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Obama's innovation push: Has US really fallen off the cutting edge?

Obama sees a push to innovate as the answer to a stalled economy and falling US status. Critics say staying on the cutting edge is not what ails America.

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"You're talking about a very narrow slice of our economy in these proposals," aimed more at big businesses than small ones, says Brad Close of the National Federation of Independent Business. While acknowledging the importance of innovation, he says Obama shouldn't focus on that without first addressing more immediate obstacles to job creation by businesses, regarding health-care costs, regulatory burdens, and rising federal debt.

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But experts who study how the economy grows say the role of technological gains shouldn't be played down, either. Advances in technology lay the groundwork for rising living standards – supporting jobs that, in turn, can increase demand for all those plumbers and florists. This is especially true with other nations pushing to catch up to and surpass US industries.

"If you don't have innovation, you have nothing," says Michael Mandel, an economist at the Progressive Policy Institute.

America's economic strengths

The US hasn't descended to the "nothing" end of the scale, of course. America is still the world's leader in science and technology, accounting for 40 percent of the world's spending on research and development and a similar share of patents, noted a 2008 RAND Corp. analysis. The country just can't take that leadership for granted, the report concluded.

The US still holds a clear lead in only two sectors: information technology and biological sciences, says Dr. Mandel, noting that the past decade saw fewer breakthroughs than anticipated, especially in bioscience.

If the US can't win by coasting, what should the priorities be?

The Obama administration recommends a "pyramid" model, with a foundation of education and infrastructure; a next level of policies to promote market innovation; and a top-tier focus on encouraging breakthroughs in priority industries: energy, biotech, health care, nanotech, advanced manufacturing, space, and educational technologies.

Obama's specific proposals have met a mix of praise and criticism:

Basic research. This may be the area of widest agreement. Policy experts say that government must lead in basic research, while corporations are best at applying that knowledge in product development. For government, this means both direct efforts in federal labs and also indirect support for private and university research.

Education. Obama said the US should again lead the world in college graduation rates, but critics say technical school may serve many young people better than an expensive degree.

Immigration. Business leaders generally laud Obama's efforts to make it easier for bright foreigners to work and help start businesses in the US. They argue that so-called "H1B" visas have become hostage to the debate over broader immigration policies. "We should be stapling a visa with a path to citizenship to every one of those PhDs" received by foreign students, Mr. Ackerman says.

Infrastructure. America has a deep backlog of needed upgrades to everything from airports to schools, according to the American Society of Civil Engineers. It's not high-tech, but it undergirds business activity.

"Catalyzing" specific industries. Supporters welcome the idea of government selecting promising industries to nurture. Critics say it could politicize an investment process that's best done by the private sector.

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