Government Stories 2007-2008

Stories that earlier appeared in Nelson's News 
Note 1: Carl Nelson Consulting, Inc is not an investment adviser and may hold a financial interest or client relationship in companies discussed.
(Note 2: Carl Nelson Consulting does not endorse these companies or organizations or their activities.) 
Looking for other older stories? Visit the archives


In association with the National Caucus of Basic Biomedical Science Chairs, we have tracked funding of R01 grants. We found an R01 decline, which slows progress in fundamental research and deters bright young people from entering science.  [Science, Oct 10]

reality will begin to dawn. Reaganomics is over - even the moderate, triangulating version of the Clinton years. It's time to embrace government again as part of the solution rather than as the source of the problem. And it's time to start paying for government again. Our future, and surely our children's, will depend on it  [Jeffrey Sachs, Fortune, Oct 27] ----------------- Lord, let me stop drinking (or gambling), just not yet.

After years of unfettered growth in military budgets, Defense Department planners now say they are almost certain that the financial meltdown will have a serious impact on future Pentagon spending. .... they are already analyzing worst-case contingency spending plans that would freeze or slash their overall budgets [T Shanker and C Drew, New York Times, Nov 3]  SBIR advocates have their perfect response: a larger share of the shrinking pie. What'll you have - war, economic security, and debt or some rational shrinking of the national idea that we can have it all.

Great presidents inspire but they also deliver. The plain fact is, Obama cannot deliver what he has promised. The problems he will confront are too difficult. ... Enthusiasm among Obama’s supporters is not just naive, it borders on the deranged ...  Perhaps he really believes that taxes, mandates and trade barriers can keep jobs at home and improve living standards. He has surrounded himself with advisers who think this is nonsense but they have made no detectable impression on his campaign speeches. So who knows? ... But his economic analysis often harks back to a more old-fashioned kind of liberalism, with its emphasis on redistribution, regulation and national priorities  [Clive Crook, Financial Times, Nov 2]  But then neither can McCain deliver what he promises. So, we will once get the government we deserve - fueled by promiscuous promises. Better to reduce the scale of what government  promises by having less government rather than more. Programs to help everyone simply compound the problem of fostering a responsible and achievable prosperity.

Neither candidate has owned up to the budget crunch that is certain to crimp their promises, send the country far deeper into debt, or both. Obama's assertion that his cost savings more than pay for his programs, and McCain's statement that he'll freeze most government spending and balance the budget in four years, are not believed outside their campaigns and circles of allies. [Calvin Woodward, AP, Nov 3] Belly up to the federal bar of handout programs, and don't worry about the downstream consequences.

Under democracy, one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right. --- H.L. Mencken

Taking some by surprise, NIH announced last week that scientists applying for grants will get only one chance to resubmit a rejected proposal. [Science, Oct 17]

There's no money. Unless the lame-duck session takes an unexpected turn, the next shot at boosting 2009 funding levels will come after the next president is sworn in and the new Congress takes up funding the government for the rest of the fiscal year. Depending on the economy, however, advocates may find that making the case for additional spending on science could prove even more daunting than it was in the fall.  As a friend from Congressional Research Service noted about change in the next administration: There's no money.   Similarly in Russia Show Me the Rubles. Last week, Russia's science ministry debuted a new scheme to evaluate 2500 Russian research institutes and guide funding decisions, but some scientists say it's a mistake. Following a new policy of making science effectively contribute to Russia's economic development, the scheme includes criteria such as the number of articles published by the staff, their citation impact factor, the number of international contracts, and even the gender proportion of the staff. Alexander Naumov, co-deputy director of the ministry department for scientific, technical, and innovation policy, says the assessments "will be taken into account by federal executive bodies [and] state science academies" when setting budget and planning priorities.  Russia's research funding system may need restructuring, say critics, but the new method is the wrong answer. "I tried to evaluate, according to this method, the organizations that I know," says Andrey Finkelstein, director of the Institute of Applied Astronomy of the Russian Academy of Sciences in Moscow. "One of the biggest astronomical organizations in the country appeared to be in the last place, while a very insignificant one turned out to be the most advanced one." After public comment, the ministry plans to amend and adopt the new scheme by November. [Science, Oct 10]

The Usual Silly Promise. It will be 35 years next week since President Richard Nixon, responding to an Arab oil embargo, vowed to make the United States energy independent — and do it in seven years. America is still waiting..... "As president I will turn all the apparatus of government in the direction of energy independence," McCain declared, labeling his energy agenda "the Lexington Project," after the New England town where America declared its political independence. He concedes it "has confounded" past Congresses and seven presidents.  Obama also embraces the idea. He promises as president to "make sure that we finally get serious about energy independence."  [HJ Hebert, AP, oct 31]

A Targeted Stimulus. the case for spending doesn't look much stronger: the only people who would benefit are likely to be the best-connected special-interest groups. If a MP really wanted to help the people of her riding, she should resign and force a by-election -  government money would rain down on her constituents like so much confetti. [Stephen Gordon, Worthwhile Canadian Initiative blog, Oct 30]

Connecticut Innovations released a report calling Fiscal Year 2008 “another successful year,” as the quasi-public agency funded 19 companies, a 73 percent increase over Fiscal Year 2007. Of the 19, 10 companies were new to the portfolio, the report stated. Investments, which are intended to support growth in Connecticut’s tech economy, totaled $11.5 million.  [Mass High Tech, Oct 28]

When it comes to getting the most for your money, Texas appears to have a lock on the country. The state’s four biggest cities are among the top 10 on Forbes magazine’s list of the best bang-for-your-buck places in the United States. [Austin Business Journal, Oct 16]

Choose Your Excavator. Senator John McCain’s tax and spending proposals would create larger annual budget deficits than those of Senator Barack Obama, analysts say.  [New York Times, Oct 29]  But this America where the government's budget deficit is a mere abstraction as our politicians tell us we can have it all, including lower taxes.

We're going to talk about finally ending 30 years of failed energy policy in this nation, ...  There hasn't been the political will to get us there [Sarah Palin]  When Republicans say "energy policy" they mean US drilling for oil and gas. They will not talk seriously about conservation nor renewables.

Herbert Hoover Economics. [HH]McCain says he's breaking with President Bush's economic policies and would put a tight lid on government spending. ... says his plan will create millions of jobs, protect savings and get the stock market rising again. [AP, Oct 27] While the Treasury pours a trillion into banks, insurers, and home owners, McCain wants to shrink economic activity in his pre-Keynesian world view.  But since it's politics, no one expects campaigns to make economic sense, only to appeal to various interest groups.  His next call could be for a return to the gold standard. If he were starting from scratch with a Congress that agreed with him, he might have a case for a smaller government than we have now, provided that smaller government had safeguards against the excesses of capitalism and of any majority. But we have a history and a Constitution that have given us the government we have (and deserve) built on two centuries of experience and compromise. He has to offer some sensible way to improve that government, not start over with some remote ideal.

Let Us Capitalists Alone. unfortunately in this world there is no tooth fairy. And the government doesn't create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved. [Arthur Laffer, Wall Street Journal, Oct 27]  Laffer, you might remember, invented supply-side tax theory on a cocktail napkin.

you can’t blame Mr. McCain for campaigning on trivia — after all, it’s worked in the past. ... But that was before the prospect of a second Great Depression concentrated the public’s mind. ..  But the Barack Obama voters see now is cool, calm, intellectual and knowledgeable, able to talk coherently about the financial crisis in a way Mr. McCain can’t. And when the world seems to be falling apart, you don’t turn to a guy you’d like to have a beer with (George W in 2000) , you turn to someone who might actually know how to fix the situation. [Paul Krugman, New York Times, Oct 26]

The City of Willmar MN has won a $1.25 million state grant that will help fund development of a bioscience research center.  [Minneapolis/St. Paul Business Journal, Oct 20]

European Union (EU) companies increased their research and development (R&D) investments by 8.8 percent over the past year, slightly more than U.S. companies (8.6 percent) did  [AAAS, Oct 23]

Never Enough Special Pleading. SBA said that $83.2 billion went to [small] companies in the last fiscal year, a record amount. And it said that the government was close to complying with a law requiring that nearly a quarter of federal contracts go to small businesses. ... But critics argued that small businesses were still not getting their fair share of government contracts. ... “As small businesses represent 99 percent of all firms nationwide and will be vital in leading economic recovery effort,” [Sen Snowe] said, “it is crucial that these enterprises receive every job-creating and capital-generating opportunity in the federal contracting marketplace.”  [New York Times, Oct 23]  And just what is a "fair share"?  Like taxes and art, it's in the eye of the beholder. Why be for free market competition if you can get your politicians to hand you an assured share of the economic pie regardless of your inability to prove any economic superiority?

the concern that political tax policy has the potential to put the dream at risk, or at the very least, make the dream’s goal less attractive to achieve. The expression of the political philosophy that “it’s good to spread the wealth” can be viewed as a direct threat to that dream. [SBIR Coach blog, Oct 19]  Fred Patterson, who knows a lot about small business success, failure, and taxes, takes Joe the Plumber's side about progressive taxes on behalf of SBIR business who succeed, although Joe has never shown that he understands the principle of progressive taxation.  The more you make, the easier it is to be for flat taxes. But Joe and the other small businesses and their employees ignore the burden that someone has to pay for all the things government does, including subsidies for high tech. The economic conservatives, abetted by the social conservatives, have preached for several decades that government is too big and that smaller taxes is the solution. Since they represent the higher income slice of America, they also oppose progressive taxation. But when the stock and bond markets collapse or terrorists attack, they are near the head of the line for expensive action (bailouts or war) with a side dish of lower taxes. They can always find an argument for lower taxes. Their economic arithmetic leaves out how such stuff will be paid for. Since it is futile to tax the poor to pay for government, the rich will have to bear greater burdens for the expensive action.  The ugly fact of political economy is that only the people with money can pay the bills. I've only seen two guys who step up to the responsibility of the rich to support the nation: Warren Buffet and Bill Gates Senior. Would you like to join their tiny club or are you for lower taxes and more SBIR?

What Price Resurgence? Fed Chairman's call for new stimulus couples with optimism that turmoil is abating to fuel a resurgence in stock markets. ...  new tax cuts and extra public spending  [The Times, Oct 21] Time to call in the supply-siders to explain their three-decade old theory how "fresh fiscal stimulus" (more spending and lower taxes) pays for itself.

The US government’s 2009 fiscal year began 1 October, without congressional approval for nine of 12 agencies with major R&D programs. The departments of Defense, Homeland Security, and Veterans Affairs are slated to receive substantial increases, according to an analysis by the AAAS R&D Budget and Policy Program. However, the other science-related agencies will be sustained for several months by a continuing resolution extending funding at or below 2008 levels. [AAAS, Oct 17]  

We're All Keynesians Now. -- RM Nixon. If governments did not take action, “we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what ultimate outcome we cannot predict.”   As the world reels from a 1929-style stock market plunge and a 1931-style banking crisis, his words are a fair assessment of the dangers we face once again. Keynes, whose life’s mission was to save capitalism from itself, is more relevant than at any time since his death in 1946. [Ed Crooks, Financial Times, Oct 17]  Nixon abandoned Eisenhower frugality to twist Keynes to justify running a deficit to pay for federal programs in economic good times.  Keynes advocated balance over a long cycle by running a surplus in good times and a deficit in bad times.  Since Nixon, only Clinton advocated surplus finance for as long as the 1990s capital gains bonanza lasted. W couldn't stand the temptation to use the temporary surplus to fund a tax cut that quickly drove the budget back into permanent deficit.

Brown, Sarkozy & Co have always done what President Ronald Reagan accused his own bureaucracy of doing: “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidise it.” [Irwin Selzer, The Sunday Times, Oct 19]

Raising taxes on some in order to give checks to others is not a tax cut; it's just another government giveaway. --- McCainIt rarely hurts in politics to insult the intelligence of the voter with half-truths and half the relevant facts.  And it never hurts a Republican to be against progressive taxation while ignoring the total tax progressivity after wage taxes and sales taxes are considered. McCain of course didn't remind us that part of the "giveaway" was a bailout of the Masters of the Universe on Wall Street.

Loaves, Fishes, and Earmarks. McCain’s campaign announced that the] would not freeze science funding. Although McCain has stated as part of his platform that he would keep discretionary funding flat, Ike Brannon, a campaign advisor, stated that it would not relate to science and that McCain "hopes to be able to find savings from earmarks, from unnecessary subsidies, and from other programs that could then be applied to research."  [AAAS, Oct 16] The McCain economic fantasy whereby every interest with a voice can keep its benefits just by  avoided earmarks. If you judge by how often he claims it, you have to conclude that he is either a complete liar or that he actually believes such math. Why not, since the rest of the government believes it, too? BTW, does unnecessary subsidies include SBIR?

[Herbert Hoover] McCain was asked how he would deal with the economic crisis, he answered: “Well, the first thing we have to do is get spending under control.”  But,  The responsible thing, right now, is to give the economy the help it needs. Now is not the time to worry about the deficit.   [Paul Krugman, New York Times, Oct 17] 

Where Government Spin Rules. Last week, the RTS stock exchange suffered its worst trading day on record, plunging 19 percent. The markets were hit after oil prices — the backbone of Russia's economy — slid heavily amid mounting concerns over the global economic meltdown. But in Russia, it didn't even make the evening news on the three state-controlled channels. [CATRINA STEWART and NATALIYA VASILYEVA, AP, Oct 15]

Oiling the Biggest Machines. The USG is expected to take stakes in nine of the nation's top financial institutions as part of a new plan to restore confidence to the battered U.S. banking system, a far-reaching effort that puts the government's guarantee behind the basic plumbing of financial markets. Even Qatar is doing it: pledging investments of as much as 20% of each publicly traded bank's market capitalization  [Monica Langley, Wall Street Journal, Oct 14] For those who grew up with only electronic gadgetry, the usual best solution for a mechanical binding problem is lubrication. Confusing the picture is that While America buckles in for years of sacrifice, the five chiefs took a different approach. The group pulled straight from the what-government-can-do-for-you school of 2006, lobbying for Wall Street tax breaks, the repeal of Sarbanes-Oxley and against the distraction of class-action lawsuits. Some of this may be sensible. But in light of a bailout already approaching $1 trillion -- including direct taxpayer injections into bank shares -- it also seemed politically suicidal.  [Dennis Berman, Wall Street Journal, Oct 14]

Insult Your Base.  McCain's recent demonizing of Wall Street made it tough to lure contributors ... [After] a conference call with Merrill Lynch Chief Executive John Thain, J.P. Morgan Chase Vice Chairman James B. Lee Jr. and Blackstone Group CEO Stephen Schwarzman [who] urged a calm reaction to the crisis, to help reassure roiling global markets.  Sen. McCain later declared on the stump: "In short order, we're going to put an end to the reckless conduct, corruption and unbridled greed that have caused the crisis on Wall Street."   [Wall Street Journal, Oct 14]

Where is Safety? Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets. [Rob Taylor, Reuters, Oct 9]  If you are a hyper-nationalist, you will reject any notion that any other place could be better than America. If so, you are probably also susceptible to politicians wrapping themselves in the flag as though they owned it. 

Unimpressed by Charles de Gaulle's droll observation that the graveyards are full of indispensable men, Michael Bloomberg, New York City's 108th mayor, has decided that he is indispensable [George Will, Wash Post, Oct 12]

Famed scientist Richard Leakey warned that the worldwide credit crisis will be "just devastating" to scientific research in coming years. [Jon Gambrell, AP, Oct 9] Hyperbole!  Although it's certain that less money will produce less science, that is only "devastating" if your project gets cut.   The Pentagon budget, and lucrative weapons programs, could face cuts to pay for the Wall Street bailout, defense-industry executives say. [August Cole, Wall Street Journal, Oct 10]

Let Free Markets Decide.  Get rid of two problems and save a pile of government spending:  decriminalize recreational narcotics. The U.S. pushed NATO allies to order their troops to target Afghanistan's heroin trade to stem the flow of drug money to the widening insurgency against the international military mission. [AP, Oct 9]  The lawless profits will disappear into a regular market like alcohol, and the government can reduce its costs for enforcement of drug trade and the crime that results. Unlikely, since the Republican moralists far outnumber the true free marketers with political courage.

Unimpressed by Charles de Gaulle's droll observation that the graveyards are full of indispensable men, Michael Bloomberg, New York City's 108th mayor, has decided that he is indispensable [George Will, Wash Post, Oct 12]

Famed scientist Richard Leakey warned that the worldwide credit crisis will be "just devastating" to scientific research in coming years. [Jon Gambrell, AP, Oct 9] Hyperbole!  Although it's certain that less money will produce less science, that is only "devastating" if your project gets cut.   The Pentagon budget, and lucrative weapons programs, could face cuts to pay for the Wall Street bailout, defense-industry executives say. [August Cole, Wall Street Journal, Oct 10]

Let Free Markets Decide.  Get rid of two problems and save a pile of government spending:  decriminalize recreational narcotics. The U.S. pushed NATO allies to order their troops to target Afghanistan's heroin trade to stem the flow of drug money to the widening insurgency against the international military mission. [AP, Oct 9]  The lawless profits will disappear into a regular market like alcohol, and the government can reduce its costs for enforcement of drug trade and the crime that results. Unlikely, since the Republican moralists far outnumber the true free marketers with political courage.

one line currently making the rounds is that the only things anyone wants to buy right now are Treasury bills and bottled water ... we have a globalized financial system in which a crisis that began with a bubble in Florida condos and California McMansions has caused monetary catastrophe in Iceland. We’re all in this together, and need a shared solution.  [Paul Krugman, NY Tines Oct 10]

Where is Safety? Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures< shake world markets. [Rob Taylor, Reuters, Oct 9]  If you are a hyper-nationalist, you will reject any notion that any other place could be better than America. If so, you are probably also susceptible to politicians wrapping themselves in the flag as though they owned it. 

Let's elect adults this time. A draft report by American intelligence agencies concludes that Afghanistan is in a “downward spiral” and casts serious doubt on the ability of the Afghan government to stem the rise in the Taliban’s influence there, according to American officials familiar with the document. [M Mazzetti and E Schmitt, New York Times, Oct 9]  Our National Command Authority took its eye off the prize in 2002 when it decided to "fix" Iraq.  Now, as the enemy has re-grouped in Afghanistan and Pakistan, we have neither the strategy nor the ready forces to re-engage.

The Fed said it will bypass ailing banks and lend directly to U.S. corporations for the first time since the Great Depression [Wall Street Journal, Oct 8]

New York state lawmakers are bracing constituents for a third round of major budget cuts this year, a ripple effect of the crisis on Wall Street. ... New York's budget relies on the financial sector for 20% of overall state revenue.  [Wall Street Journal, Oct 8]

What's Fair? The Committee chair from his pulpit asked: Your company is now bankrupt, our economy is now in a state of crisis, but you get to keep $480 million. I have a very basic question for you: Is this fair? --- HENRY WAXMAN chairman of the House Oversight Committee, questioning Lehman Brothers CEO Richard Fuld over the bank's collapse last month. The victim of this political theater could have replied: Congressman, since I abided by the rules that the Congress  made, it would not be fair to rescind those rules retroactively. If the rules produce a result that you don't like, then change the rules for the future.

Officials pretend they’re coming up with policy responses, but much of what they do is political theater. [David Brooks, New York Times, Oct 7]

The American Dream of home ownership for all is a fraud. Politicians who pimped this dream created an unsustainable mortgage industry whose collapse is only surprising because it didn't happen earlier. America's mortgage industry will not recover, nor deserve to recover, unless it is prepared to challenge this politically unpalatable reality. [an Australian, Investors Daily Guide]

SBIR Insider, Rick Shindell, reports that the Senate SBIR bill is going nowhere because Dr NoPork Coburn fights passionately against bills with earmarks, and those with what he deems to be of questionable fiscal responsibility.  He has a questionable reputation of support for small businesses. For now, with Congress focused on bigger problems and a need to get re-elected, SBIR has a temporary extension through March 20, 2009.

Good State, Bad State. When the DCI survey participants were asked to name the most favorable state business climates, Texas got the highest overall score, followed (in order) by North Carolina, Georgia, Florida and Tennessee (tied), Nevada, and South Carolina.  When participants were asked to name the least favorable state business climates, California topped the list, followed (in order) by New York, Michigan, New Jersey, Massachusetts, Illinois, and Oregon. ---  Source: “A View from Corporate America: Winning Strategies in Economic Development Marketing,” Development Counsellors International, July 2008.

Ever mindful of the danger that George Bush will lead us down the road to Socialism, we will be monitoring this very closely.  ---BARNEY FRANK, responding to a speech by US Rep Jeb Hensarling warning about the bailout's socialistic tendencies.

More Government, Please. Craig Overmiller's Austin-based company has nothing to do with banking, politics or Wall Street.  ... As co-founder of Texas Solar Power (no SBIR), Overmiller has plenty to gain — or lose. Included in the Emergency Economic Stabilization Act of 2008 is an extension and expansion of a solar power investment tax credit for consumers and businesses that Overmiller estimates could add $2 million a year to his company's $6 million in annual sales. [Bob Keefe, Austin American-Statesman, Oct 3]

"Bailout is from when I was against the bill," the veteran South Florida Republican jokingly corrected her. "Now it's economic rescue legislation. You gotta get the lingo."  Ros-Lehtinen's new perspective was one congressional leaders were hoping other lawmakers shared as well. After three days back home, ...  [Allan Fram, AP, Oct 3]

$100B Here, ... the newly added tax provisions of the bill alone will cost the government an additional $110.4 billion by 2018, according to a just-released study by Congress' Joint Committee on Taxation. Only $3.4 billion of that is related to the "bailout" portion of the bill. The AMT fix and the extension of certain tax incentives will cost $107 billion over the next 10 years. [Forbes, Oct 2] ... and pretty soon you're talking real money.  Each $100B means $300 for every head of the population. If the flat-taxers got their wish, babies would pay the same $300 as Bill Gates, although they fantasize that a "democratic" flat-tax government would resist the urge to buy votes with handouts.

The Senate saw fit to dig the national economic hole a little deeper by adding "sweeteners" to the bailout bill, and then congratulated each other on their bipartisanship.

The global financial system is out of control, and in Washington no one is in charge. ... America's reputation may not recover from having forfeited leadership at the time when its leadership is most desperately needed to restore confidence in a panicking world. This is not the pragmatic, courageous America we thought we knew. [Camilla Cavendish, The Times, Oct 1] ...  The era of the self-regarding, massively self-rewarding independent investment banker, the financial colossus of the past few years, is over. ...  The centre of financial gravity has abruptly shifted to Washington. .... The writer and economist John Kenneth Galbraith identified the essential ingredient of financial feel-good: “Speculation on a large scale requires a pervasive sense of confidence and optimism and conviction that ordinary people were meant to be rich. [Ben Macintyre, The Times, Oct 1]

President George W. Bush used Monday's drop in equity markets to argue the need for quick congressional action on a rescue plan, and said his advisers will begin working with Congress on a new solution  [Wall Street Journal, Sep 30]  The good and the bad news is that he long ago lost any audience. 

The extension of the research-and-development tax credit didn't make it through the House as it usually does, as Democrats leaned toward PayGo instead of merely adding to the deficit with every handout. Tax credits for renewable energy sources gut hit the same way. The House and the Senate conceded Monday that they were in a stalemate over proposals to provide tax incentives for the production and use of renewable energy, leaving the future of the nascent industry in limbo. [Robert Pear, New York Times, Sep 30]

[SECDEF Gates] challenged those who advocate investing in smaller numbers of higher-technology weapons in a belief that war can be revolutionized, fought at long distance with American forces never getting bloodied. [Thom Shanker, New York Times, Sep 30]

Rescue and Decline. The politicians happily trumpet their saving the banking system. Actually, they did the thing it is easiest for politicians to do: divide other people's money in a compromise that gives something to anyone with a veto power. They made no effort to raise the money except form vague ideas about the government making money on the deals or taxing the banks (and their lobbyists) five years or more from now. The Europeans and the Asians aren't so convinced, and their markets started down Monday morning (where they are).  Anyway, the free lunch is a mirage as The success of the pending rescue of the U.S. financial system probably depends as much on the central banks of China and the Middle East as on Congress and the Federal Reserve, because The U.S. is turning to foreign governments and other overseas investors to buy a good chunk of what could total $700 billion in Treasury debt expected to finance the bailout. ...  an unmistakable sign of U.S. economic decline [Bob Davis, Wall Street Journal, Sep 29]

Purely Political. On one side [of the SBIR debate] are folks like John Butler, chief scientist and a principal at Image Acoustics in Cohasset, MA. Butler says the SBIR funds account for as much as 70 to 80 percent of the budget for his five-person firm, which designs underwater sound transducers for the Navy. [Jon Chesto, Quincy Patriot Ledger, Aug 24, 08] The government SBIR data bases show Butler's firm with about $5M SBIR since 1997 which is enough to support most of five people full time. Although there is nothing obviously wrong with the company, will such a firm and its technology ever make an economic return that justifies calling the $5M an "investment"? The public may never find out since the firm is private and the government managers have an incentive to ignore the ROI question as long as they get the contract R&D they are paying for. But, of course, the SBTC wants to largesse to continue. To that end, its honcho Jere Glover (tireless SB advocate) published a piece in the Buffalo News [Sep 22] touting the program's success in helping 17000 firms nationally with 3000 New York firms getting $1B.  And the investment has paid off: The program’s firms employ 1.5 million people, including 450,000 scientists and engineers, and have received 84,000 patents, far more than American universities over a similar time period. What Glover doesn't say is that the same money would have supported the same number of jobs and patents wherever it was spent and he offers no evidence of any significantly higher economic return than would have happened anyway with the money in open competition for R&D "investment" by the federal agencies (which wouldn't be expected to come up with much economic return anyway). The bottom line: the case for SBIR remains purely political.

Bernanke and Paulson should have made outrageous promises at the hearings and argued there is no way this will cost the taxpayer $700 billion, that the taxpayer will in fact make money. That works much better on the American psyche. America loves buying lottery tickets. Think of the bailout as a lottery ticket with much better odds. [Deal Journal at, Sep 26]

How directly will small business lending be affected by the ongoing financial crisis and forthcoming bailout? The evidence is mixed. Treasury Secretary Henry Paulson told Congress that the $700 billion plan was needed "in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy." Business owners with bad credit, unproven ventures, or companies tied to troubled industries such as housing have had a particularly hard time borrowing, but many banks still want to lend to established firms with good credit and collateral. There's no question some companies are having credit cut off. In Ohio, banks are refusing to renew lines of credit and calling in loans made to decades-old family businesses that are current on payments, according to Dayton bankruptcy and workout attorney John Rieser. (Source: BusinessWeek) [Investor Daily Guide, Sep 26]

Creative accounting, I love it. “Kenny Boy” would be proud Comment by Wendy Gramm (not verified as the real Wendy Gramm of Texas)- September 26, 2008 ...  a $700 billion price tag, and it will mean a huge amount of government spending. However, due to accounting rules it likely won’t have any effect on the 2009 budget deficit.  In congressional testimony earlier this week, Peter Orszag, director of the nonpartisan Congressional Budget Office, told lawmakers that the program should be treated on net-expected-cost basis. The cost wouldn’t be recorded as gross outlays, but as “the purchase cost minus the expected value of any estimated future earnings from holding those assets and the proceeds from the eventual sale of them.” Since the value of the assets will be set by what the government pays, the program should at least be budget neutral in the near term. [Real Time Economics, Wall Street Journal, Sep 26] The government pays real money for junk of unknown value and treats it as a capital investment, not consumer spending. Which would be normal at IBM, but the government doesn't do capital budgeting, unless the payout is so big and controversial that some way is needed to hide its current effect. There's also the danger of convenient memory when the eventual sale produces revenue and the Congress treats it as current income to cover its astronomical budget deficits of FY2015. Keep it simple: make any outlay a current outlay.

Bailouts Take Priority. proposed 2009 increases for key science agencies such as the NSF and DOE’s Office of Science could be on hold until next spring. [AAAS, Sep 25]

Payback Time. Bush-Cheney had a fun five years peddling their monarchic programs to a docile Republican Congress with a bare minimum of facts and a generous portion of disdain for the Legislative Branch. Now the president-king says "pony up $700B immediately so I can do my thing for the bankers." Only our way, say both parties in Congress; anyway, why should we believe you about the urgency? We've heard your wolf cry and seen your act before about invasions and eavesdropping.

Bush warns of ‘long and painful recession’ in the American political urge to stop any recession, this time at the cost of borrowing another $700B.  Classic 'kick the can' in the model that America is so strong that it can do anything it wants with no serious consequences at least in the present. How much patience do they think our creditors have?  How can we demand that our politicians think of the long term? 

Above all, please, competence.  Mr Paulson was personally responsible for suddenly turning the painful but manageable credit crunch that had been grinding away 18 months in the background of the US economy into a global catastrophe. Mr Paulson's appearances on Capitol Hill, marked by the characteristic Bush-era combination of arrogance and incompetence, ...Henry Paulson is to finance what Donald Rumsfeld was to military strategy, Dick Cheney to geopolitics and Michael Chertoff to flood defence. .... as US Treasury Secretary he does not know what he is doing. His recent blunders, starting with the “rescue” of Fannie Mae, have triggered unintended consequences around the world, resulting in the death-spiral of financial values. But last Friday Mr Paulson outdid even these Rumsfeldian achievements, when he demanded $700 billion from Congress for a “comprehensive and fundamental” solution to the global financial crisis, without apparently having any idea of what he would actually do. The good news -   his blunders no longer matter very much.  [Anatole Kelstsky, The Times, Sep 25]

Obama says middle-class tax cuts are "absolutely necessary" for an economy that could be sliding into recession. [AP, Sep 23]  Great, another big class of earners citizens who won't have to pay for the gigantic deficits. Borrow our way to prosperity for all and sundry. Whom, then, shall we tax for our spending, including the Iraq war, on behalf of those all and sundry? Ah, of course, we'll cut $10B in "pork" to balance the $700B for financial bailouts. What's pork? Money spent in some other district for the kind of things we elect our representative to get for us.

Bailout Plan #23 The Meltzer Plan Talking on the NewHour, economist Allan Meltzer says he does not like the Treasury Plan to end the financial crisis and proposes an alternative:   if they're going to do something, then what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think -- that's an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them. People paid back the loans. They weren't allowed to pay dividends until they repaid the loans. They weren't allowed to take bonuses until they repaid the loans. I think that's the way -- if we're going to do this, then that's the way we should do it. [Greg Mankiw's blog, Sep 24]  Everybody's got a plan, but the Dems in Congress say that no plan is going anywhere until the Republicans support it.

Obama said he would slash federal spending on contractors by 10% and saving $40 billion.   Unfortunately for his plan, the contracts most likely to be cut are out in the country where he is running against Washington, and the Beltway Bandits will do fine. The good news for him is that the people out there don't know those realities.

More Silly Speech. McCain, who only a week ago said the economy was fundamentally sound, now says the U.S. financial system is facing a major crisis. ... "the most serious crisis since World War II." But, there's still the free lunch.  he would not raise taxes [which] in tough economic times that makes problems worse.  [AP, Sep 22] Borrow a trillion more dollars (from some fools) and offer no provision for repaying it. How much more would your bank extend your credit line if you took the same approach?  Apparently infinitely, since such overlooking of credit rating got us in this mess in the first place. Remember to vote Nov 4 for the lesser fool since the the candidate is likely to make equally silly speech.

Windvane McCain, the former anti-regulator,called for greater oversight of the Bush administration's proposed bailout of U.S. financial markets, saying the massive $700 billion plan being crafted by Treasury Secretary Henry Paulson needed broader supervision. [AP, Sep 22]

A Lobbyist's Dream. Stand aside or you'll get trampled by the lobbying rush in Washington as Congress and the Treasury write a panic bailout plan in the heat of a presidential campaign. Time is short and the stakes are huge.

More Free Lunch. a $700 billion financial markets rescue plan to Congress where Democrats immediately questioned its impact not only on Wall Street, but on homeowners and taxpayers as well.  ... with a provision that Decisions by the treasury secretary related to the buyback program could not be reviewed by any court. [AP, Sep 20] A get-well card for financiers,  something for workers and home buyers, some pork just to taunt McCain, and no one has to pay a penny in additional taxes to fill the hole. It will as Bill Clinton said, "blow a hole in the deficit."  But the negotiations have just begun and the courts have a way of finding themselves a role when an authority-happy Executive conspires with Congress to curtail what the courts may see as a Constitutional right by some future damaged claimant.

despite the abracadabra routine being staged in Washington, the stock market hasn't suddenly become predictable, and the future hasn't become miraculously clear. One of the only certainties is a mushrooming Federal debt as the Treasury borrows to fund the bailout of Wall Street's shameful bacchanalia. [Jason Zweig, Wall Street Journal, Sep 20]

Want More Casino Markets? McCain said Friday the Federal Reserve needs to stop bailing out failed financial institutions. .... the Fed should get back to what he called "its core business of responsibly managing our money supply and inflation."  [AP, Sep 19]  Uh, nice idea in a "normal" financial world. But had he heard that the credit markets had frozen up for lack of trust in any financial institution's credit worthiness?  And if so, does he have a good alternative to some kind of government intervention? Since before 1844 central banks have been in the business of managing financial crises. That's what they do. Milton Friedman is spinning in his grave. The prevention of large-scale bank failures--"bailouts," in McCain's terms--is an essential part of responsibly managing the money supply. John McCain does not know that. And nobody working for John McCain knows that [Brad DeLong, Sep 19]   Has he forgotten his role in the S&L crash of the 1980s and his patron Charles Keating in a similar atmosphere of loose regulation of financial markets? Is he for more or less such loose regulation that led to undercapitalized firms guaranteeing credit default swaps (and other dazzling derivatives) when they had not the means to deliver on their contractual obligations? No shortage of armchair generals though. But it’s no use whining about the prospect of a financial rescue plan. Today’s U.S. political system isn’t going to follow Andrew Mellon’s infamous advice to Herbert Hoover: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” The big buyout is coming; the only question is whether it will be done right. [Paul Krugman, NY Times, Sep 19] Shortly after McCain's quip, Bush announced a broad government rescue plan and acknowledged that it will put a significant amount of taxpayers' money on the line, and with the usual straight face Rep. Roy Blunt, the No. 2 GOP leader in the House, suggested the rescue can be handled without a tax increase.  Hundreds of billions for bailout and not a penny for taxes - sounds like the Democratic Republican Jefferson.  What magic; another free lunch  from supply-side economics.  The president has never told Americans they cannot have it all; and, indeed, this trust-fund baby who never had to balance a personal budget led the way. In his term of office, he has added a staggering $32 trillion to the unfunded government liabilities future generations of Americans will have to bear. And he has borrowed and borrowed from the Chinese to ensure that the consequences of his fiscal madness will never come back to punish him. [Andrew Sullivan, The Sunday Times, Sep 21]

foreign purchases of U.S. assets bankroll the deficit spending of the U.S. government and consumers. For approximately forever, economists have warned foreign investors will finally lose patience with the game. That day has stubbornly not arrived, as U.S. markets have long been the safest, deepest, most-liquid markets in the world. Someday, however, if and when democracy arrives in those places, "These countries will face a political and economic reckoning, when their own citizens will ask why they're sending cash to the Americans so it can be lost in risky derivative instruments," says Joseph Brusuelas, chief economist at Merk Investments, an investment-advisory firm [Mark Gongloff, Wall Street Journal, Sep 19]

Think this is pain? The broad U.S. stock market has fallen about 5% this quarter. Worst Crisis Since '30s, With No End Yet in Sight But it is the best performing in the world (at least in dollar terms), according to Standard & Poor's. A motley crew, including Norwegians, Brazilians and Russians, has suffered drops of 35% or more.  So much for the rest of the world decoupling from a struggling American financial market.  The supply siders get their wish:  A slowdown in tax revenue in 2009 could do more damage than the bailouts, a senior administration official said. "The much larger effect is what's going on with the overall economy and the effect on receipts," the official said. "It traditionally has gone up or down by hundreds of billions" based on swings in the economy. "That's what we're most concerned about anytime we estimate."  [Wall Street Journal, Sep 18] The administration sent out its least credible spokesman (the guy with a 30% approval rating) to declare that it was concerned and was working the problem.  The Republican presidential candidate said he would fire the SEC Chair, a former Republican Congressman, reminding us that Bush's first SEC Chair was also fired. Maybe the good news is that the administration point man got to be the boss of Goldman- Sachs, as did one of his predecessors, also highly regarded as an adult in a crisis. McCain, long an advocate of small government and less regulation, moved sharply toward the other end of the spectrum this week, promising to crack down on "the greed and mismanagement of Wall Street and Washington." In the text of a speech he delivered Tuesday in Florida, Sen. McCain said, "In short order, we are going to put an end to the reckless conduct, corruption, and unbridled greed that have caused a crisis on Wall Street."  [M Phillips et al, Wall Street Journal, Sep 18] Meanwhile, a McCain business advisor, Carly Fiorina said neither McCain nor Palin was ready to run a big business like HP.

The media is turning the news into a presidential video game. "Hurricane Ike" or "Wall Street Meltdown" appears onscreen, and the media boots up Barack Obama and John McCain to see how well they talk the problem. Mostly they are speaking gobbledygook about things they barely understand. Whatever a credit default swap is, I'm against it. The public is left to wonder if they are voting for a commentator in chief or commander in chief. [Daniel Henninger, WSJ, Sep 18]

An Opening is what Obama drove through when McCain said he would fire the SEC Chair:  I think that's all fine and good but .... In the next 47 days you can fire the whole trickle-down, on-your-own, look-the-other way crowd in Washington who has led us down this disastrous path. Don't just get rid of one guy. Get rid of this administration. Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem. [AP, Sep 18]  McCain should have known better; the problem isn't any individual appointee but the structure of the regulatory system. We've gone from too much to too little as the nature of the financial system adapted to the technology of instant money transfers in the hands of more imaginative manipulators than the government has checkers that could stay in the game with them. After all, they love Reagan's idea that government isn't the solution, government is the problem. 

Rescuing financial giants, an endless war in Iraq, stimulating the economy - at least a trillion dollars - all as though the money borrowing well was bottomless. And they call themselves "conservatives."  Eventually we will pay for it all as the government debauches the money by simply creating more of it since they have not the will to raise the needed taxes to pay for it. There never was a free lunch. 

The Senate passed a $612B defense budget which the Center for Defense Information notes is only the larger part of the national defense spending of $850B after adding in such items as Iraq war supplementals, Homeland Security, Veterans Affairs, and a proportional part of the national debt interest. [data from Winslow Wheeler, CDI]  The SBIR advocates have a response: we want a bigger share of the bigger pie.

The $850B national security spending piles on even more national debt as the Masters of the Financial Universe commit unknown billions at a whack to stabilize the financial markets after the orgy of dicey mortgages and credit default swaps in which no one knows the degree of exposure to more tens of billions. Plus: Support seemed to be growing quickly on Capitol Hill for $25 billion in loan guarantees to assist the auto industry.  [NY Times, Sep 18]  Anyone longing for the brief days of Y2K budget surpluses that were paying down the national debt?  Although the adults at the time knew that the magic could not last forever, they were at least using the temporary capital gains tax revenue to prepare for the coming rainy days.

More Government, Please.  Minnesotans are jittery about the state of the economy and are convinced the federal government isn't doing enough to help them out. [Minneapolis Star Tribune, Sep 16]  Does that portend a Franken victory for the Senate seat because Republicans don't want the government to help people?  Or is it just the old adage that people want more government than they are willing to pay for?

A Few Months Only. Gail and Jim Greenwood announced in a recent newsletter that: 'We have just heard that Congress has taken a stop-gap step of continuing the SBIR program "as is" through March 2009.' [SBIR Alerting Service, Sep 5]  Do a Sarah - ask for your share of the  pork pie before you later claim that you hate pork. Tell your Congresscritters that if a little bit is good, a whole lot is better, even if you cannot prove that the good was reaped by anyone except you.

NIH has awarded its first round of EUREKA grants for exceptionally innovative research. A total of $42.2 million was awarded to 38 projects. [AAAS]


neither candidate has the vaguest idea how to get the budget under control [Irwin Stelzer, Weekly Standard, Sep 12]  All beneficiaries want more and all taxpayers to pay less. And the candidates assure the public that they can have more government than they are willing to pay for. Whom do we blame for the ills of our highest political goal - self-government?

But just as the triumph appeared to be complete the innermost sanctum of the global capitalist system suddenly collapsed. [Anatole Kaletsky, The Times (London), Sep 12]  Surely if it OK for government to bail out big banks, it is OK to distort federal R&D by forcing it to subsidize uncompetitive small companies.

Fill Every Wish, It's an Election. The CBO said the fiscal 2008 U.S. budget deficit will be more than double the 2007 figure.  [WSJ, Sep 10] As the candidates tout great programs to shower on today's voters. But There are real worries the government can't cure. The global economy is slowing. Credit is tight. Stocks are not cheap - adjusted for inflation, the S&P 500 is as expensive relative to its trailing earnings as it was in August 1987 or March 2000, just prior to very bad market periods.  [Wall Street Journal, Sep 10]

worth overdoing? Here's a prediction: The media will report today that the federal budget deficit is big and getting bigger. What most of them won't report, alas, is that the cause of these deficits is an explosion in federal spending. The era of big government is back, bigger than ever. The real news in yesterday's Congressional Budget Office semiannual report is that federal expenditures on everything from roads to homeland security to health care will on present trends reach 21.5% of GDP next year. That's a larger share of national output than at anytime since 1992. If the cost of the federal takeover of Fannie Mae and Freddie Mac prove to be large and are taken into account, next year federal outlays could be higher as a share of the economy than at anytime since World War II. (Source: Wall Street Journal) [Investor Guide Daily, Sep 10] Can you think of any great ideas for more and bigger federal programs?  Anything worth doing is worth overdoing? If you want more federal program stuff, how do you propose to pay for it other than cutting somebody else's bigger and better program?

many American voters wish the U.S. industrial economy of the 1950s and '60s could be restored, and with it the sweet deal unskilled workers enjoyed. Politicians fail to pander at their peril, and globalization is often held at fault for economic insecurity.  .... [Obama's economist] Goolsbee says: "the last eight years' degradation of the budgets for science and its general politicization are so upsetting. The government's commitment to investment in advanced training of our own people has plummeted, so now something like two-thirds of those gaining science and engineering PhDs here aren't U.S. citizens. For many years America led globally in the percentage of 25-year-olds with college degrees. Now the U.S. is 31 in the world--right behind Bulgaria and right above Costa Rica. but then  Generations of the best and the brightest have come and gone in Washington, DC, usually without effecting significant changes.    [Mark Williams, MIT Tech Review, S/O 08]

Dig, Dig, Dig the Hole.  With the economy the No. 1 issue just eight weeks from Election Day, majority-party Democrats are trying to push a second stimulus package through Congress to follow the tax rebate checks sent out earlier this year. [A Taylor, AP]  and the next president is likely to face a shortfall in January of well over $500 billion, congressional budget analysts said [L Montgomery, WashPost]

The cost of the government’s [FNMA] intervention could rise into tens of billions of dollars and will probably be among the most expensive rescues ever financed by taxpayers. [New York Times, Sep 7]  Meanwhile, both presidential candidates have great plans to re-vitalize the US economy by .... pumping in money they don't have. Tax cuts or stimulus have the same effect: economic activity from borrowed money. Just like improving your family life with your credit card. How and when will it be re-paid? That's for some future election. But since the voters don't want to hear about responsible austerity, the only recourse is printing money - inflate away the debt, what governments have done for centuries. The deed will be showcased as reducing the debt as a percentage of GDP which will grow faster than real GDP by the degree of price inflation.

Plans Galore. We now have a significant advanced technology trade deficit, a turnaround from the surpluses we ran in earlier decades. In 1980, the U.S. share of world advanced technology exports was a robust 29 percent; in 2005, the most recent data show, that was down to an anemic 12 percent. .... the number of Chinese undergraduates with degrees in the natural sciences and engineering has gone from half that of the United States twenty years ago to more than twice that of the United States now.  ... The president ended up opposing most of the funding increases he had originally called for in his initiative.   ...   not a difficult issue to explain to voters, and the amounts of money involved are not large in the context of a $3 trillion budget.  [Norman Ornstein, AEI, Aug 8]  Every wonk has an imperative agenda for the nation that will require only a small fraction of the federal budget. But the number of wonks multiplied by their small budget fraction would overwhelm the available money. Oh yes, and wouldn't more SBIR be a great idea?

I have now watched a brace of US presidential nominating conventions. This has been a truly mind-numbing and depressing experience - a complete triumph of appearance over substance [William Buiter, Financial Times, Sep 5]

Change and No Change. Let me just offer an advance warning to the old big-spending, do-nothing, me-first, country-second crowd: Change is coming.  So says the candidate of the party that has held the White House for eight years and the Congress for ten of the last twelve years. Tom Toles's cartoon [Washington Post, Sep 5] has the candidate say Watch out Mr Bush! With the exception of economic policy and energy policy and social issues and tax policy and supreme court appointments and Rove-style politics, we're coming there to shake things up! You don't need a long memory to remember that W also promised a better Washington. Go ahead and vote for your favored blatherer, but don't expect the vested leopards that drive federal policy to change their spots.

