the fastest lion or it

                            will be killed.

                Every morning in Africa a lion wakes up.

              It knows it must outrun the slowest gazelle

                           or it will starve.

              It doesn't matter whether you're a lion or a

                 gazelle--when the sun comes up, you'd

                           better be running.

    And indeed we should.
    Thank you for providing me with this opportunity to testify before 
the committee. I would be pleased to answer any questions you have 
about the report.

    The Chairman. Well, let me first say I have been here now 
in the Senate at the end of this year 34 years. Compared to 
what each of you have done in your fields, that is not anything 
more than you have done.
    But I think we have made a terrible mistake. We have taken 
this American machine that produces goods and services and 
breakthroughs. We just assumed it would always happen, that we 
were just there. And frankly, myself as one Senator and one 
American, I have been terribly concerned that we are on the 
track to a second-rate economy, a second-rate country. And I 
blame it on all kinds of things in my mind. But many of them I 
do not know what to do about, but as a result of the request 
you have presented to us, I believe, a real opportunity exists 
to address that issue.
    I think it is true that when we decided that we would go 
global--either of you might remember and correct me. This will 
sort of be my first question. I think we thought that we were 
going to be all right because we were going to keep the high-
scale jobs, high-end jobs, and the low-end jobs were going 
elsewhere. So, America, do not worry about it.
    What happened was at first that was our worry, but that 
worry changed because what happened in these other countries 
changed. We assumed they would not catch on. We were the only 
one who would do accelerator technology. Right? It turns out we 
are second. They are first. And we can go through them all.
    I think we are to the point where I would say it is no 
longer 20 out of 21 of you agreeing to meet and work because 
you see it better than I do, and I think the work is a labor of 
love, of concern that something is happening. Now, maybe that 
is overstating it and maybe I am saying more than we can do, 
but it is worth trying.
    So might I ask, is my assessment of the situation, Mr. 
Augustine, correct, that when we went into globalization, when 
we thought that was a good thing, we were indeed ahead and we 
had high-scale jobs, and the others were the Vietnam kind of 
workers of today? But has that not changed in a very short 
period of time? And if it has, why did it change so fast?
    Mr. Augustine. I think your assessment is extremely 
accurate. Initially we did believe that we could put low-end 
assembly work in plants in Mexico. Now Mexico is having trouble 
competing with Vietnam and China even. We then began to move 
office work into other countries. Today there is quite a market 
of doing our income tax by accounting firms in other countries. 
Your tax form may well have been prepared abroad. I could cite 
many such examples. I am sure you could as well.
    The trend is one that really makes almost no jobs immune to 
foreign competition or to moving abroad. I have a friend who 
recently had surgery and the surgeon sat across the operating 
room from him on the other side of the room and operated on him 
using a robot. It is not a huge leap of at least this 
engineer's imagination that that surgeon, instead of sitting 
across the room, could sit across the ocean, could be an 
absolute world-class surgeon who specializes in this particular 
procedure. I could imagine that. I do not believe that has 
happened yet, but it could.
    McDonald's is running an experiment now that if you go to a 
drive-in and order your hamburger at McDonald's drive-in, at 
some of the drive-ins they send your order from your voice up 
through a satellite 23,000 miles away back to the earth 1,000 
miles away from where you were. They get the order right and 
they send it back to the person preparing the hamburger. That 
is happening today. So there are no jobs that are not going to 
be vulnerable to the kind of thing you have described.
    You are quite correct. Our committee, I think it is safe to 
say, feels passionately in terms of our concern, in terms of 
the importance we assign to this. We recognize that you and 
your colleagues in the Senate and the House and in the 
administration face enormous challenges. We are aware of 
hurricanes, and we realize there are two wars going on. But 
this is a war too, but it is one that is on a longer time 
scale. It is a war that if we lose, we likely will lose the 
fundamental strength of our economy which underpins most 
everything else we do. So I would say your assessment was very 
accurate.
    The Chairman. Senator Bingaman.
    Senator Bingaman. Thank you very much. And thank you again 
for the wonderful testimony and the report.
    Let me ask about a few of these specific recommendations 
you have here. One is that we establish an ARPA-like entity 
within the Department of Energy or focused on energy-related 
issues. I just would ask, Mr. Augustine, if you would elaborate 
on that as to how that would work, who it would be reporting 
to? It is clear under DARPA that they are doing the work of the 
Department of Defense, and there is no question as to whom they 
are reporting and working for. How would you see this other 
entity operating?
    Mr. Augustine. Senator Bingaman, I guess I should first 
indicate why we felt it was important to have this capability. 
One of the concerns we have had is that as we produce new 
scientific ideas, particularly in the energy area, the idea of 
transferring those ideas into practice--there is a large gap in 
terms of funding and capability and responsibility to do that.