Don't Share  I. A federal jury in Knoxville, Tenn., convicted a retired university professor on conspiracy, wire fraud and export control charges yesterday for improperly sharing sensitive technology with students from China and Iran.  Plasma physicist J. Reece Roth faces more than a decade in prison when he is sentenced early next year. Prosecutors say the professor emeritus at the University of Tennessee exchanged restricted military data with foreign research assistants and traveled overseas with electronic versions of sensitive materials on his laptop computer. ... among the first in which the government sought to punish a defendant for distributing scientific know-how rather than equipment to foreigners studying at universities with military research contracts.  [Carrie Johnson, Washington Post, Sep 4]

Federal funding of academic science and engineering (S&E) R&D failed to outpace inflation for two consecutive years, says NSF[SSTI, Sep 3]  The really bad news is that the nation's finances should require a third and more year of relative shrinkage. Unless we just keep muttering "growth" as the escape route. For if real growth doesn't happen, we would have to shrink the debt by moving the decimal point(s) with hyperinflation. More really bad news comes from the realization that we don't know where the required growth would come from. We just require our politicians to keep saying it without having any credible policy for achieving it.

“Citizens”, he remarks with justice, “yearn for a restoration of a mythical Old Republic. Yet one might as well hope for the revival of the family farm or for physicians to resume making house calls.” Beginning with the election of John Kennedy, he writes, “the occupant of the White House has become a combination of demigod, father figure, and, inevitably, the betrayer of inflated hopes.”  [The Economist reviewing Bachevich's The Limits of Power, Aug 30]

if the present New Orleans is to remain viable, it will be because federal money makes it so.  Just add it to the list. Final liability for more and more of life's risks is being assumed by the federal government ...  Voters and officials in New Orleans still view it as a "problem," of course, when apartment building owners can't find insurance at an affordable price. A better word would be "solution." What is the function of insurance, after all, but to provide price signals to encourage safe choices over dangerous ones?   [Wall Street Journal, Sep 3]  It extends the reach of the idea that anything bad should be illegal and anything good should be done by the government. Insuring vulnerable property owners and pushing money to high tech small business - both flying in the face of sensible free-market economics.

A recent paper by Zoltan Acs, Wiliam Parsons and Spencer Tracy, published by the SBA's Office of Advocacy, confirms this belief by finding that a very small percentage of firms are responsible for almost all revenue employment growth in the U.S. These high-growth firms can exist in any industry, but on average, they are younger than the average business. Still, the average age for a high-growth firm is 25 years, older than the nascent businesses that are the focus of much TBED activity and regional growth strategies. The study suggests that regional and state policymakers should follow a balanced approach that supports both new and expanding businesses. ... builds on research done by David Birch, who developed the concept of gazelle firms in the 1980s and 1990s ... The researchers suggest that, in light of this data, local economic development organizations should put more effort into cultivating high-growth firms, rather than focusing exclusively on entrepreneurship. [SSTI, Aug 13]

If  Obama becomes the next president, Rep. Zoe Lofgren, D-Calif., believes key appointments for high-tech sector prosperity will be within the SEC. "There have been a lot of problems there," she told a technology forum. A perceived failure to appropriately regulate markets has led to serious economic challenges, she said, noting that the next administration must provide relief for start-up companies and young innovators. ... She also told a crowd that it is crucial for Congress to pass legislation to update the U.S. patent system next year.  [Tech Daily Dose, Aug 26]  Note that "relief" does not imply handouts of money.

the war in Georgia isn’t that big a deal economically. But it does mark the end of the Pax Americana — the era in which the United States more or less maintained a monopoly on the use of military force. And that raises some real questions about the future of globalization.  [Paul Krugman, New York Times, Aug 15]

Keep the Subsidies Flowing. U.S. solar-energy companies that do business primarily in America would suffer most if Congress fails to renew expiring federal tax credits for solar energy.  .... Lawmakers are expected to mount an 11th-hour effort in September to reach agreement on a tax package for solar and other renewable energy sources before suspending their work, possibly until 2009.  .... Interest in solar energy as an electricity source has taken off in recent months, from large-scale utility projects to rooftop installations at retail outlets, ... But representatives for Macy's and REI said any plans to install rooftop solar systems in 2009 will depend upon whether the tax credit is available. .... The solar tax credits are widely supported, but Senate Republicans have blocked the broader tax bill because they object to Democrats' use of loophole-closers and tax increases to offset the cost of tax incentives for renewable energy and other tax cuts.  [Martin Vaughn, Wall Street Journal, Aug 27]

Who's Techier? Clearly the McCain campaign has been thinking about technology-related issues even if the candidate himself isn't the most tech-savvy person around. I don't think that the McCain campaign has gotten enough credit for delving into these issues and staking out responsible positions in detail. ... Give Obama some credit though. His campaign has done well in leveraging technology for partisan political purposes. He danced rings around Hillary's campaign and he's still managed to stay a bit ahead of McCain's team. Obama should certainly be given credit for running such a tech-savvy campaign. [Jim Lynch, Extreme Tech, Aug 22] But using tech in campaigning doesn't say much about likely policy stances after the election. Our last two presidents differed dramatically: Clinton the wonk loved and understood government tech investment programs, while W the playboy adored free-markets. 

Unfortunately many in our Insider network feel that the House is in no mood to compromise with the Senate. The House bill, H.R. 5819, had overwhelming support comprised of 368 Ayes, 43 Nays and 20 No Votes. That translates to a bipartisan vote of 219 Democrats and 149 Republicans voting in the affirmative. "With numbers like that, why should we compromise," said a House source wishing anonymity. I responded to my source, "you should compromise because your constituents want you to." That provoked a slight laugh and end of conversation. [SBIR Insider, Aug 20]

Anywhere, One-Hour Delivery. It's not quite a "death ray" but it's the closest existing technology can get to that fantasy weapon. Still, skeptics roll their eyes and say that the report's authors are like a bunch of junior high school boys who have seen all the James Bond movies and believe that if a weapon can be built, it must be built.  [Mark Thomas,, Aug 23]  To pay for an open-ended "national imperative" program, the advocates might suggest: a) cost is irrelevant for national imperatives, b) cut somebody else's obviously less important program(s), 3) raise all national taxes by 1%. But, the most important question of all: a hammer is worthless if you can't find the nail.

Kings Dodge Debts. Will the U.S. Treasury repudiate its obligations to its creditors, be they citizens or investors around the world? Most observers would answer "no" without hesitation. But Congress, with the complicity of the White House and the Fed, has arguably embarked on a stealth repudiation. In his famous treatise, "The Wealth of Nations," Adam Smith noted there had never been a "single instance" of sovereign debts having been repaid once "accumulated to a certain degree." We may have reached Smith's threshold. The bond markets are certainly not protecting creditors from the risk of what Smith called "pretended payment" through inflation. Nor did they do so until far into the great inflation of the 1970s. Not until late 1977 and into 1978 did the bond market fully incorporate the reality of the debased dollar, by demanding higher long-term interest rates. (Source: Wall Street Journal) Moneylenders through history know that kings don't repay deep debts.

Shovel in Hand. Obama is proposing to use the government to remake economic policies in a way that Washington hasn't seen in decades. If the economy is faltering when he takes office Obama would push a $115 billion stimulus plan, aides say. [Wall Street Journal, Aug 26]  When you're in an economic hole, keep digging?

Security First and Always. rarely has such a reasonable aim been so self-defeating. The system of export controls, known as the International Traffic in Arms Regulations (ITAR), is managed with almost comic zeal by the State Department. Anything that is part of a satellite assembly needs vetting—even if it is as common as a lithium-ion battery, as insignificant as a screw or as innocuous as a stand for a satellite. The cost, delays and inconvenience of dealing with the American space industry are exasperating enough to send its foreign partners into orbit. [The Economist, Aug 21]  The best friend of the Ministry of Defense, any where, is the MOD of any opponent, real or imagined.

The state cannot accept the Awakening. Their days are numbered. ---- SHEIK JALALADEEN AL-SAGHEER,   a leading Shiite member of Iraq's Parliament, on a crackdown on the Awakening movement, in which groups of U.S.-funded former Sunni insurgents organized citizen patrols to help stabilize the country. [, Aug 22]  And while the "peace" in Iraq may be falling prey to internal competition, the NATO leaders in Afghanistan are calling for more brigades. But from where will the several national command authorities get them? Maybe we could back up to 2002 and realize we were misunderestimating the nature of the militancy in the Muslim world. That since we had a dominance in military forces, they were the best and obvious solution.  A man has a hammer sees the world as a row of nails. And a president with no international scars is easy prey for insiders with a theory and an agenda.

the highest levels of most of the agencies would welcome the disintegration of SBIR, and look for any reasonable excuse to regain total control of their 2.5%, not to mention their admin overhead.  Please remember that this attitude is not at the level of folks you deal with.  Most of the SBIR program managers are major supporters of the program, and want to see it benefit the small businesses and their agencies.   But the lower levels have no say in the politics of SBIR. Anyway, Both the House and the Senate want to see the program continue, and will very likely become very "exercised" if an agency tries to reduce, or pull out of the program.  [Rick Shindell, SBIR Insider]

Their message (of the movie, "I.O.U.S.A.,"): You probably know that the national deficit stands at $9.6 trillion and rising. What you don't know is how bad things really are. If you include all the unfunded entitlement obligations -- Social Security, Medicare, Medicaid and so forth -- we are actually in a $53 trillion hole, Walker says. And it will only get deeper as we get older.  [Frank Ahrens, Washington Post, Aug 17]  Speed up the decline: keep seeking your handouts for work that uses rather than creates wealth!

The state of Maine has given out $30 million in the first round of grants authorized by Pine Tree State voters last fall as part of a $50 million technology bond bill. [Mass High Tech, Aug 12]  One company had one Phase 1 SBIR.

The problem is fear: private-sector finance has dried up because investors, burned by their losses on securities that were supposed to be safe, are now reluctant to buy anything that isn’t guaranteed by the U.S. government.   ....  Fed policy hasn’t done anything to encourage private investment. .... What more can policy do? The Fed has pretty much used up its ammunition: nobody thinks that additional interest-rate cuts would accomplish much  [Paul Krugman, New York Times, Aug 4]   And more handouts like SBIR are not the answer either. If the investments don't go to innovations that will attract private investment, they are just a temporary jobs program. Worse, the temporary jobs will simply be diverted from more competitive companies that would have otherwise got the business. No net gain, and possibly a net loss.

Using new DNA technology, the Federal Bureau of Investigation analyzed the anthrax strain sent to victims of the attack and linked it to the spores handled by Dr. Ivins, according to federal officials close to the seven-year investigation.    .... prosecutors may move quickly to unseal evidence against him and formally close the case after senior Justice Department officials sign off on a decision to dismiss the grand jury. [Wall Street Journal, Aug 4]  How convenient: blame the dead man and close the case as a success. The Navy tried that several years ago until the dead man's relatives objected in the press. But the evidence is still rather circumstantial and not ready for a trial where the standard is "beyond a reasonable doubt." , says [Scott Shane, New York Times, Aug 4]

Energy Independence, Lower Gas Prices, Drain America First, Windfall Profits Tax.  More and Cheaper Oil, Now.  Politicians reach for the handiest policy and slogan as they hear the cries of the oil consuming public. The states of the upper Midwest combined to support offshore drilling, since no harm will come to Minnesota or Michigan from the inevitable big spills. The president chimes in with a pander. Anybody thinking long term about American energy or how economics works? Not in the political arena where today's votes far outstrip the importance of tomorrow's energy picture. In yet another wish to repeal the laws of economics. [Arizona] Congressman Jeff Flake is among Republicans asking President Bush to call a special session of Congress in August to deal with high gasoline and oil prices. [Phoenix Business Journal, Aug 1] Just don't ask them what laws of economics they would substitute.

Pressure for action to revive the economy grew on Friday as a new report showed the unemployment rate rose in July to 5.7 per cent – its highest for four years – and the number of jobs fell for a seventh straight month. ...  Democrats in Congress renewed their call for a second fiscal stimulus package. Barney Frank, chairman of the House financial services committee, said it should include “increases in the federal share of Medicaid, significantly increased funding for home energy assistance and food stamps, and other measures which will provide badly needed stimulus for our economy and help state and local governments and individuals improve the quality of their lives”.  [Financial Times, Aug 2] When the business cycle cycles, do you expect the government to do something to stop it, or will you trust the built-in stabilizers?   If you want action, what did you have in mind that won't make the long term problem worse?  Are you patriotically buying government bonds at low interest rates so the government can afford to borrow more to pay stimulus handouts?  Or do you have a great idea how the government can sponsor a great innovation by handing you no-load investment money?

Who robs Peter to Pay Paul expects the support of Paul. Robin Hood Obama called for a $1,000 "emergency" rebate to consumers to offset soaring energy costs amid fresh signs of a struggling economy with the nation's unemployment rate climbing to a four-year high.  ... would be financed with a windfall profits tax on the oil industry.  [AP, Aug 1]  Windfall profits tax works like voiding a patent: having taken a risk to develop something profitable, the entrepreneur forfeits part of the profit for a political purpose. It changes the rules of a game during the play to profit some external entity. Besides, in this oil game there is no windfall since supply and demand factors have not been changed by any surprise externality. The only fair profits tax would tax return on investments made after the effective date of the law (which would be a boon for lawyers and accountants).  Absent any evidence of price collusion, it's just political confiscation, as we accuse Hugo Chavez and Fidel Castro of the same.  If you expect to depend on a patent for your future profits, you should oppose excess profits taxes on principle.

Food industry representatives and public health officials called on members of Congress to address failures in the nation’s response to the salmonella outbreak linked to fresh produce. [New York Times, Aug 1]  Business wants less government, until something goes wrong. Then they want more. What they forget is that every time government has to fix a perceived problem (like SBIR), the solution becomes a permanent government department with stout defenders in Congress.

National Security State Alert. Federal agents may take a traveler's laptop computer or other electronic device to an off-site location for an unspecified period of time without any suspicion of wrongdoing, as part of border search policies the Department of Homeland Security recently disclosed. Also, officials may share copies of the laptop's contents with other agencies and private entities for language translation, data decryption or other reasons  .... The policies cover "any device capable of storing information in digital or analog form," including hard drives, flash drives, cellphones, iPods, pagers, beepers, and video and audio tapes. They also cover "all papers and other written documentation," including books, pamphlets and "written materials commonly referred to as 'pocket trash' or 'pocket litter.' " [Wash Post, Aug 1] Your normal Constitutional protection against unreasonable search and seizure does not apply. They do not have to justify the seizure to you, or apparently anyone else. They claim to be looking for extreme dangers to national security, especially terror manuals and child pornography. But once a government agency gets a license to snoop, .....

Not Without Us You Don't. The Constitution checks and balances roiled the president-king's marvelous invention of a new intelligence organization for the government. The White House's intelligence-agency overhaul drew immediate fire  from lawmakers in both parties, who complained that the administration sidelined Congress while it crafted the largest rewrite of spy powers in decades. [Sioban Gorman, Wall Street Journal, Aug 1]

Instead of conducting witch hunts, we should consider bipartisan legislation to reduce the price of gas, reduce crime and secure the borders.  - House Republican LAMAR SMITH, blasting his Democratic colleagues on the Judiciary Committee for voting to cite former top White House aide Karl Rove for contempt of Congress [Time, Jul 31] Empty speech to stroke the lighter thinkers, presumably in his district as a Republican argues for more government intrusion. Reducing the price of gas may make things worse by encouraging demand [Econ 101],  federal legislation won't do much to reduce crime [a true Republican wants the death penalty for every crime, a scheme that the English abandoned a long time ago], and legislation to secure the borders already exists [although there is no consensus about immigration]. Note that the Republicans believed in witch hunts when they had the Congress and Bill Clinton had the White House. Can't we elect adult politicians?

While the house crumbles, the elders are scrapping over the candy. As Congress begins a five-week break without passing legislation to address high gasoline prices, Democrats and Republicans are fighting for the political high ground in the energy debate.  In a flurry of ads and on the campaign trail, Republicans are pounding Democrats for failing to allow votes on lifting a federal ban on oil and gas drilling in offshore areas to boost domestic production. Democrats are accusing Republicans of blocking renewable-energy initiatives and protecting wealthy oil companies at consumers' expense.  [Lueck, MacKinnon, and Power, Wall Street Journal, Aug 1] Anything to avoid the realities of energy economics.  A McCain campaign ad says that gas prices are high right now because “some in Washington are still saying no to drilling in America.” That’s just plain dishonest: the U.S. government’s own Energy Information Administration says that removing restrictions on offshore drilling wouldn’t lead to any additional domestic oil production until 2017, and that even at its peak the extra production would have an “insignificant” impact on oil prices. [Paul Krugman, New York Times, Aug 1]

The Kerry-Snowe SBIR Reauthorization Bill unanimously passed the Senate SB Committee with something for everybody except the federal agencies and the taxpayer. The Committee website says:  Reauthorizes SBIR and STTR for 14 years; a compromise on the issue of the participation of companies majority owned and controlled by multiple venture capital companies, allowing NIH to award up to 18% of its SBIR dollars to companies majority owned and controlled by multiple VCs and the other ten SBIR agencies to award up to 8% of their SBIR dollars; Increases the SBIR allocation from 2.5% of SBIR agencies’ extramural R&D budgets to 3.5% over 10 years, for all SBIR agencies except HHS/NIH; Doubles the STTR allocation from 0.3% of STTR agencies’ extramural research and development budgets to 0.6% over the course of 6 years;  Increases the award size guidelines for the SBIR and STTR programs from $100,000 to $150,000 for Phase I and from $750,000 to $1 million for Phase II in line with the recommendation of the National Academy of Sciences; Attempts to increase geographic participation, particularly in rural states, by reauthorizing through 2014 and enhancing the FAST program and the Rural Outreach Program; Calls for better and streamlined data collection and assessment; protections to address jumbo awards.  The usual political blather about unleash the ground-breaking innovation potential of our nation’s small businesses; pump another $1 billion into our small business economy. At a time when the nation is struggling to cope with skyrocketing energy prices and a slumping housing market, do everything within our power to help small businesses drive economic recovery; SBIR program has been a resounding success, garnering high praise from the National Academy of Sciences in a recent comprehensive report on the program. Approximately 1 in 4 SBIR projects will result in the sale of new commercial products or processes. All convenient half-truths, the kind that power the passage of government handout programs. And in Kerry's opener: while I don’t ask anyone to love the VC compromise, or even the bill, I do hope that you will recognize that everyone got some of what mattered to them.  SBIR Insider Rick Shindell offers a copy of the bill before it hits Thomas at   No, it's not the new law, only the Senate's proposition to be reconciled with the different House version.

DOD Rule on Export Controls. The DOD has issued an interim rule that addresses requirements that contractors must follow to comply with export control laws and regulations on DOD contracts. Export-controlled items include information and technology, such as software. DOD had published a proposed rule in July 2005 and a second, revised version in August 2006. Since the latest version is an "interim rule," it is still open for comment. Also open for comment, until August 18, are the Commerce Department's deemed export regulations. [AAAS, Jul 30]

The demise of the Doha trade round is another blow to the struggling world economy, and there's plenty of blame to go around. But the crucial question going forward is whether this is merely a temporary setback, or if it marks the end of the post-World War II free-trade era that has done so much to spread prosperity. .. In 1990, trade represented about 40% of world GDP, according to the World Bank. By 2004, trade exceeded 55% of world GDP, and the global economy had expanded by 50%.  .... The real battle is between those who want to expand this era of global trade and prosperity, and those who want to carve out their own protected niches. [Wall Street Journal, Jul 31]

Send Another $171B. The Bush administration expressed confidence that the US would be able to maintain its top-notch credit rating even as the government scrambles to find new ways of expanding debt sales to cope with soaring budget deficits. "It is a huge advantage to have that AAA-status and we are committed to that," Anthony Ryan, Treasury's acting undersecretary for domestic finance, told reporters as he unveiled plans for financing $171 billion in borrowing during the current July-September quarter, the second highest total on record. Those borrowing needs have exploded this year as the government has had to cope with a sagging economy and the need to finance more than $90 billion in economic stimulus payments made over the past three months to individuals in an effort to keep the country out of deep recession. [Yahoo Finance]  Please enlarge our credit card limit! Again.

Silly Speech Season. Obama said he offers fundamental change from reckless Republican economic policies that he contended have hammered middle-class families and would continue under Republican rival. [AP, Jul 30] And what economic policies does he have in mind that he can actually influence in a way that actually makes some difference?  Bail out silly home buyers and their silly lenders who sold the mortgages to sillier traders?  Lower interest rates than nearly nothing already?  Lower taxes that drive up the government debt?  High tariff walls to discourage international trade and bring back the Great Depression?  Bill Clinton's 1993 idea was a tax increase coupled with a spending decrease, after which the 1990s boomed, despite Congressional Republican refusal to cast even one vote for such responsible policy, and left W with a big temporary surplus that was reducing the national debt.  That was anaethma for W whose great economic plan was to cut taxes, start wars, and balloon the deficit.

July 31 the only former president to return to serve in the Senate, died. - Andrew Johnson, 1875. 

Kerry's Senate SB Committee will have mark-up session for an SBIR bill this morning [Jul 30]. That's usually a rubber stamp for a deal worked out among the interested parties.  Any national goal and benefit comes second. Too bad, but that's the way democracy works. At least the winners will no doubt see a clear national benefit. Whatever the Senate deal there still remain the House and the President to be satisfied. The free-market president-king opposes such programs on principle.

Good intentions led to bad outcomes: an old story. .... Congress's response to the present [housing/finance] crisis is, not surprisingly, more of the same. ...  When tomorrow's housing crisis occurs, we will probably find its seeds in the "solution" to today's.  [Robert Samuelson, Wash Post, Jul 30]  If you're a Congresscritter wanting re-election, it pays to stick with conventional "more is netter" on apple pie, small business, and home ownership.

When a politician declares "war on [you name it]", it little more than sloganeering. Cancer, drugs, poverty, terror.  Now, the nonpartisan Rand Corp. also contends that the administration committed a fundamental error in portraying the conflict with al-Qaeda as a "war on terrorism." The phrase falsely suggests that there can be a battlefield solution to terrorism, and symbolically conveys warrior status on terrorists, it said.  "Terrorists should be perceived and described as criminals, not holy warriors," authors Seth Jones and Martin Libicki write in "How Terrorist Groups End: Lessons for Countering al-Qaeda," a 200-page volume released yesterday  [Joby Warrick, Wash Post, Jul 30]  A little late, although any such suggestion would have been summarily rejected by the cavaliers Cheney-Rumsfeld advising their amateur king. Rand's advice will be summarily rejected by the substantial American element that believes that America's military power can better solve international dilemmas than any diplomatic or law enforcement approach.

In this sluggish economy, there is one sure-fire growth business in the next few years: government debt. With the federal government now projecting record deficits and the housing bill being shepherded through Congress allowing for an increase in the debt ceiling, the bond market is almost certain to be hit with a wave of Treasury supply over the next few years. [David Gaffen, Wall Street Journal, Jul 30] If the government debt financing keeps growing at $400B a year, unless China keeps buying and storing it, interest rates have to rise to induce the public to buy the notes.

 Note to the Next President Can someone who has never touched a computer truly be in touch with what's going on in the world?  [Lee Gomes, Wall Street Journal, Jul 30]

Savior Syndrome.  Obama blamed "irresponsible decisions" by the Bush administration and Wall Street for the country's economic woes as government officials said the budget deficit would soar to record heights next year. ...  Obama said the economy needs both short- and long-term fixes, including another round of "stimulus" measures from Congress to revive the economy and a longer-term focus on renewable energy to curb high gas prices and on universal health care to trim costs. He said he would move "rapidly and vigorously" to respond. [AP, Jul 28] Baloney!  Eight  years ago Bush would save us by giving us back the government surplus in trickle-down taxes. Then he also handed out trillions in new Medicare and started a trillion-dollar war, but none of his "irresponsible decisions" lacked Congressional Democratic consent. The latest measure is another surge, one of which Bush widely boasts of , the national deficit (one year's shortfall) surge past a half-trillion dollars next year [AP, Jul 28] It's too easy to blame one administration for the economic woes, whatever they are, when we went along with every step. Neither Obama nor McCain has any magic solution to the economic welts we laid on our own backs by insisting that our own representatives give us what we want with a story that we deserve and can afford it.

When a reporter noted that in America reporters were permitted to see witnesses and evidence, a spokeswoman for the Office of Military Commissions at the Pentagon responded, “This is not America.” ....   Asked about the unusual circumstance that an employee was on trial while a man who may have been his boss had been released, a Pentagon spokesman said, “The transfer of detainees takes various factors into consideration,” including a receiving country’s promise “to mitigate the threat.” .... “Where else in the world,” Mr. Wizner said after court one day, “is someone being prosecuted for a crime who is already serving a life sentence and will continue to serve one if he’s acquitted?”  [William Glaberson, New York Times, Jul 29]

Dr No. [Repub Sen-OK] Coburn believes that many lawmakers propose duplicative programs without any way of measuring their effectiveness. .... "What do the constituents in your state expect of you? I believe they expect me to get some things done. I don't believe they're looking for 'no.' They're looking for 'yes,' " said Sen. Ben Nelson (D-Neb.), who fought Coburn last year over an earmark for a Nebraska-based military contractor. [Paul Kane, Wash Post, Jul 28]

Energetic Posturing.  Both sides had their moments posturing on energy policy and their failure to agree led to re-assuring inaction. The Republicans blocked the Democrats' silly anti-speculator provision and got to pronounce their silly "drill more, use less" plan. No one was hurt in the skirmish.

[Congress] overwhelmingly passed a broad package of housing legislation, hoping to send a calming message to financial markets and voters amid the ongoing deterioration of the housing market and a growing number of bank failures. [Wall Street Journal, Jul 27]  Bush says he'll sign the $300B handout. Paying for it?  You betcha - the national credit card. But how long will  another $300B debt add-on calm the financial markets? Only in the short term, but Congress considers that just right palliative for the pending election. Oh yes, if that kind of handout is OK, surely diverting a couple of billion a year from federal R&D into uncompetitive small businesses is also OK.

Taxes are going to rise. But we can't be certain of how much or for whom. All we know is that the presumptive nominees for both parties have miraculously found a way to offer tax cuts to the vast majority of all taxpayers. The rich aren't included in this, of course. But it doesn't matter. Their votes alone won't elect anyone president. Instead, both candidates rely on taxing the income of the most wealthy to provide tax cuts for everyone else — the more than 95 percent of all households that aren't considered wealthy. The candidates make these offers in spite of the rising federal deficit, the rising cost of imported energy, our balance of trade, the soaring cost of Medicare, the declining dollar and the ongoing cost of the war in Iraq. ... In other words, the candidates from both parties have close ties to the Tooth Fairy. [Scott Burns, Jul 27]  Don't blame the politicians since they just tell us what we want to hear. Isn't that what "represent" means?

Add that the Republicans are no longer in a position to chide Democrats for being wild-eyed spenders, for subverting the free-market system and for favouring heavy-handed regulation. President George W Bush has presided over the most expensive expansion of the welfare state since the days of Lyndon Johnson’s Great Society programmes, acquiesced in elaborate plans to bail out troubled financial institutions rather than leave their fates to the market, and along with his Treasury secretary, Hank Paulson, has rolled out myriad regulations covering short-selling, capital requirements and conduct of mortgage brokers, to mention only a few. Bush has also approved a stimulus package designed to shore up consumer spending, proving that Richard Nixon was on to something when he said “We’re all Keynesians now”. [Irwin Stelzer, The Sunday Times, Jul 27]

The Democratic Impulse.  Then there is politics. The Congress party, which leads India's fragile governing coalition, is expected to loosen the purse strings before a general election that must happen by May. It already won approval of a debt-cancellation package for many of India's impoverished farmers. [Jackie Range, Wall Street Journal, Jul 28]  Stand by for SBIR renewal since it meets the criteria for a government program: feeds a myth, has a constituency, does little harm, and needs no annual appropriation. The fact that it does little (and economically unmeasured) good matters little.

Political risk is rising,” he added. “There is a good deal of understandable anger in the market towards Russia,” Roland Nash, head of research at the Renaissance Capital brokerage in Moscow, wrote in an investor note Friday. The combination if denying a work visa to the BP head of a joint BP-Russia venture and Putin's five sentences critical of a Russian steel company that immediately lost $6B market cap is part of nationalism as the public policy driver in KGB-controlled Russia. [New York Times, Jul 26] It has been cast as a titanic struggle between Russian national interests and Western business. But the reality is that the four oligarchs who control AAR, BP's Russian joint venture partner, are deeply plugged in to some of the West's most prestigious corporations and institutions, at the highest levels. [Tim Klein, The Times (London), Jul 26]  If Russian money is investing to the control level outside Russia, why, when there Russia lacks so much economic development? What do they know that we are not thinking of?  Beware any dealing with Russian enterprises in a place that has no rule of law but does lust for international power.

The housing and financial crisis is powering a new wave of government regulation. The result is a major challenge to the deregulation that has defined U.S. governance for much of the past quarter-century since the "Reagan Revolution." ... In fact, some proponents today of a bigger oversight role for government are Republican heirs to the legacy of President Reagan.  [Wall Street Journal, Jul 25]  When private wealth leads to public squalor, ...  [JK Galbraith, The Affluent Society]

Expecting State Help? States are being forced to slash spending and cut jobs in order to close a projected $40 billion shortfall in the current fiscal year. That gap is the result of broad economic weakness at the state and local levels that could cause pain throughout this year and into 2010, a report found. [C Dougherty, A Merrick, and A Troianowski, Wall Street Journal, Jul 24]  Smilingly, the federal government has no such problem, despite being deep in a mounting debt, it soldiers on with help programs like $300 B for A sprawling bill that reaches deep into the U.S. housing industry is close to becoming law. The bill, which began seven months ago as a modest attempt to help struggling homeowners, will now likely touch a vast array of borrowers, lenders and investors. ... As a result of the bill, Congress will raise the national debt ceiling to $10.6 trillion [D Paletta and J Haggerty, Wall Street Journal, Jul 24] That's approaching one GDP and three times the government's usual annual spending. And the longer the line of programs, the longer the line of supplicants wanting a piece of the pie, including the SBIR supplicants. And since SBIR's basic argument is "fair share", why not? The Wall Street Journal editors, unsurprisingly, oppose the bailout of reckless lenders and borrowers since the WSJ's people don't need reckless loans for their homes.

And how will all that debt be serviced? Either interest rates or inflation rates will have to rise. Or both, since the politicians don't have to take the blame for either.

Rooster Brags on Sunrise. McCain credited the recent $10-a-barrel drop in the price of oil to President Bush's lifting of a presidential ban on offshore drilling [AP, Jul 23] A modern Republican, of course, wants to drill anywhere a profitable drop of oil can be extracted, privatizing the profit and socializing the external costs. That means you pay for the clean-up after they Drain America First. 

Farmers and ethanol and other biofuel producers are lobbying to keep the existing mandates in the face of the recognition of a real cost in diversion from food production. [David Streitfeld, New York Times, Jul 23]  Imagine that: beneficiaries want to keep the handout flowing despite a recognition of an economic loss. SBIR advocates have fellow-travelers on the road to tapping the Treasury.

Neither Knows Business, since both candidates have been full time government.  Some 10.7% of registered voters own a small business—only a whisker less than the 11.9% who belong to a union. ... A recent poll of small-business owners found that 80% had little idea what either candidate might do for them. [The Economist, Jul 19]

as the late Senator Daniel Patrick Moynihan once said, “you can’t solve a problem until you can measure it.”  [The Economist, Jul 19] Although the citation was about poverty, Moynihan's rule applies to most government programs that are not mere political handouts. By Moynihan's criterion, is SBIR a solution to any measured economic problem?  The fact that the federal government's direct contracting has a lower percent of small business than does private business does not prove any problem. What's worse, after two decades, there's not even compelling evidence that SBIR even closed the alleged gap it was supposed to close. Not only is there no evidence that it did any economic good, it didn't even solve the phantom problem it was targeted against. So, by usual political logic, any solution that doesn't solve the problem needs a bigger dose of it. Therefore, go lobby for ineffective government programs while complaining of high taxes and government regulation.

Regulation is necessary, but beware the state being seduced into taking on duties it cannot possibly carry out well. As Fannie and Freddie show, regulators are easily captured and outwitted. The best controls are transparency and competition. When possible the government needs to stand back. Sadly, it failed to do so in the American mortgage market. [The Economist, Jul 19]

Silly Season Promises. But as [he] confronts an electorate that is deeply unsettled by escalating health costs, he is offering a precise “chicken in every pot” guarantee based on numbers that are largely unknowable. [Kevin Sack, New York Times, Jul 23]

A robot the size of a briefcase is flushing out illegal immigrants trying to smuggle themselves into Britain.  Fitted with powerful searchlights and high-resolution video cameras, the robot - codenamed Hero - carries out detailed searches of the undersides of lorries [trucks] and coaches [buses]. [, Jul 21]

key senators warned that only the military and homeland security spending bills would be finished by the November elections because of presidential veto threats of domestic spending bills exceeding the President’s requests. House appropriators have all but halted work on appropriations in the face of promised vetoes. Meanwhile, federal revenues for this year are down compared to last year, while federal spending is up.  [AAAS, Jul 21]

SBIR Insider reports "no news" on Senate action for SBIR re-authorization, and the likelihood that the schedule has no time to get it done this summer. The issue is still purely political since the SBIR advocates cannot show any competitive advantage for SBIR over letting the federal agencies decide for themselves how to structure their R&D programs. The fact that a lot of money was spent and some good things happened does not make a justification without a showing of superior economic efficiency for the dollars spent. A federal R&D spending program should bear the burden of proof that it is far better than letting the American innovation system operate on its own. Otherwise, how do we ever get our government finances out from under the control of lobbying and vote pandering?   Go ahead, lobby for SBIR, even for more of it, while voicing your conservative concern about an uncontrolled government.

The economic silliness of most of SBIR does not mean that SBIR is a waste in all agencies under any circumstances. But if economic efficiency is a goal, SBIR should be confined to those exceptional circumstances. And it should also be held to a standard of demonstrating a decent ROI. Never happen; such a law would be too hard to Congress to write under pressure from vested interests. We do have to remember that our political system is built on compromise and oiling the squeaky wheels.

DOD hopes to spend $20 million this year on social science research aimed at understanding real and potential threats to national security. .... Gates hopes that the 5-year, $100 million program, which he unveiled in his AAU speech, will build a firmer "intellectual foundation" in five areas: the ideological roots of terrorism, the changing face of Islam, the history of the Iraqi military, the vast unclassified literature on China's army, and miscellaneous other approaches. [Science, Jul 11] But instead of just rounding up the usual suspects of study houses, it will funnel part of it through NSF where peer review dominates funding decisions. Gates does indeed have some advanced and adult ideas on US security, the kind of ideas that must make Daddy Dick Cheney cringe in his secure undisclosed location.  It's also one of several recent signs that W is finally learning how to take advice from somebody else. 

More Hoosier Tech. Since 1990, the population of Fishers has spiked from a sleepy 7,500 to more than 62,000. Now town leaders hope to enjoy the same success in attracting new companies -- especially high-tech and life-sciences companies -- to the [fast growing Indianapolis suburban] Hamilton County.  ...planned development of the Fishers Research and Technology Campus, a technology and life-sciences incubator that eventually could include up to 1 million square feet of mixed-use commercial space. .... IU estimates the Emerging Technologies Center [downtown] has generated 350 high-tech jobs in Indianapolis at an average salary of $89,000. In March, the business incubator had 25 tenants and seven "graduate" companies. [Indianapolis Star, Jul 21]

Feed me, charge him. Advocates of health care reform tend to be long on ideas for expanding care and access, but short on practical solutions for cost control. [Tyler Cowen, New York Times, Jul 20]  All program advocates, including SBIR, and beneficiaries are long on ideas for expansion. When was the last time you advocated a federal program AND the taxes to pay for it?  Iraq, Medicare Part D, bank bailouts, stimulus, .....

The Kansas Bioscience Authority announced four grants totaling $4.85 million to help companies in the state. KC BioMediX of De Soto, VasoGenix Pharmaceuticals of Lenexa , Ventria Bioscience of Junction City ($500K SBIR), MGP Ingredients (public) of Atchison. [Kansas City Business Journal, Jul 15, 08]

Gotta Make It to Sell It. San Jose's redevelopment agency is now looking to lure a contract drug manufacturing plant to help change that - and boost its fledgling biotech center. An Edenvale facility would cost up to $23 million, according to a recently released consultant's study. Such an investment would be among the largest in the redevelopment agency's history, but San Jose officials anticipate the state and federal governments might help fund the project. ... The problem is that Aridis Pharmaceuticals, for example, is trying to convert some children's vaccines from liquids that must be refrigerated into freeze-dried strips that go on the tongue and can be stored at room temperature. But when the start-up goes out soon to look for a manufacturing company to mass-produce its formula for early clinical trials, there won't be many options here in Silicon Valley. Most manufacturers are based on the East Coast or overseas. [San Jose Mercury News, Jul 17, 08]

The University at Albany and Albany Medical Center announced a collaboration that will expand biomedical research in the Capital Region while giving students the opportunity to earn dual degrees in medicine and public health. ... $42M state funds for an Institute for Biomedical Education and Research. [Albany Times-Union, Jul 15]  Build it, they will come?  But what if the national angst over credit and war and deficits leads to a cut in federal science money?

Nor Were the Cold-War Russians Ten Feet Tall. In addition to rising inflation and the falling yuan, the Journal mentions tighter labor regulations.  I've also heard that middle managers are in short supply.  Entrepreneurs can still find plenty of cheap labor (especially in rural areas), but they have trouble finding folks to delegate management responsibilities to.  Taxes are on the rise as well, more through enforcement than through rising tax rates.  And don't forget new costs (which always should have been spent) to monitor product quality. China is not going away.  It's not a flash in the pan.  But the great shift of manufacturing from America to China will slow significantly in the coming years. [Bill Connerly, Businomics blog, Jun 30]

When No One Checks. Companies collected tens of millions of dollars in government contracts by claiming to have main offices in poor neighborhoods that were actually empty duplexes, part-time offices and other ineligible locations, congressional investigators charge.  Billions more remain at risk because the SBA doesn't usually check paperwork, rarely conducts audits and is slow to kick out firms that are no longer eligible for the $8 billion in special contract set-asides for small businesses, the GAO said. [AP, Jul 17] Small business programs are what politicians like to take credit for starting but then leave administration to an agency known as a political dumping ground since no one really cares whether the programs are efficient. SBIR is just one of many such handouts. 

[Florida] has not yet made a complete transition from an agriculture- and real estate-based economy to one built on high-tech industry and innovation. Interviews with statewide stakeholders also confirmed there is a continuing need in the state to support innovations-based entrepreneurs through economic development organizations. [SSTI, Jul 16]

Feel the Wave. We want to buy what we want when we want it without the prices inflating from growing worldwide demand for the same stuff. And to make that happen we expect the Federal Reserve to repeal the laws of economics. We already expect our politicians to do so because they say they promise to deliver what only fantasy economics can supply. U.S. consumer prices soared at their fastest annual pace in nearly two decades last month, tightening the screws on Federal Reserve officials as they balance a stagflationary mix of rising unemployment, strained financial markets and rising inflation. [Wall Street Journal, Jul 16] Those who didn't live through the 1970s will get their chance now to feel the wave of stagflation. The incoming politicians should visit the Gerald Ford museum to sense the headlines they will face and see the silly things they will be tempted to do.

Deregulation Exposes True Cost.  Texas had some of the cheapest power rates in the country when it zapped most of the state's electric regulations six years ago, convinced that rollicking competition would drive prices even lower. ...  but everything is bigger in Texas: On a hot day in May, wholesale prices rose briefly to more than $4 a kilowatt hour -- about 40 times the national average. .... a combination of soaring natural-gas prices for power generators and congested transmission lines that weren't designed to accommodate the new freewheeling market, .... When then-Gov. George W. Bush signed the state's deregulation bill in 1999, he assured that "competition in the electric industry will benefit Texans by reducing monthly rates and offering consumers more choices." The law, which took effect in 2002, left few restrictions on what power generators could charge and what consumers could pay. [Rebecca Smith, Wall Street Journal, Jul 17] A stifled Texas cheer for the free market and the prescience of George Bush. 

McCain proposed to use federal funds to finance vouchers for students in failing schools and merit pay for teachers.... delivering resources now controlled by state and local governments directly to schools and parents. [Wall Street Journal, Jul 17] A so-called conservative wants federal funding and intervention. This Reagan re-born ignores the Gipper's Government is not the solution to our problem. Government is the problem. The market was god and Reagan was its Moses, and Republicans have sworn fealty to both for the past quarter-century.  [Harold Myerson, Washington Post, Jul 17]  No mention of cost or source of the money, nor of how he would build a federal bureau to administer what would soon become a complex and infuriating task.  Programs always sound better until they start operating by political appointees with agendae.

The US federal government on Wednesday said it would open 3.9m acres of land in a designated petroleum reserve in Alaska for drilling as a means to help curb rising petrol prices. [Financial Times, Jul 17] Look for the new supply to moderate prices in about 2018 if anyone actually drills at outrageous cost for an unknown return in a volatile market.  

Easing Bureau Work.  NASA's latest SBIR solicitation says NASA will not accept more than 10 proposals to either program from any one company in order to ensure the broadest participation of the small business community. NASA does not plan to award more than 5 SBIR contracts and 2 STTR contracts to any offeror. Whether such a simplistic broadax solution to cut proposal count makes program sense is an interesting question. Limiting proposals from any company does nothing to broaden participation since anybody can send in proposals regardless of what the others do. Limiting awards to five is both too broad and too arbitrary. If NASA wants the highest program return, it must give the money to the highest potential return ideas, and not limit the number to any firm just to avoid political criticism. The companies getting many awards from many more proposals should have been weeded out long ago by a criterion of diminishing returns. But that kind of management requires selections to be made by a single mind with clear criteria - not something NASA or the other bureaus could ever bring themselves to do since they don't really care whether SBIR achieves its objectives, only whether NASA achieves it objectives as seen through the lens of its officials' career goals.

Never Mind, It's Our Money Now. Backers of a biodefense lab considered for Granville County NC got an infusion of cash that changes the dynamics of the debate and raises questions about the use of public funds. The Golden LEAF Foundation, which manages half of the state's money from a national settlement with cigarette makers, awarded $262,248 to pay for newspaper ads, a Web site and other initiatives that lab supporters want. [Jonathan Cox, Raleigh News & Observer, Jul 16]

Jawboning by the Unitary Executive. Bush said the nation's troubled financial system is "basically sound" and urged lawmakers to quickly enact legislation to prop up mortgage giants Fannie Mae and Freddie Mac. ... he also said, I don't think the government ought to be involved in bailing out companies. [AP, Jul 15] Maybe a President that sounds like Herbert Hoover 1930 (no I wasn't there) on anything economic should consider the reverse psychology that if he feels obliged to say so, the public will believe it's a sham.

The Only Sure Return is Political. No one knows the extent of US oil and natural gas reserves in the offshore and Arctic areas that are off-limits to drilling. The last time they were surveyed was in the 1980s and the technology then used is no longer considered accurate, say industry experts. ... David Bader, professor in computational science and engineering at Georgia Institute of Technology, has been working with IBM on developing its PowerXCell processor, a supercomputing chip originally designed for the Playstation 3, to search for oil reserves in what is known as “ultradeep water” – 5,000ft or more deep. “The chip in the Play- station 3 is equivalent to what was in a super computer five years ago,” Mr Bader said. But the industry is not going to use this technology to study protected areas unless they are open to production. “It costs a lot of money to take a look,” Mr McClure said. “Nobody wants to take a look unless you could get a return.” [Financial Times, Jul 16] The politicians want immediate votes but the voters get only a definite maybe in more than a decade later.  No matter, the voters want to hear about new drilling to attack high gasoline prices. It's all part of politics that cannot see past the next election.

Bribe Them Into Submission. House Democrats want to inject at least $50 billion into the economy through another economic-stimulus bill, which is likely to include a second round of checks for middle-income people. with the classic pump priming would likely include spending on road projects that take too long to get spending. The biggest construction project would be digging the financial hole deeper.   [Wall Street Journal, Jul 16]

Having been propelled into the White House by the states that tried to destroy the union over states rights, Bush joined oil with marijuana as subjects on which the states require federal control as he lifted an executive ban on offshore drilling that has stood since his father was president [AP, Jul 14] The immediate gain for gasoline prices will be zero, but the gain for votes from the mob and campaign contribution from the oil drillers [oil industry applauded Bush's announcement] will offset all the raspberries he will get from the pundits. Our leader! Let's all vote for him a third time; it's not Constitutional but then that hasn't bothered him yet. 

A federal court struck down a rule to cut air pollution from power plants in the eastern U.S., roiling environmental markets and dealing a blow to Bush Administration policy.  The decision issued by the U.S. Court of Appeals for the District of Columbia Circuit eliminates a federal program to improve air quality in 28 states using an existing market-based system created to address acid rain. [Mark Peters, Wall Street Journal, Jul 11]

Self-Analysis - in Public. The U.S. Army has done something remarkable in its new history of the disastrous first 18 months of the American occupation of Iraq: It has conducted a rigorous self-critique of how bad decisions were made, so that the Army won't make them again. ....  While Civilian leaders are still mostly engaged in a blame game about Iraq, pointing fingers to explain what went wrong and to justify their own actions, ... The Army can't afford this sort of retroactive self-justification. ...  Politicians repeat, ad nauseam, the maxim that "those who cannot learn from history are doomed to repeat it." The U.S. Army is that rare institution in American life that is actually putting this precept into practice. [David Ignatius, Washington Post, Jul 13]  Having planned to win and skedaddle, the Army had to adapt artillerymen and tank gunners into police and governors for which they had zero training.  Because the long range architects of the Army - the national civilian leadership - had the wrong image of the world they faced.

While the airlines are trying to get the politicians to cut fuel prices by penalizing "speculators" (code for investors who do what we haven't the nerve for), there is scant evidence that futures traders are the problem anyway.  One clue comes from the fact that the only commodity barred by law (raw politics in action) from futures trading is much more volatile than oil - onions. [John Birger, Fortune, Jul 7]  Never mind, the politicians need a scapegoat that points away from one real culprit - long lines of air-conditioned vehicles at rush hour with only a driver aboard. The true cost of suburban living coming due.

The US Senate passed a $300 billion plan to help thousands of Americans keep their homes and tighten regulation of Fannie Mae and Freddie Mac in an effort to ease the worst housing slump since the Great Depression. [Boston Globe, Jul 12] Money from where? We're approaching the upscale version of Ev Dirksen's  a trillion here, a trillion there, pretty soon you're talking real money. Our elected politicians don't seem to grasp the idea that money does not grow on trees, nor do we grasp that ultimately we must pay for everything. The evasion comes because we want instant gratification while our politicians want instant re-election.

Perhaps Prayer Would Help. When the consequences are too much to bear, deny the problem. The Bush administration published a government blueprint to reduce the U.S. output of global-warming gases, but at the same time rejected the document out of hand -- saying it relied on "untested legal theories" and would impose "crippling costs" on the U.S. economy.  Essentially, the White House presented critics of the report with a prepackaged rebuttal brief, in what is expected to be the Bush administration's last major effort to frame the national discussion on responding to global warming before a new president inherits the issue. The White House argues the Environmental Protection Agency must not be allowed to regulate greenhouse gas emissions, for fear it would be able to block development across the country.[Wall Street Journal, Jul 11]  After years of denying that the problem exists, the administration now says its solution is too hard to bear. What great time for a faith-based solution that would change the laws of both chemistry and economics, as if short-term oriented humans could be trusted to get the changes right.

Who Gets Them. SSTI’s FY01-07 SBIR statistics provide seven years of data to evaluate award, proposal and conversion trends for most agencies and comparable states.  How much does the US benefit from all this program activity? No one knows, nor seems to want to know. Data for FY07

The Blame Game. Bush tried to pin the blame on Congress for soaring energy prices and said lawmakers need to lift long-standing restrictions on drilling for oil in pristine lands and offshore tracts believed to hold huge reserves of fuel. [AP, Jul 12] In politics, reality takes a back seat.  All estimates (I have seen) say that unlimited drilling of US oil fields, in environmentally sensitive areas or in West Texas, would have had only a small impact on present world oil prices. That oil sits under the ground because the cost of producing it was too high for profitable extraction. But an economics-challenged president, the mumbler sitting next to Hank Paulson and saying that Fannie Mae is important, would charge right through with the loudest and least informed attack on a competing power center. Bush's former chief economist says: With the stunning rise in oil prices, both presidential candidates have been tempted to demonize market participants. Senator McCain has complained about the “obscene profits” of oil companies and called for a “thorough and complete investigation of speculators.” By contrast, most economists see nothing more sinister than the forces of global supply and demand at work. There is little benefit, and potentially much harm, in the candidates’ populist finger-pointing. [N Gregory Mankiw, New York Times, Jul 13]

Have I got something for you! Obama said there is "little doubt we've moved into recession," underscoring the country's need for a second economic stimulus package, swift steps to shore up the housing market and a long-term energy policy to reduce reliance on foreign oil imports. [Glen Johnson, AP, Jul 13]  Another politician offers big doses of things we (and he) haven't got: money, credit, and oil.  Ain't free lunch wonderfulness?

ATP Lives On.  NIST is seeking proposals for high-risk research projects to develop innovative technologies for inspecting, monitoring and evaluating critical components of the nation's roadways, bridges, and drinking and wastewater systems. The competition for cost-shared R&D support is the first to be announced by NIST's newly established Technology Innovation Program (TIP) in an effort to address critical societal challenges.  ...  $3 M total over three years for a single small company project ...  webcast July 14, 1:30pm to 3:00pm ET

If Not Cars, What? Michigan's Centers of Energy Excellence, a program designed to bring companies, academic institutions, and the state together to create jobs in alternative and advanced energy. part of an overall job creation and economic stimulus package .... support the development, growth and sustainability of alternative energy industry clusters in Michigan by identifying and/or locating a base company in a geographic region with the necessary business and supply-chain infrastructure. These centers will match the base company with universities, national labs and training centers to accelerate next-generation research, workforce development and commercialization. ... Grants will be made available to for-profit companies  [SSTI, Jul 9]

A taxpayer advocacy group opposed to government-sponsored corporate incentives lost a court fight in Durham [NC] when Judge dismissed a case against Nitronex and the county. ... challenged the county's $100,000 grant to Nitronex [bribe not to move the California], ... the plaintiffs did not have standing to bring their lawsuit because neither pays property taxes in Durham County  [Raleigh News & Observer, Jul 10]

In wartime, plans are only good until the moment you try to execute them.  --- Dwight Eisenhower

Playing the Intergenerational Card. The system for funding Social Security is "a disgrace" because it forces young Americans to pay into a program that is unlikely to benefit them in its current form, McCain said, wading into politically touchy territory. ... "and it's got to be fixed."  [AP, Jul 9]  OK, fine, there's a problem; propose a specific fix! "I cannot tell you what I would do," he said blatheringly, after his party has had a decade to propose and sell a fix. Instead, they spent their opportunity on cutting the government's income while starting a war that got out of their control and burned out our Army.

A Handy Snooping Tool. Kansas Senator and noted "conservative" Sam Brownback maintains that a laptop is no different than any other luggage, and that trifles like personal privacy rights or business confidentiality have to be balanced against the need to protect the nation from terrorists and child pornographers and, well, whatever they find on your laptop that they don't like. Asked about having his own Blackberry searched, however, and Brownback was of course less than enthusiastic. [Industry Week, Jun 30] Kansas Senators tend to find child porn as inimical to US safety as terrorist bomb plans. Hey, whatever sells at home! The DHS has found a handy way to snoop on US citizens as a CYA in case big terror ever strikes again.   Love those federal agencies sense of self preservation and the irony of Republican "leaders" signing up for more government.

1896 Redux?  The last time a moderate conservative faced a charismatic populist was 1896.  ... McKinley against Bryan. McKinley too was a genuine war hero (distinguished service in the Civil War) who then entered politics. He served several terms in the House and became chairman of the Ways and Means Committee. In 1891 he was elected governor of Ohio.  His opponent's political résumé was a lot thinner, with only two back-bencher terms in the House. But at the Democratic convention of 1896, Bryan electrified the crowd with his "Cross of Gold" speech. It instantly became an American classic and propelled him to the nomination at just 36 years old, by far the youngest man ever nominated by a major party. Like Mr. Obama, Bryan promised a new politics aimed to benefit the common man, not the capitalists.  He launched the country's first whistle-stop campaign, giving more than 500 speeches around the country. And at first it worked. The Dow Jones Industrial Average, which had made its debut on May 26 of that year at 40.94, had lost 30% by August, when it stood at 28.48. But the Republicans fought back, utilizing new advertising techniques, and painted Bryan as someone whose populist ideas would wreck the American economy. The Dow began to recover as McKinley picked up support in northern industrial cities, and among ethnic workers who had been previously Democratic. In the end he won with 51% of the popular vote against 47%. [John Steele Gordon, Wall Street Journal, Jul 10]

 I used to think that history had some value- that we could learn from our mistakes. Then we went to war in Iraq.   --- ian [The Times, Jul 9]

They must follow us. The U.S. now has an energy problem that is not only draining the bank accounts of its own citizens, but filling up the bank accounts of some who work against American interests around the globe. ... "Due to soaring oil prices, the U.S. current account deficit" -- that is, the broadest measure of the nation's trade deficit -- "has doubled since 2001. This excess consumption has been financed by huge capital inflows from Emerging Asia and oil-exporting countries." ... the third concern: that some of these mountains of petrodollars will in turn be used to advance anti-American political agendas. [David Wessel, Wall Street Journal, Jul 8]. The politicians response: flail and rail. They don't have an answer because the country is a long way from consensus on what to do. Since they are our leaders, they must follow us.  About the only thing they can do in the short run is to ramp up the cost of the oil by imposing a carbon or oil tax which would suppress demand. But that is just one of the several unacceptable answers to those many of us who just want the problem to go away.  Don't look to the election campaign for any answers; they don't have any that we want to hear. The prospects are poor when the presidential candidate says Some economists don't think much of my gas-tax holiday, but the American people like it and so do small-business owners.  Elect our new follower.

Obama says McCain's plan to balance the budget doesn't add up. Easy for him to say: It's not a goal he's even trying to reach. because he wants to make some critical investments right now in America's families. [AP, Jul 8] That kind of talk is political code for interest groups to be paid off. When politicians talk about "investment", stand by for financial baloney by two sides that differ only in which interest groups they will pay off.

SBIR Politics. the Senate is unlikely to take up the House version of the [SBIR] bill, says a person familiar with the legislation. Instead, the Senate's small-business committee, headed by Democrat John Kerry, is likely to try to strike a compromise, this person said, allowing companies controlled by venture capitalists to participate, but setting limits on the number of VC-controlled firms. .... Jere Glover, a Washington lawyer who heads the Small Business Technology Council, worries that the venture industry wants to turn the program into a "feeder" for new deals, letting the government fund high-risk research so that big investors can come in and profit later. [Rebecca Buckman, Wall Street Journal, Jul 8]  The basic answer to Glover is, What's wrong with that?  What's the use of pouring taxpayer money into companies and ideas that have no future? It's just supporting life-style companies who do whatever the government wants, at least in the large majority of the program which is funded by the mission agencies.  Since there is no evidence that small companies are any better at science and technology than large entities, there is no compelling reason to invent a government subsidy program for small business science. The only aspect where small business has an advantage is agility in getting new ideas into the marketplace, but that requires entrepreneurs, not just good scientists who write good technical reports. 

[Mark Twain's] single best one-line defense not just of himself but also of how a democratic society works in the first place. "A discriminating irreverence," he wrote, "is the creator and protector of human liberty."    ... Reverence and awe aren't democratic virtues. The last thing you need in a free society is people who know their place. ... [Richard Lacayo, Time, Jul 3]  As it happens, many of these were also the issues of his day, and he addressed them as eloquently as anyone has since. The idea that America is a Christian nation? Andrew Carnegie brought that up to him once. "Why, Carnegie," Twain answered, "so is Hell."    [Roy Blount, Time, Jul 3]

some of the underlying tensions between the two schools that guide [McCain's] economic thinking — the supply-siders who want to cut taxes and the deficit hawks who want to balance the budget — remain unresolved. ... McCain has promised once again to balance the budget by the end of his first term in 2013 [Michael Cooper, New York Times, Jul 8] The standard impossible dream that voters want to hear but reject in detail. Which government program that benefits you would you accept being cut by a third? No, don't blather about waste, fraud, and abuse in programs that benefit others; if you won't accept a cut, they won't either. And they can bribe and threaten Congresscritters just as well as you can.

The panel [from the American Academy of Arts and Sciences] notes that young investigators are struggling as training times lengthen and competition for grants gets tougher. The statistics are "scary," Yamamoto says: In 1980, 86% of new faculty members won a grant the first time they applied for one; now only 18% do. At the same time, they're getting older: The average Ph.D. gets his or her first real job at age 38 and first R01-type grant at 42. ...  The report eschews calls for increased funding  [Science, Jun 6]  More for youth but no good solution to the basic dilemma that the numbers of research brains are growing much faster than government funding.

Beware Russian Deals. A novelty in Russia, the public-private partnerships are the latest fashion. Government officials tend to want the private investors to bear all the risks, without providing any assurances about returns, according to bankers.  [Gregory White, Wall Street Journal, Jul 3]  Since Russia has no rule of law, its government can (and will) be arbitrary and exploitative.

Science for Justice. Waller is the 19th man in Dallas County TX since 2001 shown by DNA evidence to be innocent of the crime for which he was convicted. That's more than any county in the nation, according to The Innocence Project in New York, a legal center specializing in wrongful-conviction cases.  [Jeff Carlton, AP, Jul 3]  The thirst for "justice" in the wild West seems only a little better than lynching. A high false conviction rate coupled to a high execution rate doesn't inspire confidence in Texas "justice". Then after we elected its twice governor to be twice president, we wonder about his curiosity.

As the last batch of stimulus checks show up in mailboxes, some economists and Democrats are rumbling that the government needs to again intervene to prop up the flagging economy. [Deborah Solomon, Wall Street Journal, Jul 3] With what?  Even though as Nixon said, We are all Keynsians now, there is a limit on how many times we can simply borrow to pay for sustaining current prosperity. Just as Bush can't call up an Army he hasn't got any more. The politicians and the public must concede that responsible adult life entails limits and sacrifice.  Actually, if the public recognizes it,  the politicians will rush to adopt it.

Dream Economics. Obama correctly reckons that the attractive tax cuts Mr McCain proposes could pummel the federal budget. The Arizona senator wants to keep all of Mr Bush's tax cuts in place, lower the top corporate income tax rate by ten percentage points and scale back the Alternative Minimum Tax, ... McCain says he can pay for all this by cutting government spending, starting with the earmarks lawmakers use to direct money to pet projects.  [The Economist, Jun 14] Buy a luxury car from your piggy bank (for those who remember piggy-banks)

"It's a very complex problem, and it's tied to the drug trade, a faltering economy and, as I've said many times, the porous border region with Pakistan. There's no easy solution, and there will be no quick fix." said the Admiral on the need to extend the Marines' tour in Afghanistan, and fudging on the question of where the needed Army troops would come from. One practical step that the admiral cannot bring up is that since the drug trade is supplying America's illegal demand, eliminating the criminality would dramatically reduce the need for renegade protection of the industry and the cash flow to the renegades. But then that is a libertarian adult approach that our politicians cannot bring themselves to face.

Circular. a year after the surge began, more U.S. troops were in Iraq than when it started, and the argument for keeping them there had descended into circular reasoning. Either the new strategy was working so well that it shouldn’t be interrupted, or else things were still so precarious that the U.S. couldn’t afford to withdraw now. We were back to the impossibility of talking about Iraq.  [James Fallows, Atlantic Monthly]

Checks and Balances. A federal judge in California said that the wiretapping law established by Congress was the “exclusive” means for the president to eavesdrop on Americans, and he rejected the government’s claim that the president’s constitutional authority as commander in chief trumped that law. [Eric Lichtblau, Washington Post, Jul 3]  If the Democrat gets elected President, look for the Republicans to trot out the checks and balances again. Fortunately, the two-party system combined with lifetime federal judicial appointments stays the hand of power grabbers. Another rousing cheer for the Constitution.

Congress also made progress on FY 2009 appropriations. Both the House and the Senate have drafted bills endorsing the requested 14 percent increase for NSF, adding funding to the request for NASA with a special emphasis on climate change science programs, and saving two key Commerce Department technology programs from proposed elimination. [AAAS Policy Alert, Jul 2] The good news is that Congress is willing to borrow unlimited amounts for energy research; the bad news is that they expect immediate results. A library of technical reports doesn't qualify.

Grappling with a record death toll in an overshadowed war, President Bush promised to send more U.S. troops into Afghanistan by year's end. He conceded that June was a "tough month" in the nearly seven-year-old war. [AP, Jul 2] Great idea, if only he had any troops to spare, since he has worn out his Army and his welcome. Troops don't appear just because he wishes it so.

Most [1776] Americans believed passionately in liberty and freedom, but they understood those ideas in very different ways. Town-born New Englanders had an idea of ordered freedom and the rights of belonging. Virginia’s cavaliers thought of hierarchical liberty as a form of rank. Gentleman freeholders had much of it, servants little, and slaves nearly none.  Quakers in Pennsylvania, Delaware and New Jersey believed in a reciprocal liberty of conscience in the spirit of the golden rule. African slaves thought of liberty as emancipation. Settlers in the Southern backcountry understood it as a sovereign individual’s right to be free from taxes and government, and to settle things his own way: Don’t tread on me!  ... Jefferson’s job was to bring together these Americans who were united by their passion for liberty and freedom, but divided by their understanding of those ideas. [David Hackett Fischer, New York Times, Jul 3]

Appeal to the Baser Tribal Instincts. A Republican congressional candidate in a majority-white Mississippi district runs ads trying to tie his Democratic rival with Barack Obama's former pastor, seen by some as an anti-white firebrand. Democrats distribute fliers accusing the Republican of wanting a statue to honor the founder of the Ku Klux Klan. [Emily Pettus, AP, Jul 2]  We like see ourselves as an advanced society, except when it comes to power, where we grab for the rawest handle.

Power Comes First.  Whatever expectations one has of the Russian government and civil institutions, they always disappoint. The abuse of tax and visa laws to eliminate BP’s hold on its Russian oil joint venture TNK-BP is the latest in a long line of doleful examples. It has been obvious for some time that the rule of law does not apply in Russia to the international investors and companies which venture into the market in the hope of profiting from its natural resources. [John Gapper, Financial Times, Jul 2]  As in many places in the world, political power comes before any niceties of law and rights. What a shame the Bush administration and the former Republican Congress looked to the rest of the world as if they had the same power-first instinct.

Expecting a State Handout? Squeezed by high inflation, dwindling tax revenues and a national economic downturn, states from coast to coast have struggled to close yawning budget gaps while bracing for another difficult fiscal year ... Many state legislatures have been embroiled in pitched budget battles, with education, social services and fees in the crosshairs. .... [Jennifer Steinhauer, New York Times, Jul 1] When they can't pay for the basics, they won't do innovation investment with questionable returns. Try a lottery ticket.

Necessary but Insufficient. Research conducted or sponsored by the NIH tends to be concentrated in the basic science of disease biology, biochemistry and disease processes. A major goal of that work is to identify biologic targets that might prove vulnerable to "attack" by drugs yet to be developed. Private-sector research is weighted heavily toward applied science: discovering ways to exploit the findings of basic science in pursuit of treatments and cures. [Benjamin Zycher, Wall Street Journal, Jun 28]  Research successes don't march into products by themselves. They need big money which only private capital supplies, and any government policy that discourages such investment will slow the emergence of new treatments.

Do You Look Like an SBIR Mill? Copyright© 2008 by Greenwood Consulting Group, Inc.  ... The SBIR/STTR agencies don't like SBIR mills, and they are doing a pretty good job of ferreting them out and not giving them future SBIR/STTR awards. [SBIR Alerting Service, Jun 27]  An interesting observation although the big dog SBIR agencies - DOD and NASA - help create the mills. Greenwood's advice: conjure up a great story to excuse your past failure to commercialize or provide solid evidence that you are a new person. My advice: if you got a lot SBIR before, keep it up just to cover your salaries and air-conditioning expenses. If DOD and NASA like your technology, they will fund it regardless of your "commercialization failures" since their commercialization talk is just window-dressing.

Steven Hatfill finally has his life back. Thanks to FBI incompetence, he also has $5.8 million.  the Justice Department announced it had settled a lawsuit with Mr. Hatfill, a former military scientist whom then-Attorney General John Ashcroft publicly identified in 2002 as a "person of interest" in the investigation into the anthrax attacks in the aftermath of 9/11.... The Justice Department proclaimed, "The United States does not admit to any violation of the Privacy Act and continues to deny all liability in connection with Dr. Hatfill's claims."  [Wall Street Journal, Jun 30] The problem wasn't that Hatfill was a natural suspect with means and opportunity (but no obvious motivation) but that the government ruined his name and career by seeking a hit in the news cycle to show it was on the case. Can't we have adults at the Cabinet level? 

The Sovereigns Are Coming! Norway’s finance minister Kristin Halvorsen responded to gentle criticism of her country’s sovereign wealth fund by responding, “It seems you don’t like us, but you need our money.”  ... the biggest risk posed by SWFs to date has not been their actions, but the possibility of protectionist overreaction in Washington ... Over the long term, SWFs are merely a symptom. One deeper problem is that U.S. energy consumption is keeping energy prices high. [Daniel Drezner, The American, M/J08]

Dekortage writes "The US Bureau of Land Management, overwhelmed by applications for large-scale solar energy plants, has declared a two-year freeze on applications for new projects until it completes an extensive environmental impact study. The study will produce 'a single set of environmental criteria to weigh future solar proposals, which will ultimately speed the application process.' The freeze means that current applications will continue to be processed — plants producing enough electricity for 20 million average American homes — but no new applications will be accepted until the study is complete. Solar power companies are worried that this will harm the industry just as it is poised for explosive growth. Some note that gas and oil projects are booming in the southwestern states most favorable to solar development. Another threat looming over the solar industry is that federal tax credits must be renewed in Congress, else they will expire this year."  [, Jun 27]

In a remarkable shift, Afghanistan, where U.S. officials were once confident of victory, is now rivaling Iraq as the biggest cause of concern for American policymakers.  According to a new Pentagon report, Taliban militants have regrouped after their initial fall from power and "coalesced into a resilient insurgency." The report paints a grim picture of the conflict, concluding that Afghanistan's security conditions have deteriorated sharply while the fledgling national government in Kabul remains incapable of extending its reach throughout the country or taking effective counternarcotics measures. ... Senior Pentagon officials and military commanders have ordered a top-to-bottom review of U.S. strategy in Afghanistan.  [Yochi Dreazen, Wall Street Journal, Jun 28] Three key facts; 1) our Army is too busy and tired to help, 2) we'll soon have a new National Command, and 3) being the world's biggest dog guarantees nothing.

So much for that second-half rebound.  Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal. It ain't gonna happen. Not this summer. Not this fall. Not even next winter.  This thing's going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge-fund meltdowns and 6 percent unemployment. We're caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.  Only this will be a different kind of recession — a recession with an overlay of inflation. That combo puts the Federal Reserve in a Catch-22 — whatever it does to solve one problem only makes the other worse.  [Steve Pearlstein, Washington Post, Jun 28]  What a great sixty years of prosperity, funded in part by government borrowing to pay for three big wars. Since we were rich, we had to keep up appearances, and our politicians were happy to keep the guns and butter charade going.

Buying Votes. He promises to exempt anybody age 65 and older, and making no more than $50,000 per household, from paying income taxes. ... "It's time to give America's seniors a break,"   [Wall Street Journal, Jun 28] Add another $7B per year to the debt to reward an interest group that vote in higher numbers than other populations. As long as the national debt is an abstraction to the citizen,  only the economists will worry.

Elect Adults This Time. We are a country in debt and in decline .... Our political system seems incapable of producing long-range answers to big problems or big opportunities. ...  digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters. [Tom Friedman, New York Times, Jun 29]

the fifth successful intercept in five attempts since 2005 for the Terminal High Altitude Area Defense system [AP, Jun 26]  Which shows that sometimes under some circumstances with enough warning, a bullet can hit a bullet.

Congress passed another $258B supplemental for the Iraq war, new veterans' education benefits, and an extension of unemployment insurance. Who pays for it? Not a fair question in an election year.

[McCain activist] Carly Fiorina told about 500 building industry executives that tough times demand strong leadership. [Tom Abate, San Francisco Chronicle, Jun 26] True enough. But then, Bush-Cheney exercised excessively strong leadership - to do many of the wrong things for the wrong reasons. They tried to re-write the Constitution by executive fiat. The founders tried to prevent such "leadership" by distributing power to three branches of government, a scheme that Bush-Cheney tried to undermine with the "unitary executive" theory.

“Now is the time for European companies to invest in Wisconsin. It makes perfect sense, given the weak dollar — especially since it’s well-known that Wisconsin excels in medical imaging,” said Teresa Esser, managing director of Silicon Pastures angel investing group. ... MeVis Medical Solutions has completed the acquisition of a California company [the computed tomography division of R2 Technology (Santa Clara, CA, subsidiary of Hologic ], in April] and will soon begin shipping its first product ... based in Bremen, Germany, specializes in software for medical imaging technology. The company went public in 2007 in Frankfurt. [Milwaukee Journal-Sentinel, Jun 25]

The Army is set to announce a significant reshaping of its biggest and perhaps most contentious acquisitions program [FCS] in an effort to speed the delivery of high-tech equipment to forces in Iraq and Afghanistan, according to senior military officials. .... work to get large numbers of robots and miniature aerial drones -- both of which are designed for use in crowded urban areas -- out to forces in Iraq and Afghanistan by late 2010 [Cole and Dreazen, Wall Street Journal, Jun 26]  Army SBIR contractors and hopefuls, be alert that if FCS suddenly changes, SBIR promises will also suddenly change. The Army doesn't care about SBIR, it cares about its budget and its missions.

They Pay to Play.  The pharmaceutical industry spent a record $168 M on lobbying the federal government in 2007, according to a report by the Center for Public Integrity. ...The center said the industry's 32 percent increase in lobbying expenditures may have been fueled by the Democratic takeover of Congress. Democrats have not been as friendly to drug companies as Republicans.   [Maureen Groppa, Indianapolis (home of Eli Lilly) Star, Jun 25]

Go Home, and Take Your Brains With You. Two-thirds of doctoral candidates in science and engineering in U.S. universities are foreign-born. But only 140,000 employment-based green cards are available annually, and 1 million educated professionals are waiting -- often five or more years -- for cards. Congress could quickly add a zero to the number available, thereby boosting the U.S. economy and complicating matters for America's competitors. ... Instead, U.S. policy is: As soon as U.S. institutions of higher education have awarded you a PhD, equipping you to add vast value to the economy, get out. Go home. Or to Europe, which is responding to America's folly with "blue cards" to expedite acceptance of the immigrants America is spurning. [George Will, Washington Post, Jun 26]  Don't expect Congress to give anything to foreigners when the nativists are crying for more and bigger fences. Looking after long-term interests doesn't compute in election math.

Elect Common Sense. presidential campaigns can bog down in details of proposals that will never be implemented as proposed. Neither President McCain nor President Obama, no matter what he says, can do much that will make an immediate difference to higher energy prices, falling house prices, rising unemployment, sagging wages. And no matter how many briefings by learned advisers or position papers posted on Web sites, no candidate can honestly tell us exactly what he'd do in office. [David Wessel. Wall Street Journal, Jun 26]  Remember, too, that any president will play politics with policy to help the party gain a power edge, and that you cannot sue over failure to do what you thought was a firm promise that you wanted to hear.

Marc Stanley, TIP Director, has more professional lives than a cat. His ATP and now the TIP program has been zeroed out 7 times by the President. TIP has been zeroed out for 09, but Congress has a soft spot for him and his programs usually get rescued (in one form or another). The SBIR Insider has heard that a series of TIP kickoff meetings will take place throughout the country. We'll keep you informed about the schedule. The TIP Critical National Needs (CNN) webcast has been rescheduled to July 8, 2008, from 1:30pm to 3:00pm. For more information please visit the TIP web site at  [SBIR Insider, Jun 12]

Better on the Outside. Over the last decade, even as spending on new military projects has reached its highest level since the Reagan years, the Pentagon has increasingly been losing the people most skilled at managing them. That brain drain, military experts like Mr. Kaminski say, is a big factor in a breakdown in engineering management that has made huge cost overruns and long delays the maddening norm. [Philip Taubman, New York Times, Jun 25]  Three decades of Republican denigrating the federal government didn't help attract the best and brightest. But then, the best and brightest should be in the private sector creating wealth and not in government re-distributing it.

At stake in the presidential election is whether we will all need to consult lobbyists to have our medical issues heard by a remote, bureaucratic Medicare program. [Scott Gottleib, Wall Street Journal, Jun 24]  We will have to consult a lot of lobbyists before the national health system for seniors settles down to something affordable, which the present Medicare is not. 

Handout Refused. Skeptical states are shoving aside millions of federal dollars for abstinence education, walking away from the program the Bush administration touts for slowing teen sexual activity. Barely half the states are still in, and two more say they are leaving. ... many have doubts that the program does much, if any good ... In April 2007, a federally funded study of four abstinence-only programs by Mathematica Policy Research Inc., found that participants had just as many sexual partners as nonparticipants and had sex at the same median age as nonparticipants. [Kevin Freking, AP, Jun 24]  Imagine that, a federal program that spends money and makes no difference. For a while, it at least soothed the religious right which doesn't rely much on real data anyway.

Politicians take the credit and the federal agency takes the heat.  Ah well, that's what we got paid for.  tens of millions of Americans have been flooding the IRS with questions about the government's economic-stimulus payments. Some callers want to know why their payment hasn't arrived and when it will. Others want to know why they didn't get as much as they had expected. [Wall Street Journal, Jun 25]

The peer review process employed by NIH to select winners in competitive solicitation cycles, lauded for its impartiality for years, has been indicted by many recently as adding to the problem. During the first weeks of June, NIH announced plans to address some of the criticism, including a commitment of  $1 billion over the next five years for investigator-initiated, high-risk/high-impact transformative research. [SSTI, Jun 18]

Battery Smackdown.  the Pentagon has set up a competition. In October, it will field test new power storage technologies in a contest offering three cash awards of $1 million, $500,000 and $250,000. The winning devices must deliver at least 96 hours worth of power in a package weighing less than 9 pounds. ... More than 100 corporate, academic and private teams already have cleared the preliminary hurdles [Tom Abate, SF Chronicle, Jun 22]

No more SBIRs.  Those government guys convinced me to keep people on with their CPP junk. Kept my costs high, then called and said "sorry, no CPP". Now I'm scrambling.  I suppose it will be okay, we still have a good strong company, but if I never hear SBIR again, it will be just fine with me.  Says an entrepreneurial company that got a juicy DOD Phase 2 from an agency that expressed interest in pursuing a Commercialization Project and then stopped everything cold [presumably because the Iraq mess was running out of money again].   Lesson: the government's word, as Sam Goldwyn once about oral contracts, isn't worth the paper it's printed on. CPP was one of those DOD wishstorms to make lemonade from the SBIR lemons. If DOD wants strong drink, it should start with strong ingredients: companies with ideas that will commercialize on their own after some SBIR nursery help. 

Physics Losing Energy a troubled experimental reactor has proved too pricey for the DOE [which] terminated the National Compact Stellarator Experiment (NCSX) at the Princeton Plasma Physics Laboratory. The not-yet-completed reactor would have been one of four large "magnetic confinement" reactors in the US after the estimated cost at least tripled and the time doubled.  Meanwhile, The US's last particle physics lab finds itself in turmoil, with its current experiments soon to wind down and nothing under construction to replace them.  ... In the past 3 months, U.S. researchers have shuttered colliders at Cornell University and the Stanford Linear Accelerator Center in Menlo Park. Only the 25-year-old Tevatron remains, and it will shut off in 2010. Fermilab's smaller experiments will end at about the same time. In this country, the cupboard is bare, and physicists have only unapproved plans with which to restock it  [Adrian Cho, Science, May 30]

McCain thinks the government should offer a $300 million prize to the person who can develop an automobile battery that leapfrogs existing technology ... $1 for every man, woman and child in the country. [Glen Johnson, AP, Jun 23]  The idea of prizes as a spur to innovation keeps gaining adherents.

The Army's march to overhaul its tarnished contracting system has been slowed by an unlikely foe: the White House. ... OMB shot down a service plan to add five active-duty generals who would oversee purchasing and monitor contractor performance.  Generals are severely rationed by law, jealously guarded by each service, and OMB says the Army has enough already to staff any new contracting outfit. [Richard Lardner, AP, Jun 23] 

A key problem, Orszag said, is that the nation does little to assess which policies actually work and which don't. Innovative, evidence-based policy could help shape effective initiatives on health care, education, and climate change, .... White House Science Adviser John H. Marburger III defended federal S&T funding, saying in a keynote address that "there cannot be any question that this country has significantly boosted spending on research during this administration."   [notes from AAAS Forum on Science & Technology Policy, Science, May 30]Which is all interesting and true, but the federal government is stuck with a bigger problem - demand way outrunning the supply of money - and until Russia launches another Sputnik, science will continue to lose in the budget politics. Unfortunately, SBIR which has effectively squandered its 3% offers no brightened corner in pleas for science and innovation money.

The sovereign wealth funds set up by producers have more cash than they can reasonably invest in skyscrapers in their own cities. Their investments in America’s financial institutions have proved a costly adventure so far, but these are long-term investors, the best kind from the point of view of the managers of our banks - so long as they remain passive - and so will remain key players in American financial markets.  ...My own guess is that the emergence of richer Chinese and Indians as competitors for the world’s resources will mean a gradual decline in American and western living standards as more food, oil, iron, coal and other resources head for Asia and the Middle East.  ... [western industrialised countries] will have to produce more every hour, which means that their governments will have to provide some substitute for today’s failed state-run education systems ... They will have to change their tax systems to encourage investment and discourage consumption. Unfortunately, the number of Solomons serving in our Congress is quite limited. So the outlook is less than bright.  [Irwin Stelzer, The Sunday Times, Jun 22]  No, handing SBIR money to uncompetitive life-style companies is not the answer to American productivity and competitiveness.

The U.S. has long depended on the kindness of strangers to finance its import bill. These days, those strangers are likely to be in China, Brazil, Mexico or some other emerging nation.  The U.S. has to import, on net, almost $2 billion in capital a day to cover its enormous trade gap. Of the $920 billion that foreigners pumped into U.S. stocks, bonds and government securities last year, $361 billion -- a stunning 39% -- came from emerging-market nations, according to calculations by Bank of America, using Treasury Department data.   China alone accounted for 21 percentage points of the total, with Brazil at 8.4 points, Russia at 2.8 points, and Mexico, Singapore, Malaysia, South Korea and others in the mix.  That's probably just the tip of the iceberg. Capital from the oil-soaked Persian Gulf states often flows through London on its way to New York, so billions of dollars in investment flows that look British in the government reports are actually Arab.  Why? [Kristin Forbes, a former Bush adviser] concludes that it's not the profits that attract foreign money to the U.S., it's the sophistication of U.S. capital markets. [Michael Phillips, Wall Street Journal, Jun 23]  Treat them well, for if they ever change their attitudes, US capital market chaos. Walter Wriston had the idea: Capital goes where it is welcome and stays where it is well treated. Remember that nativist xenophobia could spoil the whole deal with isolationist ideas like the Department of Homeland Security begins electronic prescreening for travelers from countries with favored travel status ... Travelers rejected by the new screening process would need to apply for a visa, which could double the number of visa applicants from Great Britain, Japan and much of Western Europe. [Brad Haynes, Wall Street Journal, Jun 23] Obsession with physical security could conceivably damage economic security.  That's one of the dangers of inventing a government department with a vested interest in "seeing a Red under every bed.".

I suppose it’s better than nothing. Because it’s really close to being nothing. The 2008 legislative session recently came to a close and once again supporters of an angel investor/venture capital tax credit were left empty-handed. Well, that’s not exactly true. Investors can now get a 45 percent tax credit up to $112,500….in Breckenridge, Dilworth, East Grand Forks, Moorhead and Ortonville. [Thomas Lee, Minneapolis Star Tribune, Jun 18, 08]   Such legislative inconstancy is just what would happen if SBIR were directly appropriated with regular need for justification since it has no quantitative return worth measuring after two decades.

[The candidate] announced a new program to offer matching grants that encourage businesses, government and university leaders to collaborate on regional economic clusters, such as the North Carolina Research Triangle Park and Nashville's entertainment cluster. The campaign said the proposal would cost $200 million a year and would be funded by improving government efficiency [Nedra Pickler, AP, Jun 21] Blah, blah, the standard dodge to avoid saying how a handout would be funded. Stand by for another four months of such drivel.

They Don't Want to Hear It. "I'd like to be a government activist. But if we don't have the resources, we're actually kidding ourselves about the direction we're taking." ... "We've borrowed until we're blue in the face," he added. "We've got to change. Change does not come easily." The Democrat's bleak message is not one that politicians normally like to deliver -- and his popularity has plummeted as a result. [Keith Richburg, Washington Post, Jun 22] The governor of New Jersey, a rich man who self-financed his getting elected Senator and then Governor.

Maryland Gov. O'Malley outlined a strategy yesterday to invest $1.1 billion in the state's bioscience industry over the next decade or so, expanding tax credits, bolstering stem cell research and providing new support for start-ups. [Washington Post, Jun 17]

Lamenting the Route 128 brand has lost its luster, leaders of the information technology, communications, and defense industries today called on state government to invest more than $64 million in new efforts to make Massachusetts an "innovation gateway." [Robert Weisman, Boston Globe, Jun 17]

Early-stage companies in Wisconsin pulled in $147 million of funding last year, 43% more than in 2006, according to a report released by the Wisconsin Technology Council. .... Wisconsin also showed gains in federal Small Business Innovation Research grants to $33.7 million and in initial public offerings. Four companies raised $343 million in IPOs in 2007, the report says.  [Milwaukee Journal-Sentinel, Jun 19]

An initiative in Iowa to disperse tax credits worth 20% of equity investments into pre-qualified businesses or seed capital funds has reached its $10 M cap and will not be continued in the next fiscal year. The Iowa Venture Capital Credit – Qualified Business or Seed Capital Fund was started in 2002 with a cap of $10 million, and as monitored by the Iowa Department of Revenue, all credits have been issued.  Efforts in the most recent Iowa legislative session to increase the monetary cap of the program under House Bill 2484 by an additional $3 million did not succeed. The discontinuance of the initiative comes as the practice of utilizing tax credits in Iowa for various activities has grown dramatically over the last several years. However, the scrutiny of the tax credit programs has grown, as well.  [SSTI, Jun 17]

"They want what we've got," said Governor Patrick, who is leading a brigade of four dozen state and local officials at BIO in an attempt to persuade biotech executives to expand in Massachusetts. The scene at the convention - organizers call it the "Olympics" of the biotech industry - underscores the growing competition that Massachusetts faces to remain a leader in the industry.  ....But it is difficult for other states to compete with Cambridge's Kendall Square and San Francisco's Bay Area, especially if they are trying to build an industry from scratch. Both areas have deep roots in the industry. The commercial biotech revolution arguably began in 1976 with the founding of Genentech, a south San Francisco biotech giant. Cambridge-based Biogen (now Biogen Idec Inc.) launched just two years later. Today, the Bay Area has 77 publicly traded biotech companies, more than any other region, according to a recent study by Ernst & Young. Massachusetts is close behind with 62.   [Todd Wallack, Boston Globe, Jun 19]

They haven't rechristened a ship the Irony, but federal [NOAA] researchers  are canceling and cutting back on voyages aimed at studying climate change and ocean ecosystems so they can save money on boat fuel. [Brian Skoloff, AP, Jun 18]

An employer has no right to read an employee's text messages without the worker's knowledge and consent, and federal law bars service providers from turning over the contents of the messages to the employer who pays for the service, the 9th U.S. Circuit Court of Appeals ruled. [Maura Dolan, LA Times, Jun 18]

It was reported last week that President Bush has signed an executive order requiring all federal contractors or subcontractors, including colleges and universities, to use DHS’s E-Verify system to establish the immigration status of newly hired employees and all workers on such contracts. ... Aug. 11 is the deadline for public comments on the proposed rule published in the June 12 Federal Register. [SSTI, Jun 17]

'S Wonderful.  $165 billion to fund the wars in Iraq and Afghanistan into next year and more than $50 billion over 10 years in college funding for veterans of those wars. It also is expected to include more than $2 billion in aid for Midwestern states affected by flooding, plus a 13-week extension of jobless benefits in all states for the long-term unemployed. [Wall Street Journal, Jun 19] Paying for it? 'S wonderful, the magic of deficit finance: something for everybody and nobody has to pay. 

The Louisiana House of Representatives, by a vote of 94-3, last week passed an "academic freedom" bill that singles out evolution and other theories or fields of science and implies that they are controversial. [AAAS, Jun 18] So-called academics will now be free to opine that creationism is a credible alternative to evolution. I wonder how many academics in Louisiana will be able to safely argue that god is a mere human construct with no credible evidence as to its nature.  

Let Loose the Drills of War.  The Republicans hear the populist call of high gasoline prices and the business prospect of new oil profits if they can just drill everywhere in America without regard to the inevitable environmental damage they will cause. Bush, McCain, even Florida's governor want to Drain America First, at least until the next election. But there is no compelling need to panic over supply; the world has plenty of supply at a competitive prices as world demand rises. The laws of economics have not been repealed.

The state of Minnesota's attempt to win passage for a bill to lure start-up investors with tax credits was stripped down. [Minneapolis Star-Tribune, Jun 16]

Cargo Jock. Gen Schwartz the new CSAF comes from an underprivileged background - a cargo pilot in a world of bomber and fighter pilots. Since 1982, for example, the fighter mafia has been in control, and before that the bombers. Now, since senior officers tend to favor the platforms they operated as junior officers, and  since one of the key advantages that small fighters used to enjoy — their ability to swoop low for greater accuracy while dodging enemy fire — has been rendered much less important by the development of “smart” bombs, big money fighter programs should look fearfully at prospects for continued free play in the Pentagon's budget game. [New York Times, Jun 16]

Lobby, Lobby. Lobby. Defense contractors Boeing and SAIC, worried that key aspects of a $160 billion Army modernization contract known as Future Combat Systems may be in danger, are scrambling along with the Army to shore up support on Capitol Hill. [Wall Street Journal, Jun 13] There is no good substitute for stroking your politicians if you want federal programs to continue pouring out money. BTW: despie all the imaginary financial math, the only source of the money is you and your neighbors.

Watching the Watchdog, The criminal-investigations wing of the Food and Drug Administration is in hot water with [Congress] .... its arrests and convictions in fiscal 2006 were 20% lower than in fiscal 2000, according to numbers on the agency's Web site ... the Bush administration announced it would ask Congress for an extra $275 million to beef up FDA inspections... up from a present budget of $42M  [Alicia Mundy, Wall Street Journal, Jun 11]

"The 'Blue Dogs' won't like it. But, frankly, this is just kabuki," Montana Democrat Max Baucus, chairman of the Finance Committee, told the U.S. Chamber of Commerce in a Tuesday speech. "We all know [the AMT provision] is not going to be paid for, so why not just get to it?"  [Wall Street Journal, Jun 11]  It's election year; use the overextended credit card to hand out the gifts.

Drain America First, Among the many mythical "solutions" to energy costs is "Republicans by and large believe that the solution to this problem, in part, is to increase domestic production," McConnell said. Anything to avoid telling the people the economic laws of energy costs that the more everyone wants, the higher the price will be for all. The American production approach does have the great Republican advantage of raising measurable profits for American energy companies as long as the supply lasts.

Now he sees the problem. Having created the problem he sounds an alarm.  President Bush issued a call for a rise in the value of the US dollar on currency markets yesterday in a signal of mounting official alarm in Washington about the effect of the slumping greenback on the world’s largest economy. [The Times, Jun 10] After revenue draining tax cuts, and a long expensive war, and sitting on his free-market hands while the home mortgage finance system debauched itself, the US reliance on external financing has brought the dollar lower and lower.

President Bush has ordered federal contractors to participate in the DHS electronic system for verifying the immigration status of their workers, greatly expanding the reach of the administration’s crackdown on employers who hire illegal immigrants. An executive order, signed by the president on Friday and announced on Monday, requires federal contractors to use the system, known as E-Verify, to check immigration status when they hire new workers or start work under government contracts.  ....  But Mike Aitken, director of governmental affairs for the Society for Human Resource Management, a trade association, said the E-Verify system remained vulnerable to cheating by immigrants who used real identity documents belonging to other people. Without new money and more staff members, Mr. Aitken said, the Social Security Administration could be overwhelmed by inquiries from federal contractors.   [Julia Preston, New York Times, Jun 10]

The Supreme Court relaxed the grip that patent owners hold over third-party uses of their inventions, continuing a recent recalibration of intellectual-property law intended to foster competition and innovation. .... Citing a doctrine called patent exhaustion, the court said LG had no right to control the "downstream" use of a patent it had licensed to a manufacturer.   [Jess Braven, Wall Street Journal, Jun 10]

Obama is an impressive speaker who has run a brilliant campaign — but if he wins in November, it will be because our country has already been transformed. [Paul Krugman, New York Times, Jun 9] We should remember that elections are a confirmation, not a cause, of a trend shift. Reagan did not turn the country to the right, he rode it. As Gandhi once said, "I must follow that crowd for I am their leader."  The voters ,having had a decade's trial with Republican solutions, sound like they want to go back to Democrat solutions, even though they are kidding themselves that either party has the answer. The basic problem is the the voters don't want to hear the real solutions that will cost them big money and dash their dreams, and neither party is about to tell them the truth.

Adjusting to Tech Revolution, nearly all conflicts since the end of the Cold War can be described in terms of swarming "hiders and finders." Combatants stay hidden, pop up to strike, and then disappear until they attack again.  .... technologies are wonders, but generally they have not been accompanied by shifts in military doctrine and organization. The result: a tidal wave of data is being created that can swamp systems still organized around large units (such as army divisions, naval strike groups, or air force wings) whose goal is to apply "overwhelming force" at some mythical "decisive point." [John Arquilla, MIT Tech Review, Mar/Apr 08] Since we have only a small Army and short memories, we have to choose only one fighting doctrine at a time, usually fighting the last war better.

A decade after opening the Center for Emerging Technologies biotech business incubator, Marcia Mellitz has learned not to take anything for granted. Markets pop and fade. Political and financial support comes and goes. Good ideas can fail.  But she and the CET — along with the local life-science industry they stand for — have weathered it all. [Rachel Melzer, St Louis Post-Dispatch, Jun 7]

Money from Where?  In Indiana, Gov. Daniels declared 41 counties disaster areas — the first step to gain federal aid — following severe storms and tornadoes. [AP, Jun 6] Bush demands a pile of military money for Iraq, hints of new stimuli plans and chants his permanent tax cut mantra; oil rockets near $140; severe storms rack the heartland all spring (but, of course, climate change is not worth any sacrifice); home equity drops below the mortgage; SBIR advocates want another percent or so. Every politician has a good cause for money from the federal government, but none can answer: money from where?  