    We are looking in this idea of ARPA-energy, as we call it, 
ARPA-E, for breakthrough technologies, transformational 
technologies, things that really change the whole paradigm. The 
DARPA of the Department of Defense has been extremely 
effective, as I think you might agree. You do just that.
    I should say also that our focus on energy really has its 
origin in the fact that we view energy to be one of the 
principal factors in America's competitiveness in the years 
ahead. Our ability to provide energy at a reasonable cost, 
provide it reliably, cleanly, and also to remove the threats to 
national security that are so closely associated to energy all 
argue that it is a key part of competitiveness and of 
prosperity.
    Beyond that, as you would know so well, energy research is 
so closely affiliated with the very areas of science and 
technology about which we are concerned, mainly the physical 
sciences, mathematics, computer science, and engineering. I 
separate those from the biological sciences which have been 
reasonably well cared for by the National Institutes of Health.
    With regard to the specific proposal, it would be our 
belief that an ARPA-E would report to the Under Secretary of 
Energy for Science, that it would have a staff that rotated. 
The people would stay maybe 4 years, much like at DARPA. It 
would do no research of its own. It would fund the innovative 
breakthrough high-risk, high-payoff research and applied 
development. That work would be performed actually at 
universities, at companies, at startups, established companies, 
and at the national labs. It would be awarded competitively. We 
believe by so doing, we can take a major step forward in 
improving the health of our physical science, math and 
engineering fields and address an important problem at the same 
time.
    So I hope that answers your question.
    Senator Bingaman. It does and I thank you for that answer.
    Another big thrust of your report, as you describe it, is 
to urge some specific actions we can take to get our training 
of people in science and mathematics up to where it ought to be 
or at least closer to where it ought to be in the near future. 
You have one recommendation in here that I heartily endorse. I 
just think it sounds pretty ambitious, and again, I would like 
your comments on it. It says, by 2010, increase the number of 
students in advanced placement and international baccalaureate 
mathematics and science courses from 1.2 million to 4.5 million 
and set a goal of tripling the number who pass those tests to 
700,000 by 2010.
    It is easy to talk about these things. It is easy to set 
goals. It is harder when you get down to saying, okay, now how 
many of those increased AP or IB students are we going to have 
in this high school or that high school and how are we going to 
get them there. Any comments you would have about the 
achievability of that kind of a very ambitious goal?
    Mr. Augustine. We believe it is achievable, but we would 
share your characterization of a very ambitious goal. That was 
my intent. It is nearly a factor of four increase in students 
in that area.
    We made the recommendation because experiments at various 
State and local levels have indicated that having more students 
exposed to the AP programs has a major impact in terms of their 
overall level of education, how they score on examinations, 
college boards and the like, and on the international tests.
    To accomplish this goal, though, I think we have to start--
and our committee proposes this--with teachers. We first have 
to train the teachers to teach AP programs. We have made a 
recommendation as to how to go about doing that. We believe if 
we can train those teachers, they can, in turn, train the 
students and we will get much better graduates in the process.
    With regard to the ambitiousness of our proposal, to some 
degree we have scaled the experience of other programs along 
this line, one particularly in Texas that has been very 
successful. We scaled the school population in Texas with what 
it has done in the way of growth that it has actually 
accomplished with what we are proposing. Given that, we feel 
that with a significant effort, we can do at least as well.
    Senator Bingaman. Thank you very much. I think my time is 
up although nobody seems to be keeping time around here. Let me 
go ahead and defer to Senator Alexander.
    Senator Alexander. Thank you, Senator Bingaman.
    A couple of comments and then a couple of questions. $10 
billion a year. I spent a lot of time as Governor trying to 
restrain the growth of Medicaid so we could create centers of 
excellence at the universities. We had these choices to make. 
Over the next 5 years, Medicaid spending will grow 41 percent 
in the Federal budget. Restraining that by 1 percent, 40 
instead of 41, would produce $10 billion new Federal dollars a 
year, in other words, enough to fund everything you have said 
here. So I think we have to think about whether even in the end 
putting the $10 billion into roughly the recommendations you 
have made might not do more to help transform the health care 
system in America and reduce medical costs and improve health 
care than spending another $10 billion just on the system we 
have got. So the amount of money is well within the reach of 
this country.
    No. 2, maybe Senator Bingaman and I and the staff of the 
committee and the chairman can talk with you more about this. I 
think it would be helpful to have a follow-up group from the 
Academies to provide technical advice to us as we work through 
trying to develop the legislation to implement these 
recommendations because just as you have been able to sort out 
among all these various ideas that people throw at us 10 or 4 
broad categories, once we get down to how do we deal with 
teachers, there are 100 ideas out there about how to do things, 
programs going on. It would help us to have evaluations. So 
that is one thing I would ask you to consider. What would be 
the appropriate way, working between the Academies and here to 
have the follow-up?