Denial Before Consequences. The cap-and-trade scheme that America's Senate began debating this week would also allow firms to fulfil some of their obligations through green investments in other countries.  But the bill in Congress would allow only a small number of offsets, and only from factories that do not compete with American firms—a big hurdle in a globalised world. Worse, to make the bill more palatable to China-bashing politicians, its authors have strengthened provisions that would impose tariffs on energy-intensive imports from countries that are not taking “comparable action” against climate change, meaning all developing countries. That is a recipe for a trade war, which would only compound the economic pain of global warming. Just when a deal is possible, the stage is being set for a tragedy of Wagnerian dimensions.   Meanwhile, a new opera will open at La Scala in Milan, based on [Al Gore's]“An Inconvenient Truth”.  Opera's ending still unwritten. [The Economist, Jun 5]

the pressure on politicians to do something. Not for them Ronald Reagan’s famous plea to his officials: “Don’t just do something, stand there.” Some sensible new policies are badly needed but that is not on the cards, since the inclination of politicians is to do the opposite of what needs doing.  .... At some point, perhaps a decade hence, alternatives to oil will make their appearance on a scale that might matter - unless the oil-producing nations respond to the threat to their dominance of energy markets by lowering prices. [Irwin Stelzer, The Sunday Times, Jun 8]

A Tiny Sensor Simply Made. Researchers at NASA Ames Research Center have developed a nanotechnology-based biosensor that can detect trace amounts of as many as 25 different microorganisms simultaneously and within minutes. The researchers make the biosensors by growing carbon nanofibers--a material with the same properties as carbon nanotubes but with a slightly larger diameter--using a process similar to the one employed to fabricate computer chips. [Brittany Sauser, MIT Tech Review, Jun 5]

[Florida] will increase the state retirement fund's investment in high-tech industries. Under new legislation, the Florida State Retirement System will dedicate up to 1.5% of the system's trust fund to technology and growth investments. The Miami Herald estimates that this could provide nearly $2 billion for high-tech industries in the state.  [SSTI, Jun 4]

The Senate's Budget Resolution supports $101 million in additional funding for small business programs that will benefit America’s entrepreneurs., says the Senate SB Committee. Where will the extra money come from? Don't ask about political economics.

Great Work, Send Money. A decade after opening the Center for Emerging Technologies biotech business incubator, Marcia Mellitz has learned not to take anything for granted. ...  "This stuff isn't easy." ...  CET is fundraising for a $29.5 million, 60,000-square-foot expansion.  The extra space is needed because CET has filled its wet labs, specialized and expensive facilities needed for scientific research. Local universities recently stepped up their efforts to commercialize research by creating new companies — but soon there will be nowhere to put them, Mellitz said. CET in March received $5 million in state tax credits to sell in exchange for $10 million in contributions. But an earlier $5 million funding pledge by Gov. Matt Blunt's administration failed to pass in the Legislature.  [Rachel Melzer, St Louis Post-Dispatch, Jun 6]

Long Island (NY) has, in fits and starts, been working to attract start-up life sciences companies. The outcome of this effort remains to be seen, however, and it is possible that Long Island has too many liabilities to ever become a hub of life science activity. Still, New York State is persisting in its push to develop such industries. It has spent about $43 million toward the effort along the industrial Route 110 corridor, a major 17-mile north-south artery in western Suffolk County, near the border with Nassau County. That money has gone to the only biotech office complex on the corridor, Broad Hollow Bioscience Park, which is on the Farmingdale State College campus  [Alison Gregor, New York Times, Jun 4]

Despite the Pilot Mafia. Early last year, the Air Force was able to keep no more than 11 of the remotely piloted, armed Predator surveillance aircraft flying over Iraq and Afghanistan at any one time. By this past Sunday, that number had more than doubled to 25, and Air Force officials now say they can guarantee at least that many of the hunter-killer aircraft will be aloft around the clock, a new element of the buildup in American forces for the two wars. [Thom Shanker, New York Times, Jun 5]  SECDEF Gates just fired the two top-most AF leaders over a different issue but may have been influenced by AF foot-dragging on remote pilots.

Shock and Aw. The chairman of the Senate Armed Services Committee declared that cost overruns for Defense Department weapons had "reached crisis proportions," after government auditors reported that the projected final cost of the Pentagon’s major programs had ballooned $295 billion over initial budget estimates. ... the system is growing worse, according to a report earlier this spring by the Government Accountability Office. [Charlie Savage, New York Times, Jun 4]

The voters have chosen the two big quadrennial liars - Obama and McCain - who have five months to tell us how they will repeal the laws of economics and thermodynamics on our behalf.

Super-Terrorist Khalid Sheikh Mohammed invoked the spirit of Nathan Hale's "I regret that I have but one life to give for my country."  Why do we applaud Hale and condemn Mohammed? Our fighter is a hero; their fighter is a devil.

Climate warming is not a threat worth any sacrifice to ameliorate, according to Republicans who are blocking any Congressional action. It might hurt business and economics, says their leader in the White House. Whereas, it is worth a trillion dollars plus 4000 dead and 30,000 wounded soldiers to invade and occupy Iraq for shifting reasons. Besides, war making is good for business, at least in the short run. Meanwhile, the International Energy Agency says The world needs to invest $45 trillion in energy in coming decades, build some 1,400 nuclear power plants and vastly expand wind power in order to halve greenhouse gas emissions by 2050, according to an energy study. [AP, Jun 6] But then, why would Republicans heed any international agency?

$3T, Details Later. The Senate yesterday approved a $3 trillion budget blueprint that would authorize a small increase for domestic priorities and spare millions of households from an unpopular tax. But it delays most major budget decisions until after the election. [Washington Post, Jun 5] Note that the lack of a firm appropriation gives any agency an excuse to delay SBIR funding.

More Spin Than Data. An investigation by the NASA inspector general found that political appointees in the space agency's public affairs office worked to control and distort public accounts of its researchers' findings about climate change for at least two years, the inspector general's office said yesterday. [Juliet Eilperin, Washington Post, Jun 3]

as soldiers say: "Amateurs talk strategy; professionals talk logistics."  [Harry Levins, St Louis Post- Dispatch, Jun 1]  

Climate Posturing. An election-year debate over how the U.S. should respond to climate change began in earnest, as President Bush warned he would veto a Senate bill, and congressional Democrats and Republicans jockeyed to define the climate-change issue to their advantage. While it is unlikely Congress will send Mr. Bush a climate-change bill before he leaves office, the debate that began Monday in the Senate will set a framework for how the issue is perceived by voters this fall. [Stephen Power, Wall Street Journal, Jun 3]  Look for no new climate science programs until at least the middle of 2009. 

What will happen to the U.S. economy if Barack Obama wins the presidency and he's backed by a filibuster-proof majority in the Senate?  Taxes will go up. Capital gains and dividends will bypass 20% on their way to 25% to 30%. Income taxes will go to 40% for higher-income earners and possibly more for the "superrich." The ceiling on payroll taxes will rise to $150,000 or so.  Government tax receipts won't grow at all. The highest taxpayers, feeling assaulted, will flee. To where?  Some will take longer vacations.  [Rich Karlgaard, Forbes , 06.16.08] The supply-side case for less progressive taxes.

The 1981 Tax Scene. VP George H.W. Bush knew that Reagan's fiscal policies didn't add up: he and his people coined the phrase "voodoo economics." Republican Senate Majority Leader Howard Baker knew that Reagan's plan made no sense: he called it a "riverboat gamble," meaning an imprudent and unwise throw of the dice. Those working for Reagan in 1981 fell into four groups: 1.) The innumerate and gullible--most of them willfully so--who did not look into assurances that the Reagan administration's plan would balance the budget. 2.) True believers in broadening the base, lowering the rates, and balancing the budget who looked on in horror and who hoped to fix things later. 3.) Those who didn't care that the Reagan administration's budget policies were bad for the country in the long-run if they were politically advantageous in the short run. 4.) Those who knew that the tax cuts and defense spending increases would unbalance the budget, and thought that the deficits created would put irresistible pressure on congress to do what it would never do otherwise--shrink a social insurance state.  [Grasping Reality with Both Hands: The Semi-Daily Journal Economist Brad DeLong]  The next administration of whichever party will have a similar gaggle of opportunists. 

A Prize Incentive. erikaaboe notes that the US DOE has announced a competition to develop efficient solid-state lighting technology. The "L Prize" program will allocate as much as $20 million in cash prizes for innovations to replace the common light bulb. Further details are available at the L Prize website. [, May 29]

Corporate Welfare Averted. A $182 million tax break for Weyerhaeuser, tucked inside the farm bill, was expected to help the century-old timber company fend off a major restructuring sought by Wall Street that could have forced the firm to sell off its mills and increase logging on its forests. But Weyerhaeuser officials cautioned there are no guarantees the restructuring still won't happen. Analysts believe the tax relief might not be enough to protect Weyerhaeuser. Its days as the nation's last, major integrated timber company -- growing its own trees and milling them into lumber and other forest products -- could be numbered.  [The Oregonian, May 27]  On such a scale, SBIR corporate welfare for SBIR-mills is small potatoes.

As rising unemployment and layoffs beset workers around the country, Iowa faces a different problem: a surplus of jobs. Or to put it another way: a shortage of workers. A survey of companies by Iowa Workforce Development, a state agency, found as many as 48,000 job vacancies, in industries including financial services — Des Moines trails only Hartford as the nation’s insurance capital — health care and skilled manufacturing. One estimate projects the job surplus to reach 198,000 by 2014, with vacancies increasingly in professional positions. [John Leland, New York Times, May 31]

Only Old Enough to Die. This military base in the far West Texas desert stood as the last Army post in America where if you were old enough to fight and die for your country, you were old enough to drink a beer. But the party is over at Fort Bliss. ..  too many accidents and fights for the general's career image... the drinking age on base from 18 to 21, bringing 17,000-soldier Fort Bliss into line with what has been the law in the rest of Texas since 1986.  And not only that, but all Fort Bliss soldiers are barred from slipping across the Mexican border to Ciudad Juarez, the city of famously loose morals where young Americans have been getting drunk – and getting into trouble – for generations. From now on, no passes to Juarez will be issued. [AP, May 30] More paternalism that leads to black markets. I wonder if that general is an avid Christian imposing his values rather than society's values.

Three prizes worth $1 million apiece were awarded Wednesday to seven scientists for their discoveries in neuroscience, astrophysics and the study of vanishingly small structures. They are the first recipients of the Kavli prizes, which are awarded by the Norwegian Academy of Science and Letters in partnership with the Kavli Foundation and the Norwegian Ministry of Education and Research. The prizes are named after, and funded by, entrepreneur and philanthropist Fred Kavli. ... Kavli, a Norwegian-born physicist, moved to the United States in 1956. He was the CEO of Kavlico Corp. of Moorpark, Calif., which was one of the world's largest suppliers of sensors for aeronautics, automotive and industrial uses when it was sold in 2000. Kavli then founded the California-based Kavli Foundation. [Malcolm Ritter, AP, May 28]

When the Free Market Isn't.  the savings-and-loan mess of the 1980s was made in Washington, the inevitable result of government deposit insurance that led to tails-you-lose, heads-I-win banking. The current mess was made on Wall Street. A bubble so large also required aggressive mortgage originators, imprudent home buyers and myopic investors. But it wouldn't have been as bad if not for the paper factories that sliced up individual subprime mortgages and assembled the pieces into securities, each with its own acronym, that were deemed safer than the underlying loans. They behaved as if they were taking a little poison and diluting it in a big reservoir; instead, they poisoned the entire water supply. [David Wessel, Wall St Journal, May 29]  And now, The SEC's staff is expected to propose rules for credit-ratings firms requiring a new set of risk rankings for complex financial instruments. [Wall St Journal, May 29]

Federalism.  Fourteen states plus NYC and DC sued EPA saying smog regulations issued in March watered-down standards for ground-level ozone and air pollution. [Bloomberg News, May 29]

Shocked, they said they were shocked. The administration that wallowed in Swiftboat now complains of disloyalty by its own insiders. White House loyalists said they were surprised and dismayed by the new book in which President Bush's former press secretary, Scott McClellan, turns on his old bosses. [John McKinnon, Wall Street Journal, May 29] Their cries of betrayal served as a stern warning to other potential turncoats that, despite some well-publicized cracks, the Bush inner circle remains tight. Their language was so similar that the collective reaction amounted to one big inside-the-Beltway echo chamber.  [Sheryl Stolberg, New York Times, May 29]  As Harry Truman said, If you want a friend in Washington, get a dog.

Too Few Checkers. Defense Department auditors said they have been unable to oversee tens of billions of dollars in military spending because of manpower shortfalls, leaving the Pentagon "more vulnerable to fraud, waste, and abuse." ... the defense budget doubled to $600 billion in fiscal 2007 from $300 billion in fiscal 2000, while the number of auditors essentially remained constant. [Yochi J. Dreazen, Wall Street Journal, May 28] It's an ideal set-up for an administration that wants to spend on its friends and claim government efficiencies by lowering employee count.

Invading the Middle East is the kind of imperial overreach that breaks the spine of great powers.  ... After their invasion in December 1979, the Russians walked into Kabul with ease, as invaders of Afghanistan invariably do, but after that it was mounting trouble all the way. The Russians paid a substantial price for thinking they could "win" if they stuck to it—a still-hidden number of dead soldiers, probably exceeding 20,000, and perhaps five times that number of seriously wounded; loss of nearly 500 aircraft including 350 helicopters; huge quantities of other equipment destroyed; hundreds of thousands of disaffected soldiers returned to civilian life back home, not to mention the opprobrium of the world. ... Now we're back in Afghanistan with an army and strong words about unshakable resolution, while the Pentagon cites worrying statistics about the enemy of the kind used to take the temperature of military conflicts. It's the usual stuff—a steady rise in small actions, ambushes, suicide bombers, attacks on convoys, clandestine traffic over the mountains into Pakistan. [Thomas Powers, New York Review of Books, May 29] Powers estimates that the new president will face the same choice as the present one who invented the problem: fight on to "victory", or withdraw in defeat. Like Nixon with Vietnam, the new president will not be able to survive politically by unilaterally choosing to withdraw.  But neither can he win by fighting on endlessly against an adaptive and determined enemy on his home turf.

Quit complaining. That's the message from the Pentagon and Congress to defense companies that cry foul when they don't win contracts. ... the House Armed Services Committee has raised the possibility of fining companies that submit "frivolous or improper" protests to the GAO. [AP, May 24] The SBIR managers often create the conditions for protests form piles of unhappy losers by not clarifying what they are looking for and what it takes to be competitive in terms that the companies can grasp. "Good for the Army" in fuzzy bureauspeak, for example, clarifies nothing. Of course, I recommend to them the course I took at SDIO/BMDO in clarifying my criteria and plain talk debriefings. But I also allowed Phase 2 proposers to clean up their act and re-submit since I wanted the best ideas, not the prettiest one-shot writers. I also disdained time windows for Phase 2 proposals.

A running total of campaign donations by Silicon Valley zip codes maintained by TechNet, an association made up of 150 high-tech chief executive officers, finds that by March 31, Sen. Obama had raised $5 million, compared with almost $800,000 for Mr. McCain. [Amy Schatz, Wall Street Journal, May 27]

Innovation Nation outlines nearly four dozen specific action items to encourage the permeation of innovation throughout the United Kingdom. Virtually no element of society is left untouched by the agenda. [SSTI, May 21]

Too Much Democracy. Interest in [British] politics is being diverted from established parties and elections (whose membership and turnout have fallen) to groups who campaign on single issues, sometimes on the streets. The rise of this brand of politics is often said to reflect a failure by politicians, who are either hopelessly remote from voters' concerns or powerless to address them. But the big worry may be less politicians' failure than the naive expectations of the public. ...  swelling numbers seem to expect the same sort of service from Westminster as they get from Starbucks—to choose their policies in the same way as they choose the toppings on a cappuccino (a sprinkling of low taxation, please, with a referendum on the side). They demand a kind of personal satisfaction that government, with its conflicting priorities, can't deliver. In places such as California where government has tried to do so, by introducing more direct forms of democracy, the results have been chaotic. [The Economist, Mar 8]

NIH-Envy. The USDA's National Research Initiative would be rechristened as the Agriculture and Food Research Initiative (AFRI), which would award grants to address critical issues in U.S. agriculture. Its grants would be used to provide competitive grants to colleges and universities, agriculture experiment stations and other organizations conducting research in high-priority fields. The farm bill would authorize funding for the initiative at $700 million per year, with 60 percent of appropriated funds dedicated to basic research and the remaining 40 percent for applied research programs. AFRI also would be charged with stimulating entrepreneurship, supporting business development, expanding access to capital, and building rural entrepreneurial networks. .... The House Committee on Agriculture has said that this new body would finally give the department a grant-making agency with the same kind of visibility as the National Institutes of Health. [SSTI, May 21]

More War Needs More Soldiers. Ever since the G.I.’s came home from World War II, it has been the nation’s policy to reward war veterans with college education. Now, a bipartisan proposal to expand that benefit significantly for today’s veterans has encountered a new complication: the military still needs its fighting men and women in uniform, not in classrooms. ... At its peak, in 1947, nearly half of the nation’s college students were veterans. [Steven Lee Myers, New York Times, May 22] The administration has a big problem: it made big promises of  a short war with no need to disrupt civil life with unpleasant realities like taxes or recruiting soldiers. Now the bill is coming due as the frat-boy matures into his retirement. Who is going to pay for, and serve in, a further extended war, and who is going to pay for the deficits already piled up?  Who will tell the public that it cannot have all the government it is unwilling to pay for? Do you suppose the SBIR advocates could set an example by telling the Congress that we don't need more money, we need smarter agency management?

"It works well to stand on the partisan rhetorical wall and shout. You can raise money, you can get a standing ovation at the county party convention. But you surely won't win back control of the House," Mr. Inglis said. "The first party that gets off the partisan wall and into a solution orientation wins."  ... The Republican Study Committee, a group of conservative House members, unveiled Tuesday a plan under the title "bold, simple and different than the Democrats." It calls for an end to earmarks, a simpler tax code and the prohibition of minors from being transported across state lines for an abortion without parental consent. [Sarah Lueck, Wall Street Journal, May 21] They may never learn what is important or how they blew their ten-year opportunity: earmarks belong to the majority party and are only a big political, not economic, deal anyway; everybody wants a simpler tax code but since they also want tax breaks, the tax code will stay complex; abortion is a religious and emotional issue of no economic nor governance consequence that serves only as a flag waver for the moral busybodies.

SBIR TV. Rick Shindell is creating a new video web site, that will show those of you who are interested, how ridiculous this [House SBIR bill] process  was. The site will open later this week. Rick is SBIR Insider and advocate who, like all the other advocates, doesn't get beyond feel-good and fair-share arguments for SBIR. Advocates can also consult The most complete and up-to-date data on SBIR awardees by state is now available on the Innovation Development Institute's web site at This easy to use (and free) service is made available by [owner Ann] Eskesen to help demonstrate the importance of SBIR and why it should be reauthorized. This is a "must" for state outreach representatives and hill staffers. You can also check their other information by going to the home page at

Liu Keli couldn't tell you much about South Carolina, .. It's as obscure to him as his home region, Shanxi province, is to most Americans.  But Liu is investing $10 million in the state, building a printing-plate factory that will open this fall and hire 120 workers. His main aim is to tap the large American market, but when his finance staff penciled out the costs, he was stunned to learn how it compared with China.  Liu spent about $500,000 for 7 acres in Spartanburg — less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city 80 miles north of Hong Kong where he runs three plants. U.S. electricity rates are about 75 percent lower, and in South Carolina, Liu doesn't have to put up with frequent blackouts. About the only major thing that's more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board.  [Don Lee, LA Times, May 20]

Here, in the very home of the taxing, regulating leviathan, the libertarian is such a commonplace and unremarkable bird that no one gives him a second glance. Here he is a factotum of the establishment, a tiny voice in a vast choir assembled by business and its tax-exempt front groups to sing the virtues of the entrepreneur. ...   Private-sector Washington is one of the wealthiest places in America. Public-service Washington lags considerably behind. The chance of ditching the one for the other is what accounts for everything from the power of K Street to the infamous "revolving door," by which a public servant takes a cushy corporate job after engineering some extravagant government favor for the corporation in question – or its clients.  [Thomas Frank, Wall Street Journal, May 21]  Those avid SBIR advocates should remember that they are merely seeking a government subsidy for companies that would otherwise not compete well in the marketplace; any idea that the subsidy will foster entrepreneurial private economic activity is just another myth around subsidies. The real builders of innovation are the VCs: In "Creative Capital," Spencer E. Ante traces the origins of the investment world that gave us semiconductors, videogames and personal computers to Georges Doriot (1899-1987), a French-born Harvard Business School professor, and to the Boston-based company he took public in 1946, American Research & Development (ARD). "I want money to do things," Doriot liked to say, "that have never been done before."   [Randall Smith,, Wall Street Journal, May 21] If there is to be such a subsidy, it should be held to a standard that it provably fosters private economic activity that would not happen otherwise. Unfortunately, that is a high standard that government agencies are ill-equipped to achieve.

Military Wants Commercial. "Our goal is to drive the development of a market here in the U.S.," says Mr. Anderson. ...  the U.S. military, the country's largest single consumer of oil, is turning into an alternative-fuels pioneer. ... the military is increasingly concerned that its dependence on oil represents a strategic threat. U.S. forces in Iraq alone consume 40,000 barrels of oil a day trucked in from neighboring countries, and would be paralyzed without it  [Vochi Dreazen, Wall Street Journal, May 21]

Same Old Tactic. For five decades, Republicans have pandered for "patriotic" and "anti-Communist" votes by waving their flag against a mostly toothless Cuba. McCain, speaking to a raucous crowd on Cuba's independence day, hammered Democrat Barack Obama for saying he would meet with President Raul Castro. The country pays for the tactic in its sugar bills, in the loss of a trading partner, and in sounding silly. Unfortunately, Obama shows a political naivete in offering to sit down without pre-conditions with governments that we see as security threats. The world out there is still an ugly place of intense and unforgiving competition for power. The difference within the USA is that our power competitors don't use guns and bombs.

Washington interest groups usually want more for themselves. Today, one organization will start a crusade to get less. The Committee for a Responsible Federal Budget plans to unveil a program designed to nudge presidential candidates toward policies that, for a change, would not widen the federal budget deficit and might even narrow it a bit. Every month, the nonpartisan organization will examine a different policy of each nominee and lay out its costs, subtly applying pressure for austerity. [Jeffrey Birnbaum, Washington Post, May 20]  The usual idea of a responsible budget gives me a handout while lowering my taxes. The SBIR advocates seem to support such a responsible budget.

Just Like SBIR. a letter sent by social-conservative leaders to Mr. Bush last month, complaining that his administration was consistently rejecting federal funding for organizations that run programs promoting sexual abstinence among young Americans. Many social conservatives believe that abstinence training has led to a drop in teen pregnancies and contributed to a decline in abortion rates. But the five-page letter cites a series of cases in which private groups that promote abstinence have had grant requests turned down by the administration, principally by the DHHS.  The letter says those grant decisions are "weakening" the president's policy supporting abstinence training as vigorously as contraception efforts, "with concomitant harm to American youth." It was signed by 50 Republican leaders representing a who's who of social conservatives. An HHS spokesman said the administration "strongly supports abstinence education" but that winning grants for abstinence programs is an "extremely competitive" process. "We are only able to fund a small fraction of the applications"  [Gerald Seib, Wall Street Journal, May 20]  Some years ago, the entrepreneur-in-residence of the SBA opined that SBIR should fund every decent qualified proposal. And that gaggle of conservatives most important complaint:. Bush's failure to compel the Senate to vote on the federal judges he has nominated. Passionate advocates don't let the Constitution stand in their way. I wonder if they would support such unlimited executive authority for a Democratic president.

All for Us. Officials from the University of Nebraska told [their Senator] that they had not received all of a $1M medical research earmark he had secured for them. The DOD, the agency controlling the money, was withholding 12% of the total to oversee the project. [Ron Nixon, New York Times, May 20] Oh yes, SBIR management has to be paid for also, and the Congress seems about the let the agencies claw back some of the money for such administration tasks as pawing through big piles of hopeless proposals.  Elsewhere, As the Legislature finally prepares to produce a $1 billion life sciences bill more than a year after it was conceived, some of the industry's most ardent advocates are losing enthusiasm, saying the legislation has been watered down and larded with earmarks. [Boston Globe, May 20]  In democracy when all the interests have had their say, the original idea of who would benefit gets broadened.

The reality is that presidents make important, large-scale changes to the economy only in those rare circumstances where history hands them the opportunity. When the top marginal income tax rate was 70%, Reagan had a historic opportunity to reform the tax structure; everything since has been tinkering. Likewise, Clinton faced a historic opportunity to revolutionize the federal welfare system. His changes are widely regarded as successful, and that issue has since been off the table.  What major economic opportunity will history hand to the next president? Health care. [Geoffrey Colvin, Washington Post, May 20]

My Threat is Graver Than Your Threat. McCain and Obama trade juvenile barbs over how serious a threat is Iran. As usual, each distorts the other's message. while neither has much experience in international relations and strategy anyway. Are we headed for another W, all hat and no cattle, who depends on advisors whose advice he barely understands? C'mon guys, show us you have some adult world view.  We can stand a serious discussion for at least 30 seconds.

The University of Minnesota needs more eggs ... and more baskets. With time running out on its royalty income stream, the U is scrambling to find the next Medtronic. ... Since 1999, Ziagen, manufactured by GlaxoSmithKline, has generated $290 million in royalties for the university. But take away Ziagen and the university is left with very little else to show for its recent intellectual property investments. The drug generates 95 percent of the school's annual licensing income. [Robert Lee, Minneapolis Star Tribune, Apr 3]

The Colorado Bioscience Research Grant Program will provide $26.5 million [for tech transfer] over five years to research institutions and private companies, beginning with $5.5 million this year. [SSTI, May 14]

federal officials agreed to allot 57 acres for private businesses at the Watervliet Arsenal [NY]. A possible 1,000 jobs could be created ... the plan would continue to accomplish the arsenal’s core mission and manufacture large-caliber cannon in volume. [Danielle Sanzona, Troy Record, May 17]

The Military Power Export. In the end, the currency question is as much political as economic. The link between the dollar and the riyal (or dirham or dinar) in large part reflects the links between the U.S. and the countries that both supply American oil and depend on American might. Keeping the riyal stuck to the dollar is "the implicit way of paying back the provider and guarantor of security," says John Sfakianakis, chief economist of Saudi British Bank in Riyadh  [Wall Street Journal, May 19]  Economics 101: sell what you have to those who have what you need.

The Tribal Xenophobia in Us.  In Serbia it's the West v. hyper-Serb; in Iraq it's Shia v. Sunni v. Kurd; in Sri Lanka it's Sinhalese v. Tamil; in LA it's Crips v. Bloods. In American politics it's McCain's patriotism v. Obama's delicacy, at least as painted by McCain. The appeal to voters, where they have free elections, is Us v. Them. The Republicans have claimed the mantle of tribal defense against all comers with violence as the preferred tool. With the Republicans of Cheney and DeLay in power for a decade, the USA is seen in the world as an advocate of naked force as the preferred tool of relations between peoples.  The lesson is not lost on the Serbs, the Tamils, or the Sunnis. The tribalism evokes what Gretel Ehrlich called small-mindedness that seals people in  in her 1985 work on the American West, The Solace of Open Spaces. [Thanks to Alexandra Fuller for listing her five best books on the modern American West, Wall Street Journal, May 17]

Washington Technology says OPM opposes any funding boost for SBIR because it would cut $650M from essential research in several agencies. Such opposition must rise from a judgment that small business doesn't have any competitive advantage over large entities in open competition. The whole idea could stand an examination of the underlying assumption that small business should automatically have the same percentage of government R&D as does small business of private R&D. After 20 years, the SBIR advocates still cannot make any credible claim that SBIR produced better results than open competition, even though they can say that some good came from the billions spent. The advocates' one credible argument is that small companies are better at getting new ideas into the economic market. But SBIR as managed by the agencies for twenty years rarely tried to exploit that advantage by pushing the money at the most entrepreneurial companies with high market potential technology that would also help government users. Instead, the government's technology needs became the first and only criterion. Which leaves the advocates looking silly as they argue that the nation needs more of a policy that has proved no advantage.

Grabbing Muni Sun. The city of San Francisco upped its commitment to solar power this week, choosing a local firm to build what will be the country's third-largest solar photovoltaic system. The San Francisco Public Utilities Commission selected Recurrent Energy to install 30,000 solar panels on the roof of the Sunset Reservoir, and on top of a recycling facility at Pier 96. [SF Chronicle, May 16]  And with a tall enough pedestal, they can get the panels above the fog.

Military Loves Control. Noah Shachtman on's Danger Room reports that Monday, the Air Force Research Laboratory at Wright-Patterson AFB introduced a two-year, $11 million effort to put together hardware and software tools for 'Dominant Cyber Offensive Engagement.' 'Of interest are any and all techniques to enable user and/or root level access,' a request for proposals notes, 'to both fixed (PC) or mobile computing platforms ... any and all operating systems, patch levels, applications and hardware.' This isn't just some computer science study, mind you; 'research efforts under this program are expected to result in complete functional capabilities.' The Air Force has already announced their desire to manage an offensive BotNet, comprised of unwitting participatory computers. How long before they slip a root kit on you?  [, May 15]  BTW, the control concept helps explain DOD's ultra-conservative SBIR; the military would rather pay the whole cost and have complete control of a technology's development than to attract private capital that would take the technology down unpredictable roads. No economic return to SBIR?  So what, say the uniforms.

Tectonic plates in motion don't distinguish between democracies and autocracies, but the record shows that getting hit by an earthquake or cyclone in an authoritarian government is a high-risk proposition for the survivors. ... after nature kills people, delay and incompetence kill the rest. ... The bottom line is accountability. In democracies, even poor or imperfect ones, public pressure, even outrage, pushes elected officials to act. In nondemocracies, the politicians don't give a damn because they don't have to. ...Democracy's greatest value may well be the average politician's cynical compulsion to survive the next election. [Daniel Henninger, Wall Street Journal, May 15]

If Only. McCain declared for the first time Thursday he believes the Iraq war can be won by 2013 .... "It's not a timetable; it's victory. It's victory, which I have always predicted. I didn't know when we were going to win World War II; I just knew we were going to win," McCain said. [AP, May 15]  Well, talk is cheap, especially political campaign talk. He doesn't say how he will pay for another five years and and where he will get the soldiers to fight it. If you believe that wishing victory will make it come true, ....

Evidence-based policy is sought by government, but mostly the result is policy-based evidence. Only facts and arguments that support the desired policy are admitted, ... In the run-up to the Iraq war, the results were disastrous. In the Middle East, British and US governments, like banks in the credit crunch, enjoyed the most extensive information and analytic capabilities available. Yet they made elementary and catastrophic mistakes. ... bureaucracies engaged in self-justification frequently mislead themselves – more often, perhaps, than they mislead the public.  [John Kay, Financial Times, May 14]

Veto-Proof, Mr President.  The House passed a $289 billion farm bill Wednesday by a veto-beating margin, the latest sign that the waning months of President Bush's term are being defined by battles with a Congress that appears to be tuning him out. [Wall Street Journal, May 15] We don't have the money, but we do have the votes: a full dose of democracy.

corporate tax revenues are falling and leaving big holes in the federal budget [Wall Street Journal, May 13] What better time to dig the national financial hole deeper by adding on new handouts in the election run-up?  JM Keynes must be despairing even in the great beyond of the mess made by politicians invoking his economic theory of counterbalancing the business cycle to buy votes. In his day, the unrestrained vote-buying had not yet started. One observation made in the American Experience program on FDR was the 1930s was the first time that the public came to depend on the government for economic help.

Government We Deserve. The enemy, [Prof Paul] Light aptly notes, is us, demanding more government services and refusing to pay for them. A formula to produce the government you deserve, every time. [Al Kamen, Washington Post, May 14]  With the possible exception of Iraq -- a matter that compels candidates to face real issues -- the campaign has been an exercise in mass merchandising. Candidates make alluring promises (to "fix the economy," "defeat special interests" or "achieve energy independence") and offer freebies to voters (more tax cuts, health care, college aid). ... The candidates dissemble because they believe that Americans don't want the truth. ... Politics is mostly about immediate gratification -- about offering up convenient scapegoats and instant solutions for voters' complaints, even if the villains and promises are often false. [Robert Samuelson, Washington Post, May 14]

For now, Team America is losing on just about every front. How come? The short answer is that Iran is smart and ruthless, America is dumb and weak, and the Sunni Arab world is feckless and divided. Any other questions? ...The Bush team in eight years has managed to put America in the unique position in the Middle East where it is “not liked, not feared and not respected,” writes Aaron David Miller, a former Mideast negotiator under both Republican and Democratic administrations, in his provocative new book on the peace process, titled “The Much Too Promised Land.” [Tom Friedman, New York Times, May 14]  Perhaps finding our way in the world would improve if we demanded maturity and world experience in our elected officials instead of atmospherics and impossible domestic promises.

This fight - for this clearly is what this is and a nasty one at that -is about the health of our economy and the demonstrable role that SBIR firms have played - and must continue to be allowed to play - in positively contributing into that health, regionally and nationally. [Innovation Development Institute]  SBIR hyper-advocate Ann Eskesen hyperventilates a call to new arms against the VC villains' hijacking of SBIR. She admits that the arguments used so far against the VCs have failed to deflect Congress from allowing VC entry.  But most federal agency deciders will pay little attention to outside money. Only politicians genuflect to outside money; career civil servants execute the SBIR law to redirect the SBIR tax back into the agencies' own goals from which it was politically robbed. To a DOD SBIR decider, a VC is as irrelevant as a special political pleader, both of which put their own economic interests ahead of the nation's ability to defend itself.

DHS to Educate America. DHS has an SBIR topic to revise US education to get smarter adults.  Innovative Educational Environments to Develop the Necessary Intellectual Basis for a National DHS S&T Workforce. Talk about mission creep! Who will be the first to propose playing continuous Mozart while the fetus is developing, if the mother can stand the culture shock? Or eliminating the Second Law of Thermodynamics? Or the power of positive prayer? Only an administration whose first instinct is that everything is driven by security would give a security department a general education mission. Should we also expect the lame-duck administration proposal to disband the Department of Education, appoint Dick Cheney the national school principal, and send failing students to a Gitmo re-education camp? Should we also expect topics on proper nutrition for low income ten-year olds? Perhaps Congress will step in to remind DHS of the idea of limited and specified missions for government departments.

SBTC published a letter to the HSBC on re-authorization of SBIR with the usual pleadings and half-truth claims for SBIR's value. Whatever the problem, more SBIR set-aside is the answer. SBTC of course objects to letting more VC money into the program; who wants competitors in their monopoly? It cites VC's intrusion into NIH SBIR without ever mentioning the NIH has the only decent track record of economic success for SBIR as measured by public capital invested after SBIR. (MDA had one once.) The House bill provides substantial evidence that the two decades of special pleading may no longer work for gathering a set-aside for uncompetitive companies.

Love Those Subsidies. California's fascination with solar power has created thousands of jobs in the state and will probably add thousands more, according to a new survey of the industry. ... now employ between 16,500 and 17,500 people and may hire another 5,000 in the next year. [David Baker, SF Chronicle, May 11]

The Bush administration is leading the international effort to put a floor under the falling dollar, according to a U.S. Treasury official. [Wall Street Journal, May 11] Relieving the symptoms without attacking the disease.

Taxes are unpleasant, we all know this. The only thing about taxes that all Americans can agree on is that someone else should pay them. ... When political talk turns to tax "fairness," none of the candidates mentions what constitutes a high income. So I thought you might want to know. You were in the top 25% of taxpayers in 2005 if your taxable income exceeded $61,055. [Scott Burns, Boston Globe, May 10]  Should SBIR winners owners volunteer to pay a tax surcharge as gratitude for collecting business that it would never have got if it had to compete openly against all comers?

At the Nanobusiness 2008 conference here [New York], Sen. John Kerry (D-Mass.) and Rep. Bart Gordon (D-Tenn.), chairman of the House Science and Technology Committee, both endorsed fast-track commercialization of nanotechnology research as a way to boost U.S. productivity.  [Niolas Mokhoff, EE Times, May 6] Great idea; just don't expect SBIR to get the desired commercialization since the agencies don't care about commercialization.

A spokeswoman for Sen. John Kerry, D-Mass., who chairs the Senate Small Business and Entrepreneurship Committee, said the senator "understands the concerns from both sides of the venture capital issue" and is "working to see if there's a middle ground that will ensure the SBIR program remains strong for small businesses while still encouraging investment in our smallest, most innovative firms." [Kent Hoover, Jacksonville Business Journal, May 5]

Budget Crisis Hits Innovation.  Florida has invested nearly $1 B over five years in its Innovation Incentive Fund . ... Though Enterprise Florida proposed another $250 million investment this year, the state's overall revenue shortfalls prevented even a $25 million proposal from passing.[SSTI, May 7] States simply don't have the staying power to keep pouring money into fine sounding enterprises that don't produce at least some short term payback or buy votes.

When Militaries Rule. Myanmar's badly conceived agricultural policies are compounding the country's already dire food situation.  In recent years, Myanmar's reclusive military rulers have plowed large tracts of rice- and vegetable-growing land to plant jatropha -- an inedible plant used for making biodiesel. Soldiers in the country's 400,000-strong army are routinely instructed to be self-sufficient and do so by simply seizing food from farmers. And villagers in the highland regions are often given rice strains requiring expensive fertilizers that they can't afford, according to academic researchers and nongovernment organizations.  Now, the folly of such policies is becoming apparent in the wake of the cyclone that devastated the country last weekend. [James Hookway, Wall Street Journal, May 9]  Militaries don't do well at economics since they think that it is the civil economy's duty to supply everything that the military "requires".  And with no feedback allowed on policy, foolish "investments" abound. For a less drastic view of how it works, have a long look at DOD's actions and explanations in two decades of SBIR.

Governments Under Pressure. Tennessee plans to cut 2,011 state jobs, mostly through voluntary buyouts, to shore up the state budget, Vallejo CA declares bankruptcy, Ohio, Rhode Island, and New Jersey cutting state employees. [New York Times, May 8] All of which bode ill for state sponsored programs to fund tech start-ups or research as basic services come first.

Gasoline Econ 101. Why are economists so opposed [to zeroing the federal 18 cents gas tax ]? In the short run, the supply of gasoline is basically fixed; it takes a while to build a new refinery. The demand for gasoline, in contrast, is more responsive to price; we’re already seeing greater use of public transportation and brisk sales of fuel-efficient cars. When you combine fixed supply with flexible demand, it’s suppliers, not demanders, who pocket the tax cut. That’s Econ 101.  [Bryan Caplan, New York Times, May 8]  Never mind, it's short term politics that rule, not economics. Which is one reason why an SBIR mandate keeps breathing.

It is little surprise that the youngest candidate, Barack Obama, has the most detailed technology platform--no other candidate has vowed to crack down on phishing or spyware, for instance. Obama's strong support for net neutrality and his ambitious proposal to increase broadband deployment nationwide have won him the endorsement of such tech luminaries as free-culture proponent Lawrence Lessig and Netscape cofounder Marc Andreessen. ...  Clinton has also thrown her support behind corn ethanol as a key piece of her energy plan, despite opposition to federal subsidies earlier in her Senate career (and now needing votes from corn states). ... his avowed commitment to free-market principles has led McCain to oppose net-neutrality legislation and further regulation of the telecommunications industry.  [Matt Mahoney, MIT Tech Review, May 6]  It's no surprise that all the candidates are for technology,  motherhood, apple pie, and small business.   Like all politics, the devil is in the details and the competing interests.

Dueling over gas prices,Clinton and Obama strained for every last vote. How does a politician tell the voters the truth that the voters' appetites are driving up the prices that the government can do little about (except to tax them higher to suppress the demand)? Easier and slipperier to point to a scapegoat while the candidates themselves set an example by burning  plenty of fuel flitting thither and yon to touch the voters. 

Invalid Patent Judges. Law professor John F. Duffy has discovered a constitutional flaw in the appointment process over the last eight years for judges who decide patent appeals and disputes, and his short paper documenting the problem seems poised to undo thousands of patent decisions concerning claims worth billions of dollars.  His basic point does not appear to be in dispute. Since 2000, patent judges have been appointed by a government official without the constitutional power to do so. [Adam Liptak, New York Times, May 6]

Free Lunch for All. Forty-one Republican senators say they want $100 billion in tax cuts, but they insist they shouldn't have to cut spending to match. Whatever happened to the GOP's quest for smaller government, not to mention its claims to fiscal responsibility?    [USA Today, May 5]

Double-Edge Sword of Subsidy.  Two dozen Republican senators asked the EPA to ease requirements mandated by Congress in 2007 to blend more ethanol and other renewable fuels into the gasoline supply. ...despite the popularity of ethanol subsidies in farm states critical to the November election ... the mandates are contributing to a sharp increase in food prices. [Wall Street Journal, May 3]

Relax and Invest. In inaugural years we discover that Democratic presidents are phonies and never meant most of what they said in their populist, anticapitalist campaigns. They could never get reelected if they really delivered on their campaign promises. Inaugural years for Republican presidents remind us that they are phonies, too; they don't do much for the economy or for investors. We get disappointed and pummel stock prices. [Ken Fisher, Forbes, May 19]

The Bush administration warned it will start furloughing civilian Defense Department employees to save money unless Congress quickly passes a new round of funds for the Iraq war, escalating a clash that has risks for both parties. [Wall Street Journal, May 3] Well, of course, when the supply of federal money drops, expected jobs have to go. Only in campaign speeches can money be cut without hurting anyone. And the government is not allowed to accept donated labor. Bush could also get the same saving by furloughing some of the contract employees from his gleeful outsourcing program. 

Gotta Do Something. The dearth of fresh ideas is perhaps the clearest sign of how policy makers have been flummoxed by the rise in oil prices. The Democrats are drawing up mostly recycled ideas to release oil from the Strategic Petroleum Reserve, to tax excessive profits by oil companies, to limit speculation in trading oil futures and to crack down more aggressively on price gouging. Senate Republicans, who mostly oppose suspending the 18.4-cent-a-gallon gasoline tax, also skirted around the issue this week to avoid contradicting their presumptive candidate, McCain who wants to suspend it for the summer. The Republicans, meanwhile, recycled some of their old proposals to increase domestic production, with bills that would allow drilling in the Arctic, as well as in the Atlantic and Pacific, and would mandate increased production of fuel derived from coal.  [David Herszenhorn, New York Times, May 3]Even the Republicans, for whom the free-market is the ideal, vie for attention in pretending to be concerned enough to do something. They are concerned - about votes by a public they "know" is too dumb to let the market rule. Why can't we have a smarter mob?

Top Republican lawmakers are calling for congressional hearings on the dollar's decline, including how the Federal Reserve's interest-rate cuts have pushed the greenback lower and commodity prices higher. [Henry Pulizzi, New York Times, May 3] The nation's creditors must want higher interest payments on their wealth.

read the warning on the medications prescribed by economists: “The effects of this nostrum are uncertain and will vary depending on circumstances we cannot now foresee.” [Irwin Stelzer, The Sunday Times, May 4]

Clinton shot back at economists who have dismissed the idea of a summer gasoline-tax holiday. "I'm not going to put my lot in with economists," she said  [Wall Street Journal, May 5] No hard economic truths, please, we're having an election. If asked, she would probably also dismiss any economic criticism of SBIR.

Better in Theory than Practice. President Bush’s $1 billion a year initiative [known as Reading First] to teach reading to low-income children has not helped improve their reading comprehension, according to a Department of Education report [New York Times, May 2]

McCain said: The bridge in Minneapolis didn't collapse because there wasn't enough money. The bridge in Minneapolis collapsed because so much money was spent on wasteful, unnecessary pork-barrel projects. [AP, Apr 30] There is no evidence that recognition and repair of that bridge was prevented by the relatively minor political game of pork handouts. If he has hard evidence, let him show it.  When something bad happens, blame it on something you don't like, since we don't hold our politicians to any decent standard of cause-and-effect in their pronouncements. If we did, they would be more careful not to insult our intelligence. Note: even McCain is backing up to make his point, whatever it is, a different way as politicians from both parties, who do the porking, screamed in dispute.

While Politicians Babble.  The economic optimism induced this week as Americans began to receive $110 billion (£55.8 billion) of tax rebates has been dashed by bad news about everything from house prices and consumer sentiment to job prospects.  [Tom Bawden, The Times, Apr 30]  As sales decline and costs mount, only the richest companies can exploit the opportunity to invest. No, more SBIR isn't a sensible answer since little of the money ever goes to economic investment anyway. If you had "leveraged" the SBIR investment by investing your capital in the same companies pursuing the same technologies, you could look forward to a long delayed retirement. You would see how it is easy to make a little money if you start with a lot of money. And if you are an SBIR eligible company asking the government to invest in uneconomic enterprises, so you can have the lifestyle of a big fish in a tiny pond, you are contributing to the problem. Propose, instead, something that will make you a good profit afterward while you help government with its technology development.

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.” ... But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. ... At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies. [Tom Friedman, New York Times, Apr 30]  Big house, big car, long commute - the American dream come true - at an accelerating price with stagnating real income.

Circular Logic 101. [McCain] said companies that do business in multiple states have greatly reduced health care costs because they are able to offer policies in many states. ... He suggests a $5000 tax credit for families to buy insurance from companies allowed to operate in multiple states.  Elizabeth Edwards said "John McCain's health care program works very well, if you happen to be rich and healthy," . Republicans love private market solutions funded with tax credits which is fine IFF you have enough income to pay $5000 taxes and health insurance companies were all honest and not driven more by claim avoidance than claim acceptance and more by profit maximization than customer service. 