    Now, let me just go to the questions. Should we not be 
thinking about using the national labs in a big way here? I 
have had some experience with dealing with programs for 
outstanding teachers and students, and summer academies are 
great ways to deal with that. If they were affiliated with the 
labs, it would give a luster and a prestige and a place to go 
and a new way to deal with issues about career paths and 
satisfactory performance and how to pass out stipends and make 
sure we were not wasting money in a way that would really 
encourage the students and honor the teachers. We have these 
labs and they could conduct it. I think of the Governor's 
schools for teachers of math and science that we had at 
Knoxville at the University of Tennessee. They were 
inexpensive, easy to do, enormously well attended, and 
competitively sought. So should we not use the labs?
    And my second question is: Should we not be more ambitious 
about insourcing brains? I mean, you have suggested we would 
attach a green card, in effect, to somebody who gets a graduate 
degree so they can stay another year. Well, why do we not give 
scholarships to the 2,500 most outstanding engineers in the 
world in hopes they come here and stay? While we do it for 
liquified natural gas, we might as well do it for scientists, 
at least in the interim until we grow our own. Should we insist 
that every foreign student who comes here swears that he does 
not plan to stay here when, in fact, we hope that the smartest 
of them would stay here and help improve our standard of living 
instead of going home and improving India's standard of living?
    So should we not use national labs, and should we be more 
ambitious in terms of insourcing brain power?
    Mr. Augustine. I would turn to my colleague who has 
experience, particularly on the latter topic.
    Mr. Cicerone. Why do we not deal with the national labs 
first? Because the report does speak quite a bit about the 
roles of the national labs in hosting teachers in the 
summertime, in student research projects, and in the research 
and development. Do you want to handle that first?
    Mr. Augustine. All right. We did address the national labs 
and view those labs as a national asset. Of course, there are 
programs such as the one at the University of Tennessee, when 
you were president of the University of Tennessee, that was a 
cooperative arrangement of this type.
    The national labs have a huge collection of extremely 
talented people. They have the stability that industrial 
laboratories tend not to have. The national labs tend to be 
working at the very leading edge of the state-of-the-art, so 
they do provide a great resource not only to provide research 
itself, but as a training ground.
    With regard to bringing foreign students in and trying to 
get them to stay, I must confess that when I first learned a 
little bit about this question--I am told that when a foreign 
student applies at our embassy for a student visa, the person 
in our embassy has to certify that that student intends to go 
back home when they get their degree.
    Senator Alexander. That is the law.
    Mr. Augustine. My reaction was that if I had been a foreign 
student that wanted to come to America and I had been asked 
that question, my reaction would have been to say, oh, yes, I 
promise to stay and get a job in America and help start a 
company and make America great. If I answered that way, I would 
not have been permitted to come into the country. There is 
something backward with this that really does need to be 
changed.
    Ralph, do you want to comment?
    Mr. Cicerone. I do not think I have ever heard the idea 
before of having a scholarship program to try to attract the 
top, let us say, engineering students from around the world. So 
that is a new idea as far as I know.
    I think it, obviously, could be implemented. Now, what 
would go through the minds of young students--I just left a 
campus after 20 years to come here, so I have been in touch 
with a lot of students. The things that we all know well. They 
are interested in what they think the future of careers are, 
where would their best chance at a career be, what kind of 
financial aid is available so that when they emerge as a 
student, they will not be in debt too much. Are they going to 
encounter a welcoming atmosphere in this new place, and then 
what would be the opportunity for a really stimulating 
experience, for example, doing research as a student? And then 
in each one of those cases, they make a comparison to what they 
think the opportunity would be either in their home country or 
increasingly in other countries that are having English-
speaking instruction, that is, instruction at the undergraduate 
or graduate level offered in English.
    In the last few years, one unfortunate side effect of our 
making it more difficult for foreign students to come here is 
that programs have grown up in England, Australia, Canada, and 
Japan, for example, where students are offered instruction in 
English and they are being actively recruited away from 
American universities. This was an unintended consequence of 
making it harder for foreign students to come here.
    It is a great idea and I think that is what would go 
through the minds of the young students whether or not they 
should come here or go somewhere else.
    Senator Alexander. Mr. Chairman, while you were out of the 
room--and I want to make you aware of this--I suggested to Dr. 
Cicerone and Mr. Augustine that they might want to consider 
setting up a follow-up group to their report that could provide 
technical advice to our committee and other Senators, when 
asked, as we work through developing legislation, whenever that 
is appropriate. So I wanted you to know that I asked that 
question.