Green-power deadlock: Continued congressional delays over extending tax breaks to solar, wind and other renewable-energy companies are starting to affect 2009 deals being made now by Silicon Valley companies, San Jose Mayor Chuck Reed said at an industry forum this morning. "I've got my finger on the panic button"  .... for now, the U.S. House and Senate are in a stalemate  over how to pay for the subsidies [San Jose Mercury News, Apr 28]

Let's Pretend. the wonks mounted a joint assault on what they describe as "myths that perpetuate inaction." The U.S., they say, cannot grow its way out of difficult budget choices; a faster-growing economy will help, but won't suffice. Eliminating waste or improving the efficiency of the health system, though welcome, won't suffice either. Nor will rolling back the Bush tax cuts, though the carefully worded compromise concedes that "higher taxes could contribute to pay part of the...bill." And though cutting taxes from today's levels "can stimulate long-term economic growth," it won't do so "by enough to pay for the lost revenue."  [David Wessel, Wall Street Journal, Apr 3]

18-cent pander Clinton criticized Obama for opposing the concept of suspending the gas tax during the peak summer driving months, a plan both she and McCain have endorsed. [AP, Apr 28]  Obama takes the long view that cutting gas taxes merely prolongs the national problem of  unsustainable oil use and from the wrong sources. The other two just want votes from drivers while they defer tackling the national budget problem. Could the drivers be honest enough to see through the pander and see that any tax decrease has to be offset by an increase somewhere else? The pander also tickles the paleo-right that never saw a tax they didn't want to wipe out.

[Colorado] will put $26.5 M into the state's bioscience community over the next five years.  At least 30% of the money will go to university and research institution technology transfer offices. Another 30% or more will go to startup bioscience companies that are commercializing technologies.  The remainder will help support other public and private efforts to commercialize bioscience research. [Denver Post, Apr 25]

From California Biotech Law BlogAll in all, it is safe to say that SBIR is riddled with some fundamental problems that Congress would be wise to address as it evaluates the Program's future.  While there is no doubt that the SBIR Program plays a valuable role in early -stage biotech start-ups, the industry should perhaps consider redirecting its efforts toward clarifying the goals of the Program and generating useful data over focusing on the more narrow issue of overturning the prohibition on making awards to venture-backed companies. 

Liberals know why corporate welfare is bad: It takes taxpayer money and gives it to fat cats. But there is a more effective conservative argument against economic development subsidies: They amount to government economic planning and, by taking resources from one company and giving them to another, they breach the Constitution's promise of equal protection under the law. ...  Robert Lynch argues that it isn't. The Washington College economist has been studying state subsidy issues for 20 years and found that such packages rarely cause firms to expand in geographic areas that they would not have otherwise expanded to without state incentives. The implication is that many of the businesses choosing to locate in Alabama or any other state would have moved there anyway...  Indeed, these malinvestments are multiplied when carried out among a cartel of fifty states, each competing with the other for limited capital. When they do, each state development agency becomes a net negative to its state, at which time taxpayers would be better off if they all shut down. [Jay Hancock's blog, Baltimore Sun, Aug 28, 07]  Any government program that directs funding into a preferred class of companies qualifies as corporate welfare, regardless of special pleading about vague or fairness arguments backed by no compelling evidence for any economic gain.

DOE issued a Funding Opportunity Announcement for the Energy Frontier Research Centers.  ... envisions providing $2 to $5 million annual awards for an initial five-year period to universities, national laboratories, nonprofit organizations and for-profit businesses acting singly or in partnerships. There will not be a matching requirement. It is anticipated that the Office of Science will fund 20-30 of these centers All it needs is new money from Congress which Congress hasn't got. Stand by for pork which Congress always has. 

The Utah Fund of Funds, a major economic development program created by the Utah Legislature to provide the state’s entrepreneurs with access to a broad array of quality funding sources, has announced that recent legislation has expanded the program by $200 million – from $100 million to $300 million. And of course the self-congratulatory yadda, yadda:  This is a tremendous victory, not only for the Fund of Funds program, but also for the state’s growth companies and entrepreneurial economy,” said Jeremy Neilson, managing director of the Utah Fund of Funds. Entrepreneurship is consistently the greatest accelerator of economic growth in Utah, and it is fitting that entrepreneurs played a key role in ensuring passage of this legislation.   Utah Business Magazine

Hold the Hired Mouths. The Pentagon is suspending its briefings for retired military officers who often appear as military analysts on television and radio programs. ... Internal Pentagon documents showed that Defense Department officials referred to the retired officers as “surrogates” or “message force multipliers” who could be counted on to deliver administration “themes and messages” in the form of their own opinions.  [David Barstow, New York Times, Apr 26]

War Comes First. the Navy is restricting nominations to the astronaut corps. The move comes nearly 50 years after Alan B. Shepard, a naval aviator, became the first American in space. The cutback, Navy officials say, comes as the service tries to retain the expertise it needs to fulfill its wartime obligations while experiencing an overall decline in its numbers. A message from Vice Admiral J. C. Harvey Jr. last month stated that applications for Navy nominations to the space program from 10 specialties would not be accepted “due to critical inventory shortfalls and/or priority global war on terrorism skill set requirements.”  [John Schwartz, New York Times, Apr 26]

No Atheists in Our Foxholes. [the major] began to berate Specialist Hall and another soldier about atheism, Specialist Hall wrote in a sworn statement. “People like you are not holding up the Constitution and are going against what the founding fathers, who were Christians, wanted for America!” [the major] told the soldiers he might bar them from re-enlistment and bring charges against them, according to the statement. ... In 2005, the Air Force issued new regulations in response to complaints from cadets at the Air Force Academy that evangelical Christian officers used their positions to proselytize. ...  Another sergeant allegedly told Specialist Hall that as an atheist, he was not entitled to religious freedom because he had no religion. ... the Justice Department has yet to respond to Specialist Hall’s lawsuit.   [Neela Banarjee, New York Times, Apr 26]

McCain isn’t unique in making promises he has no way to pay for ... But Mr. McCain’s plan is far more irresponsible than anything the Democrats are proposing, and the difference in degree is so large as to be a difference in kind. ...  the McCain tax plan doesn’t seem to embody any coherent policy agenda. Instead, it looks like a giant exercise in pandering — an attempt to mollify the G.O.P.’s right wing, and never mind if it makes any sense. [Paul Krugman, New York Times, Apr 28]  Vote for responsible finance, wherever you find it, for if we vote for the biggest promises, who loses?

The Brookings Institution and the Information Technology and Innovation Foundation called on the federal government to respond to America’s slipping leadership in commercial innovation.  A report Boosting Productivity, Innovation, and Growth through a National Innovation Foundation proposes a new entity NIF, with a proposed annual budget of $1 - $2 B, within NIST, as a government-related public corporation, or as an independent federal agency like NSF. [SSTI, Apr 24]  It's the sort of thing that ATP and SBIR were supposed to do with grand assumptions about what the political system would support and what a federal agency could actually do to keep an annual appropriation going as the national financial picture heads toward a black hole.

The SBTC wants you to write your Congresscritters to get SBIR re-authorized (the House already did its version) before agencies stop funding critical new research out of fear that the program will not be reauthorized in time.  Which is nonsense. The agencies will keep funding the same level of R&D with or without SBIR since SBIR only mandates that a portion of the total go to SBIR companies. And there has never been any demonstration that SBIR has produced anything that would not have happened anyway with the agencies' R&D investments. So, go ahead and write, but show some evidence (skip the platitudes) that your SBIR  had a net gain to the nation that would not have happened without SBIR. Don't tell them that it bought jobs; it bought no more jobs than an alternative use of the money would have bought. [Although it's not clear they care about such distinctions.] Tell them about a permanent job or economic increase from the downstream growth of the technology - permanent jobs (in their electorate) arising from the temporary support of SBIR.

Sounded Good in Theory. A project heralded as the dawning of an innovative, low-cost era in Navy shipbuilding has turned into a case study of how not to build a combat ship. The bill ...has soared to $531 million, more than double the original, and by some calculations could be $100 million more. With an alternate General Dynamics prototype similarly struggling at an Alabama shipyard, the Navy last year temporarily suspended the entire program. ... the troubled birth of the coastal ships was rooted in the Navy’s misbegotten faith in a feat of maritime alchemy: building a hardened warship by adapting the design of a high-speed commercial ferry. ... a dynamic of mutually re-enforcing deficiencies: ever-changing Pentagon design requirements; unrealistic cost estimates and production schedules abetted by companies eager to win contracts, and a fondness for commercial technologies that often, as with the ferry concept, prove unsuitable for specialized military projects.  [Philip Taubman, New York Times, Apr 25]  In case you want to grow from a DOD SBIR contractor to a DOD R&D supplier, remember that they usually start changing the requirements after the ink is barely dry on the deal. The big contractors love it as they recover from their award-winning underbid for the main contract.

Virginia Postrel writes Dynamist Blog: There's No Such Thing as a Free Carbon Cap: It's infuriating how all three presidential candidates prattle on about the need to fight global warming while also complaining about the high price of gasoline. The candidates treat CO2 emissions as a social issue like gay marriage, with no economic ramifications.... The last thing you'd want to do is reduce gas taxes during the summer, as John McCain has proposed. That would just encourage people to burn more gas on extra vacation trips--as any straight talker would admit.

Credibility. When confronted with video evidence of North Koreans working at a suspected Syrian nuclear reactor, the Syrians had a ready answer: just like US video evidence of Iraq's WMD! Government that lie lose precious credibility.

More SBIR Panic. As the BIO's VCs got everything they wanted in the House approval of HR5819, the semi-revolutionary SBIR re-authorization, the SBIR advocates cry panic. Their child is being handed off the VCs for re-education. Strong SBIR driver Ann Eskesen screams a "Call to Action" . Unhappily for the advocates, they may be reaping the whirlwind of their fighting every attempt at serious economic evaluation and they have nothing but platitudes to offer in the program's defense. Ann ignores that aspect in her plea for haranguing your Congresscritters. They might review Charles Dickens's treatment given Oliver Twist when he asked for more to eat at the workhouse. 

Whether SBIR should be continued as it has been for two decades depends on a view of what it is for and what benefits it has produced.  There is precious little evidence that anyone except the companies getting the money got any great benefit.  There is no compelling evidence that any of the law's intended beneficiaries got anything that would not have happened without SBIR:  small business volume,  federal agency innovation, the nation's economy. The daily business news shows active private investment in small high tech business that needs no help from the government. The lists of SBIR winners show companies that simply feed on the SBIR money and attract little private capital to continue the innovation. The federal agencies never wanted SBIR in the first place, a fact that can be tested by making SBIR voluntary in the agencies. The SBIR advocates rely on the assumption that if a government set-aside program hands money to a small company that does the required work, more benefit accrued to the nation than if the agency gave the money to some other business. The federal agencies will the first to claim that they need no such micro-management to produce the best return to the nation for the funds allocated the agency for R&D.  Economic evaluations of SBIR have shown no noticeable ROI by any decent economic standard, which is not surprising since the SBIR advocates have politically blocked any such evaluation. If the Congress wants SBIR to produce the objectives it originally claimed for the handout, it needs to shake up the program's methods, which the House has challenged the Senate to do with them. Political handouts through federal agencies should have a strong burden of proof that they will have an outsize return for the investment; whereas, SBIR has no compelling evidence an any noticeable return at all.  Actually, such a program might actually show a decent return if it were organized and managed for the return, which the present program is not.

Since the ATP was abolished Aug 07, NIST now has newly created Technology Innovation Program (TIP).  ...  to assist U.S. businesses and institutions of higher education or other organizations, such as national laboratories and nonprofit research institutes, to support, promote, and accelerate innovation in the United States through high-risk, high-reward research in areas of critical national need.  Information about TIP is available at If you would like your name added to the TIP mailing list, please complete the electronic request at   

War is Now. “I said I am really not, frankly, interested in what you can bring to the table two years from now,” Mr. Gates said in recounting what he said had been his message to the armed services. “We are in the war — now. This is a critical time in the war. We need more, and we need it now.”  ...the Air Force owns most of these airborne surveillance systems, and the message Mr. Gates delivered at the Air War College was clear — and especially painful to a service whose reliance on expensive new jets can seem at odds with 21st-century counterinsurgencies fought in the alleyways of the Middle East. [Tom Shanker, New York Times, Apr 23]

Vote for Dreamworld. McCain is proposing tax cuts that would either cause the federal deficit to explode or would require unprecedented spending cuts equal to one-third of federal spending on domestic programs.  ... $650 billion in tax cuts a year, much of it benefiting corporations and upper-income families. That includes the cost of extending tax cuts implemented under President Bush ... The cuts that would be needed to balance the books are "inconceivable," and "wildly draconian," Mr. Greenstein said. "No president would really propose it and no Congress of either party would really pass it."  [Laura Meckler, Wall Street Journal, Apr 22]  And the inconceivable propositions would only cover a fourth of the tax breaks anyway. Not even the best new math can form a fig leaf big enough to cover the voter-insulting assumptions.  The dreamworld candidate also said the hard-hit steel towns of Ohio can rebound like his own presidential campaign did last year ... "Dramatic change can happen, in this great city and others like it," he said. "With pro-growth policies to create new jobs, and with honest and efficient government in Washington, we can turn things around in this city."  [AP, Apr 22] Where do our politicians get such drivel? While steel places like Youngstown could in theory revive, POTUS would play no role in it. And running a big war in the Middle East that consumes young people and piles of money would certainly be a drag on Youngstown's efforts which have been ongoing for at least three decades. 

Tech Resistance. SECDEF  Gates said the Air Force is not doing enough to help in the Iraq and Afghanistan war effort, complaining that some military leaders are "stuck in old ways of doing business."  ... getting the Air Force to send more surveillance and reconnaissance aircraft to Iraq and Afghanistan has been "like pulling teeth." [AP, Apr 21]  The problem seems centered in the pilot mafia which doesn't like any mission except air superiority where they fly higher and faster. Low and slow, like Predators remotely controlled by ground pilots and A-10s, have no glamour and swagger potential.

Give Us Ferocious Felons. the Army and Marine Corps have sharply raised [doubled] the number of recruits with felony convictions they are admitting to the services. [AP, Apr 21] When the law-abiding citizenry demands a large army but has "other priorities", what's a democracy to do?  Take whoever is available and feels at ease with a gun. Then we quickly "train" them, hand them a gun, and send them into a lawless gun-filled world to bring peace and justice  to a civil war.  Then, eventually, when our part of the war is over, we recover our moral posturing and decide these warriors aren't suitable future leaders of men and have to be dead-ended in any army career they might like. What then?

Groping for Commercialization. The House SB Committee has submitted a draft SBIR bill HR5819 that would "modernize" SBIR and extend it only two years.  More total money - 3%,  and higher award "max" - $2.2M.  An advisory board for each agency that meets twice a year (exempt from FACA) and reports directly to Congress. Cross-agency adoption for Phase 2.  A huge change: direct funding of Phase II without Phase I if feasibility already demonstrated, and since feasibility is in the eye of the beholder, anything can happen. It's likely to be a wide pipeline to the SBIR mills. Allowing waiver of the minimum work requirement by the small business (corporate welfare provision). An opening for large VC ownership of the small company. More than one Phase II allowed (as was effectively possible under the existing law anyway). Lots of hopeful text on commercialization but not many teeth. Congress seems to want commercialization but doesn't know how to get it if the agencies have unilateral authority to pick winners. No sign of demanding third-party validation of the market potential, and if the agency picks the most compliant advisors for its Advisory Board, nothing much good is likely to happen. Now, if Congress were to mandate the source of the external members of the advisory boards from private organizations, there could be some fireworks and movement in the right economic direction. Say, from the US Chamber of Commerce, the Pew Foundation, CATO, AEI, Brookings, American Economic Association, etc. Will the House SB version become law? Stand by for the Senate version (Kerry protecting the MA mills) and objections to higher tax.

In complaining about the VCs getting their noses in the tent, SBIR Insider says, Although the program is very successful and well liked. Successful by what standards, and liked by whom? A bunch of companies got a pile of money that would have distributed to different small companies if SBIR never existed. No demonstrable showing that the nation's economy was improved by the actual spending over what would have happened anyway. Hated by the agencies and the universities. Liked by the SBIR farmers that learned how to milk the government cow.

If you are a Texas business or if you do business in Texas, you may be eligible for a loan from the Texas Product Development Fund. ... looking for companies that have inventions, devices or processes that are well on their way to commercialization. Preference is given to businesses in certain industries: agriculture and aerospace, biotechnology and biomedicine, nanotechnology, renewable energy and semiconductors. Preference is also given to those that will create or save jobs in Texas. [Jacqueline Taylor, Houston Chronicle, Apr 20]

Energy Secretary Samuel Bodman said that the growing emphasis on corn-based ethanol has contributed to higher food prices, and he said the nation should begin "moving away gradually" from ethanol made from food such as corn. [Wall Street Journal, Apr 19]  Now, if he only had a clue as to what could be reasonably done. Waving his arms while chanting "wood chips" or "hydrogen" hardly qualifies as sensible policy. As I have previously noted in “Risk Of President Bush's Ethanol Fuel Program To Common Sense,” there is no economical way for the U.S. to be weaned off oil imports by diverting grain toward ethanol production. So, by going to ethanol production, we are spending approximately $7 billion a year on ethanol subsidy (OECD report section 1.4 notes this to be $4 billion).  [one of most egregious] risks of the Bush’s Poor Fiscal Leadership  [Ed Kim,, Practical Risk Management blog, Apr 18]

Pander They Must. whenever elections come around politicians treat the people at the bottom of the heap as the embodiment of American values. And aren't Americans supposed to believe in self-reliance? America's farms are some of the country's biggest subsidy hogs. Many small towns—Congressman Jack Murtha's Johnstown in central Pennsylvania is an egregious example—are kept alive only by federal pork. As for family values, America's small towns and rural havens suffer from higher rates of marital breakdown and illegitimate births than the degenerate big cities. But pander the politicians feel they must. ... The hypocrisy extends to the commentariat who have been busting their cheeks blowing their populist trumpets. Rush Limbaugh and Bill O'Reilly make millions out of championing “the folks” against “the elites”.  [The Economist]

Without a fully funded, federal alternative energy policy, the U.S. risks squandering the potential of a powerful economic engine and will continue to depend on foreign energy resources [Business Week, Feb 11]  Well, some great government programs have to be cut. Instead, for energy policy, give tax breaks for incentives when world fuel prices are soaring (in dollars).  Here's another chance to do something useful with all the wasted DOD SBIR dollars on rocket plume models.

The Free Lunch Syndrome. Federal election candidates all over the country are promising all kinds of goodies from the federal government. They have learned to tap into the prevailing myth that the federal government has some independent source of wealth from which it is merely inter-state competition as to who gets how many goodies. The people fail to look into the mirror to see who is providing the money for the goodies, almost always less money than the politicians pass out and a whole lot less than they are promising.  BTW, the free-riding charge applies to SBIR pleaders as well. They fantasize that the federal R&D contracting machine has surplus dollars to hand out to people who want to maintain life-style companies with no burden to show that they are supplying an large economic return for the dollars diverted. The federal government has no federal responsibility to maintain life-style companies, only to avoid impeding them. And there is no showing of any net economic gain let alone a large enough one to call the money an investment.

The candidate's economic plan: extend the tax cuts that had to expire as a budgetary gimmick to avoid the true cost of the cuts, reduce gas taxes, help homeowners, double an income tax exemption, keep the wars going. A total of $700B in handouts. And the new income to pay for all the spending? Uh, Republicans don't do that. $200B in naturally unspecified spending cuts and the usual appeal to Waste Fraud and Abuse and earmarks.  Wishful thinking, again!  It's not a plan, it's a pander that ignores the common sense advice: when you find yourself in a hole, stop digging.   Has the other party got a better plan? Of course not, not in the pander competition derby. If we vote for candidates spewing such drivel, we deserve the government we get.

More Stimulus. This time stimulating gullible voters: McCain called for a summer-long suspension of the federal gasoline tax. 18 cents a gallon, just until the election, and just like Bob Dole in '96, inviting the public to be another day dumber and deeper in debt.  But then Republicans were born to cut taxes, regardless of the consequences. Is no pander too low for a presidential candidate? Would a responsible candidate promote raising the gas tax to suppress demand for imports and reduce the national debt while the president makes or sustains an expensive foreign war adventure?    Meanwhile, Clinton said I'll shut down Guantanamo, without explaining how. Like Nixon's, "I have a secret plan for ending the (Vietnam) war."? Blanket promises without mechanisms have no credibility. It's like promising to get rid of nuclear waste: oh really, and in whose backyard will you dump the load of Gitmo's toxic waste?  Do people really want political candidates to insult their intelligence?

SBIR Insider, Rick Shindell, reports that the House Innovation Committee has proposed a new SBIR law with several interesting provisions. That committee is much more interested in results from SBIR than in just feeding the small business lobby.

Investing in Politicians.  executives from an Alabama defense contractor, Digital Fusion (Huntsville, AL; one SBIR) , met with the House intelligence committee chairman, Silvestre Reyes. They handed over checks totaling $24,000 for his re-election campaign.  Just five weeks earlier, Congress had approved a $461 billion defense-spending bill, which included a provision inserted by the Texas Democrat that would direct $2.6 million to Digital Fusion to fund a no-bid engineering contract at a Texas military base in his district.  Both the congressman and company say there is no connection between the contract and the contribution ... In the past five years, [the company's] executives have given more than $150,000 to lawmakers, including Sen. Richard Shelby and Rep. Terry Everett, both Republicans, and Rep. Robert "Bud" Cramer, a Democrat, and Rep. Reyes. In the same period, the company got at least $31 million in contracts funded by earmarks, according to Taxpayers for Common Sense [John Wilke, Wall Street Journal, Apr 14]  No connection? Tell it to the jury.

Everybody's Got an Urgent Need. The next administration must increase weapons spending in order to keep the U.S.'s technological edge, a defense industry trade group said. The AIA suggests in a report to be delivered Tuesday that the Pentagon spend up to $150 billion a year on weapons procurement.  [August Cole, Wall Street Journal, Apr 15]  But nobody feels an urgent need to pay the bills.

Mission Creep.  When capitalists create a disaster, it gives rise to more government.  Even avowed capitalists who enjoyed the benefits of bull markets are now advocating government intervention. Government officials need little prodding to respond, and so the process of increased regulation has clearly begun. Every day comes news of the increasing creep of the public sector. [Ethan Penner, Wall Street Journal, Apr 11] Which means more taxes to pay for the new tasks, and more Congressional staffers to watch them.

Has Honesty Hit BigBiz?  The I.R.S.’s scrutiny of the nation’s biggest companies is at a 20-year low, according to the study, conducted by Transactional Records Access Clearinghouse, or TRAC, a research group affiliated with Syracuse University.  The study, made public Sunday, points to “a historic collapse in audits.” It found that major corporations — defined as those with assets of at least $250 million — have about a one in four chance of being audited, down from about three in four in 1990. [Lynnley Browning, New York Times, Apr 14]

Exit Deferred.  Colin Powell said that President Bush's successor will have to come to grips with the reality that the United States cannot continue to keep such large numbers of troops in Iraq and AfghanistanMeanwhile the Bush/Cheney animal will run out the clock [Bush ordered a halt in U.S. troop withdrawals from Iraq after July, embracing the recommendation of his top commander (thank you, General Yes)] so that the mess that follows the US force withdrawal troops they will blame on the Iraqis, the mainstream media, the former generals-in-charge, and the treasonous Democrats.  The next administration will also have to deal with what to do with the prisoners at Gitmo, for which there is no good answer since their home countries won't take them back. A whole list of things that seemed doable and convenient at the time turn into long term liabilities - SURPRISE. And no one will want to pay the bills, especially the hedge fund winners with big capital gains and income.

When Some Colleagues Cheat, Everyone Pays. Advocates for small businesses are fighting changes in tax laws that the Bush administration says are aimed at cracking down on tax cheating ... One proposal would require detailed reporting of credit card transactions ... small-business lobbyists say small enterprises are already overburdened by current requirements for tax withholding, record-keeping and reporting. ... More worrisome to some small companies is the Treasury Department proposal that businesses report payments to corporations over $600  [Elizabeth Olson, New York Times, Apr 10]

Stop Digging. While tighter lending standards have cut off all but the most credit-worthy borrowers from auto loans and home loans, many people are turning to credit cards and tapping home-equity lines of credit to dig themselves in deeper.  [Jane Kim, Wall Street Journal, Apr 10, 08]  Who's leading whom: the people or their elected representatives? The old adage that when you find yourself in a hole, stop digging, hasn't yet sunk in.

The big general came to plead for keeping steady his US troop level whose mission is to keep the cap on Iraq's civil war. Just what his CINC wanted to hear, so that the CINC can get out of office with the problem dumped in his successor's lap. BTW, the rationalization for the occupation is shifting again , this time to forestalling Iran, the latest enemy.  Unfortunately for the general's credibility, a Washington Post analysis (Apr 9) of his multi-color charts finds that they lacked context or were misleading. Let's not blame the general, though, for putting the best face on his attempts to succeed in his mission. It's the mission that needs examining, and that is politics, not military. How much should we pay in treasure and blood to be the Iraqi police force in an inherently unstable tribal conflict within artificial boundaries set by the colonial powers nearly a century ago?   And if we insist we must do it, how do we pay for it? Lowering taxes, handing out stimulus and other goodies when the economy has a hiccup, and pretending that war's cost isn't all that much is not a route to financial sanity.

You Bring the Money and We'll Make the Rules. Sovereign wealth funds and other overseas investors will face closer scrutiny by US regulators under changes to the way foreign deals are vetted on national security grounds. [Stephanie Kirchgaessner, Financial Times, Apr 8]  Wha'pp'n the idea that "who has the gold makes the rules."?  What if the money doesn't like the rules, and doesn't come to the party, and calls in their loans? The more we owe them, the less our control of the rules. Another $400-500B on the cuff this year in oil and government notes?

The single most important thing Washington can do right now is to unleash these [US entrepreneurs] and support new company formation in the tech world ...  six more things Washington can do to help the U.S. compete: Build up Brand America, Create a Fat Pipe, Revamp Nafta, Promote a Free Internet, Reform patent laws, Make education more open. [Michael Malone, Wall Street Journal, Apr 5]

Happy birth month, DARPA. The best program managers are "freewheeling zealots" with big ideas. The staff has been called "100 geniuses connected by a travel agent." And the boss describes his agency as a home for "radical innovation." [Washington Post, Apr 7]

Despite his aspirations for higher office and years of public service, Hoover retained a deep skepticism of politics and government, which were prone to ignorant demagogues and bureaucratic placeholders.... in December, 1937, Compton attacked government-funded research for its inefficiency and susceptibility to "political domination. ...  Sheltered from competition by the Interstate Commerce Commission, the [railroad] industry had neither the incentive nor the funds to invest in new technologies over the next few decades.  [David Hart, "Herbert Hoover's Last Laugh", Journal of Policy History, Mar 98]

Political Panic. The speaker of the House, Nancy Pelosi, said she would propose a second economic stimulus package amid job losses approaching those seen in 2001 [New York Times, Apr 5]  Got a problem? Throw money at it? What else can Congress do well? Where's the money to come from?  Look at all the people who use their credit card beyond their means to pay the bill. Alert: there are some things that the government cannot reasonably fix, the business cycle being on of them. Not to worry excessively, because the already built-in mechanisms attenuate the cycles to a degree that 19th century economists could not imagine. Throwing money into it acts more like a forcing function than a damper. If history is any guide, government efforts to combat recessions often come too late to do much good. Furthermore, such efforts can sow the seeds for the next downturn.  Efforts to head off or alleviate recessions with crash spending programs and tax rebates — classic anti-recessionary plays — often did not kick in until after the recession had ended. ... Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, cites an "unquenchable taste in Washington" to find quick fixes, one that is even more pronounced in an election year. [Tom Raum, AP, Apr 5] Besides, the political system mocks Keynes by finding an excuse to overspend in both boom and bust parts of the cycle.

A Land Fit for Heroes. The Senator urging the administration to ramp up its hiring of recent combat veterans. ... asked President Bush to establish the goal that 10% of all new hires by federal agencies be veterans. "Because the nature of military service can make it more difficult for veterans to find employment after separating from the service, the federal government has a special obligation to look to veterans first when federal jobs come open,"  [Washington Post, Apr 4] The facts apparently are that the Pentagon hires huge numbers of veterans but the civil agencies only a small percent. The trouble is much wider and deeper. As the returning living heroes returned to Britain after World War I to what the PM (Lloyd George) promised would be "a land fit for heroes", they found unemployment.  In America today there seems little effort to preferentially hire veterans as a service to the nation that needs volunteer military, especially when the National Command likes war as a favored international relations tool. The capitalists apparently depend on someone else to defend capitalism for them as they complain that their taxes are too high. And our chicken-hawk administration: have you heard any speeches or programs that twist private arms to find places for the combat veterans, or even full medical care for hard to understand ailments like Gulf War syndrome or brain trauma? It won't even permit the nation to see the coffins arriving weekly. Politics first, land for heroes fifth.  Could employers' inaction be rationalized by the idea that, although the soldiers served bravely, the cause was deeply misguided? Or does economics drive everything until an invader enters their town?

It's Our War and We Want to Keep It.  Republicans plan to push for new money for troops in Iraq; to highlight statements by Democrats that the troop “surge,” which ended last fall, has worked; to point out some signs of political reconciliation; and to insist that troops can be removed from Iraq only when military leaders decide it is the proper time.  [Carl Hulse, New York Times, Apr 5]  The big general's coming to "testify" again, and he knows that he could find himself commanding the outer Aleutian Islands if he punches any holes in the Bush/Cheney world plan before Jan 21, 2009.   On the five-year anniversary of the invasion of Iraq, President Bush declared that the United States is on the way to winning the war. He made this stupefying pronouncement in the safe confines of the Pentagon, where it's unacceptable to question the commander-in-chief, no matter how dense or self-deluded he might be. [Carl Hiaasen, Miami Herald, Mar 23]

The God Defense. An investment adviser has been convicted in a tax fraud case in which he claimed to be a "child of God" with citizenship in heaven, not America. A federal jury in Dallas on Friday convicted on all 17 counts related to sham offshore entities.  [Houston Chronicle, Apr 5] Didn't work, even in the Bible Belt.

It is peculiar how often foreigners are surprised to learn that American presidents serve American interests, not those of the world at large. ...But they do not always overlap. And in a world that is still Hobbesian, the country that is for now still the world's sole superpower is going to continue to put its own interests first. although it is easy for a president to promise international co-operation on climate change, it is hard to make Congress enact laws that trample on vested interests, threaten to hamper growth or price Americans out of their huge cars.  [The Economist, Mar 29]

The Golden Fleece Instinct. Katherine Kendall has stood her ground in the face of growling grizzlies. The 56-year-old USGS biologist has demonstrated the same steeliness against Arizona Senator John McCain who has repeatedly cited Kendall's $5 million project in a campaign to eliminate what he regards as wasteful earmarking by Congress.  Kendall's large-scale DNA analysis of bear hair, which was first added to the USGS budget in 2003, provides a nonintrusive way to do a census of the bear population in the Northern Continental Divide Ecosystem, with an eye toward determining the best way to manage the species. But McCain has ridiculed it as useful only for investigating bear paternity suits and dumpster crimes. [Science, Mar 28] The poster fleece chatter in the Senator Proxmire 60s was the sex life of the tse-tse fly.

Consider climate legislation in Congress. A staffer on the Hill is already short on time between meetings on appropriations, homeland security, energy, the latest crisis overseas, and prepping his boss for a statement on health care. You're a scientist with 30 minutes to make your case on what excess carbon in the atmosphere does to our environment. You're armed with charts, figures, stats, and p-values, but what you don't know is you're the fifth Ph.D. visiting this office on the topic this week--and it's only Wednesday. And it happens you're also providing the fifth different explanation. Joe staffer listens patiently. He smiles and nods pondering why scientists can't get their story straight or stick to a single point. [Chris Mooney, The Intersection blog, Apr 2]

Ann Eskesen's Innovation Development Institute counts that by June 2007 SBIR had 16,760 firms, 73,593 Phase I awards, and a federal investment of $22,378,889,504.  So much for what government counts well - input. If it was, as she calls it, an investment, what is the Return? We could take a note from the musical "Evita":  When the money keeps rolling out, you don't keep books./ You can tell you've done well by the happy, grateful looks./ Accountants only slow things down; figures get in the way/ Never been a lady loved as much as Eva Peron.

Seriously, it wasn't an April Fool's Day joke. Treasury Secretary Henry Paulson presented his plan for regulatory revolution in Washington yesterday, releasing a 212- page "Blueprint For a Modernized Financial Regulatory Structure.'' After the biggest financial meltdown since your great-grandfather stood in bread lines, Paulson mostly proposed that the markets be less regulated. Depending upon which broadcast/print/Internet outlet you use to get your news, you might have thought that just the opposite had happened. Words like "sweeping'' are, well, sweeping the coverage. Promises of the biggest changes "since the Great Depression'' are peppering the commentary. (Source: Bloomberg) Full Story [Investors Guide Daily, Apr 1]

Alarm and Panic. SBIR Insider is delivering the bad news that the VCs are winning the battle to get in on SBIR and giving detailed instructions on how to plead to your Congresscritter. What Rick doesn't say is that one contributor to the loss of SBIR ownership could be the lack of any demonstrable economic gain to the country. Whereas VCs have a lively story to tell about creating economic life. Two decades of resistance to putting economics in the forefront of SBIR has undercut any claim that SBIR is good for anyone except the companies getting the money. Strangely, the field that wants the VCs, bio-medicine, is the one with a good economic story of public capital following SBIR.  No wonder that Congress would want more of that and less of whining from the SBIR mills. The mills are being thrown a bone by allowing huge and repeated SBIR awards to a project. What'll you have: politics or prosperity?

Since Hands Off Led to Disaster,  The Bush administration's proposal to overhaul the financial regulatory system underscores a philosophical shift in Washington toward a greater role for government in overseeing markets, analysts said. [Robert Gavin, Boston Globe, Apr 1] Since several oxen will be gored by any change, resistance mounts, and a big spoonful of sugar will be needed for the medicine to go down.

Need a Government Handout? They can't afford it. The $34 Trillion Problem. a multitrillion-dollar (that's TRILLION) problem that's about to get dramatically worse, and one that nobody wants to talk about. ... the day of reckoning is imminent. Sometime in the next President's first term, Medicare Part A (hospital insurance) will go cash-flow-negative, and it's all downhill from there. ... estimates, reported in the latest Financial Report of the U.S. Government, assume that Medicare payments to doctors will be slashed drastically, by some 41% over the next nine years, as required by current law. It won't happen. Every year for the past five years, Congress has overridden the mandatory cuts. As for future cuts, the Financial Report says drily, "Reductions of this magnitude are not feasible and are very unlikely to occur fully in practice." So in reality, Medicare will go into the hole even faster than official projections reflect. And they show that if Medicare had to be accounted for like a company pension fund, it would be underfunded by $34 trillion. [Geoff Colvin, Fortune, Mar 17] Before then, the government oversight negligence that led to the credit crunch and the unhappy negative equity home "owners" is ballooning the current year deficit to way beyond the White House drivel about balancing in 2012 (or 2112).  [John McKinnon, Wall Street Journal, Mar 29] What's the core problem? Too much democracy. We elect people who cannot deliver on promising us what we want. No, don't look askance at them; we made them the yes-men they are. Looking for an SBIR plus-up from your Congresscritter for a technology that won't compete in any open market? They're stuck in a foreign civil war  that they can't afford either.

What's a Real Republican To Do? In the House, Democrats plan to push Republicans for quick action to create a $300 billion loan guarantee program. Representative Barney Frank, (D-MA) said that a failure by Republicans to sufficiently regulate lenders had allowed problems in the mortgage market to hold the larger economy hostage. “At this point it’s some government versus no government,” he said, adding: “In effect we have to pay a ransom. It’s not fun to have to pay a ransom.”  ... Mr. Bush and Mr. McCain offer similar reasons in warning against too much government intervention and say the administration has already taken prudent steps, by giving more flexibility to the FHA, Fannie Mae and Freddie Mac.  But if the legislation is complicated, for Democrats the political message seems clear: no help for the little guy. “You are on your own,” said Representative Chris Van Hollen (D-MD) “Unless you are a big financial firm on Wall Street, in which case we’ll work around the clock all weekend to help you out.”  [David Herzenhorn, New York Times, Mar 30]  And who will bail out the small high tech companies about to be starved for R&D funding?  Capitalistic lenders and foreign interventionists are looking like a heavy burden for the Republican theory of American governance.

Obama has social engineering plans as ambitious, in their own way, as the Bush administration’s failed social engineering plans to change the psyche of America and the Middle East. [Maureen Dowd, NY Times, Mar 30]  Great social plans usually require great blood and treasure before being declared silly.

The draft SBIR renewal law has a new oversight provision wherein the larger agencies must have an SBIR advisory board that meets twice a year. Two agency insiders, two tech company folks, and such others as the agency chooses. An annual report to Congress that describes how that agency’s SBIR program is functioning and any recommendations of the advisory board for strengthening that agency’s SBIR program. Look for the agencies to capture the board by picking compliant advisors.

We're going to have to take some pain. We'll have to reconfigure our economy less towards consumption and more towards manufacturing more products that can be sold abroad. Our standard of living is going to have to come down. ...The dollar is a huge problem because foreigners see us continuing to debase our currency. It's going to be a massive recession if not a depression. The fixes don't really fix anything; they just make it worse. ... We will have to have a 40%-plus decline in the U.S. stock market, plus a massive adjustment to the U.S. economy, away from consumption towards saving and investment, resulting in massive closures of various retailers and a dramatically reduced current-account deficit.  [David Tice (interview with The Prudent Bear), Wall Street Journal, Mar 27]  Don't expect an intelligent discussion of the problem in the coming election circus because neither side can claim much economic virtue. So the Republicans will try to revive Michael Dukakis of 1988. The Democrats will point to 40000 wounded to have achieved nothing useful.

Missouri, which has lagged competing states in financial support of biotech and other high-tech companies, is creating a $1.25 M illion fund to help small firms get off the ground. The Missouri Technology Incentive Program, MoTIP.  ... the first expenditure from a $15 M pool created by lawmakers to support research commercialization and innovation-based economic development ... up to $5,000 to companies that want to apply for SBIR ... loans of up to $50,000 for SBIR Phase to Phase 2, forgiven if Phase 2 not approved. [St Louis Post Dispatch, Mar 26]

Once a Subsidy Starts. With grain prices soaring, farm income at record highs and the federal budget deficit widening, the subsidies and handouts given to American farmers would seem vulnerable to a serious pruning. But it appears that farmers, at least so far, have succeeded in stopping the strongest effort in years to shrink the government safety net that doles out billions of dollars to them each year. ... The agribusiness industry plowed more than $80 million into lobbying last year, according to the nonprofit Center for Responsive Politics, which tracks spending on lobbying.   [Lauren Etter and Greg Hitt, Wall Street Journal, Mar 27] There's no interest like a vested interest willing to "pay to play".

The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse. ... A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.  "The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II," economist Ed Yardeni wrote to clients. ... So the next step, no matter how it is dressed up, is likely to involve the government's moving in ways that put a floor under prices, hoping that will limit the downside risks enough so more Americans are willing to buy homes and deeper-pocketed investors are willing, in effect, to lend them the money to do so. [David Wessel, Wall Street Journal, Mar 27] 

The Royal Society, the United Kingdom's academy of science (350 years old, dating back to Newton), last month announced the creation of an Enterprise Fund, with the aim of funneling money into start-up companies seeking to commercialize the fruits of academic research. [Science, Mar 14] It foresees equity investment in the range of $1M per case.

The public sector needs to take the lead. The difficulty is that, while many government schemes sound good in theory, they are often surrounded by restrictions, including constraints on co-investment and deal size, that make them risk-averse and inhibit effective investment. Public funds are also not always well-directed.  [Jonathan Kestenbaum, Financial Times, Mar 26] A response to the announcement that Britain's premier VC was going to invest only in later stage companies.  It is also unlikely that government officials will have the needed instincts to fund the best prospects and to supply any other missing ingredients, like competent competitive management. Skills in competing for government money don't translate into success in competing in the open market.

Yadda, Yadda, MedicarePaulson renewed his call for action on Social Security and Medicare reform [Wall Street Journal, Mar 25] The rites of spring .. members of the Bush Cabinet are warning about entitlement calamity. ... The administration officials, along with their counterparts in Congress, then spend the rest of the year achieving nothing to fix the problem. [Dana Milbank, Washington Post, Mar 26] after yet another report shows the geezer programs running out of money in the forgettable future (after every next election). Lattes now; responsibility later. The off-putting political question: which generation will have to pay twice or get nothing for something? A proposition: use the DOD and NASA SBIR set-aside to buy Treasury bonds, which will have a lot more economic impact than spending their SBIR the same old way. Somebody has to pay, and euphemisms don't solve anything.

Oily Political Myth. Bryce declares that "energy independence is hogwash." There is not a chance in the world, he says, that we're going to kick our "oil addiction." ... When it comes to "energy independence," American politics has discovered a new spirit of bipartisanship. ... Mr. Bryce's ultimate counsel -- that we should forget about what Arab countries are doing with their petrodollars and learn to get along -- is also hard to accept. [William Tucker, reviewing Bryce's Gusher of Lies, Wall Street Journal, Mar 26]

the economy grows more vigorously when you lower tax rates,” said [devout supply-sider] Kevin Hassett, ... director for economic policy studies at the conservative American Enterprise Institute. “It is beyond the reach of economic science to explain precisely why that happens, but it does.” [Louis Uchitelle, New York Times, Mar 26]  The proponents of such "voodoo economics" are simply inventing rationalizations for cutting the taxes of their clientele - the comfortable economic class.

Farther and Smarter, a packaging problem.  After more than a decade of research and $600M spent, the Navy said yesterday it will cut off funding for a long-range naval weapon that has repeatedly failed to perform as advertised in field tests, according to Navy and [Raytheon] company officials. The goal was firing accurately from Navy destroyers up to 50 miles offshore in support of ground troops [B Bender and M Negrin, Boston Globe, Mar 22] The core problem seems to be the shock to the GPS package from the high acceleration in the gun to reach a really high muzzle velocity in such a short distance available on a destroyer.

In a collaboration with UCSD's von Liebig Center for Entrepreneurism and Technology Advancement, the city of San Diego plans to provide $140,000 in seed money to accelerate development of environmentally friendly “clean” technologies. The partners intend to solicit applications this spring from local academic researchers for startup business funding and business mentoring services. An expert review panel will select at least two pilot projects by summer. Sponsors hope to award six projects this year. [San Diego Union-Tribune, Mar 22]

the new do-gooders have absorbed the disappointments of the past decades. They have a much more decentralized worldview. They don’t believe government on its own can be innovative. A thousand different private groups have to try new things. Then we measure to see what works. [David Brooks, New York Times, Mar 21]  Although Brooks targets innovators in social activities, SBIR qualifies as a failed innovation experiment that government agencies re-captured for their own use and then co-operated with the beneficiaries against any data-driven economic evaluation. All that remains of innovation are the platitudes. 

Need Number Crunching? Officials from Purdue and Indiana universities and the Indiana Economic Development Corp. on Wednesday said they are working to target businesses that could use the new IBM supercomputer (based in Bloomington) to develop products, improve efficiency or enhance profitability. The computer is the same size as IU's original Big Red and part of IBM's pledge to create 1,000 jobs in the state, said a news release. [Indianapolis Star, Mar 23]

Stimulus and Subsidy Coming. The Massachusetts state Senate approved a $1 billion life sciences stimulus bill in a 32-4 vote... includes a $500 million public bond to pay for capital projects in the life sciences sector, $250 million in research grants, and $250 million in tax incentives for firms in the industry that create jobs in the state. [Mass High Tech, Mar 21] Interstate competition. New England will go for the smart people and Dixie can have the sprawling auto assembly plants.

Muni WiFi Disenchantment. the excited momentum has sputtered to a standstill, tripped up by unrealistic ambitions and technological glitches. The conclusion that such ventures would not be profitable led to sudden withdrawals by service providers like EarthLink, the Internet company that had effectively cornered the market on the efforts by the larger cities. [Ian Urbina, New York Times, Mar 22]

They Are Us.  While everybody else is running headlong from the burning building of debt, Uncle Sam looks like he is rushing in the other direction. [Mark Gongloff, Wall Street Journal, Mar 24]  ... few economists have supported the [stimulus] idea. They note that we have tried rebates in the past — most recently in 2001 — and there is no evidence that they have meaningfully stimulated either consumption or growth. By and large, people saved the money they received or paid bills (which is the same thing); very few used their rebates to increase spending. The true reason why the current rebate has been so popular in Washington is that giving away free money in an election year is good for politicians of both parties. Superficially, it looks as if Washington is responding to a real problem with decisive action. [Bruce Bartlett, New York Times, Mar 24]  Don't blame the politicians, for they are us.

The war is indeed a grotesque waste of resources, which will place huge long-run burdens on the American public. But it’s just wrong to blame the war for our current economic mess: in the short run, wartime spending actually stimulates the economy. Remember, the lowest unemployment rate America has experienced over the last half-century came at the height of the Vietnam War. [Paul Krugman, New York Times, Mar 24]

The latest draft SBIR re-authorization is a SBIR-mill bill that would double the awards for Phase I and Phase II to $200K and $1500K. Plus the agency could award follow-on Phase 2s for "test and evaluation." [story from SSTI] Credit for such a scheme should no doubt go to SBTC which represents the interests of the regular beneficiaries. The follow-on provision lets the agencies use SBIR for regular agency R&D (which it effectively doing already) instead of using the "sole-source" provision for easy procurement from mainline funds. More money to SBIR-mills. Since the lion's share of SBIR goes to the mission agencies who would likely concentrate their SBIR on regular activities, the idea that SBIR somehow will economically help US innovation becomes an even greater myth than it is already.

The 8th Continent Project at the Colorado School of Mines is launching an aerospace business incubator for Colorado with the help of a $150,000 grant from the state Economic Development Commission.  The 8th Continent Project, launched last year to establish a space-focused chamber of commerce, funding network, research center and the business incubator, plans to help as many as 15 startups a year.  [Kelly Yamanouchi,  Denver Post, Mar 16]

Techpoint and the Indiana Economic Development Corp. said the second collegiate entrepreneur boot camp will offer Indiana students a chance to network with some of the country's top business experts. The event will be Thursday at the Indiana Roof Ballroom in Indianapolis. To register or obtain more information, visit [Indianapolis Star, Mar 15]  The more innovative entrepreneurs we create, the better the USA will be able to compete in the world. No, putting DOD and NASA SBIR money into SBIR mills and science hobby shops does not do the job.

In the Arsenal City. with the help of tens of millions of dollars from the state and federal government, the hulking structure is being transformed into a high-tech palace. ... More than 30,000 square feet of space is being renovated. That includes an 11,000-square-foot clean room. The building's first tenant will be Vistec Lithography, a British company that state officials lured to the Capital Region last year with $30 million in incentives. ... [Watervliet] arsenal was founded in 1813 ... the Army's only volume manufacturer of large-caliber cannon .  [Larry Rulison, Albany Times-Union, Mar 15] The arsenal's inimitable core skill was boring a long straight accurate hole into a long piece of hard steel. The arsenal thrived there because Watervliet was the eastern terminus of the Erie Canal which brought iron and coal from the mid-West and fostered an iron industry. The industry is now gone and the politicians are looking for some alternative mission for the arsenal which the Army still needs for making cannon.

Two years after receiving a $2M grant from the 21st Century Research and Technology Fund to develop and market its tissue technology, Schwartz Biomedical (Fort Wayne, IN; no SBIR) announced, via the Indiana Economic Development Corp., its plan to launch its BioDuct Meniscal Repair Device implant this year [Indianapolis Star, Mar 19, 08]  It did get a SBIR Phase 0 (zero) grant, money from the state to prepare SBIR proposals.

Subsidy Power. Tax breaks and cash rebates have done what the most gung-ho green talk has not: ignited a solar power boom in Oregon. ... The surge is courtesy of the taxpayer, who foots the bill in this effort to go green. [Gail Kinsey Hill,, Mar 16]  Do the taxpayers know they're paying? There's not much evidence that the taxpayers connect handouts with their taxes. The myth of free government money abounds.

Guns and Butter. Members of New York's congressional delegation will call on the Army today to allow Watervliet Arsenal to be developed into a technology business park -- a plan that could create 1,500 jobs on the site. ... Full-scale commercialization of the arsenal was suggested in the 2005 Defense Base Closure and Realignment Commission Report, with the Army maintaining its cannon manufacturing base there.  The cost of the commercialization project was estimated at $63.7 M , with the site being conveyed to a local development authority. The authority would lease the Army the space it needs to continue cannon manufacturing for $1 a year.  [Larry Rulison, Albany Times-Union, Mar 18]

Which president said,  financial markets are continuing to function, adding that the U.S. is “on top of the situation.”   [Wall Street Journal, Mar 17]  Cleveland, McKinley, Hoover, Bush 43. Hint: he started a foreign war under questionable pretense. The answer is the guy under "Mission Accomplished." banner, not McKinley.  Do you think he knows what he's talking about? Standing with was the SECTREAS who at least has scars from those markets but who is probably in doubt as to what the government can do that would stop the bleeding.

The Fear that Unregulated Derivatives could bring down the finance system finally happened. Fear now has displaced greed. Even the conservative Bush government is panicked into thinking of government solutions. the goal of U.S. policy makers is to avoid the malaise that gripped Japan for a decade after its banks accumulated vast sums of bad debt following the burst of a late-1980s bubble in real estate. When land prices collapsed, so did the value of the real-estate collateral that backed most loans, leaving many borrowers unable to repay and saddling Japanese lenders with trillions of yen in bad loans.  Financial authorities waited years for the bad loans to fade away without government action. But the problem only started to lift after the government, starting around 1998, began injecting huge amounts of public funds in the hobbled banks. It took until around 2005 for the banks to clear up the worst of their bad loans and for the first time in nearly a decade report rises in their loans outstanding. [Davis, Ip, and Paletta, Wall Street Journal, Mar 18]

Keeping planes apart the old way.  Aviation experts say lawmakers may now be at least a year away from taking another stab at raising the $15 billion needed over 12 years to fully upgrade the nation's creaky radar-based system. [Cox News Service, Mar 17] Unfortunately for a lot of people hoping that government would adopt more new technology, the government has put itself in the position of wanting (needing) more than it can afford without collecting a lot more taxes. And in an election year, no candidate will be for that. So we'll keep the aged radars and aging humans. Now, it we hadn't buried a trillion in Iraq, ...

coondoggie writes to tell us that DARPA announced a wide array of new projects in a report to the House Armed Services Committee that they will be funding in the near future. "everything from advanced network and communications implementations to powerful laser and unmanned aircraft development as well as developing techniques to help military personnel survive myriad dangerous situations"  [, Mar 15]

No Deficits, Just Pain.   About half of the state legislatures nationwide are scrambling to plug gaps in their budgets, shot through by rapid declines in corporate and sales tax revenue, distressed housing markets and a national economy on the verge of a recession. ... Arizona’s $1.8B budget gap is 16% of its general fund, the largest percentage in the nation.. [Jennifer Steinhauer, New York Times, Mar 17] States will have to choose between feeding the elderly and feeding companies, not a good sign for incubator and other seed programs. 

Borrow From Whom?  the central risk to the U.S. economy: an unprecedented crash in home values that is sapping households' wealth and confidence while putting an enormous strain on the banking system.   How bad will this downturn get? No one can know because we've never experienced such a headlong slide in the housing market—and this comes at a time when its current value of $20 trillion accounts for the vast majority of most families' wealth. [Business Week, Mar 13]  For years, the U.S. economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer. ... Global investors are pulling money from the U.S., steepening the decline of the U.S. dollar . ... That is a troubling prospect for a savings-short, debt-heavy economy that relies on $2 billion a day from abroad to finance investment.  [Wall Street Journal, Mar 15] An antique store owner in lower Manhattan, ticket vendors at India's Taj Mahal and Brazilian business executives heading to China all have one thing in common these days: They don't want U.S. dollars.  [Alan Clendenning, AP, Mar 15] There could soon come a day when the USA has to answer the question about its deficit finance: borrow from whom? Perhaps the Republicans with their core in Dixie can find the answer by looking to the short and hallowed history of their Confederacy.

If it looks like a bail-out, and sounds like a bail-out, it is a bail-out. But “capitalism without failure is like religion without sin. It doesn’t work”, says Carnegie Mellon professor Allan Meltzer.  Guarantee lenders against failure and they will lend and lend and lend, diverting resources to ill-conceived ventures, driving down productivity and living standards.  [Irwin Stelzer, The Sunday Times, Mar 16]  With a lot more to come.  I expect that the Fed will have to do a lot more by way of liquidity injections. Over the remainder of the year, even an additional $1 trillion of collateralised lending by the Fed (over and above the normal levels seen before the second half of 2007) is likely to be inadequate to get key financial markets functioning effectively again and to keep them that way. It would barely be more than $100bn extra per month - too little to make a substantial difference. My guess is that somewhere between $1.5trillion and $2.0 trillion of further above-normal liquidity provision will be required in the US before this crisis is over.  [Willem Buiter, Financial Times, Mar 13] A trillion here, a trillion ,here and pretty soon, you're talking real money. (Everitt Dirksen after inflation.)  Be sure to send your taxes in on time so the Fed can buy paper and printing for the money printing press.  You can even watch it being printed and palletized at the Bureau of Engraving and Printing regular tours.

The Republican smaller government that makes war and collects few taxes is nevertheless swinging its big bats in trying to rescue the financial system that the unrestrained capitalists have put in jeopardy - again. It is ladling out credit with a big spoon as it colluded with a big bank to keep a shark banker out of bankruptcy which would have frozen the credit markets even icier. Let's hear it for "let capitalism be capitalism." The economy is not likely to repeat the Great Depression when banks failed because not only does the government have authority and mandate to do something, its very size is an economic counterweight that provides a steady core of decent paying jobs.  And, of course, if the government had invested all the SBIR money in economic potential technology that was also good for government internal purposes, instead of funding mere government service, the economy would have even more strength to resist downturns. You get no ore than what you pay for when you have no foresight for the long term.

MDA's Tech Applications quarterly featured Kyma Technologies for reaching a milestone in growing defect-free GaN which both MDA and Kyma say has many billions in future nitride semiconductor markets ($25B by 2015). Great, but, could the company be an effective ward of the government?  Apparently almost all Kyma's s financing for seven years has come from SBIR - $7M in seven years in a company that averaged about ten employees. Neither KYMA nor MDA talk about the GaN economics and whether either GaN or KYMA can compete in the open market - a general weakness in government talk about commercialization.  The government probably doesn't know and the company naturally won't reveal such secrets.  After all, the acid test of marketability is actually trying to sell the goods, and a big market does not necessarily mean that Kyma will get any decent part of it.  In the more capitalistic days of MDA's SBIR, MDA would have required substantial private co-investment for multiple Phase 2 SBIRs in a technology. With no economic evaluation of SBIR, we will never know whether the tax dollars were wisely spent, which in any one company's case we can't know unless the company opens its books by going public.  MDA shows no signs of evaluating its SBIR economic impact despite a long-standing Tech App program to do what is possible to foster economic impact from whatever companies and technologies the SBIR deciders choose for funding. And it seems highly unlikely that the SBIR deciders would seek counsel from the Tech App folks on which companies and technologies have the best chance for success. That's just not the way the government does its R&D, especially in a Republican administration after DARPA's head got sacked by Bush's father for thinking along those lines.

Tragedy or farce?  The House passed a $3 trillion Democratic spending plan as Congress engaged in a day of budget theater. If we added up everything everyone wanted, it would be $4+ trillion (when someone else is paying, we want lots). And if was what everyone was willing to pay, $2 trillion. But since the government must operate, the actors have to come to some final agreement which will surely hand out more than they collect. Taxing is taking the most feathers from the goose with the least hissing.

Locking the Barn Door Afterwards. Top U.S. policy makers released their broadest plan yet for avoiding a recurrence of the current credit crunch.  [WSJ, Mar 13]  Unrestrained capitalists simply cannot resist excess.

The Power to De-Regulate. The EPA weakened one part of its new limits on smog-forming ozone after an unusual last-minute intervention by President Bush, according to documents released by the EPA. [Juliet Eilperin, Washington Post, Mar 14]

A New Economic Order  Why the Downturn Had to Happen   Retail sales plummeting. The dollar at a new low against other world currencies. A 60 percent jump in U.S. home foreclosures. A major investment fund going kaput.  ...  Rosenberg said, "The grim reality is that recessions are a part of life. It's like surgery. You don't feel good as you get out of the operating room, but inevitably there's a healing process and things get better."  [Neil Irwin, Washington Post, Mar 14] Only if there was a competent surgeon. Fear not, though: The Bush administration expects a rebound after the arrival of stimulus checks. If only, ...  Not to worry, either, for Congress is on the case:  markets steadied as senior Democrats in Congress put forward a rescue plan to offer $300bn in loan guarantees for new mortgages [Financial Times, Mar 14] But, where's the $300bn to come from? Don't ask. Do your bit, as W asked after Sep 11, go shopping. The fantasy world of American feel-good politics.

Could Get Ugly. I used to think that the major issues facing the next president would be how to get out of Iraq and what to do about health care. At this point, however, I suspect that the biggest problem for the next administration will be figuring out which parts of the financial system to bail out, how to pay the cleanup bills and how to explain what it’s doing to an angry public.  [Paul Krugman, New York Times, Mar 14] Expect another election with fantasies about what government can and should do. Maybe the outcome will be a national recognition that expensive wars just make the financial problem deeper without solving our international relations dilemmas. At least war-monger Cheney will have moved on on taken his victim president with him.

The federal budget had a record deficit month in February $175B. Quick, think of a new or improved federal program for which you are a beneficiary and no new taxes are collected to pay for it.

The Bottomless Cup. Harvard University President Drew Gilpin Faust says the government needs to give more money to the NIH to make sure research that could lead to disease cures or prevention stays on track. Faust today told a Senate panel that five consecutive years of flat funding for NIH is deterring young researchers at premier academic research institutions.  [AP, Mar 11]That is, after the government pays Harvard to turn out PhDs, it is the taxpayers' duty to provide money to pay for jobs for PhDs. Supply creates demand. And where do they think the government will get the money to keep the NIH at $29B a year, much less increase it? Beneficiaries of government largesse can always find a compelling reason for more money but no compelling way to pay for it. BTW, don't forget to howl for more SBIR money.

Alabaman Economics. As members of Congress, we are concerned about US jobs. But any assertion that this award “outsources” jobs to France is simply false. With a new assembly site in Mobile, Alabama, this contract will bring tens of thousands of jobs into the US. [Richard Shelby, Financial Times, Mar 9]  It may seem odd the a US Senator publishes an op-ed piece in a foreign newspaper defending the US government's decision to award the AF tanker building to a foreign firm instead of to a US national champion. But his home-cooking Alabaman economics don't quite stand inspection (how many politicians can get the economics straight?). The thousands of jobs into the US would be offset by even more thousands of jobs lost at Boeing and its sub-contractors - a net loss of US jobs.  We are left to wonder whether this senior member of the appropriations committee and a member of the appropriations subcommittee on defence had any influence on the AF decision and if so, whether he left any fingerprints. Boeing says it will protest the decision.

Another Genie Out of the Bottle.  Pentagon Bans Google Earth From Mapping Military Bases  [AP, Mar 6]

Scientist and Innovator to Congress. Democrat Bill Foster won a close race to upset Republican hopes of keeping Denny Hastert's seat in Illinois-14. Founder 1975 of  Electronic Theatre Controls (no SBIR); Scientist, Fermilab. PhD, Physics, Harvard University, 1984. BA, Physics, University of Wisconsin-Madison, 1975. Not your standard politician. Washington Post story on the race.  Foster's acceptance sounded the typical: "Tonight our voices are echoing across the country and Washington will hear us loud and clear, it's time for a change," Foster told cheering supporters. [AP, Mar 9]

Free Markets and Mandates Don't Mix. Few things prompt Washington policymakers to forget their professed belief in the efficiency of free markets faster than $100-a-barrel oil prices ... So, Congress mandated a new industry with the Energy Independence and Security Act of 2007 which Bush gleefully signed. ... While de Gorter acknowledges that some economists might justify mandated markets as a way to promote a desired social policy, he questions the strategy's effectiveness. "Historically, there are no good examples of it working in alternative energy," he says. ... One reason economists tend to be wary of mandated consumption levels is that they can have unintended consequences for related markets. Producing 15 billion gallons of conventional ethanol will require farmers to grow far more corn than they now do. And even with the increased harvest, biofuel production will consume around 45 percent of the U.S. corn crop, compared with 22 percent in 2007. The effects on the agricultural sector will be various and complex. [David Rotman, MIT Tech Review, Mar/Apr 08]

It's the Economy. We need (the next president) to rejuvenate the economy and financial markets, says a 60-year old retiree Tennessee voter. [Adam Shell, USA Today, Mar 7] A 60-year old should know better, that presidents cannot do what he wants. If you bid too much for a house, or a stock, and the price subsequently falls in the auction market, the president cannot help you. If you were the house's seller, you thought the markets were doing just fine.  Instead of making speech about better presidents, we could spend our energy understanding the economics of everyday transactions.  Maybe if the Bible Belt spent more time educating kids in economics  we would be better off than giving them courses in the history of the Bible as a way of squeezing religion into public schools.

they ain't gonna like it. EARL LONG, Louisiana's notorious ex-governor, is best remembered for dating a stripper, winning an election while confined to an asylum and crafting some of the sharpest political aphorisms of his time. For instance: “Someday Louisiana is gonna get good government. And they ain't gonna like it.”  [The Economist, Mar 6]  When it comes to SBIR, gthe advocates wouldn't like good government either, which would mend or end SBIR.  And mend doesn't mean more money to the same bunch of companies just doing government bidding.

McCain, who has gone out of his way to shout his support for free trade in general and Nafta in particular, would face down such protectionist outrage, partly because he doesn’t believe you can erect barriers to Canadian goods and then turn round and ask their government to keep troops on the front line in Afghanistan. [Irwin Stelzer, The Sunday Times (London), Mar 9]  Meanwhile, Four campaign seasons have come and gone since presidential hopeful Ross Perot warned that NAFTA would create a "giant sucking sound" of jobs going to Mexico, and the trade pact is still generating plenty of noise. Calls to renegotiate the 14-year-old deal are rising from both sides of the border. ... The Rust Belt has shed hundreds of thousands of factory jobs since 1994 ... The nation has lost 3.1 million manufacturing jobs since 1994...  "Let's get real about NAFTA. It simply isn't working for all Americans," Clinton said at a recent rally in Youngstown .. Texas cities along the Mexico border have flourished [Marla Dickinson, LA Times, Mar 9]  International trade has offsetting effects, but the losers scream louder which politicians try to exploit. Youngstown was an economic basket case long before 1994 as the US steel industry lost out to modernization abroad. If you believe in economics, pay no attention to the political pandering. It is highly unlikely that we would be better off if we merely took in each other's laundry.

Where money is on offer, demand will arise. Joshua Berger of the Delta Democrat Times (Greenville MS) reports from Merigold MS that a business man will be sentenced today for collecting $400K for econ development from federal loans to build a motorcycle factory. And in January two other area men (one a former mayor) were sentenced for $500K misappropriation for a chemical factory. Federal money has a lot better chance of getting to the intended purpose if the feds distribute it directly through federal officers than satisfying local politicians with feed-through grants administered locally. [story from Jackson MS Clarion-Ledger, Mar 9] 

None, if not American. Congressional leaders threatened yesterday to withhold funding for one of the U.S. military's biggest aircraft programs because the $40 billion contract went to a group that includes a European manufacturer. [Dana Hedgpeth, Washington Post, Mar 6]

Another Free Lunch Offer. McCain, whose father, grandfather and sons served in the military, has also vowed to increase the size of the armed forces to 900,000 from 750,000 -- an expensive endeavor he says can happen without raising taxes.   [Wall Street Journal, Mar 6] It's magic; Republicans can do everything without raising taxes. But after the Army's experience in Iraq (and Vietnam), where will it get 250,000 more volunteers? Citizenship deals with illegal immigrants? Sons of SBIR mills?

"I believe in my bones these things should be paid for, But that's not the will of the United States Senate."   Said Sen Conrad about paying for middle class AMT relief.

political strategist James Carville once described [Pennsylvania] as Philadelphia at one end, Pittsburgh at the other with Alabama in between. [Jonathan Kaufman, Wall Street Journal, Mar 6]

TIME LEFT TO REAUTHORIZE SBIR  211 Days, ... hours, ... minutes, ...  seconds  SBTC is anxiously counting down the time left before SBIR expires when the agencies will be free to ditch it or invent their own version. SBIR has only two advantages to the mission agencies: a vehicle for a national call for ideas, and a way to sole-source post-SBIR procurement. Otherwise it's an administrative pain, especially since they reject the idea that it can be a good vehicle for inducing private capital to develop technology for agency longer term needs. Typical of government attitudes, they think they can control tech development by offering to pay the complete development costs from their own budgets. Which is how the military winds up with slow development of hardware that proves too clunky against an adaptable enemy. It's all theirs, expensive, and half wrong.

Government's Compulsion to Control Information. 'The Iranian government might block private access to the Internet for the general legislative election on March 14, two Iranian news outlets reported Monday. In 2006, the authorities banned download speeds on private computers faster than 128 kilobytes per second. The government also uses sophisticated filtering equipment to block hundreds of Web sites and blogs that it considers religiously or politically inappropriate. Many bloggers have been jailed in the past years, and dozens of Web sites have been shut down.' It would appear that Iran's own government is more a threat to the nation's internet connectivity than the fragility of the undersea cable network.  [, Mar 4]  Governments cannot resist the urge to shape information to their ends, be it Iranian censorship or Bush's doctoring EPA science.

Mr. Conrad said the Senate budget plan ... would result in a balanced budget by 2012 [Saran Lueck, Wall Street Journal, Mar 5]  Nonsense, all based on dreamy political assumptions that tell people they can ignore the problem. And as long as we reward such foolish talk with our votes, it will continue. The politicians are not fools when it comes to their own livelihood.

Dithering until the next Inauguration. The top U.S. military commander in the Middle East said Tuesday that officials will probably need some time this summer to reassess the situation in Iraq before drawing down more troops. From Jan 21 whatever happens will be the fault of the new administration, including the chance the military gets to diss the President as it did to early Clinton. At least next time, we won't have another draft dodger.

"DARPA to iRobot: Build a LANdroid bot .  Price - a mystery.

In a major milestone in the development of New York state's Tech Valley, a state oversight board gave final approval Friday to $300 million in spending for the International Sematech project at the University at Albany. [Albany Times-Union, Mar 1]

The Spiral. Tighter credit, especially when combined with plummeting consumer confidence, causes the blood to run cold in the nation’s boardrooms. Projects are put on hold, investment spending declines and with it the new jobs needed to keep the unemployment rate down. Unemployment rises, consumer confidence and spending drop even more, foreclosures increase, credit tightens even more, and America settles into a long period of sub-standard growth, or actual decline. [Irwin Stelzer, The Sunday Times, Mar 2]  Since Stelzer is a business adviser and director of economic policy studies at the Hudson Institute he can see optimism for the economy as a whole. But if you left hand is in boiling water and right in ice water, your OK on the whole. Which is why several observers see why populism could more be a live factor in the next election than it was in Gore's 2000 version when the 1990s boom was still alive.

What do you get when you cram more than 20,000 people from the biotechnology industry into downtown San Diego? You can insert a punch line here  Scientists and suits, more than $32 million into San Diego businesses,  Schwarzenegger speaking, not Al Gore who wanted more than $200K  June 17-20. [San Diego Union-Tribune, Feb 29]

Grow corn, add water and heat ("thermal energy" if you are a bureauphile). A backlash against the federally financed biofuels boom is growing around the country, and “water could be the Achilles heel” of ethanol, said a report by the Minneapolis-based Institute for Agriculture and Trade Policy. [The Economist, Feb 28]  But from where will come the water and heat that have been more or less assumed as a free good in America? The good news is that ethanol plants are becoming more efficient. They now use about half as much water per gallon of ethanol as they did a decade ago. New technology might be able to halve the amount of water again,

Ain't Gonna Happen, thinks NSF in its FY2009 SBIR solicitation. This solicitation will ONLY accept a maximum of 4 proposals in total. It also warns that SBIR may not be re-authorized without a break. Such a happening would test the idea that the agencies hate SBIR and will do it only under mandate. NSF, like all the agencies, has a mob of proposers and politicians with ideas for spending taxpayer money.  The advocates better get busy with their stories about how SBIR is needed despite the lack of any convincing economic gain after two decades.  Since NSF invented SBIR, it seems telling that it would de-fund SBIR  just because it isn't re-authorized specifically. Procurement rules allow an agency to have an R&D program like SBIR if it wants one. The money cannot be saved since it is coming from money to be spent externally anyway; it can only be diverted from small companies - not NSF's constituency - to large enterprises, like universities who never did like SBIR. Since nobody except the beneficiaries likes SBIR, and since there is little evidence that it is doing much good except to the beneficiaries, only politics can keep it alive. >

the U.S. is prodding two of the biggest [sovereign wealth] funds to embrace a set of promises that they won't use their wealth for political advantage ...A representative of the Singapore fund declined to discuss the matter   [Bob Davis, Wall Street Journal, Feb 26]  And what do we have as bargaining chips if our Christian plea, "Blessed are the merciful, for they shall find mercy." falls on deaf Eastern ears? I suppose we could offer that Bush/Cheney will be gone. Our wishful thinking, of course, mounts the political stage, Several U.S. lawmakers have raised the prospect of legislation if they aren't satisfied with the voluntary IMF code.  Unfortunately, we have put ourselves in the position of needing their money to avoid paying a painful price to right our financial ship by ourselves.  For example, how will we pay for: Government spending on health care could nearly double by 2017 to more than $2 trillion, according to a new federal study.. Driven by the aging of the baby-boom generation and rising costs of new drugs and medical technology [Jane Zhang, Wall Street Journal, Feb 26]? Note: The Treasury plans to raise $41.18 billion in new cash this week  [Wall Street Journal, Feb 26]  From whom?

Gusty Wind Subsidy. What makes wind power an on-again, off-again business? Congressional foot-dragging. Legislators tend to renew the tax credits for such alternative-energy producers at the last minute each year—or even let them lapse temporarily. That brings periodic busts in the industry (chart), as investors hold back. The chill is already beginning for 2009. [John Carey, Business Week, Feb 25]  With the financial hole getting deeper every month, Congress needs some sacrificial victims.

All six zones of the Minneapolis Wi-Fi Internet access network are to be completed March 11 [Minneapolis Star Tribune, Feb 20]

soldiers are augmenting or replacing military-issued gear through Internet and retail stores offering accoutrement that could save precious seconds in combat, or just make life more comfortable in the field.  [Martha Quillen, Raleigh News&Observer, Feb 21] You may think you have won a long term contract when the Army adopts your new technology. But the soldiers may change the Army's mind in ways the Army establishment never thought of. 

"We need to continue to lower barriers to trade because 95% of the world's customers live outside the United States," Mr. McCain said recently in Michigan, where the jobless rate is 7.6%, the highest in the nation. "We need to have competitive manufacturing through lower health-care costs, lower taxes and opening new markets." [Wall Street Journal, Feb 21] The ugly facts of economics say that a manufacturer in Ohio paying high wages and benefits will soon be out of business for uncompetitive world prices. Wal-Mart would also be in serious trouble. Let's everyone understand the principles of economics by which the real world operates. That includes companies depending on government handouts of money for work that has no potential for national economic benefit.   Who cares? the latest cuts in corporate information-technology budgets are likely to ripple through the [NC Triangle] area, which is home to software developers, telecommunications-gear makers and other tech companies.  To weather the downturn, companies are relying increasingly on sales overseas. [Frank Norton, Raleigh News&Observer, Feb 21]

The biotech center, which is largely funded with state tax dollars, spent $899,875 to help the University of North Carolina at Chapel Hill recruit [Nobelist] Smithies and six other researchers. It took 20 years for the investment to pay off. ... Now the third-largest U.S. biotech hub by number of companies, North Carolina is again counting on the biotech center to attract the next generation of researchers, companies and discoveries.  Legislators have more than doubled state funding for the biotech center ... North Carolina's response has been not only to spend more but also to promote diversification beyond drug development, which has long been the strength of the state's biotech industry. It is throwing money into biofuels, natural remedies, nanotechnology and medical devices. [Sabine Vollmer, Raleigh News&Observer, Feb 20] Thirty years ago I-95 was lined with billboards for discount textiles (towels and bed linens); now not a one. It's now about bedrooms for Northeast to Florida drivers.

The North Carolina government's direct investment in the private sector has its critics, as does SBIR for the same reason -  unpromising payback. The N.C. Biotechnology Center has had mixed results picking winners since its inception in 1984.  Companies that received $16 million in grants and loans were able to attract $1.5 billion in follow-up funding, said John Pearce, the biotech center's controller. But a $10 million investment in a biotech venture capital fund fell short of its financial-return goal.  The fund generated $1.3 million, most of it cash, but by June 30, the fund's assets had a fair market value of $764,125, according to the biotech center's last annual report. [Sabine Vollmer, Raleigh News&Observer, Feb 20]  What can government do better than the private sector to attract economic actors? Good schools, clean environment, modest taxes, catching thieves.

Your Gift. if we are going to insist on burdening our children and grandchildren with more debt, the least we could do is build or repair some roads, or bridges, or help end our dependency on foreign oil by building more refineries or by slapping solar panels on every flat roof in America-- something that will help the next generation. Anyone receiving this check should know what it is-- a welfare check drawn on our children's checking account.  [A Red Mind in a Blue State blog] When thinking is shallow, so are the results.

We'll diet tomorrow.  a twelve-hundred-dollar windfall, and it comes with a message Americans always like to hear: we can spend our way to prosperity.  But, lest we forget In 1932, with America suffering through the Great Depression, Franklin Roosevelt, the Democratic candidate for President, attacked President Herbert Hoover for spending too much trying to fight the downturn. Hoover, he charged, was recklessly running up the deficit and driving the country toward “the poorhouse.” The Democratic platform that year called for “an immediate and drastic” cut in government spending and a balanced budget. [James Surowiecki, The New Yorker, Feb 25]  Enter the political magic of JM Keynes that lets politicians spend whenever and however they like while deferring any reckoning to the undefined future.  Even Bush advocates this redistributive spending, although he offers the upper economic classses a stimulus in the form of continued lower tax rates. Watch for the latest forecast of a balanced budget in the future, always the future

NSF says that its FY 2009 SBIR will fund only four proposals from the two submission dates in June and December 2008. That's tantamount to shutting down the program. No, appropriation rules prohibit sending NSF money to DOD for the Iraq adventure. Not to worry much, the small business politics will somehow fill at least part of the hole when the vested interests get going, especially in an election year.

Peddlers With Journal Articles. The government proposed guidelines for how pharmaceutical companies can use medical journal articles to market drugs for unapproved uses. ...  Off-label prescriptions account for an estimated 21% of overall drug use  [AP, Feb 15]

This will be an old-fashioned debate about the role of business in America, whether it will be a federal cash cow and punching bag, or its tax rates lowered so it can compete with the rest of the globe. This will be an old-fashioned debate about trade, which will, with any luck, finally explore the vagaries of the growing "fair trade" movement. This will be an old-fashioned debate about the minimum wage, and its ability to kill jobs. [Kimberly Strassel, Wall Street Journal, Feb 15] It will feature the question: how much government are we willing to pay for? Unfortunately, the candidates for both president and Congress are unlikely to face the facts of what government can sensibly do, how much it costs, and where's the money to come from. It's likely to be the usual campaign of half-truths.

A Little Money. Governor kicked off a $12M grant program intended to help spark life science research in the state at an event today at Massachusetts General Hospital.The grants, from $100,000 to $250,000, are designed to increase industry-sponsored research, attract and keep nationally known faculty at Massachusetts’ colleges, and help fund the research of new investigators working on life sciences. [Boston Globe, Feb 12]

LARTA trumpets its help to the USDA's Commercialization Assistance Program to turn agriculture techies into agribusiness.  a two-day January workshop brought 24 SBIR Phase II Grant recipients for "intensive training" in SWOT analysis, Intellectual Property Management, Market Readiness, Venture Capital financing, Business Planning, and Marketing. The government deludes itself that it can fund SBIR on technical merit and then convert the winners into market-driven businesses, or blame the lack of economic success on the businesses. The VC world knows better. There is a smarter way: fund companies with good technology who also show demonstrable signs of market intelligence, like third parties willing to co-invest at least during the later stages of Phase II. It's hard enough to turn chemists into chemical engineers; it's even harder to turn chemists into chemical entrepreneurs. And as long as their chemistry smarts drive the funding selections, nothing will change. There even once existed an SBIR program with that smart approach - SDIO/BMDO throughout the 1990s.  No, don't bother asking MDA, because it probably burned all the records and published papers in a great bonfire as heretical.

Why is government unable to reap the same benefits as business, which uses technology to lower costs, please customers and raise profits? The three main reasons are lack of competitive pressure, a tendency to reinvent the wheel and a focus on technology rather than organisation. ...Failure in bureaucracy means not bankruptcy but writing self-justifying memos   [The Economist, Feb 14]  I wonder why so many companies chosen by the government to do technology innovation don't succeed in the competitive market, except for getting more government work. Wherein, do you think, lies the problem?

Vote Buying. [the candidate] would spend $210 billion to create jobs in construction and environmental industries, to win over economically struggling voters. Even if such spending would merit the pile-on borrowing, the candidate should take a refresher course in the Constitution about how government spending is set.  Oh never mind, political promises needn't meet any sanity test. Maybe one of the handout candidates will pretend that SBIR is passing out extra money also to a needy class.

Dear Uncle, please rescue us from our naked rapacity. The banking industry, struggling to contain the fallout from the mortgage debacle, is urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government. [Wall Street Journal, Feb 14]  Moral hazard never dies. Help the farmers too, although they have a different problem -contracts for federal handouts that restrict their profiting from the world grain price bonanza. the National Chicken Council and the American Meat Institute, asked the newly sworn-in secretary, Ed Schafer, to release farmers from long-term contracts that idle land to preserve wildlife habitats under an effort called the Conservation Reserve Program. After all, what's a government for if not to redistribute wealth from the taxpayer, present and future, to the vested interests?

Do Something, Even If It's Wrong (Army saying). Figuratively speaking, Alexander Hamilton made 10 times more mistakes than the other key founders, but he got 100 times more done. Wrote Washington's speeches, invented the USG finance system, and was the best New York lawyer.

colonized by purchase. Foreign buyers, such as sovereign wealth funds from countries like Kuwait and Singapore, will continue to make headlines by grabbing major U.S. assets this year, and the trend is much broader than investments in Wall Street firms that need a capital infusion. ... We'd been running a trade deficit since the 1970s, but it took off in the late 1990s and has been galloping ever since. All those dollars we send into the world come back to us - some as purchases of our goods and services, and the rest, equal to the trade deficit, as investments.   [Geoff Colvin, Fortune, Feb 18]  "investments" sounds so mundane and comforting, even though they are in fact buying ownership in American institutions, the long term effect of which is unknown. In the extreme, As Warren Buffett put it in a prophetic Fortune article more than four years ago, a country that goes too far down this road can be "colonized by purchase rather than conquest."   Could the government help, other than by restraining its urge to start expensive wars to fix problems?  Over the last two centuries we have had three things we could sell abroad: minerals (gold, copper, iron, oil, etc) most of which are now irretrievably gone, food (almost infinitely renewable), and fruits of industrial capitalism. Government can help by fostering a competitive climate for new industrial products and services. That would include preventing monopolies, basic research too risky for ROI calculations, and small seed capital for high risk technology with high market potential. SBIR was, at least in principle, intended for this last function. Unhappily, the government agencies didn't see it that way and put most of the seed money into mediocre R&D in service companies. It's less the $2B a year, but most of it is wasted. 

It has happened for the past two years: President Bush, in a play to fiscal conservatives, draws up a budget request that sends a long list of domestic programs to the slaughter. [Elizabeth Williamson, Washington Post, Feb 13] Don't worry, the budget battle has just begun and won't end before the election.

We're Winning: Send Money and Soldiers.  There is an overarching reason American commanders in Iraq want a pause in American troop reductions this summer: The United States has learned through painful experience that security can rapidly deteriorate if it overestimates the ability of Iraq’s forces to keep the peace. [Michael Gordon, New York Times, Feb 13] Money and soldiers from where? Can't afford either: the money goes to an economic stimulus handout and the citizen soldiers aren't very willing.

Why Bother? SBIR Insider (Rick Shindell) bemoans a lack of Congressional enthusiasm for re-authorizing SBIR. The federal agencies don't want it, as most have done their best to capture it for their own purposes and ignore the goals of national economic pay-off. As a result, most of the money has gone to companies that merely do whatever the government will pay for. From that comes the almost complete lack of any compelling reason for Congress to make any effort to keep it alive. Sure, it hands jobs to small companies, but it does so by taking the same number of jobs away from other companies that would do the needed federal work. Meanwhile, the SBIR advocates actively oppose any honest economic evaluation that would expose the meager return to the federal treasury or to the nation's economic activity.

Science Debate 2008 wants to put scientific issues front and center in the Presidential race by hosting a debate among candidates.  When most of the Republican candidates for President proclaimed that they did not believe in evolution during a debate last year, ... [John Carey, Business Week, Feb 8]  If people elect a president who doesn't believe in evolution, they deserve whatever bonehead administration policy that emerges from reliance on religion. Although it might be even better than the Bush administration attitude about scientific facts that would cost business money. Fortunately, the courts are at last getting the cases where politics over-ruled science. At least there is little economic impact from half the country's denying evolution.

"People always argue well you ought to fund this, you ought to fund that. That's great, but the pie is only as big as it is and no one ever comes up with this slice they want to give back in return for this," [DHS SEC] Chertoff said.

Inconsistency Breed Suspicion. SECDEF Gates said that many Europeans were confused about NATO’s security mission in Afghanistan, and that they did not support the alliance effort because they opposed the American-led invasion of Iraq.  “I worry that for many Europeans the missions in Iraq and Afghanistan are confused,” Mr. Gates said [New York Times, Feb 9] If you want people to believe your motives and intents, make all your actions consistent with what you claim as your motives. When we invaded Afghanistan, the Euros saw that we had a serious strategic basis. When we ignored their attitudes and now find our Army burnt out by Iraq, they don't see any compelling reason to bail us out in Afghanistan.  A classified Pentagon assessment concludes that long battlefield tours in Iraq and Afghanistan, along with persistent terrorist activity and other threats, have prevented the U.S. military from improving its ability to respond to any new crisis, [AP, Feb 9] Surprise? How do we avoid another such trap? Elect an adult president with some experience scars who had to appeal to the center of the electorate to get there.  Don't be distracted by atmospherics like "hope" and ''change."

not exactly a distinction that he had in mind, but seven years into his presidency, George W. Bush is in line to be the first president since World War II to preside over an economy in which federal government employment rose more rapidly than employment in the private sector.  [Floyd Norris, New York Times, Feb 9]  It is easy for a Republican to advocate a smaller government, but is quite another matter to deliver the more services that the people demand through their Congresscritters with less federal work force. Even a handout as apparently simple as SBIR takes a lot of people to manage. And if you want those federals to be smart about your ideas, you will support high quality federal workers - which means well compensated. No, there never was a free lunch.  Bush's economic problem is that his trickle-down tax breaks for the upper brackets isn't producing the economic miracle he implied for his "ownership society."  Which shouldn't surprise because politically motivated public policy to pay off interest groups almost never delivers on its promises.

Only the other guys do earmarks. . The White House defines “earmarks” in a way that applies only to projects designated by Congress, not to those requested by the administration....In the 2004 campaign, administration officials raced around the country handing out money for federal programs, including some that Mr. Bush had tried to cut or eliminate. ...But in his new budget, Mr. Bush has requested money for thousands of similar projects [Robert Pear, New York Times, Feb 10] 

Venezuela's top oil official accused Exxon Mobil of "judicial terrorism". That must mean that the other guy sued you and won a  judgment in a fair court.

Rooster Claims Sunrise. Networked Nation: Broadband in America 2007, a new report from the U.S. Department of Commerce's National Telecommunication and Information Administration (NTIA), states this initiative has "to a very great degree" accomplished [a nationwide initiative to increase the availability of affordable, high-speed Internet access]. External groups tracking broadband policy and use disagree with that conclusion. ... A new report from the Information Technology and Innovation Foundation (ITIF) entitled Framing a National Broadband Policy, however, casts some doubt on NTIA's assertions and contends that the U.S. will require a concerted national effort to keep pace with broadband deployment around the world. Recent ranking from the Organization for Economic Cooperation and Development (OECD) put the U.S. at 15th among the 30 OECD nations in broadband subscribers per capita. [SSTI, Feb 6]

Never Dead, Never Adopted. A new Navy electric railgun could eventually send a 40-pound slug 200 miles in six minutes--10 times the range of the navy's primary surface support gun, the MK 45--and it could be used to support Marine troops engaged in land-based operations. [MIT Tech Review, Feb 6] The electric dream is still alive.

Farming the Government. The generous subsidies paid by electricity users to fund a drive towards renewable energy have boosted the profits of wind farm owners. But they have not produced many more turbines. Now utilities are snapping up the farms to make fast returns. ...  The main obstacle to new turbines, and the reason why wind seems excessively profitable, is the the difficulty in winning planning consent for new projects. ... said one farmer, "Wind is my best crop."  [Financial Times, Feb 4] When government offers a subsidy, a class of opportunists will arise to farm it. If the subsidy is sloppily drawn, government will pay money and get nothing for it other than temporary jobs while the money lasts. Just look at the results from billions in SBIR. Other than the medicine field, how many companies have turned a small subsidy into seed corn that produced lots of wealth? Don't ask!

Physicists Hope Again. Research in the physical sciences would receive a hefty boost in Bush's budget, just like before. Until the fiscal reality sets in that high energy physics is just not a high national priority, even as politicians stroke the scientists until the money voting time. We have more wonderful program ideas than we are willing to tax ourselves to pay for.

Tax breaks included in a plan to spur the economy would benefit business but may fall short of lawmakers' expectations.... "Broadly, I'm sure this plan will provide a little relief," said Eric Hobbs, president of Technology Associates, which provides tech support to small businesses. "But are we going to run out and make investments in capital equipment? No." [Norton & Cox, Raleigh News&Observer, Feb 6] Nice theory, but beware self-serving theories when there's money on the table.

Sensible voters should look beyond the cheery or dreary economy of the moment. They should recognize that if presidents could control the business cycle, recessions would never occur, there would always be "full employment" and inflation would remain forever tame. ... But Carville is probably right. For many, it will be the economy, and it will be stupid. [Robert Samuelson, Washington Post, Feb 6]

Upward (Debt) and Outward (Bush). The record $3.1 trillion budget (plus add-on Iraq cost) proposed by President Bush would produce eyepopping federal deficits, despite his attempts to impose politically wrenching curbs on Medicare and eliminate scores of popular domestic programs. The Pentagon would receive a $36 billion, 8% boost, [would be the largest military budget -- adjusted for inflation -- since World War II] even as programs aimed at the poor would be cut back or eliminated. Half of domestic Cabinet departments would see their budgets cut outright. [AP, Feb 4] Although Democrats declare such a budget DOA, they need money for their constituencies too. The likely compromise is a rationalization that avoids budget gridlock in an election year and passes the pain on to the future. Aren't we lucky to elect such clear thinkers?

prostoalex writes "The bionic arm project sponsored by DARPA is nearing completion, and might undergo clinical trials. 'The arm has motor control fine enough for test subjects to pluck chocolate-covered coffee beans one by one, pick up a power drill, unlock a door, and shake a hand. Six preconfigured grip settings make this possible, with names like chuck grip, key grip, and power grip. The different grips are shortcuts for the main operations humans perform daily.'"  [, Feb 2]

Speak Cautiously Abroad. mrogers writes "A journalism student in Afghanistan has been sentenced to death by a Sharia court for downloading and sharing a report criticizing the treatment of women in some Islamic countries. The student was accused of blasphemy and tried without representation. According to Reporters Without Borders, sixty people are currently in jail worldwide for criticizing governments online, fifty of them in China, but this may be the first time someone has been sentenced to death for using the internet. Internet censorship is on the rise worldwide, according to The OpenNet Initiative." [, Feb 2]  We revel in our nattering about our politicians and government, but don't try it abroad. Assume every word is monitored and illegal where criticism is hated.

Few Big Contributing Winners, Many Voting Losers.  something momentous is happening inside the church of free trade: Doubts are creeping in. ... Economists are noting that their ideas can't explain the disturbing stagnation in income that much of the middle class is experiencing. They also fear a protectionist backlash unless more is done to help those who are losing out. [Jane Sasseen, Business, Jan 31] The minute the prosperity sees a cloud over the job market, protection comes to the political mind. Just like the trickle-down tax cuts, concern is rising that the gains from free trade may increasingly be going to a small group at the top. Look also for the losers to cry for government help.

Something Red for Everyone.  Bush will present a budget that would slow the growth of Medicare and cut or eliminate an array of domestic programs but still anticipates a flood of new red ink that will rival the record deficits of his first term, administration officials said. [Washington Post, Feb 3] In an election year, the voters don't want to hear about financial responsibility. But don't blame the politicians who are just doing our bidding. And if war had to be paid for in the present, we would have a lot less of it. A temporarily dowplayed item - war: The cost of U.S. military operations in Iraq is rising rapidly, and could reignite the national debate about the war  [Wall Street Journal, Feb 4]

Conservative Legacy. Bush took office with budget surpluses projected well into the future. But it's almost certain that when he exits, he'll leave behind deficits and debt that will sharply constrain his successor. [Wall Street Journal, Feb 1] How he did it: he cut the taxes for the richer and made an expensive elective war. Can we next time elect someone who knows how to govern in the national interest?  A true conservative: not "spend today on borrowed money". Unhappily, the political term "conservative" has come to mean something entirely different from a conservative governing philosophy.

The Energy Department canceled a futuristic, virtually emissions-free coal plant scheduled to be built in Illinois, saying it preferred to spend the money on a handful of projects around the country that would demonstrate the capture and burial of carbon dioxide from commercial power plants. [AP, Jan 31]

Bush urged fast action on free-trade deals and said he is open to overhauling aid for workers who lose their jobs as a result of foreign competition [Wall Street Journal, Jan 31] A nice sounding political that will not work in practice because it is impossible to allocate a specific single cause to job changes. Such ideas are promulgated to get votes, not to actually fix a problem.