    The Chairman. Very good. Did they say no?
    [Laughter.]
    Senator Alexander. They did not say.
    Mr. Augustine. We said yes.
    The Chairman. They are captive. They have no chance.
    [Laughter.]
    The Chairman. One of the items that you recommend is to 
allocate a minimum of 8 percent of Federal research funding to 
high-risk, high-payoff research. If the Federal research 
agencies are under-investing in high-risk research now, first, 
why is that under-investment occurring? And second, do you know 
whether the Office of Management and Budget's PART process--
they have a process--as used now, discourages high-risk 
research? The first one you probably can answer. If you do not 
know what PART is, you cannot.
    Mr. Augustine. Let me begin and I will ask my colleague to 
continue.
    With regard to the deterrents to high-risk research, there 
are many deterrents. One of the deterrents, of course, is that 
our society has become very failure intolerant. The media is a 
part of that. We put far more attention on our failures than on 
our successes, in many cases. And if you are a researcher 
trying to build a career, it is probably easier to take the 
safe route than to try something that might be a total failure.
    We also have a peer review system that, by and large, is 
very effective, but the peer review system and the people who 
lead our laboratories too are pressured to not have failures. 
So they tend to bet on the safer thing so that at the end of 
the year, they will have something to show that worked.
    These things tend to combine to make our researchers 
reluctant to take chances.
    Also, it has another effect, and that is, it tends to make 
it difficult for younger researchers to compete for grants 
because they do not have a track record, and that is in spite 
of the fact that it has been shown by many studies that some of 
the greatest innovations have occurred by people who are quite 
young. So these things have combined to be, I think, a real 
problem.
    Do you want to add to that, Ralph?
    Mr. Cicerone. Very briefly on your last point, Mr. 
Augustine. Younger researchers are feeling this discouragement, 
and it is a disincentive to stay in the field not just from a 
financial point of view that they have difficulty obtaining 
financial grants, but in terms of getting their own 
independence to be able to try out their own ideas and to run 
their own laboratories at universities. When they cannot get 
their own grants until age 42, which is, I think, now the 
median at which an NIH investigator gets his or her own grant, 
it is a real disincentive to this field as a career 
opportunity.
    I think Mr. Augustine is right. Some of this is self-
imposed where with our peer review system everybody is trying 
so hard to avoid making mistakes, that we are discouraging 
people from taking risks.
    And then finally, there probably are some things that have 
been imposed by different administrations and different 
Congresses, like the GPRA, the Government Performance and 
Results Act. The Federal agencies, including the ones that 
support basic research, have tried very hard to avoid making 
any mistakes. So in an effort to prevent anything bad from 
happening, they have prevented a lot of other things from 
happening too.
    The Chairman. You note in the report that as of 2007 the 
United States, for instance, will not have the world's most 
advanced high energy particle accelerator. Will the U.S. 
researchers not have access to the new world-class accelerator, 
even though it would be in Europe? Should we be concerned about 
losing our status as the world's leader in high energy physics? 
And how does that affect or relate to what we are talking about 
here today?
    Mr. Augustine. Indeed, the most capable high energy 
accelerator in the world will go on line probably in 2007. It 
will be in Bern in Switzerland and will be operated by the 
European countries. The United States has been permitted to put 
its researchers there, as you pointed out, and one of the 
concerns is that for high energy physicists in this country, if 
they want to have any chance of a Nobel Prize for the 5 or 10 
years after 2007, the place to be is in Europe, not in the 
United States. And our researchers are voting with their feet. 
They are going to where these facilities are. So I think we 
will, if we do not take drastic steps, likely lose the lead for 
the first time in high energy physics research as these people 
go to Europe to use this facility.
    The Chairman. I was out a short time and this might be 
repetitious on DARPA. But I know, Mr. Augustine, you have been 
a staunch supporter if not even an admirer of DARPA as a modus 
operandi. It might not be the most direct, but considering how 
the Government has to do business with all of the 
entanglements, it has been rather successful in your opinion.
    Mr. Augustine. Indeed.
    The Chairman. Now, who would be the customer of these 
technologies that are developed at this new ARPA-E? If the 
customer is the private sector and not the Government, then is 
this the right approach? Maybe you have already answered that. 
Did Senator Bingaman ask that?
    Mr. Augustine. We did not address that specific aspect.
    The Chairman. Would you tell me that?
    Mr. Augustine. The customer would, indeed, be those 
organizations generally in the private sector that will provide 
the energy we need to run our country in the years ahead. That 
is somewhat different, of course, from the Department of 
Defense model where the DOD, by and large, is the customer for 
the work of DARPA. Nonetheless, we have a lot of experience 
with organizations such as the NIH that does basic research 
that supports products that are built, say, by the drug 
companies and pharmaceutical companies in that case. So that 
aspect was not of great concern to us, although we discussed it 
at some length.