DOD Contractors Take Note. The Pentagon has declared war on possible abuses in its multibillion-dollar program for feeding American military personnel around the world. [Glenn Simpson, Wall Street Journal, Jan 30] The issue is whether a contractor has to share a volume discount from it supplier with the government. In principle, a fully competitive procurement would take care of the issue by lowering the lowest bid price. But if you are a government contractor, watch out for rules whereby you cannot excessively profit.

Ornaments are collecting on the stimulus bill tree as everyone is for a must-pass handout bill. For example, businesses with losses want more tax relief than already provided. Get your bid in through your favorite lobby shop before the window closes on the prancing egos in the Senate. senators have complained they weren't involved in discussions, and many are pitching their own ideas. A North Carolina senator wants a ten-day sales tax holiday, even though there is no federal sales tax.   [Raleigh News&Observer, Jan 29] 

More than 50 angel investors at the Milwaukee Yacht Club heard [the secretary of the Wisconsin Department of Financial Institutions]  promote a package of tax breaks for investments they were preparing to make in start-up enterprises. [Milwaukee Journal-Sentinel, Jan 28] Tax breaks are the way the government hands out money before it ever appears on the books. So, it's not officially spending even if the economic activity would have happened anyway.

Expect No Thaw.  [Russian] Students who said they planned to be diplomats were significantly less likely than other international-relations students to support free speech. While a majority of them supported democracy in principle, 37% considered some form of the Soviet system of government as superior to today's system. [Foreign Policy, Jan 08] Before doing business with Russians, remember that they do not have rule of law.

The Bidding's Not Over Yet, Senate Democrats will move to add to a $150 billion economic stimulus package rebates for senior citizens living off Social Security and an extension of unemployment benefits, setting up a clash with the White House

More War, Less Tax, says the monotonic Bush in his last SOU appeal for doing things his way. No formula offered for filling the fiscal hole created by such an approach. I suppose that since he always had his pocketbook filled for him, he wouldn't think first of self-responsibility.

LAVISH subsidies and high electricity prices have turned Britain’s onshore wind farms into an extraordinary moneyspinner, with a single turbine capable of generating £500,000 of pure profit per year ... a typical 2 megawatt (2MW) turbine can now generate power worth £200,000 on the wholesale markets - plus another £300,000 of subsidy from taxpayers. Since such turbines cost around £2m to build and last for 20 or more years, it means they can pay for themselves in just 4-5 years and then produce nothing but profit. [Jonathan Leake, The Sunday Times (London), Jan 27]  Get your subsidy, too. Apply to SBIR and then get your Congresscritter to insert an earmark for your unmissable project. They love to pay off the voters and contributors. Oh yes, you might have to do something for the Congresscritter in return.

We Got Ours; Let's Stop Now. House Republicans called on Friday for “an immediate moratorium” on earmarking money for pet projects.

Do they know what they are doing?  Washington's speed in hashing out the stimulus package was driven by the drumbeat of bad economic news and fears of a backlash among voters. [Wall Street Journal, Jan 27] These are the people who criticize the American taxpayer for financing a lifestyle and $4 lattes with ever growing credit card debt.

Kansas Grappling Also. Kansas bioscience leaders took steps toward stimulating collaboration between companies and university researchers pursuing new drug technology, biomaterials and plant genetics. The Kansas Bioscience Authority signed off on three planning grants totaling $580,000 for the potential creation of new bioscience centers of innovation. That initiative, investments in companies such as XenoTech (no SBIR) and Pinnacle Technology (Lawrence KS; $2M+ SBIR) and providing up to $7M toward the recruitment of two renowned scientists are the latest examples of how Kansas is attempting to bolster its bioscience economy, said Sandra Lawrence, chairwoman of the authority’s board. [Jason Gertzen, Kansas City Star, Jan 17]

Incumbent Stimulus Bill. Democrats and plutocrats agreed to spend money they haven't got to give you money to spend on something, anything. Quick agreement that both parties can get away with directly paying off their constituencies. If you save any of it, you will fail the stimulus goal. If you vote the givers back into office, they may give you some more.  The next question is whether the paymaster can pass out the money fast enough to achieve the stimulus goal before it turns to inflation. Companies with government contracts know how long it can take to pass the money through new hoops. First beneficiary: Oil futures jumped more than $2 a barrel [Houston Chronicle, Jan 25]

Northeast Ohio The Lorain County Community College (LCCC) Foundation recently announced that it would make its first three grants to support Northeast Ohio start-ups through its new Innovation Fund. These grants provide pre-seed and technology validation funding for businesses in the region that agree to provide internships for LCCC students and to participate in on-campus lectures on entrepreneurship. The program offers grants of up to $100,000 and a one-to-one match with outside investment. Businesses must agree to contribute back to the fund if they achieve certain agreed-upon milestones.  The fund is one of four investment organizations seeded by Cleveland’s NorTech through its TechLift program to create new capital opportunities for Northeast Ohio entrepreneurs. Last year, NorTech reported that the region would need $375 million in seed- and early-stage investments over the next five years to support companies graduating from local incubators and other support programs. [SSTI, Jan 24]

Reality Awakening. an electorate that is deeply unsettled about the United States’ place in the world and its ability to control its own destiny. Since World War II, the assumption of American hegemony has never been much in doubt. ... a jarring end to the Pax Americana, just as it seemed that victory in the cold war might usher in prolonged prosperity and relative peace (save the occasional mop-up operation). Its confluence with an era of unparalleled technological innovation had only heightened the nation’s sense of post-millennial possibility. [Washington Post, Jan 24] Although politicians wallow in fear at election time, the electorate may start to see through the blather to a search for practical approaches to the real world out there.

"We need a president who will run the government and manage the economy," she said. "The American people don't need a president to talk about our problems, but to solve them," said one Presidential hopeful. [AP, Jan 24] If the people elect any president to solve the problems, they are kidding themselves. The only effective solvers can be seen in the mirror. Unfortunately, the electees in Washington don't lead people to solutions, they follow the people, telling them what they want to hear and begging for piles of money to tell them again and again what they want to hear.  

New York State stiffed the empty Adirondack Mountain counties by putting its Restore NY incubator money in the populated places where high tech infrastructure already exists. [Larry Rulison, Albany Times-Union, Jan 23]

Conservatism Abandoned. The recent financial turmoil has many causes, but they are tied to a basic fear that some of the economic successes of the last generation may yet turn out to be a mirage. ... The great moderation now seems to have depended — in part — on a huge speculative bubble, first in stocks and then real estate, that hid the economy’s rough edges. Everyone from first-time home buyers to Wall Street chief executives made bets they did not fully understand, and then spent money as if those bets couldn’t go bad  [David Leonhardt, New York Times, Jan 23]  ... it is becoming clear that capitalism's most dangerous enemies are capitalists. No one can have watched the "subprime mortgage" debacle without noticing the absurd contrast between the magnitude of the failure and the lavish rewards heaped on those who presided over it.  [Robert Samuelson, Washington Post, Jan 23] Unhappily, the name of conservatism was hijacked by social radicals who want to change the Constitution and run giant deficits while allowing the capitalists to do whatever they want without regard to the long term consequences. They don't want to tell the public that we are living beyond our means in the grip of instant gratification. Think Starbucks's price for a cuppa.  Now we will add another $200B in stimulus to $200B in Iraq war costs to the national debt (atop a just plain $215B CBO projected deficit) to be paid eventually BY WHOM? If the government simply prints the money, we'll pay for it in inflation. Just like the Confederacy 1861-1865. 

Caveat Emptor. The U.S. Supreme Court gave us more evidence earlier this week of what people in the stock market already knew: This is no time to be an investor. People who buy shares in companies that defraud them can't sue those who may have helped in an illegal deed, the court said. Money lost because Smith Co. and Jones Co. lent a hand while Acme Co. cooked the books? The court says tough luck unless Smith and Jones somehow led you to buy Acme's stock. This judicial gift came via the Jan. 15 decision in Stoneridge Investment Partners LLC versus Scientific-Atlanta Inc. and Motorola Inc. Stoneridge, a Malvern, Pennsylvania, money manager, alleged that the two cable-television box-makers helped pull off an accounting fraud that let Charter Communications Inc. show more revenue than it really had. The court ruled on whether Stoneridge could sue so-called abettors, not on whether the allegations were true. (Source: Bloomberg) Full Story  [Investor Guide Weekly]

It was supposed to be a year bringing sharp increases in federal funding for physical-sciences research. Instead, the final 2008 appropriations bill brought cuts that will cause hundreds of researchers to lose their jobs, and it's putting the future of two important international projects in jeopardy, including one to make a large-scale fusion demonstration facility. [Kevin Bullis, MIT Tech Review, Jan 18] Somebody had to get cut, notwithstanding all the happy talk about funding more science, and the Bush administration foreign attitude would rather spend $200B a year for invasion than share expenses of a few million.

If Napoleon's armies marched on their stomachs, American ones march on bandwidth. Much of this electronic data is transmitted by satellites, most of them unprotected commercial systems. The revolution in military technology is, at heart, a revolution in the use of space.  [The Economist, Jan 19]   DOD’s new long-term road map for development of unmanned systems is the first to include unmanned aircraft, vehicle and marine systems in a single, comprehensive plan. The combined global market for such systems is estimated to surpass $19 billion by 2020. [Washington Technology, Jan 14]

In politics, appeals to fear usually sell better than those to reason. But the hypocrisy of erecting barriers to foreign investment while demanding open access to developing markets is self-evident. [The Economist, Jan 19]

A Stimulating Circus. One breath after touting how strong the economy was, Bush called for a stimulus package of about $145 billion to help boost business and consumer spending, ... Clinton added a $40 billion tax rebate to her $70 billion economic proposal. [Wall Street Journal, Jan 18]  But a cooler head (no longer in the election game) lists  five principal reasons why a politically motivated economic stimulus bill should not be enacted in the middle of the presidential primary season. ... Good public policy cannot be the result of a focus on micromanaging consumer demand to meet the objectives of the congressional and White House political calendar.    [Bill Thomas and Alex Brill, Wall Street Journal, Jan 18] Both represent AEI and Thomas was the House Republican tax writing chair in the GOP's heyday of early Bush.  A candidate's voice: McCain said his party lost control of federal spending and expressed reservations about Bush's economic stimulus plan [AP, Jan 18] Once upon a once, Republicans stood for financial responsibility before they got control of the Congress in 1994.  BTW: I have not heard a single political figure use the classic economic term  "marginal propensity to consume" to describe the most efficient place to pour money if spending it is their major objective. Giving tax breaks to the poor who don't pay taxes (and surely don't vote Republican), for example, has no effect on their spending. Instead the pump priming will probably once again go to the vested interests, a good fraction of which will simply save the money rather than spend it. The latest Romney plan doubles the give-away with it all going to the Republican-leaning interests. Some conservative!  Bruce Bartlett, an old hand at political economics, notes that Treasury Secretary Paul O'Neill cautioned against the rebate. "I was here when we tried that in 1975, and it just didn't work," .. In short, [says Bartlett] there is virtually no empirical evidence that tax rebates are an effective response to economic slowdowns. ... anyone who thinks it will prevent a recession is dreaming. It's an insult to Keynes ... its only real effect is to make politicians feel good about themselves and buy re-election with the public purse. [Wall Street Journal, Jan 19] Nevertheless, business lobbyists are pitching their favorite tax breaks ... The National Federation of Independent Business, which boasts 350,000 members, most with 10 or fewer employees, is circulating a two-page list of tax-break requests ... The U.S. Chamber of Commerce is floating the idea of a permanent reduction in the 35% corporate-tax rate. The National Association of Manufacturers is pressing for a reduction of the corporate capital-gains tax rate to 15%. Surely, the nation needs a mere half-billion more SBIR. But politics trumps economics. The package will pass. So will the downturn, allowing the politicians to claim credit, deserved or not. [Irwin Stelzer, The Sunday Times, Jan 20]

DARPA's 10% cut for 2008 (says AAAS, Jan 4) is bad news for SBIR Phase 1 performers who hope for Phase 2. The structure of SBIR magnifies budgets cuts into an unusually high cut rate for new Phase 2s unless the agency pours more money than the required minimum into SBIR. Don't bet on any agency doing when the budget gets cut.

SV Smart Pool to Grow. A tighter federal budget and a move to streamline the country's nuclear weapons complex is expected to lead to hundreds of layoffs at Lawrence Livermore National Laboratory this year. [SF Chronicle, Jan 18] Many of those people like California's weather and opportunity and will stay around to start tech companies and fill in tech jobs in existing firms. Places in the "flyover" states have a hard time competing for such people and competing with their businesses.

Only With Subsidy. Congress' failure to include a renewable energy tax credit in the much-touted energy bill passed late last year could chill wind-farm development in the Columbia River Gorge and elsewhere, industry and utility leaders say.  For several years, wind developers have taken advantage of a tax credit based on the amount of energy a project generates. That incentive is to expire at the end of this year.  [GK Hill, The Oregonian, Jan 17]  Where's the conservative virtue of unintrusive government?

"We as a government are not in the business of picking winners and losers," said [Mass] state Sen. Mark Montigny, chairman of the bonding committee ... over a proposed $500M bond for capital projects intended to grow the state's life sciences sector, voicing concerns about favoring the industry over others and awarding funds to benefit individual companies. [Mass High Tech, Jan 17] Principled libertarian or just holding out for a piece of the pie?  Well, if the government is going to hand money to private companies, somebody has to pick the winners.

Rogue Competition. For now, this disturbing challenge from the Iraq war has no answer: in a globalized world of instant communications and easy commerce, how do we prevent ever-increasing enemies from acquiring sophisticated weapons and tactical manuals to nullify ours quickly and cheaply? ... the Iraq war also shows us why and how, with parasitic technologies, without care for international law, and with little regard for human life, our rivals are making things off the battlefield far more quickly and cheaply than we can respond to them. [VD Hanson, The American, J/F 08] Since no one yet has the counter to the suicide bomber, we should look to one place that has been fighting unconventional war for six decades - Israel.

Everybody can see the irony in the proudest and loudest proponents of American-style private enterprise limping, cap in hand, around the capitals of Asia and Arabia, begging for some government assistance, after the private money managers on Wall Street have kicked them in the teeth. ... As a result, Asian and energy-producing sovereign wealth funds will soon become the biggest shareholders in most of the leading American and European financial institutions. ... marking a decisive shift in the centre of gravity of the world economy towards Asia after five centuries of financial, economic and therefore political dominance by Europe and America. [Anatole Kaletsky, The Times (London), Jan 17]  The deadly combo of private hubris and a license to steal with government indifference, the Masters of the Universe exploited the market-knows-best government. Back to the restraint-free Gilded Age?

No Interest Like a Vested Interest. Putting aside concerns about structural problems in old F-15s, Missouri's senior senator Wednesday urged the Air Force to buy new versions of the St. Louis-built fighter jet instead of the more-expensive F-22.  It's been a common plea for Sen. Christopher "Kit" Bond for years. [Tim Logan, St Louis Post Dispatch, Jan 17]

Bandwagon Rolling. President Bush (Mr Tax Cut) and Federal Reserve Chairman Ben Bernanke embraced calls for an economic stimulus package to avert recession. When you get a cold, do you eat chicken soup, drink fluids, and rest. Or do you reach for a symptom palliative that lets you pretend you're OK and can ignore the measures that will let the cold cure itself? Aren't chemistry and its advertisers as great as our politicians who cast us deeper in debt to "cure" our colds"?

Americans don't really know what they want. Sure, they are desperate for “change”: with the economy reeling, politics gridlocked, young people dying in Iraq and the Bush administration a global byword for callous incompetence, huge numbers of Americans have long believed their country is on the wrong track. But what sort of change? And who can deliver it? [The Economist, Jan 12]

His conclusion is that: “This is still a Republic worth keeping, with a polity capable of doing the job.” Despite the waste and folly of its bureaucracy, despite the slander and polarisation of its election campaigns, America's system of government is extraordinarily robust and flexible. Though everyone grumbles that politicians are out of touch, both Republicans and Democrats in fact respond swiftly to shifts in the national mood.  [The Economist reviewing Morton Keller's political history of America, Jan 12]

Frightening the Natives. In a self-fulfilling prophecy, Federal Reserve Chairman Ben Bernanke endorsed government efforts to stimulate the economy Thursday, as congressional leaders and the Bush administration moved closer to agreement on a plan. [Washington Post, Jan 18] The stock market tanked.

Lollipop Economics. It's an election year. Voters feel anxious about a weakening economy. Send them economic lollipops (say, a $500 tax rebate for most families). ...Show them you're concerned. ...  Folks, we have a $14 trillion economy. A one-time stimulus (rebates aren't permanent tax cuts, and grants to states would probably be temporary) of $75 billion or $100 billion is too small to do much. If the economy is in serious trouble, something much larger is needed. But if the outlook is not so dire, then a modest stimulus plan is mostly political symbolism. The truth is that there's a touch of hysteria to much current economic commentary that is, as yet, unjustified by what's actually happened to the economy.  ... The great danger of a stimulus package is that once proposed in a modest lollipop form, it would quickly be expanded to include many other tax breaks and spending increases, the fiscal equivalents of candy bars and peppermint sticks. [Robert Samuelson, Washington Post, Jan 16] As long as the people refuse to learn economics, their politicians will thrive on lollipop policies.  So, is SBIR a lollipop program which also expands into peppermint sticks?  In a hint that lollipops are on the way, House Majority Leader Hoyer says "Bipartisanship is breaking out all over." Stand by for more PAYGO-avoiding deficit.

But NIH grants are not focused on younger researchers. Instead, more than 90% of the money goes to researchers who have received at least one NIH grant.  The average age of those getting money for the first time is 42. ... As a respected doctor with a bright future at Duke University, David Kirsch has some bold ideas about cancer research. But it takes more than a good idea for a 37-year-old researcher to win a big government grant. In this case, the hunt for money led to a California multimillionaire with his own ideas about paying for cancer research. Kirsch was one of three people named Tuesday to each receive a $450,000 cancer research grant from the Damon Runyon-Rachleff Innovation Award Program. [Tim Simmons, Raleigh News&Observer, Jan 16]

Tech Not Tamper-proof. Colorado officials are leaning toward abandoning the electronic voting terminals that have thrown the state's election system into turmoil and are instead looking at using only paper ballots for this year's elections. [Denver Post, Jan 16]  A tech innovation has to do more than just work in the lab.

Republican presidential candidate Ron Paul says a proposal to raise the federal gasoline tax is the last thing the American people need in a slumping economy. [press release, Jan 15] Well, of course, just what we want to hear -- we can have what we want, free. Elect him, unless, of course, all the others say the same thing, or you think it's just empty campaign speech insulting your intelligence.  Foolishly, Paul called on the other presidential candidates to join him in opposing this and any other tax increase proposals.  He should want them to support new taxes so he can get elected as the best panderer. Now, if you have a sensible idea for escaping our Middle-East oil dependence, write your three Congresscritters early and often. 

Another Pork Knuckle. The 2008 DOD money includes $85M to transition small business technology into military programs: $20M for Army's  Future Combat System, $40 million for Navy submarine and surface ship programs, and $25M for Joint Strike Fighter Program.  Another SBTC inspired small business set-aside with no compelling justification grounded in data. If the beneficiaries are SBIR, the military can at least get the benefit of avoiding the travails of a competitive procurement. Who loses? The programs from which the $85M was taken to get up the pool of money just like the much bigger SBIR is taken. Don't expect an honest evaluation of political handout. “Thanks to the efforts of these three members of Congress, the best defense technologies that our nation’s small companies produce will reach American soldiers in the field, saving lives and preventing injuries,” said SBTC executive director Jere Glover. But with a Congress where pork is the Meat of the Month, why be shocked that the national security budget is parceled out among interest groups while tens of thousands of service people get killed and wounded in a misunderestimated war for an abstraction? The big winner is the lobby industry that feeds the growing gentrification of NW Washington which leads to a wider choice of good restaurants for the denizens.

the Patent Reform Act of 2007 faces a bruising Senate fight this year. As it now stands, the bill would shift the balance of power in the legal quarrels between patent holders and possible infringers by significantly limiting damage awards. ... The peril of the new patent legislation as currently written, he argues, is that it would allow the nation’s dominant high technology companies to largely control the pace of innovation, leading to a situation the country has seen once before — in the American auto industry. [John Markoff, New York Times, Jan 13]

The Nuisance of Competition. sjbe sends in an old story with a poetic justice ending. Almost a year ago Chris Soghoian blogged about multiple security holes exposing visitors to a TSA site to possible identity theft. Wired and others picked up the story and the TSA took down the insecure site and fixed the problems. On Friday the US House of Representatives Committee on Oversight and Government Reform released a report (PDF; HTML summary) finding that the TSA contractor, Desyne Web Services, had received a no-bid contract for the faulty site from a former employee who was then a TSA project manager. TSA has taken no action to sanction the responsible parties for the vulnerabilities. The poetic justice is that Soghoian had been investigated for 6 months by the FBI and TSA because he pointed out a vulnerability in the US air transport system; no charges were ever filed. [, Jan 13]  New Agency, Old Problems. No matter how many laws and investigations, where contracts for money are involved, favoritism intrudes, especially when the awarding official is a political appointee.  Even when security is at stake.

Huge and complex, the American economy has in recent years been aided by a global web of finance so elaborate that no one seems capable of fully comprehending it. That makes it all but impossible to predict how much the economy can be expected to fall before it stabilizes. [Peter Goodman and Floyd Norris, New York Times, Jan 13]  No matter; it's election time and "stimulus" sounds so re-assuring to an electorate unversed in economics. But the forces menacing the economy, like the unraveling of the real estate market and high oil prices, are too entrenched to be swiftly dispatched by government largess or cheaper credit, some economists say. ... While tax rebates can encourage spending and generate jobs, Mr. Roubini said, the government cannot afford to unleash the significant amounts — $300 billion or $400 billion — that he believes would be required to ensure a substantial rebound in economic growth." Whatever they’re going to do,” he said, “it’s going to be cosmetic.”  But the politicians cannot resist the old Army motto, "Do something, even if it's wrong." What they want is bragging rights in November. In Michigan, many said they were also deeply skeptical of all the new economic promises: the sudden release of candidates’ revitalization packages, talk of retraining programs, television commercials pledging help. ... People here have heard promises before. [Monica Davey, New York Times, Jan 13]

Past President Model. Presidential hopefuls of both parties pivoted sharply to the economy, proposing new federal spending plans, help for homeowners facing foreclosures and tax cuts and making promises to preserve and create new jobs.  [John Broder, New York Times, Jan 12]  Even the Republicans want to violate Reagan's "Don't just do something, sit there."  Reagan's instinct was that the federal government is so large that its spending automatically provides a decent counter-weight to reduced private economic activity. But apparently Republicans cannot can't avoid Bill Clinton's "feeling your pain." So, which past president is the model for the candidates?

Tax Cut Religion. Thompson, who advocates a cut in corporate taxes, ... also said tax cuts enacted in recent years should be extended. Giuliani also advocated tax cuts, and his campaign purchased an advertisement that said he would send the largest tax cut in history to Congress on his first day in the White House. [Liz Sedoti, AP, Jan 11] Republican candidates and the Wall Street Journal op-ed page have no stronger remedy for any problem than cutting taxes. They don't talk about the economic consequences, mostly because the Republican voters don't want to hear it. If and when cornered on the subject, a Republican will mumble about hypothetical growth to fill in any lost revenue gap, or in extreme cases, will invoke the supply-side fantasy that lowering taxes actually  raises government revenue. 

Token Money for Token Projects. The [Illinois] Entrepreneurship in Residence Program (EIR) provides mentorship by pairing experienced entrepreneurs with young entrepreneurs to help them start new businesses. The Chicagoland Entrepreneurial Center (CEC) will administer the program through a grant totaling $860,000 awarded by the Illinois Department of Commerce and Economic Opportunity. The CEC will select qualified entrepreneurs to enroll in the EIR program who, in turn, will identify promising technologies and match them with young entrepreneurs. The goal is to help them start a business and move toward a first round of financing. Each EIR-approved business is eligible to receive up to $80,000 for prototype development, technology assessments, intellectual property protection and market assessments. [SSTI, Jan 9] The biggest incentive will be spend the state's money as far as it will go.  Accountability? Next bright idea! 

Meddling, Micro-Management, or Corruption? The DOD R&D portfolio contains $3.5 billion in R&D earmarks 2008, dramatically higher than in previous years. 12% of Army R&D.  Says AAAS. Sure, it's all good stuff, just not what the department would have funded left to its own judgment.

If Iran wants a large-scale military conflict with a U.S. that is angry, aroused and united, endangering American naval vessels in the Straits of Hormuz is the right way to get one. [Walter Russell Mead, Wall Street Journal, Jan 10]

"Democracy in the Middle East is now part of history. Nobody believes Bush any more. He has turned the Middle East into a big mess, and you can't bring democracy and change with instability," said Sateh Nour Eddine, managing editor and columnist at Lebanon's As-Safir newspaper, which is aligned with the U.S.-backed government here.  [Farnaz Fassihi, Wall Street Journal, Jan 11] The legacy of seven years of a unilateral, self-serving "US knows best" policy by a "Masters of the Universe" mindset that brought us the sub-prime mess.

supplements for diversity collaboration  ... CREST partnership supplements are designed to facilitate self-improvement.... Proposals are expected to incorporate a depth and quality of creative, coherent, and strategic actions that extend beyond commonplace approaches to normal institutional operations. Proposals may also be submitted for research on institutional integration, commensurate with the goals above.  NSF bureauspeak for a new program Centers of Research Excellence in Science and Technology (CREST) and HBCU Research Infrastructure for Science and Engineering (RISE) that shovels $150K per project of SBIR money to minorities. In a double set-aside, it seems that a present Phase II awardee has to cut a deal with a minority institution wherein the institution gets a grant and the SBIR awardee gets a handout from the SBIR money pool for playing nice with the minority.  No hint that the supplement will be subject to competition from regular SBIR companies. Although such a handout may seem consistent with one of the SBIR law's objectives, it undermines the principle that competition for SBIR funds is open to all US companies without regard to minority status. No set-asides beyond the SBIR itself.  But since SBIR is a political handout anyway, why object to a double handout?

Why, More Ships, Of Course. The Navy's oft-stated goal of a 313-ship fleet should be considered a minimum level that may have to be increased to meet obligations around the world, the Navy's top admiral said. [Boston Globe, Jan 19] And how shall we pay for them, Admiral? Why, the USA is the world's richest nation and we can have all the toys we want.

While we're buying more ships, we can buy some votes. For political reasons, a stimulus package seems almost certain despite a lack of need, lack of money, and some indicators of normal economics being OK as the National Federation of Independent Businesses. On Tuesday, it released its December survey of economic trends affecting small businesses, which found that its members still plan to add jobs and boost spending. ... "Any time you start from a hole, digging usually isn't the strategy to get out of it," said Vincent Reinhart, an economist with the [quite conservative] American Enterprise Institute. [Kevin Hall and Renee Schoof, McClatchey papers, Jan 10] It's the quadrennial Year of Suspended Responsibility.

Wisconsin's governor proposed tax credits and tax exemptions [dubbed Innovate Wisconsin] aimed at more innovation from manufacturers. With industrial research and development at about half the rate of Minnesota. [Milwaukee Journal-Sentinel, Jan 9] Tech innovation is good, but whether such tax credits probably don't do much for disruptive innovation because the companies who could benefit from such tax policy aren't interested in disruptive innovation. 

Power, Control, Recklessness. In a demonstration of reckless provocation in the search for power, the Iranian "Revolutionary Guards" taunt a US Navy force and risk an incident that could lead to war. Control of such situations is what governments are for to protect the nation against unintended wars. Letting militias pretend they are both national warriors and independent, as in East Timor, for example, violates government's responsibility to protect and represent the nation.  It's bad enough when the national command authority makes a big mistake in starting a war that blooms out of control. It is even worse when reckless militias drag the government into a war for which it is not prepared. War as an instrument of national power must be handled with great care and foresight. 

Save the Economy, Buy Votes. a one-year tax rebate of $500 might provide a sufficient shot-in-the-arm for the economy. Oh sure, put it on the national credit card to be paid by .... guess who.  For addiction advice, refer the politicians to the Drug Enforcement Agency for supply interdiction methods which will waste big money fighting addiction by criminalizing supply. Round and round the carousel of irresponsibility and delusional economics. And we're rapidly losing people whose parents passed on lessons learned as adults in the Depression. The retiring boomers are all children of prosperity with high expectations who evade the idea that living within one's income demands a sustainable standard of living. (Declaration: my father was born in 1898.)

More Free Money. Even though George Bush says the economy is great, he agrees with Larry Summers that the nation needs economic stimulus despite the Republicans' heartily objecting to stimulus when Clinton was newly presiding. Whether the money comes from Bush's new tax cuts of Summers's new spending, the result is the same - using the credit card to support the family's living beyond its income.  Which politician will advocate financial responsibility?  In an election year? As evidenced by the runaway mortgage debacle, people want to spend what they haven't yet earned and the politicians won't say no.   If you're an SBIR-eligible company, tell your Congresscritter that you want your "share" of the free money with no economic accountability.

The senior Chinese official did his best to be polite. When, at a recent conference on Europe and Asia, I asked him how the Chinese viewed Europe, he chewed thoughtfully on a canapé before replying: “Europe needs to rediscover its entrepreneurial spirit.”  [Financial Times, Jan 3]  Do you feel more economically and militarily secure in knowing that DOD's SBIR follows the safe and sane European model of R&D investment?

Do We Even Know What We Want? the good news that 84% of Americans say they are satisfied with how things are going for them personally. ... One then has to account for the darker data Gallup released two weeks earlier: Some 70% of those responding believe the nation is headed in the wrong direction. [Daniel Henninger, Wall St Journal, Jan 3] The longer we vote for a free lunch, the bigger will be the eventual reckoning.

If your company can create and validate an LED-based screw-in replacement for the standard Edison-type 60-watt incandescent light bulb, the US Congress has mandated a $10M prize for the effort. The prize is designated as one element of the Bright Tomorrow Lighting Prizes,  [Compound Semi-News, Dec 30]

More Miniaturization, Please. The military's reliance on unmanned aircraft that can watch, hunt and sometimes kill insurgents has soared to more than 500,000 hours in the air, largely in Iraq, .... the Air Force more than doubled its monthly use of drones between January and October, forcing it to take pilots out of the air and shift them to remote flying duty to meet part of the demand  [Lolita Baldour, AP, Jan 2]

Dual-Use - Profit v. Fear. Six months ago, the Bush administration quietly eased some restrictions on the export of sensitive technologies to China. The new approach was intended to help American companies increase sales of high-tech equipment to China despite tight curbs on sharing technology that might have military applications. But today the administration is facing questions from weapons experts about whether some equipment — newly authorized for export to Chinese companies deemed trustworthy by Washington — could instead end up helping China modernize its military. Equally worrisome, the weapons experts say, is the possibility that China could share the technology with Iran or Syria. [Steven Weisman, New York Times, Jan 2] Conservatives have always had a split mind between selling whatever they could and protecting security by keeping the best stuff at home.  The same split mind as immigration.

More or Less Contracting?  As the season of half-truths bores on, Clinton would cut 500,000 government contractors over 10 years; Edwards has a five-point plan to overhaul federal contracting, and Obama would require all contracts worth more than $25,000 to be competitively bid; Rudy Giuliani would cut the civil service by 20% by replacing only half of the federal employees likely to retire in the next decade; Huckabee would take the Federal Emergency Management Agency out of the Department of Homeland Security and ensure that professionals run FEMA; Romney would review all federal spending, and permit the executive branch to spend as much as 25% less than what Congress appropriates. [Stephen Barr, Washington Post, Jan 2, 08]  Do you think any of them knows what it takes to run a government rather than just pander to voters half-grasp of government?  Meanwhile, the voters still want more government than they are willing to pay for. And SBIR advocates still want a free lunch in the form of more share of government R&D contracting with no economic evaluation of any benefit. We get the government we deserve.

------------------------------------------2008 --------------
------------------------------------------2007  ----------------

So Much Money, So Little Usein Johnstown, Pa., the privately run center has received at least $671M worth of federal contracts and earmarks since [1991] to research and develop pollution-abatement technology and other systems for the Defense Department. ... They said the center had delivered nearly 500 technology products and tools to protect the environment, improve safety and cut Pentagon costs. But a months-long examination by The Washington Post, including a review of documents and interviews with Pentagon officials, found that little of the center's work has been widely used or deployed by the Defense Department. ... Murtha also helped start Concurrent Technologies, the tax-exempt charity that manages the center. .... "Something is very wrong here. Why is the government pouring hundreds of millions of dollars into a contractor whose work it isn't using?" said Danielle Brian, executive director of the Project on Government Oversight, a nonprofit watchdog group in the District that has examined defense spending over the years. [Robert O'Harrow, Washington Post, Dec 29] Sic semper res publica.

Krauss, science journalist Chris Mooney and other concerned citizens hope to do just that with Science Debate 2008, a grassroots movement that proposes a dedicated presidential debate in which the candidates discuss in detail their ideas about health and medicine, science and technology policy, and the environment. [American Scientist online]  Good luck. Politics is about power and advantage, not about good science policy, and the news from around the world shows a steady deterioration of restraints on political means as murder trumps debate.

An expanding foreign appetite for capital goods such as tractors, medical equipment and electrical machinery  means that a growing number of U.S. manufacturers are making up for slowing domestic sales by expanding them overseas, often with sophisticated products. ... exports grew 12.7% between 2005 and 2006. This year, they are on track to increase even more, [Michael Fletcher, Washington Post, Dec 26]  But these benefits of the falling dollar are being challenged by political developments that Robert Samuelson [Washington Post, Dec 26] sees as a rise in a new version of mercantilism. It's an open question whether these conflicting forces -- growing economic interdependence and rising nationalism -- can coexist uneasily or are on a collision course.

An anonymous reader writes "This year's democrat-controlled Congress largely ignored technological issues in favor of social problems, CNet notes in another 2007 retrospective. Issues important to the tech industry (such as net neutrality) received short shrift, while the political body spent a considerable amount of time decrying the evils of the Internet. 'Hot topics this time around included foreign cybersecurity threats to U.S. government systems, terrorist cells flourishing on the Web, inadvertent file sharing through peer-to-peer networks, and sexual predators ensnaring unsuspecting youth through online social sites. And for a third time, the House passed not just one, but two, different bills aimed at deterring spyware.'" [, Dec 25] Politics greases the squeaking wheel.

New Neighbors. a growing wave of foreigners who buy second homes in the U.S. for work and play and as an investment ..."At this point the English are more actively looking in Manhattan than American buyers," ....  Durham, Raleigh and Chapel Hill getting inquiries from French and Scandinavian home buyers ... In Los Angeles, demand from wealthy South Koreans for attractive condo towers and mid-level rise buildings ... Scottsdale's phlegmatic residential real estate market reportedly is getting a boost from Canadian buyers .... Miami in particular is a magnet for buyers from throughout Latin America and Europe. [Leslie Wines, AP, Dec 24] The more we buy from foreigners, the more we have to sell them something.  Globalization is a two-way street.  The most recent influx of big buyers are also grabbing pieces of the financial industry that maimed itself with uncontrolled mortgage speculation.  Along the road, while the government was playing hands-off the financial industry, it was pouring a billion a year into small tech firms that had no future except more government money when it could have been investing those billions in firms that could develop new technology that foreigners would line up to buy. The power of domestic politics that ignores world competition.

When the Atlantic seaboard colonies expressed their founding principles for a new nation, a republic, which set of values drove them:  honor, valor, nationalism, discipline, and self-sacrifice OR personal autonomy, self-expression, cultural diversity, and profound skepticism of authority of any kind?  Will Marshall sees the difference between the military and the academy as the root of the polarization in today's politics. [Blueprint, Feb 06]

A Talent Contest We're Losing, says Craig Barrett.  By proposing a simple change in immigration policy, E.U. politicians served notice that they are serious about competing with the United States and Asia to attract the world's top talent to live, work and innovate in Europe. With Congress gridlocked on immigration, it's clear that the next Silicon Valley will not be in the United States. ... H-1B visas, which are capped at 85,000 per year, are now gone in one day, with the "winners" determined by lottery. [Washington Post, Dec 23]  As long as our election campaigns cater to the least common denominator ("America for Americans"), we will foster policies of isolation - not the way to compete in the modern world.

Assume a Supply. The U.S. might send more combat troops to Afghanistan to reverse a surge in violence there, said SECDEF Gates[WSJ, Dec 22]  And where will he get the troops? From the phantom 47,000 more authorized Army strength?  After 4000 dead and 40,000 injured in Iraq by "surprise", when will the queue form to join the Army, especially the NG and Reserves? Will parents advise their youth to believe that the government 1) will keep its promises, 2) knows what it's doing? As one economist famously said in the bottom of a hole, "Assume a ladder."

Give Them Money. Secretary of Defense Robert Gates rates a Teddy [courage award] for the speed with which his rational professionalism restored morale at the Pentagon ...  in one speech, he actually called for an increase in the State Department's budget, which is the first time I've ever heard a SecDef asking for money for diplomats instead of bullets. And finally, I'd like to thank the men and women Gates leads, the members of the U.S. military, especially those I was privileged to meet in places like Baqubah, Yusufia and Baghdad this year. We are honored by your courage, your determination — your all-American informality and good humor — in the ultimate bloody, dust-blasted arena. Please be safe over there, and in Afghanistan, too. [Joe Klein, Time, Dec 31]  The lowest common denominator people and the neo-con hawks typically denigrate State as a roadblock to half-thought out raw power schemes as State represents the USA professionally in all parts of the globe.

The Best Congress Money Can Buy.  "I'd say Santa Claus visited everybody in the business community this year, or at least nobody got a lump of coal," said Frederick H. Graefe, a lobbyist with health-care clients. [Sarah Lueck, Wall Street Journal, Dec 22]  Democratic ideas of fair distribution of the burden of government clashed with Republicans who had just enough votes to assure gridlock that kept Republican ideas in place for at least another year.

Eye of the Beholder.  Republican presidential hopeful Ron Paul defended his efforts in Congress to bring home money to his Texas district, despite his long-held aversion to big government and congressional votes to reign in federal spending. "I've never voted for an earmark in my life," ... "I put them in because I represent people who are asking for some of their money back," said Paul, who likened it to taking a tax credit. "I'm against the tax system, but I take all my tax credits. I want to get their money back for the people."  [Jennifer Kerr, AP, Dec 23]

In a blow to the scientific journal industry, a new law compels scientists getting grant money from the NIH to submit to the NIH a final copy of their research papers when those papers are accepted for publication in a journal. An NIH database would then post those papers, free to the public, within 12 months after publication. [Rick Weiss, Washington Post, Dec 21]

A combo of religion and fiscal thrift killed a proposal to boost stem cell research in New Jersey with a $450M bond issue.  The state's voters said no 53% to 47%. [Science, Nov 16]  Not everything good has to be done by government, especially with borrowed money and no guarantee of any spectacular ROI for the state. All such propositions run the risk of the resulting science and scientists leaving the state at any time.

Short of Money? Spend More. Facing a projected budget deficit of more than $600 million, Gov. Tim Kaine told lawmakers the state must invest more money in research and commercialization efforts to accelerate Virginia’s progress in key areas. Anticipating the state’s investments in R&D will pay off in the future, Gov. Kaine unveiled a $1.65 billion bond package for higher education needs that includes support for researchers and research facilities aimed at R&D and commercialization.  [SSTI, Dec 17]

1993 Redux. Lawrence Summers said in an interview that Washington should consider a stimulus plan of up to $75B to stave off a recession. [Wall Street Journal, Dec 19] Democrats love stimuli; Republicans love trickle-down tax cuts and war. Neither acts like a responsible financial steward.  Everybody gets endless wishes and no one has to pay. What a great country; no wonder they're breaking down the walls to get in.

Outta There for Christmas.   Senate Republicans proved too strong, and as resistance collapsed, the House quickly sent Mr. Bush a bill that again makes no attempt to cover the cost (of AMT relief, Iraq, or anything else). [Wall Street Journal, Dec 19] The middle class gets tax relief and the upper class gets to avoid paying for it. Who pays, then?  For Christmas, send your children the Spirit of Christmas Future chained to a large debt. But don't forget to remind your Congresscritters that you need more SBIR money.

Many Republicans denounced the Democratic-crafted [energy] bill for failing to push for more domestic production of fossil fuels. The cry of the Congresscritters from the shrinking domestic oil drilling industry. Pay Houston now!  Hey, little George, we put you there for a reason. After all, if SBIR can subsidize uncompetitive tech companies, why shouldn't an energy bill subsidize domestic oil drillers?

Let the Market Magic Work. Treasury Secretary Henry Paulson said the administration remained opposed to any type of government bailout.  "I think what we need is to help the markets work the way they're intended to work and avoid those foreclosures that are preventable". OK, to be faithful to the market magic, Bush can veto the SBIR renewal since there is no demonstrable "market failure" to correct. Don't worry, for all his professions of faith, he hasn't got the nerve to be that faithful since he is, after all, a politician whose party cannot afford to alienate anyone.  But the pressure keeps building for bailouts: Alan Greenspan suggested that more government intervention was needed to help borrowers. ... Support is growing on several fronts in Washington, D.C., for mortgage-industry reforms and homeowner-assistance programs with broader potential impact than the Bush administration's plan to freeze interest rates on a small percentage of home loans. [Alan Zibel, AP, Dec 18] Eventually, the question will come down to help everybody or nobody, which means everybody. How to pay for it?  Natch, the national credit card, just like the S&L bailout in Bush 41.

A $2B emergency radio network intended to connect all emergency agencies and local police and fire departments in New York State has failed its first major test ... Officials from [installation contractor] M/A-Com expressed confidence the issues could be addressed  [New York Times, Dec 18]

Think Big. To soothe public anger over rising fuel costs, Congress repeals laws of chemistry and economics. Congress is on the verge of writing into law one of the most ambitious dictates ever issued to American business: to create, from scratch, a huge new industry capable of converting agricultural wastes and other plant material into automotive fuel. ... No fuel of the type in question has been produced commercially in the United States. Even in the view of people who back the idea, the technology to do it is immature, the economics are uncertain, and the potential for unintended consequences is high. Hundreds of new factories will be required, perhaps a billion tons of plant material will need to be hauled around every year, and estimates of the required investment start at tens of billions of dollars. ... “Congress is making the assumption that the technology will appear,” said Aaron Brady, an ethanol expert at Cambridge Energy Research Associates. [Clifford Krauss, New York Times, Dec 18]  Part of the rising fuel costs will be shifted to rising food costs which will require more repeals of basic laws of economics.

When Bail-Outs Favor a Few. A mortgage-relief plan being pushed by the government is supposed to help debt-laden homeowners across America.   ... another layer of discord to neighborhoods already racked by plummeting home values, rising bank repossessions and vacant houses whose owners simply up and left. [Jonathan Karp, Wall Street Journal, Dec 17] When voters ask, "why not me too", the politicians have a problem. They let capitalism get out of hand again, with "victims" who vote.

A Subsidy Report Card. "We have failed miserably at attracting new engineering companies," said John Monroe, a former Boeing executive who now consults for the state and Snohomish County on aerospace economic development. ... No data are available on how many 787 jobs existing state subcontractors have added. Whatever the number, many of the local aerospace jobs outside Boeing — including 787 suppliers — pay poorly, according to job and wage data compiled this year by the state's Department of Revenue.  Boeing's state tax avoidance: $500-900M. [Dominic Gates, Seattle Times, Dec 17]

Is Everybody Happy?  Bush says US economy is safe and sound. ... Bush tried to position himself as an advocate for working families by taking aim at his favorite target: the Democratic Congress." The Congress cannot take economic vitality for granted," Bush said.  "The most negative thing Congress can do in the face of economic uncertainty is to raise taxes on the American people," Bush said. Another Republican trying to project the prosperity of the upper class onto the lesser classes. It didn't work for his father in 1992 as Clinton adopted the motto, It's the economy, stupid. Bush also sweeps all the classes into the candidate group that would be taxed under the plan passed and trumpeted by the Republicans in 2001. That plan was a gimmick when the Republicans could not admit that permanent tax cuts would produce too much deficit. Unfortunately for Bush and the Republicans, the Democrats won back the Congress and people stopped listening to Bush's pronouncements. 

A Fox for the Henhouse. President Bush's pick for a top Energy Department post is a former executive for a coal company that has a long history of mine safety and environmental violations. If confirmed as assistant secretary for fossil energy, Stanley C. Suboleski would oversee development of clean-coal technology and other fossil-fuel projects.

"Most people, of course, think that taxes are necessary, that they shouldn't be abolished and that everyone should pay their fair share, says Ryan Ellis, tax policy director at Americans for Tax Reform. Like all political abstractions, the devil is in the details where almost everyone agrees that their taxes should be lower while the politicians are not even collecting enough taxes to pay for the government spending including the 8,983 home-district and home-state pork projects.

The number of permissions needed by a start-up – reaching 21 or so in Italy – has become a measure of the veto powers arrayed against innovation. In Germany’s co-determination, a labour representative guards against innovations that would cause job cuts. There is no one to vote for innovations that create jobs in the economy as a whole. [Edmund Phelps, Financial Times, Dec 17]

Rescue the Reckless. The political pressure for action is likely to intensify as the 2008 elections approach. [Wall Street Journal,. Dec 15] Use taxpayers' money to rescue punters from the consequences of playing in the housing casino with borrowed money. Oh yes, the rescue money will be borrowed (as taxes are cut) also because the taxpayers cannot be asked to pay for their excessive spending either. What we need is some heavenly manna or some kind of deal where the rescued are obligated for a term of public service.

there’s no way to reduce the gross wastefulness of our health system without also reducing the profits of the industries that generate the waste. ...Anyone who thinks that the next president can achieve real change without bitter confrontation is living in a fantasy world. [Paul Krugman, New York Times, Dec 17] In a nation where the nation's business is business (said Cal Coolidge), business has a huge say in public policy. The only businesses who put public service first are those who have government for a customer.