    The question implicit in some of your comments is also a 
very good one. Why should the private sector, if it is to be 
the beneficiary, not pay for this research? If I might, Mr. 
Chairman, in answering your question, I would like to share 
with the committee a story. I may have shared it with you in 
the past, in fact. It occurred when I was working for Martin 
Marietta, the aerospace firm that is the predecessor of 
Lockheed Martin.
    Our company had some opportunities for some very exciting 
research, research that we thought held such enormous promise. 
We called a meeting in New York of stock analysts, and we sent 
our company's president there to tell them about this exciting 
research we were going to do. He made a wonderful presentation. 
At the end of the presentation, the analysts got up and 
literally they ran out of the room and they sold our stock. Our 
stock dropped 11 percent in 3 days and continued to decline for 
another year before we got it turned back around.
    When I asked one particular analyst--I remember almost 
verbatim what he said--I said, what did we say that was wrong? 
And his answer was, do you not understand that it takes 10 or 
15 years for research to pay off? And your average shareholder 
holds his stock about 18 months. So by the time your research 
pays off, they could care less about what you have gained. They 
will probably own your competitor's stock by that time. They 
certainly do not want to pay for the research now. And he 
concluded by saying to me that our firm does not invest in 
managements with such short-sighted viewpoints. That was his 
characterization.
    So the fact is, with the pressure of the stock market on 
quarterly earnings, it is just very hard for a corporation and 
its board to spend much money on basic research. Development is 
a different story. Basic research has an additional 
disadvantage that you never really know who it is going to pay 
off for. It is general. It is generic. And it may pay off for 
your competitor and not for you, and that is why organizations 
such as Bell Labs and such as GE Labs, many of which exist in 
some form, but I think no one argue that they are what they 
once were.
    The Chairman. I may have missed this somewhere in this big 
report. I am not seeing it just today. I have looked at it 
briefly. It seems to me that one of the areas where we have a 
built-in duplication, if not triplication, and whatever the 
next word is, is in the university system. We take a great deal 
of pride in having many, many universities, and it is obvious 
that on basic things that each one has--that you spend many 
times over to have the same kind of facilities. I guess, in 
general, I would look out there and say where the Government is 
involved in some institutional process that has long tales that 
has been there a long time, even the National Institutes of 
Health, there may be an opportunity, if not a necessity, in our 
country to reassess the allocation of resources so as to move 
in the direction you are speaking of in two ways, with new 
assets and converting older assets to the right thing. I do not 
know enough about that, but it is just patent to me that the 
one thing we have plenty of is our universities.
    Could you kind of talk to my notion? Did you comment on 
reallocation of resources in the whole, broad field so we could 
do more of what you are talking about?
    Mr. Augustine. Well, we did discuss allocation in general. 
We talked about the fact that some of the funding that we have 
proposed that--I should mention some of our proposals do not 
require additional funding. They would require other kinds of 
actions. But before we put new funds in, some of which will be 
certainly required, we should examine places where we do have 
duplication or triplication or what have you. Some of that does 
exist.
    We also have in our proposal to establish a new fund for 
facilities for research, many of which would be at 
universities. Also, that the Government create a new office, 
probably in the Office of Science and Technology Policy, to 
oversee the planning for this additional fund so that you do 
not wind up with the situation you described where you have 
similar facilities, particularly expensive facilities. There is 
no reason why they cannot be shared among universities, as far 
as I know. Dr. Cicerone knows more about universities than I 
do, so I will defer to you.
    The Chairman. Doctor, would you comment please?
    Mr. Cicerone. I think there is good potential for sharing 
the expense of facilities and a good deal of it is already 
being done. I think that that goal could be worked into these 
plans.
    Having just been in charge of a campus with a total budget 
of a little over $1 billion a year, I was sitting here, since 
you asked, Mr. Chairman, trying to think of any examples I 
could come up with quickly of facilities that I think where we 
were duplicative, and I honestly cannot think of any. I can 
think, instead, of having people fighting for access to every 
computer, every mass spectrometer. But there is potential and I 
think people would take that challenge seriously.
    The Chairman. The last one. Do either of you or both of you 
or any of you know about this program within the laboratories 
called LDRD? That is the one where the----
    Mr. Cicerone. Laboratory Directed Research Directives or 
something.
    The Chairman. In disclosing my vintage, I remember when 
that was a very prominent part of the DOE's nuclear 
laboratories. 12 or 15 percent when Agnew was at Los Alamos was 
left up to the discretion of the director to put into science 
that was promising, maybe even directed at the goal, but not 
provided for explicitly. Somehow or another that has turned 
around up here, and the U.S. House thinks of it as--what do 
they call it?
    Mr. Augustine. A slush fund.
    The Chairman. Yes, a slush fund for the director. Frankly, 
I saw it as something spectacular, but I have more confidence 
in the projects.
    Could you kind of assess that and just talk about it a 
minute?
    Mr. Cicerone. Mr. Chairman, about 10 or 15 years ago, I 
served as a reviewer for a request coming into those LDRD 
project funds at the Lawrence Livermore National Lab and a 
little bit at Los Alamos. The results were stunning. Those 
little bit of funds that the laboratory directors had at their 
discretion were dangled in front of people and all the best 
ideas came out of the woodwork. Teamwork came out of the 
woodwork. Some new technologies, some of the best work that I 
ever saw. I had nothing to do with the laboratories except 
being called in as an outside reviewer. The results were 
stunning for the reasons that you said. I agree with you 
completely.
    The Chairman. They are down now. They have chipped it away. 
What is it?
    Mr. Augustine. 1 to 3 percent now. Our committee addressed 
that. It is about 1 to 3 percent in most places today. We 
recommended increasing it to 8 percent. Some argue it should be 
still greater.
    But it is true that has been a source of some of the 
greatest payoff of all. The reason for that is that nobody 
knows what the good ideas are better than the people who are 
creating the good ideas.
    The Chairman. Senator Bingaman.
    Senator Bingaman. Let me ask about two of the issues that 
you discussed a little bit there. This national coordination 
office for research infrastructure that you recommend. You have 
been around this city quite a while and watched the Congress in 
action. How can we conceivably legislate something that we 
would give $500 million to and keep it all from being earmarked 
for the particular institutions that various members of the 
appropriations committees here want it earmarked for? Is there 
any way to actually do what you are recommending here? It seems 
to me to be a great concept but very hard to accomplish, given 
the reality of how this place functions.
    Mr. Cicerone. From a university perspective, right now 
there is no such capability for pay for major facilities. So 
the only alternative is earmarking. So I think instead, the 
lack of such of a fund is what is causing earmarking to 
increase. By setting up this kind of an operation and 
potentially having it go through high-level peer review, I 
think we could prevent some of the least productive earmarking.
    Senator Bingaman. Well, I like the concept. I hope that 
that would be the result. I do not know that setting up an 
additional fund would prevent earmarking or be an invitation to 
earmarking, but I wanted to raise it as an issue.
    Mr. Augustine. If I might, Senator Bingaman, I believe that 
if the legislation could specify the money is to be allocated 
based on peer review, you could do a lot to insulate against 
earmarking.
    Senator Bingaman. Well, I would hope that would work.
    The Chairman. What was it he said was an answer?
    Senator Bingaman. He said that we could specify in the 
legislation that the funds within this pool of $500 million per 
year would be allocated on the basis of peer review and that 
would help to guard against earmarking, which as I say, I would 
love to see happen.
    On the tax incentive recommendation here, provide tax 
incentives for U.S.-based innovation, you talk about provision 
of incentives for the purchase of high-technology research and 
manufacturing equipment. I was fortunate to travel to India in 
January and to visit a couple of the large research facilities, 
centers in Bangalore, that our own U.S. companies have 
established; General Electric's research center; the Jack Welsh 
center; and Intel's new center. I am sure there is a whole raft 
of others that I did not get the chance to visit.
    Are there tax reasons why those are located there? My 
impression was that they were there because of, No. 1, the 
talent and, No. 2, the cost of the talent, but primarily the 
availability of the talent was what caused them to establish 
those centers in those locations. Is there also a tax reason, 
as you see it?
    Mr. Augustine. I cannot speak to those specific centers, 
but I have talked to enough people and have lived in this world 
long enough to know that you don't put facilities someplace 
just to have a view. I think there are a lot of factors that go 
into that decision, but I think you have got it right, 
particularly the research facility. The No. 1 issue is the 
quality of the people, and if you can get the highest quality 
people, that sort of eclipses everything else.
    Now, the cost of the people is obviously a major factor 
because research facilities tend to be rich in people costs. 
But I think that beyond that--and it is included in the 
appendix to our report--when companies go through and look at 
where do we want to be located, they look at, for example, for 
a factory, the capital gains tax and so on. We are not 
competitive with much of the world. In places like Ireland and 
Singapore and India and Japan, they figured this out. And 
Finland, some very surprising places, have turned their 
economy, as you know, by just offering extremely attractive 
packages, some total tax forgiveness for a period of years. And 
that is what we have to learn to compete with.
    Senator Bingaman. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. Senator Alexander.
    Senator Alexander. Thank you, Mr. Chairman.
    The Chairman. It is getting late, but it is too exciting to 
quit, is it not?
    Senator Alexander. Senator Domenici is always worried that 
I may go on for a while.
    The Chairman. I went longer than you just a little while 
ago and said less.
    Senator Alexander. We are all very excited about this. Did 
I gather you said that you would be willing to work with 
Senator Domenici and Senator Bingaman to set up a technical 
advice follow-up group so that as we work with the committee, 
we can continue to get your advice?
    Mr. Cicerone. Certainly.
    Senator Alexander. Let me ask you about your very 
interesting idea about a core curriculum for math and science. 
I want to suggest--and this is the reason that the technical 
advisory group might be good--you work with the Governors on 
that. Going back to 1997, we had the national education goals. 
They included math, science, English, history, and geography. 
Then under the first President Bush, when I was Education 
Secretary, we proposed creating voluntary national standards 
and worked in each of those areas to do so. I guess, getting to 
the bottom line, what we found was that we cannot impose that 
on the States and the local school districts, but it seems to 
me that it can be made so attractive that many States and 
school districts would want it.
    For example, if there were--and there may be--an 
engineering and science core curriculum that were approved by 
the National Academy of Sciences, just had your stamp on it--
maybe that exists today--then Governors I think would compete 
to see how many States could adopt those statewide standards. 
In Maryville, Tennessee, where we think we have a great high 
school, we would probably want to say, well, we have those 
standards. We have the National Academy core curriculum. And if 
there were other parts to it, such as AP courses, as Senator 
Bingaman mentioned, and if that were integrated into a program 
with the national labs--in our case, it would be Oak Ridge. In 
other cases, it would be other ones--or certain research 
universities where outstanding teachers and students could go, 
I could see how, instead of imposing such a core curriculum, 
you might just create one. And it would be such a powerful idea 
that the forces that exist within our society, when combined 
with the efforts we are making for teachers and students, could 
within 10 years make it something every school would be 
embarrassed not to have.
    So what was the discussion that you all had about this core 
curriculum?
    Mr. Augustine. You have given a very good description of 
exactly what we had in mind. Our thought was to collect from 
around the Nation world-class experts in teaching and in the 
fields themselves to prepare a curriculum in science, 
technology, mathematics for K-12 that would be strictly 
voluntary, as you suggest, such that we were advising the 
Federal Government. The Federal Government obviously cannot 
impose this. But if it were so good, then we would think that 
States and local communities would voluntarily want to adopt 
it. And the idea of having the Governors take some ownership 
for this would be a tremendous promotion for it.
    Senator Alexander. Did you find, Mr. Augustine, that this 
curriculum exists today at all?
    Mr. Augustine. There are pieces of it. There are pieces, 
but there really is not an integrated curriculum of the type 
that we think is needed. It is important that we have not only 
the curriculum but that we have standards and that we measure 
the standards. We have means of measuring them. So that would 
be our hope.
    Senator Alexander, if I might footnote this with an answer 
to an earlier question you asked about should we not be 
offering scholarships and encouraging foreign students more 
actively to come here. I wanted to relate an experience.
    Recently in Singapore, where I visited Biopolis, which has 
to be one of the world's finest biological research facilities 
I have ever seen--it would make anyone in this country envious. 
The leader of that laboratory showed me a three-hole notebook 
he had about 2-3 inches thick. In it were tabs for different 
countries: United States, Israel, Germany, France. He opened it 
up and in it on each page is a student, a junior in high school 
in that country that they have spotted as one of the real 
outstanding science/technology students coming along. And they 
are going to encourage them to come to Singapore for the last 
years of high school. They will pay them to do that. They will 
pay their way through college. They will pay them to get a 
Ph.D. as long as they stay at the top competitively. Their 
belief was, he said, that if you can encourage someone to come 
before they are done with high school and stay through a Ph.D. 
and you have a good job for them when they are done, they will 
probably stay. So there is no requirement that you stay. They 
just think you will. So others have tumbled your idea. We are 
just behind on this one.
    Senator Alexander. Well, the Soviets used to do that with 
gymnasts, and Duke University does it with 8th graders. So it 
is a good recruiting tool.
    Mr. Augustine. My son-in-law played for Duke, so I will 
stay out of that.
    [Laughter.]
    Senator Alexander. But, Mr. Chairman, I would conclude with 
just as you are answering our question, by saying not a lot of 
gobbledygook, but here are the 10 things that you need to do, 
then that gives policymakers, who really do not know that, a 
place to go. We are not the only ones like that. School board 
members are being elected. Governors are being elected. They 
all really do not know what to do. So if in math and science 
they could turn to the National Academy of Sciences and you 
could say, here is what we recommend you do, I think you would 
be astonished at how many people would adopt that curriculum.
    The Chairman. And they are perplexed out there. They are 
hungry, confused. They are put upon. I taught a little math 
when I was just a youngster. Before I went to law school, I was 
a math teacher at a junior high school. The only reason I got 
the job is because I agreed to coach baseball free. They had a 
lot of applicants for my job. It is not like today. I tell you, 
even then the bucks they gave you to teach with are just 
incredible. I did not know much about it. I never did much in 
education. I was a math and science guy, and at the end I said, 
well, I do not know if I want to be in a laboratory, so why do 
I not get an education certificate. Then they said, well, we 
will hire you if you coach baseball. That sounded neat. Then 
somebody talked me into going to law school, and that is how I 
got to where I am.
    Anyway, I want to revert back to goals. In this Energy and 
Natural Resource Committee, we have some innate jurisdiction 
because we have a lot of science. Nobody knows us as a science 
group. It could have been called that, but that was not this 
committee's name.
    Now, we are involved, while we have this crisis that we are 
speaking of, in competitiveness and standard of living and 
maintenance. In fact, I would just say when we are talking, 
before I get to my point, about bringing more young people to 
come and live here, if things do not change pretty quick, they 
are not going to be interested in coming here. They are going 
to be interested in going elsewhere. There is already 
competition for certain kinds of students. Where students know 
they can come here even with our ridiculous rules, they are 
choosing someplace else. So that is over on the side.
    But let me ask on energy. I know you did not come out and 
recommend that we change our course on energy and go ahead and 
say we want to build this whole physical science and 
competitiveness challenge around a goal as big as energy 
independence. Talk about that just a minute here, each of you. 
I do not know what to do about it. I am excited and encouraged, 
but I am wondering. Let us start with you, Norm.
    Mr. Augustine. All right, Mr. Chairman. We did address the 
question of what should we build this around. I speak 
particularly to those things that affected the Department of 
Energy and specifically the ARPA-E proposal. It has been most 
of our experience that innovation occurs best when you are 
trying to solve a specific problem and not just when you go out 
and say I will go in the laboratory and see what I can learn. 
That is quite the opposite to basic research. So we needed some 
focal point for our work. As we tried to address what is the 
most important problem we could think of--and the remarks of 
Chairman Greenspan just yesterday certainly reinforced the 
importance of the energy problem, if anyone ever questioned its 
importance--we felt that provided a good centerpiece for our 
work. As I mentioned, it also is the place that the physical 
sciences, mathematics, computer science, engineering, all tend 
to come together. Much of that is in the Department of Energy. 
As you know so well, most of the research or much of the 
research in the country today in those fields is sponsored by 
the Department of Energy. So to us it was an important problem. 
It was appropriate to our goal, and so it was sort of a natural 
focus for us.
    So if I were to say what are the two focuses, if I were 
limited to only two things about what is our effort about, the 
first is to create jobs for Americans and the second is to 
provide affordable energy.
    The Chairman. Doctor.
    Mr. Cicerone. I will just add something briefly that I 
think most people would agree that the new sources of energy 
and higher efficiency have become a necessity rather than just 
a research luxury. So as a focal point, I think the committee 
felt that there is an increasing amount of necessity here, very 
interdisciplinary involving all kinds of research and 
instruction at the same time. So it was just an appropriate 
focus and it will be. We may be entering a high-price energy 
future where the matter of necessity will become even higher.
    The Chairman. I guess what bothers me is people have 
thought for so long that it is unachievable. We pop out of the 
box here. We think we have got something exceptional by way of 
the dedication and quality and the timing. We pop out of the 
box and say now we are going to convert to energy independence. 
What would happen?
    Mr. Cicerone. It is also a large goal. If this situation 
were easy, I think the problem would have been solved. I think 
people are anticipating that the easy sources of energy have 
already been found and exploited, and now we are in for a 
tougher time and that is why it has to be part of the research 
agenda.
    The Chairman. How about you, Norm? Do you think it would be 
a joke? Do you think people would take it seriously? How do you 
feel?
    Mr. Augustine. My view, Mr. Chairman, would be that people 
take this terribly seriously when people pay $50 to fill their 
gas tank and it is likely they are going to pay something like 
that for quite a while.
    The Chairman. And shortages.
    Mr. Augustine. And shortages, and when you know what it 
implies, the instability in the world politically, I think 
people will take this very seriously. Now, how easy the problem 
is to solve is another story, but we will not solve it if we do 
not try. I think there are things that we can do. We will run 
out of fossil fuel energy, as you know. I am not qualified to 
say whether it is 20 years from now or 40 years from now, but 
we will run out. So we better get started on solving the 
problem.
    The Chairman. Anything else? We stand adjourned.
    [Whereupon, at 4:55 p.m., the hearing was adjourned.]

                                    

      
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