No Reality, Please, We're Political. It is awkward, to say the least, for the West to complain when Asian and Middle Eastern government-owned investment pools shore up capital-starved banks that are vital to the world economy. It is like running out of gasoline in the middle of nowhere and being picky about who drives by with spare fuel. And the U.S. economy needs about $2 billion every day from foreigners to keep it going. It gets this money by borrowing or by selling off chunks of assets like Citigroup or Bear Stearns. ... The specter of undemocratic governments buying up whole U.S. companies, or stakes large enough to have a big influence, is red meat to xenophobes and protectionists [David Wessel, Wall Street Journal, Dec 13] Meanwhile, the government is in gridlock over how to pay for things that the politicians want; (remember that gridlock is your friend). The tax-phobic Republicans would rather borrow endlessly (these are "modern" Republicans) than face the costs. The Democrats want to balance the books (sort of) but don't have enough voting power in Congress to force it.  So, the longer we dawdle, the more American assets will be sold to pay for our imports with declining dollars, especially the boatloads of cheap energy we demand as our Constitutional right.  Yes, our energy is still cheap, just not as ridiculously cheap as it was a few decades ago. Remember gasoline at twenty cents a gallon? Oh dear, I must be getting ancient. 

The Center for Democracy and Technology  and OMB Watch jointly released Hiding in Plain Sight a report highlighting a critical gap in online access to vital government information. The report, presented to a Senate panel today, exposes a simple technological roadblock as the culprit and notes the problem has an equally simple technological fix. The problem comes to light as the E-Government Act of 2002, which promotes access to government information and services, is up for reauthorization. [CDT, Dec 11] And OMB lets in some sunshine with a new website, Where Americans Can See Where Their Money Goes which even has a feedback option.

Misunderengaged. "It will be interesting to know what the true facts are," President George W. Bush told ABC News the other night when asked about the CIA's premature and perhaps illegal destruction of interrogation recordings.  Of course, the president doesn't have to wait for the investigations to unfold. All he has to do is pick up the phone. [Andrew Cohen, Washington Post, Dec 12]

Government subsidies reflect the careless and cynical manipulation of worthy public goals for selfish ends. That the new farm bill may expand the ethanol mandates confirms an old lesson: Having embraced a giveaway, politicians cannot stop it, no matter how dubious. [Robert Samuelson, Washington Post, Dec 12]  But subsidies feel so-o-o good and deserved to the beneficiary. Meanwhile, Republican presidential rivals called for deep cuts in federal spending, and said the reductions need not require painful sacrifice by the millions of Americans who receive government services. [AP, Dec 12] Good old waste, fraud, and abuse to be against. Unfortunately for everyone, WFA is always someone else's program, and if the voters fall for such vague drivel, they deserve the poor government that results. The politicians could start by cutting programs that have "results not demonstrated" like DOD's SBIR. Now where have I heard all this before, before, and before?

Political Science. 'Where do I find a field director?' " says Michael Brown, workshop coordinator and executive director of Scientists and Engineers for America. "They were raring to go." time for revenge of the (supposed) nerds, this is it. Partisan rhetoric is clouding debates on global warming, birth control, stem cell research, and evolution. "To a great extent, [scientists] see that their way of life is being challenged," Brown says, "and that it's time for them to strike back." That means voters may soon notice an influx of candidates more comfortable working an algorithm than a crowd. [Bret Schulte, US News & World Report, Dec 6]  With enough activism by S&Es, the next administration may take science seriously.

Quick, Cozy, and Maybe Mediocre. A new survey by the Defense Department's inspector general's office found that Pentagon buyers rarely sought out competition when granting task awards for work. [Robert O'Harrow, Washington Post, Nov 30] Bureaus prefer to get their work started with the least fuss. With a hot war on, the White House cutting government employees in favor of businesses, and Congress mandating earmarks, it's a wonder that the DOD has time and staff for any full competitions.

Unsecure Security. Oak Ridge National Laboratory has been bombarded by a coordinated phishing attack aimed at multiple national labs and may have unwittingly handed over to attackers the personal information of anybody who visited the lab over a 14-year span, including Social Security numbers. ... ORNL's investigators now believe that about 11 staff fell for the come-ons and opened the attachments or clicked on the links.  [Lisa Vaas, eWeek, Dec 10] DON'T click on e-mailed links nor attachments. Is the federal government yet ready to issue new SSNs frequently?

We Need, Want, Deserve Another Tax Break. The United States now ranks 17th of the 30 countries in the Organization for Economic Co-operation and Development in offering R&D tax credits.  "If the U.S. does not guarantee similar incentives, we will continue to see R&D activities, innovation and jobs moving offshore," Christopher Hansen, president and CEO of the American Electronics Association, said. [Roy Mark, eWeek, Dec 10]

As for the intrepid boldness of the latest generation of "wealth creators": Reich lists the tax breaks, pension guarantees, safety nets, "superfunds," and bail-outs provided in recent years to savings and loans, hedge funds, banks, and other "risk-takers" before dryly concluding that arrangements "that confer all upside benefit on private investors and all downside risk on the public are bound to stimulate great feats of entrepreneurial daring."  [Tony Judt reviewing Reich's Supercapitalism]   Think of all the so-called "wealth creators" who live on SBIR and plead for more.

Moral Hazard Defeats Discipline. The government sure has a funny prescription for restoring confidence in America's credit markets. It purports to solve the nation's credit crunch — a slowdown stemming from investors' loss of trust in instruments such as mortgage-backed securities — by pressuring millions of borrowers and lenders to renege on their contracts and bilk mortgage investors. Unless there was fraud, both borrowers and lenders should be expected to live up to the terms of their contract, unless they mutually agree to changes. Innovations such as ARMs enabled many smart borrowers to improve their prospects by using the extra cash flow for purposes such as starting a business or getting a new degree. These responsible borrowers and their lenders should not be punished for the imprudence of others.  [John Berlau of the Competitive Enterprise Institute, writing in USAToday]      

A stopgap government funding bill runs out Friday.  Until the political struggle over war and the budget is resolved, SBIR could well be suspended in the affected agencies.

Brinker kept on pursuing the idea of preserving living cells outside their host, and the Air Force threw in $500,000 for research. This year he showed how, by injecting the cells into a matrix made from silica nanotubes wrapped in a sol-gel, he was able to keep a cell alive for six months. The structure is so sturdy that Brinker and his students left mammalian cells in broiling car trunks without any damage. These same silica nanostructures with other cell recipes inside them could be used to detect cancer. Someday that engineering feat may turn into a commercial reality. [Zach O'Malley Greenberg, Forbes, Dec 24]

After a week of intense research, [Congressman Jim] Cooper’s D.C. staff discovered that somehow, several businessmen previously unknown in the nation’s venture capital circles, convinced the U.S. Army to hand over $61.9M in unspent military funds since 2002 [Alexei Smirnov, Business TN Magazine, June 2007] reported by The Project on Government Oversight.

the Renewable Fuel Standard, which would mandate (insofar as one can mandate ponies) 36 billion gallons of ethanol by 2036 -- and worse yet, 15 billion gallons of corn ethanol by 2015 -- is a grotesquerie that will do far more harm than good.  I tend to think that it will get ratcheted back by a subsequent Congress, particularly once the perversity becomes clear and the backlash full-fledged. We can't do what the RFS mandates we do; the question is how long we'll keep bashing our head into a wall before we figure it out. [Grist blog, Dec 7]

 Jam Today.  Treasury secretary Hank Paulson has finally persuaded the relevant politicians, regulators and lenders that it would be in nobody’s interest to turn millions of people out of their homes. .... There will be a cost: future lenders are on notice that the government is willing to come between them and the interest payments they are due. This will make mortgage lending riskier, and drive up the rate needed to cover that risk ...But politicians always favour jam today over jam tomorrow [Irwin Stelzer, The Sunday Times (London), Dec 9]

Tech's Only a Part. The Army has a name for this vision: Future Combat Systems, or FCS. The project involves creating a family of 14 weapons, drones, robots, sensors and hybrid-electric combat vehicles connected by a wireless network. It has turned into the most ambitious modernization of the Army since World War II and the most expensive Army weapons program ever, military officials say. ... Other officials' opinions: "has some serious problems," said Neil Abercrombie (D-Hawaii), chairman of the House air and land forces subcommittee. "Since its inception, costs have gone up dramatically while promised capability has steadily diminished."  But don't worry; it's bullet proof in classic DOD style: Today, the Army program involves more than 550 contractors and subcontractors in 41 states and 220 congressional districts   [Washington Post, Dec 7]

Free Lunches. leading candidates from both parties support ethanol ... call for requiring the production of 60 billion gallons of biofuels or more by 2030 [Kevin Bullis, MIT Tech Review, Dec 7] Voters want to hear that science can solve their pollution and fuel cost dilemmas so they don't have to sacrifice. Meanwhile, Chevron Corp. has signaled it may stop investing in a biodiesel fuel plant in Galveston, [Houston Chronicle, Dec 7] If only a free lunch could be that easy, just like the Senate voted overwhelmingly to prevent the alternative minimum tax from hitting millions of middle-class Americans without replacing the $50B that would be lost. [Carl Hulse, New York Times, Dec 7]

Pork, Pork, Pork.   To the winners go the riches -- and the earmarks.  That's essentially the conclusion of a nicely executed story by Robert Brodsky of Government Executive Magaine.  In an analysis of the 2008 Defense Appropriations bill, Brodsky found that "the 20 biggest federal contractors received at least 80 earmarks worth more than $212 million."  The amount of congressional spending targeted to the big guys, however, is likely much larger. As Bodsky notes: "That figure is almost certainly understated because a significant percentage of earmarks fail to list a designated recipient -- a legislative loophole carved out by the Senate. Earmarks directed to subsidiaries of large contractors also may not have been attributed to the parent company."  [Robert O'Harrow, Washington Post, Nov 29]

Drain America First. For the Republican candidates, energy policy is primarily about producing more energy at home — more oil and gas drilling on the Outer Continental Shelf and in the Arctic National Wildlife Refuge; more use of American coal to produce liquid fuel; and, as with Democrats, more renewable fuels like ethanol. [Edmund Andrews, New York Times, Nov 28]  The market approach wherein American producers make short-term profits and any permanent solutions get deferred.

Jobs for the Boys. Massachusetts ranked 49th in the creation of jobs during the last six years and its share of the nation's technology jobs decreased [Mass High Tech, Nov 28] No wonder the Senator wants more SBIR, no matter how inefficient at capital investment.

Wake up to the dangers of a deepening crisis, says Larry Summers [Financial Times, November 25]. the odds now favour a US recession that slows growth significantly on a global basis. Without stronger policy responses ... there is the risk that the adverse impacts will be felt for the rest of this decade and beyond. His solution(s): keep the dollars flowing by temporary stimulus through spending or tax benefits for low- and middle-income families ... maintaining demand in the housing market. On the other hand, without a nasty recession, where are our lessons in finance to come from?  Buyers, lends, and hedge funds take foolish risks and then get off relatively lightly?  California is already stepping in by "convincing" mortgage writers to extend the teaser rates that induced people who should have known better to buy more house than they could afford. Moral hazard. Capitalism without bankruptcy is like Christianity without hell. Must be an election coming soon in which foolish buyers have more votes than foolish lenders.

A committee under the STEP Board concluded that an ambitious program of innovation inducement prize contests would be a sound investment in strengthening the infrastructure for U.S. innovation and that NSF, although inexperienced administering prizes, is well suited to designing an experimental program that could add substantially to understanding regarding the appropriate goals of such contests, the motivations of participants and sponsors, and the rules and conditions that contribute to successful contests. [The National Academies Press] read online or purchase.

Subsidies Ignore Economics. in all the decades ethanol has been subsidized, Washington has never rigorously applied cost-benefit analysis to ethanol's myriad preferences. ... If annual production increases by three billion gallons in 2012 -- a plausibly modest number when the EPA made its own calculations -- we estimate that the costs will exceed the benefits by about $1 billion a year. ...  [Robert Hahn, Wall Street Journal, Nov 24] Another billion gift for the Corn Belt? Great politics. Another billion for SBIR? Stand-by for politics and imaginary economics. ... Without [an independent analysis] agency, interest-group logrolling will continue to trump science and economics in major policy choices. Why pays for all the subsidies? Don't ask.

Missouri's first state funding for biotech research and commercial projects was doled out Tuesday, with St. Louis receiving nearly one-third of the $13.1 M pot for one project in biofuels and another that would turn plants into plastics. [St Louis Post Dispatch, Nov 21] is SBA's new SBIR website run by NSF.  It has just government's perspective with no useful advice that I can see for companies wondering whether and how to use SBIR for rewarding purposes beyond the money for doing government work.

Good Tech, Cheaper Housing. Sales of existing homes in Central Texas declined in October for the fifth straight month amid continued fallout from the national mortgage crisis. ...Though sales are off from a record-breaking 2006, experts say Central Texas' housing market is still in relatively good shape, fortified by healthy jobs, income and population growth. The region added 22,500 jobs between October 2006 and October 2007. [Austin American-Statesman, Nov 21]

Officials in Saudi Arabia, the region's largest economy, have said they will not break the peg between their currency, the riyal, and the dollar. However, ...  [J Slater and C Cummins, Wall Street Journal, Nov 20] If  you don't like today's oil prices, you'll really hate them if them the sheiks stop taking dollars. However, if you export goods, you can earn whatever better currency they use instead.

Cheering the Take. Fifty-one companies that won 84 federal R&D grants totaling $33.7M honored during the annual SBIR awards ceremony [Wisconsin Technology Network]   An up-and-comer that shot out of nowhere to fourth on the list with $1.55M of federal innovation grants is C5-6 Technologies  (Middleton, WI; no SBIR yet archived) [using ]proprietary technology to mine untapped genetic material to discover and commercialize enzymes for biofuels. .... Some of the state's biggest success stories in recent years - companies like NimbleGen Systems, TomoTherapy and Third Wave Technologies  - were awarded SBIR grants in their early years, Still said. "Companies shouldn't, and usually don't, remain dependent on SBIR grants for very long. But they're great sources of early stage money and they don't dilute ownership in the company," Still said.  [Kathleen Gallagher, Milwaukee Journal-Sentinel, Nov 14]

Capitalism Meets Subsidies. Boxes of energy-saving lightbulbs that California utilities are supposed to distribute within the state to save power are instead turning up on eBay, where anyone in the country can buy them, a watchdog group reported. As a result, California may not be saving as much power as it planned.  [David Baker, San Francisco Chronicle, Nov 17]  When government gives, opportunists profit. Although government intended SBIR as a subsidy to high tech companies that would spread wealth (at least in principle), instead it got mostly a combination of agencies which don't care about growth handing multiple contracts to companies who don't care either. But the Senator from Massachusetts thinks it's a great deal since his state gets lots of those contracts. Politicians acting first in the national interest? Don't bet on it.  We have only one politician elected to pursue the national interest and he's mired in his own ill-founded enterprise that expends lives as well as big money he hasn't got.

Grow-Me State. A researcher at the Bloch School of Business and Public Administration at the University of Missouri–Kansas City recently found that the state was investing pennies compared with the nearly $3 per resident spent by other states toward stimulating scientific commercialization. In response, a new coalition — the Grow Me State Initiative — is calling for a comprehensive strategy and initial commitments to invest at least $17M a year on programs that would nurture promising high-tech startups and important discoveries. [Kansas City Star, Nov 18]  Can governments based in politics invest wisely in tech start-ups?  Evidence for their case seems little beyond wishful thinking.  The politics of re-election cycles almost guarantees a lack of enough patience.

A Changing World. the current account deficit of the US is larger relative to GDP than in any previous bout of dollar weakness. It is improving a little but is still about 6% of GDP and that is huge. ... the United Arab Emirates may cut the link with the dollar, as Kuwait already has done ... even when the dollar does recover the world will be different. Maybe we will still price oil in dollars but a lot more people around the world will think – and place their assets – in euros[Hamish McRae, The Independent, Nov 17]  So, if you just want an SBIR, should you care?  The more the dollar shrinks, the more pressure on the USG to cut back its spending, and the more pressure on US companies for efficiency (which is not encouraged by government's subsidizing uncompetitive businesses). Get globally competitive!  And borrowing a trillion for an elective war just jacks up the pressure.

The good news: gridlock is your friend.  As the Congress, especially the Senate wrestles with Iraq and farm subsidies, progress is being made in bringing sanity to budget making. All parties have to compromise to reach something like consensus. Any time that one party controls both Congress and the White House, we get too much of a good thing.

Politicians are always talking about the necessity of other countries’ opening their markets to American products. They never mention the virtues of opening U.S. markets to foreign products. This perspective on imports and exports is called mercantilism. It goes back to the 14th century and has about as much intellectual rigor as alchemy, another landmark of the pre-Enlightenment era. [Russell Roberts, Foreign Policy, Nov07] The politician doesn't care what's true, only what will appeal to voters. First power, then policy.

SBIR Money Alert. Defense Secretary Gates said that unless Congress passes funding for the war within days, he will direct the Army and Marine Corps to begin developing plans to lay off employees and terminate contracts early next year. [AP, Nov 16]  One of the first victims of a forced re-shuffle of DOD money would be SBIR which the department considers low value. Expect delays in funding new contracts and funding of the second year of Phase 2 contracts.

"Whoever the next president is, the new administration will be extremely disappointed if it believes that our relationships will mend because its leader has a different name . . . . Personal diplomacy and relationship-building, although important, are rarely the paramount drivers of global affairs. These are shaped importantly by the long-term national interest." Thus spake Henry Kissinger .... "the United States must operate in a democratic manner, and our foreign policy must reflect and properly balance both value and power considerations." ... the world we have known for 300 years now -- the "Westphalian" international system that arose after Europe's wars of religion and is based on the nation-state -- is "collapsing." [Wall Street Journal, Nov 17] All of which means we have to elect adults to both Congress and the White House.

Making climate safe. To please everybody, they have included the magic word “security” in the bill's title: keeping America safe from dangerous weather. America's Climate Security Act [The Economist, Nov 17]   Or keeping climate safe from dangerous Americans. If only such juvenile pretensions would do anything useful.

Charley Rangel and George Bush agree that the AMT should be fixed to avoid cutting deeper into the middle class. Bush might support Rangel's $930 billion bill if it didn't want to fill the ensuing revenue gap. Rangel wants offsetting tax increases whereas Bush wants the supply-side free lunch.  Oh, and Bush needs another $200B or so for the next installment of Iraq, no funding source suggested; just put it on the cuff. What kind of math and economics did Bush learn in his Harvard MBA? Could you run your company with that kind of math?

Tech Games. Chinese spying in America represents the greatest threat to U.S. technology, according to a congressional advisory panel report that recommended lawmakers consider financing counterintelligence efforts meant to stop China from stealing U.S. manufacturing expertise. [AP, Nov 15] The xenophobes see xenophobia everywhere except in the mirror. Panels want lots of things done but have no charter to find the money to pay for them. A few thousand fewer troops to be supported in Iraq should free up some money the administration doesn't want to pay for anyway.

The technology ambitions of China and India are viewed with alarm by the leading technological powers, not least America. Policymakers and industry groups quake at the number of scientists and engineers the two populous Asian countries turn out. ... on Capitol Hill, a suggestion that America should “nationalise whatever is left of the machine-tool industry” to stop firms decamping overseas. ... Technological creativity is rooted in a country's institutions as well as its people's ingenuity. The rules that govern a society must police ideas just enough to reward innovation, without stifling diffusion and collaboration. China and India have yet to show they can crack that problem. [The Economist, Nov 10]

The 2007-08 NIH Commercialization Assistance Program officially kicked off with the Commercialization Training Workshop in Marina del Rey, CA. More than 70 participating companies attended ... [in four years] more than 300 early  stage life science companies have completed the program. [LARTA Vox, Nov 6] It's a common government conceit that government can teach companies how to commercialize. Another way to getting government funded technology commercialized is to make the exploitation a live competitive criterion in awarding SBIR Phase 2s. If and when government deciders acknowledge that they know next to nothing about which technology will sell and how to sell it, they will let the companies show that they understand by attracting private capital to co-invest with the government. Note that co-investment does not have to be "cost-sharing" in developing government technology; it is whatever forwards the technology into some market. And yes, it has already been done, by BMDO in the 1990s, with remarkable results as measured by downstream private investment.

Ugly Energy Economics. While most of the candidates have developed "energy independence" strategies that take shape over the next two decades, few offer fixes for what could be a painful short-term crisis as gasoline and home heating oil rise above $3 a gallon. [John Fialka, Wall Street Journal, Nov 14] America leads the world in energy use per capita, and voters don't know any good way out of the structure built over decades of cheap fossil fuel - big cars for long commutes from big houses to jobs priced by global competition. Since we have become dependent on imported labor and energy, "energy independence" like "no illegal immigrants" are just feel-good political slogans of which politicians ignore the price.  Technology's contribution to an energy solution must be dramatically more efficient use of every energy source. And if we let our politicians get away with sloganeering without advocating real solutions, we deserve the eventual disaster.

President Bush, in a television interview, said he believes "the dollar will be stronger" if markets "would look at the strength of our economy."  The great advocate of market solutions with a Harvard MBA says the markets are blind. Who writes his drivel?

Handouts for the Favored. thousands that can be found on, a new Web site that enlists voters' help monitoring congressional spending. ... It took three clicks to turn up four lawmakers behind the hand-protection earmark yesterday for Outdoor Research (Seattle). Also named as beneficiaries: Darn Tough Socks (VT) and ICRC Solutions (AK).... Of 240 corporations and nonprofits identified as earmark recipients so far, nearly half employ lobbyists, who ostensibly helped steer the cash their way. [Elizabeth Williamson, Washington Post, Nov 14] None of these three did SBIR.

Republican Fred Thompson is taking his call for expanding the military, spending more money on defense and taking better care of current and former service members before a receptive audience at a military college in a Southern state. [AP, Nov 13] Talk is cheap, Fred. How will you attract a lot more comfortable and disconnected American youths without lowering the standards? Where will you get the money for both more warriors and for more veterans care? By lowering taxes? The good old "waste, fraud, and abuse" words? And just what mission do you have in mind for all these warriors who would be a temptation for more foreign campaigns to right the world's wrongs. Salute the fine military minded kids and get real! The people of the South in particular should be attuned to the idea of not starting a war unless you have the staying power in men, money, stuff, and political will.

VC Invasion Partly Enabled. HR3567 passed (Sep 27) with an amendment that prohibits a business from being considered small if a venture capital firm owns more than 50% of it or if the venture capital firm’s employees constitute a majority of the business’ board of directors. The bill also creates a new Office of Angel Investment to build the first-ever nationwide network of angel groups and enhance awareness about available investment opportunities.  The White House doesn't like the angel part and there are enough Republicans in the Senate to kill anything that ranks below motherhood. 

Club for Growth has been given the 2007 Best Business Blog award. a national network of thousands of Americans, from all walks of life, who believe that prosperity and opportunity come through economic freedom.  That means We hate taxes, especially on anyone with moneyAnd it's not even a business instead it's a funnel:  The primary tactic of the separate Club for Growth PAC is to provide financial support from Club members to viable pro-growth candidates to Congress, particularly in Republican primaries. Be sure never to call contributory advocacy "bribery". 

Federal prosecutors call them bribes and kickbacks. Orthopedic surgeons call them legitimate consulting fees for their hard work and expertise. Under a federal settlement, five artificial knee and implant device companies have disclosed on their Web sites the names of more than 1,800 recipients of consulting fees this year, including dozens of surgeons, medical practices, hospitals and universities in Indiana. [John Russell,, Nov 12]

Enough may be too much. in the House, there's opposition to the Senate's mandate to increase ethanol production by 30 billion gallons annually by 2022. [Betsy's Page] Betsy teaches AP history in North Carolina.  Meanwhile, the fuel farmers tap the taxpayers directly, the farm bill before the Senate this week authorizes about $10 billion in new subsidies, price guarantees and disaster aid in the next decade, even as farmers report near-record profits ... Spread through the huge bill are gains for producers of wheat, milk, sugar, peanuts, barley, oats and honey, and a new $1 million-a-year subsidy earmarked for camelina, a seed used to make biofuels. [Dan Morgan, Washington Post, Nov 13]   If rich farmers can have big subsidies, why not SBIR-mill companies that sell only contract services to the government?  All it takes is shameless politicking. 

Tens of thousands of Web pages are now devoted to terrorist propaganda designed to attract followers. ... Researchers at the University of Arizona are developing a tool that uses these clues to automate the analysis of online jihadism. The Dark Web project aims to scour Web sites, forums and chat rooms to find the Internet's most prolific and influential jihadists and learn how they reel in adherents. ... "Our tool will help them ID the high-risk, radical opinion leaders in cyberspace," Chen said. Chen said a few agencies are on the verge of using some of his team's techniques  [

The chief executive of Exxon Mobil  said that resource nationalism is counterproductive and may pose a threat to achieving secure energy supplies. [Houston Chronicle, Nov 13] Secure for whom? Our nationalism is good, theirs is bad?

“Vote for me, and I will take money from somebody else for your purposes.”  We have allowed our federal system of government to degenerate into civilized mob rule.  The only difference between modern American democracy and Communist rule is that Americans demand that more than one political party conspire to rob minorities to cement their power.  This is surely not the American dream.“Federalist” is a graduate of Yale University and a U.S. Air Force Reservist, and presently works in the finance industry.

Speaking for Vets. Tens of thousands of Guardsmen and Reservists are getting shafted by their bosses, when they get home from Afghanistan and Iraq. "Since 9/11, nearly 11,000 National Guard and Reserve troops have been denied prompt reemployment. 20,000 service men and women had their pensions cut, and another 11,000 lost their health insurance," write Senator Edward Kennedy and former Senator Max Cleland.  Part of business's, all businesses, contribution to national security is keeping their chair warm for civilian workers serving as the nation's military reserve. You don't have to pay them while they are gone, although some businesses at least make up the difference, but they are entitled to be treated as though they never left when they get back. If it weren't for such promises in the past, there would have been no reserve for the war-making administration to draw on when it used up its regular Army in Iraq. BTW, Mr War-Monger-in-Chief could help make up for his amateurish management by contributing generously, from his $800K or so annual income, to veterans and military family organizations.

KDH Defense Systems (Johnstown PA; no SBIR) makes Navy body armor and Army elbow pads in a converted bra factory, and Mr. Murtha asked for a $2 million earmark to help the company improve its bulletproof vests. Another earmark would provide $3 million for KDH to develop a “waterways threat detection system.”  The company’s lobbying firm is KSA Consulting, which employed Mr. Murtha’s younger brother, Kit, until 2006. The firm has contributed $4,000 to Mr. Murtha’s campaign since 2005.  [Marilyn Thompson and Ron Nixon, New York Times, Nov 4]

The Michigan Small Business and Technology Centers will receive $1.4M from the funds appropriated to be used for the SBIR and STTR matching grants program.

Our Fair Share. Snowed and Kerry drafted a bill, passed this week by a Senate committee, to improve small businesses' chances of getting federal contracts by nailing more oversight into the process. But St. Louis business leaders and local entrepreneurs who have clamored for federal contracts are skeptical. ... "The U.S. government is the largest procurement company, the largest buyer, in the world," [Christine Bierman, chief executive of Colt Safety] said. "We just want our fair share."  [Angela Tablas, St Louis Post Dispatch, Nov 10] And what is the clear criterion for "fair"? None, which is why only politicians can decide, and their decisions are not likely to favor efficient government.

Future Imagery in Danger. Today, space technology has lost its luster for young engineers, who are drawn increasingly to companies like Google and Apple. Defense experts say the entire acquisition system for space-based imagery technologies is in danger of breaking down. [Philip Tubman, New York Times, Nov 11] Tubman's long piece reports the demise of new spy satellites where technology and management could not meet the budgeted prices. It's not a new dilemma in government R&D where optimism is needed to get started and magic is needed to do the job. Albert D. Wheel on, who founded the Directorate of Science and Technology at the CIT.. in 1963 and played a leading role in the early development of spy satellites, said in an interview, “Writing winning proposals is different from building winning hardware.”  Classified projects suffer an added burden, they can't get criticism from a marketplace of smart people.

Responsibility as a Liability. "paygo" underpins many of the struggles. It requires lawmakers to vote for tax increases or spending cuts that hit powerful industries and campaign contributors, and it introduces a tangle of considerations to already-complex bills. [Sarah Lueck, Wall Street Journal, Nov 9] The Prez and the Republicans scream about tax increases on hedge fund managers to pay for AMT relief for middle class. The opposition stands for a free lunch as beneficiaries cheer for more. SBIR is just one of the galaxy of beneficiaries who disdain any inspection of who is paying and what the taxpayer gets as ROI. With a president to whom war funding comes from heaven, and for whom taxes are meant to be paid by someone else, later, ...

The War on Drugs is a War on Economics. You can ignore economics if you want. You can even fight economics. But economics is going to win every time~The Angry Economist  Surely people who expect the government to believe their commercialization fantasies support facing up to the realities of economics. One reality is that where there is a demand, a supply will arise to fill it; only the equilibrium price is in question. The alternative that innovators dream of is not so certain: that where there is a supply, a demand will arise.

Investing in WiFi. A Burnsville MN man who allegedly has been selling stock in a wireless rural communications network to investors in Minnesota, Iowa, Wisconsin and the Dakotas for the past seven years has been indicted by a federal grand jury on 15 counts of securities and mail fraud.  ... presented himself to investors as the president and CEO of Epcom Ltd., Epcom Corp., Epcom Wireless Corp. and other entities. The indictment says he promised returns of as much as 2,500 percent when the company eventually went public. It says he also solicited investors in two other businesses involving bottled and filtered water. And, a new enforcement tool: Someone complained about Anderson in September on the Internet bulletin board Craigslist, prompting a rash of new complaints to law enforcement. [Minneapolis Star Tribune, Nov 9]

Neither Check Nor Balance. Under the Bush administration we have seen two fundamental assaults on this system. One, embodied in the idea of “signing statements” that the president makes when he signs congressional legislation, proposes that the president is himself equal to the supreme court in his power to review the constitutionality of legislation. According to this notion, the chief executive has the unilateral authority to say, “I don’t think this or that part of this law is constitutional, so I will reserve the right not to enforce or obey it.” He’s not saying, “I think this is an unconstitutional law, so I’m going to challenge it before the supreme court.” He’s saying, “I think this is an unconstitutional law, so I’m going to ignore it.”   The second assault centers on the notion of the “unitary executive.” This theory proposes that the entire executive branch is a sort of “off limits” zone for congress. To the extent that a congressional law or rule constrains the president’s authority over the executive branch in some way, he is free to ignore it, because it’s unconstitutional — and, right, he gets to ignore laws he believes are unconstitutional.   Put these two notions together and you have, I think it’s fair to say, a whole new game in the federal government town. Forget checks and balances, or “government by laws and not men.” Say hello to a new world in which the unitary executive claims supremacy over both the congress (whose laws he can ignore at will and whose powers cannot reach into the executive branch) and the supreme court (whose role as reviewer of the constitutionality of legislation the president is now quite able to assume himself). [Scott Rosenberg, Wordyard blog, Oct 25]

Lessons from the Credit Mess. Ditch the cliché that government should be run more like a business. It's too flattering to business. Government doesn't have a monopoly on incompetence, imprudence or short-sightedness. ... Only government can protect the most vulnerable consumer. [David Wessel, Wall Street Journal, Nov 8]

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. -- Ronald Reagan [thanks to Eamonn Butler of the Adam Smith Institute]  Reagan did sign the 1982 SBIR law that wound up subsidizing a lot of pet rocks.

This is the biggest fool thing we have ever done. The bomb will never go off, and I speak as an expert in explosives. -- Admiral William D. Leahy, Chief of Staff to the Commander in Chief of the Army and Navy during World War II, advising President Truman on the atomic bomb, 1945.

New Jersey voters rejected the state's plan to borrow $450M over 10 years to finance stem cell research. [AP, Nov 7]

Wishful Economics.  Massachusetts politicians propose a mandate for biofuel in the hope that it would reduce cost and carbon. They would reduce neither although they may reduce demand for oil imports.  The mandates would require all heating oil and diesel fuel to contain at least 2 percent of "renewable biobased alternatives" by the year 2010 and 5 percent by the year 2013.  Biofuel heating oil currently costs the same or more than regular heating oil, but state officials said they were hopeful the price advantage would tip in favor of biofuel heating oil by 2010. [Bruce Mohl, Boston Globe, Nov 6]   Biofuels still burn carbon into carbon dioxide and increasing the demand for them would raise their market price. Can't we insist that our politicians use real economics? On the other hand, if we did so, SBIR would be gone. We love our wishful economics.

Carnegie Mellon's car named Boss won first prize in DARPA's Urban Challenge ahead of Junior from Stanford and Victor Tango from Virginia Tech. ... “It was a good day in robotland,” said William L. Whittaker, a Carnegie Mellon University professor who pioneered the idea of contests to help advance robot technology during the 1980s. [New York Times, Nov 5] .... sent them along neighborhood roads, through traffic and around jams created by humans. About 50 humans piloted cars equipped with roll cages -- in case of robot road rage. [Peter Henderson, Reuters, Nov 3] Wisconsin's view: Saturday's race was a historic, technological milestone, given that most autonomous vehicles were barely able to travel a few miles in the first DARPA robot race only three years ago. Oshkosh Truck officials were disappointed that their entry, a 13-ton robotic military truck named TerraMax, washed out of the competition less than two hours after the start of the six-hour event, ... The Pentagon's goal of having one-third of its ground combat vehicles unmanned by 2015 is achievable, said Norm Whitaker, [race] chairman. [Rick Barrett. Milwaukee Journal-Sentinel, Nov 4]

After sleeping through the high tech revolutions of the late 20th century, the Russian government is dumping billions into the burgeoning science of nanotechnology. ... Rosnanotekh, a state nanotechnology corporation slated for $5 billion in initial funding -- an outlay that propels Russia past China in nanotech spending, and puts the country on a par with the United States in government-funded nano research. [Alexander Zaitchek, Wired News, Nov 1] Serious competition? Can you envision a Russian government that would rely on market potential for handing out government money? Can you envision the American government doing so? If so, you need to examine the ROI of two decades of SBIR handouts.

This week, TechPoint will hold its 10th annual Indiana Technology Summit at the Indiana Convention Center. As many as 900 entrepreneurs, politicians and economic development officials are expected to attend. ... Jim Jay transformed TechPoint from a financially needy lobbying group for tech companies to an advocacy group that's tackling real problems affecting Indiana's tech sector. [Erika Smith, Indianapolis Star, Nov 4]

A new protectionism: dashed hopes and perhaps worse for US trade policy, by Daniel Ikenson. Over the next 14 months, culminating in US elections in November 2008, the world will learn whether America’s budding protectionism reaches full bloom or is just a passing fancy. The global economy can shake off a failed Doha Round of multilateral trade negotiations without missing two beats. But if the United States turns inward as well, the consequences could be profound and far-reaching. This article appeared in the IPA Review October 2007. [CATO, Nov 2] Whaddya think: is open trade good or bad for US high tech small business?

"Congratulations! We celebrate your success. You don't need subsidies anymore!"  No, not about SBIR; Agriculture Secretary Mike Johanns, a former Nebraska farm boy, [said] hours before he announced his resignation. [Michael Grunwald, Time, Nov 12] Big subsidies to large farmers runs the same game as repeated SBIRs to companies with neither hope nor desire for market success.

The rooster takes credit for the sunrise. Clinton noted Iowa's success with creating new jobs at ethanol plants, and the high corn prices sparked by the ethanol boom. [Mike Glover, AP, Nov 3] The high corn prices and the ethanol plants result from government subsidy of a product that seems unlikely to compete in the open market with fossil fuels for a long time. If she wants to connect with success for Iowa farmers, she deserves part of the blame for higher food costs for everybody else. When you hear political claims, look underneath for the real-world economics.

Public money, private gain. $100K by the city of Riverside to help pay for an IT company relocate within its borders. $75K by the city of Brookville for the restoration of 310 Sycamore St. for Kitchen Solvers, a kitchen and bath remodeling company. $75K by the city of Englewood for upgrades to a vacant building on Smith Drive, to house a metal-stamping plant. Naturally, the county got requests for half again the $700K it had planned for its Economic  Development/Government Equity grant program. [Dayton Daily News, Nov 2] One past winner was General Motors which was bribed to keep a manufacturing plant in the county. In a few years, I presume, GM can play that card again. Such bribes create a dilemma for the anti-immigrant nativists who want to keep the manufacturing jobs in but the immigrants out, because one way to reduce the pressure for illegal immigration is to, Oh Horrors, bribe US manufacturers to build job-rich plants in Mexico. Alternately, one way to sell exported goods is to reduce their cost by building them with cheap immigrant labor.

Science and Values.  In his new book, The Honest Broker, University of Colorado political scientist Roger A. Pielke, Jr. sees a “pathological” politicization of science in public policy today. What was framed as a debate over “sound science” was really a proxy battle over environmental policy, with most participants “focused on the advantages or disadvantages the book putatively lent to opposing political perspectives  ... One purpose of Pielke’s book is to encourage more scientists to take up the honest broker role ... although science .... cannot resolve what are, at their core, disputes about subjective values or preferences [Jonathan Adler, The New Atlantis, Sum 07]

In the Congress, fiscal sanity is what they talk about, and fiscal insanity is what they vote for. The possibility that senators won't follow Congress's pay-go rules has put them at odds with House Democrats. "We're talking about a train wreck," said Rep. Charles Rangel (D., N.Y.), the chairman of the House tax panel. [Sarah Lueck, Wall Street Journal, Nov 2] To relieve the middle class's AMT encroachment, some other taxes have to be raised or, Heaven Forbid, some handout programs will have to be cut. Since DOD's SBIR has already been declared to not get results, switch the funds to buying Treasury notes and get a lot higher economic return,  Every billion counts.

If your DOD SBIR overseer seems distracted these days, it could be worry about the new personnel system. Merit Pay, a child of the 1970s, is back with a new name as the old dilemma of today's problem was yesterdays' solution haunts politicians with no corporate memory. They overlook the ugly fact that without meaningful quantitative productivity measures, it's just opinion and obsequiousness that will drive pay decisions.

Too Much Elixir. Dozens of U.S. farm towns are counting on bioenergy to revitalize their economies. But they're learning a tough lesson about the difficulties alternative fuels face, as a glut of ethanol supply -- and a sharp drop in price -- reins in expansion. ... "This is America's first BioTown in the making," Gov. Daniels declared in front of about 300 people at Reynolds's fairgrounds. [D Belkin and J Barrett, Wall Street Journal, Nov 1] Now as the corn country politicians need another line, how about more subsidy? If SBIR can ask for it, why not farmers? Why can't everybody have some free government money with their tax cuts?

Vermont Wants to Know. Vermont regulators allowed an investigation to proceed into how telecommunications companies cooperate with government surveillance. Simply invoking "national security" may not be the all-purpose flak-jacket for Executive Branch antics.

Window Dresser Leaves, Again. [Karen Hughes] said she thought she had accomplished what she had set out to do. She said that she had increased financing for public diplomacy to $845M (aren't input measures great as output stats?), and that she had reversed a decline in the number of visas given to foreigners to study in the United States. ... support for the United States has plummeted in the Muslim world. ... the American image “remains abysmal in most Muslim countries in the Middle East and Asia.”  ... [Pew Center] poll found that in five predominantly Muslim countries, fewer than 33% of the population had a favorable image of the United States. Even in Turkey, one of America’s closest allies in the Muslim world, only 9% of the public had favorable views of the United States, down from 52% in 2000. [Helene Cooper, New York Times, Nov 1] Thinking of international sales? Hire a government that cares about international relations.

Governor urged the Legislature yesterday to act quickly on his 10-year, $1 B life-sciences initiative, saying the state is losing its grip on one of its most important industries ... finance cutting-edge research, create the nation's largest stem-cell bank, and provide expanded tax credits to life-science companies  [Boston Globe, Oct 31] No mention of where the money would come from.

Don't tax you, don't tax me, tax that guy behind the tree. The VC industry -- and the entrepreneurs they fund -- are raising red flags about a tax proposal introduced in Congress last week that would significantly reduce the profitability of VC firms. A letter to Congress -- released Monday and signed by more than 500 entrepreneurs nationwide, -- argues that approval of a bill to increase taxes on VC firms would depress investments. [David Ranii, Raleigh News&Observer, Oct 30] A fair tax is in the eye of the beholder and the group whose taxes would be "reformed" can always find reasons against any increase in their taxes. The same way young men in the Vietnam war era found excuses not to serve in the military because they "had other priorities." So goes the national fantasy of government  - someone else will pay for our wishes. And in Johnstown PA, they also oppose higher taxes for their government handouts;  If John Murtha were a businessman in Johnstown, Pa., he'd be the biggest employer in town. The Democratic congressman has used his clout to create thousands of jobs and steer billions in federal spending to help his hometown. [John Wilke, Wall Street Journal, Oct 30] If you think SBIR should be increased, how would you pay for it?

Misunderestimated.  opined a panel of the National Academy of Sciences that urged [the administration] to abandon an ambitious plan to resume nuclear waste reprocessing that is the heart of the administration's push to expand the civilian use of nuclear power. .... has not been adequately peer reviewed and is banking on reprocessing technology that hasn't been proven, or isn't expected to be ready in the time the administration envisions. .... with "significant technical and financial risks."  Responds the administration: they have a misconception of the (GNEP) program. What's more likely is that the panel understands it better than the yes men.

The Budget as Theater. The White House’s point, and I laugh as I write this, is that the Democrats cannot be trusted with the public purse. Though this may be true, coming from Mr Bush it is audacious by any standard. Spending has surged on his watch – and not just on defence or homeland security. He has been an equal-opportunity spendthrift. Now, at the start of his last full fiscal year as president, and at the very moment he submits a supplemental request for additional spending on Iraq (an extra $46bn, for a total of $196bn this year), he asks to be recognised as an old-fashioned fiscal conservative.... Concerning this year’s appropriations bills, [Congressional Democrats'] exasperation at the White House is entirely justified. But those bills are a sideshow. Neither party seems willing or able to grapple with the spending issues that really matter.  [Clive Crook, Financial Times, Oct 29]

Have a Contractor Do It. whatever the possible sins of the Blackwater firm, the overall problem is not private contracting in itself; contractors do not set the tone but rather reflect the sins and virtues of their customers, namely their sponsoring governments. ... Today, America no longer has a draft, its military bureaucracy can be inflexible and the public wishes to be insulated from the direct impact of war. ... Excessive use of private contractors erodes checks and balances, and it substitutes market transactions, controlled by the executive branch, for traditional political mechanisms of accountability. [Tyler Cowen, New York Times, Oct 28]

[Sen] Ensign did win unanimous approval of his amendment to shift $7.8M from (what used to be called) the Advanced Technology Program budget to increase funding for the enforcement of a child sex predator program. He said the Commerce Department program "has been something of questionable efficacy." [AIP Science Policy Bulletin] If efficacy, instead of politics, was the standard, SBIR would be a goner.

It’s easy to blame the violence in Iraq and the pitfalls of the war on terror on a small cabal of neocons, a bumbling president, and an overstretched military. But real fault lies with the American people as well. Americans now ask more of their government but sacrifice less than ever before. It’s an unrealistic, even deadly, way to fight a global war. And, unfortunately, that’s just how the American people want it.  [Alasdair Roberts, The War We Deserve, Foreign Policy] We reward our politicians who promise us a free lunch, as in we can re-make the Middle East at little cost and cut taxes. And, of course, we can energize American technology innovation by diverting federal R&D money to buy the services of market-dead companies, partly because the chair of the Senate SB committee represents dozens of companies who provide those services with no economic accountability.

A congressional committee last week took a hard look at the explosion of U.S. biodefense research since the 2001 anthrax attacks and concluded that the number of labs is growing without adequate oversight. At a 5-hour hearing, federal officials acknowledged gaps in monitoring safety at biocontainment labs. But although scientists agree there's a problem, they worry that hasty reforms could do more harm than good  [Science, Oct 12]

Dayton OH wants to become known internationally as a center in the RFID industry, ... the City Commission signed a $1.4 M development deal for seed money over four years to create the Dayton RFID Incubator Corp,  a for-profit corporation, will function as an incubator for new and small businesses in the industry  [Joanne Huist Smith, Dayton Daily News, Sep 26]

Open wallet, closed mind.  King Abdullah of Saudi Arabia is staking $12.5B on a gargantuan bid to catch up with the West in science and technology. ... building from scratch a graduate research institution that will have one of the 10 largest endowments in the world, worth more than $10B.  ...  where the Islamic authorities vet the curriculum, medical researchers tread carefully around controversial subjects like evolution, and female and male students enter classrooms through separate doors and follow lectures while separated by partitions. [Thanassis Cabanis, New York Times, Oct 26]

Political Innovation. The U.S. Commerce Department picked a 32-year-old political operative with no scientific background or industrial experience to head a new office intended to foster innovation. Joel Harris, who has worked at the White House and for Republican former Colorado governor William Owens, will direct the Technology Council, which replaces the department's 19-year-old Technology Administration. [Science, Oct 12]

Rising Star.  When Laura Strong set out in 2000 to forge a licensing agreement and raise money for a young Madison biotech company, there were no programs or networks set up to help. Strong and her colleagues at Quintessence Biosciences (no SBIR) managed to get the license and raise angel capital, ... accomplishments earned Strong one of five Rising Star awards at the Wisconsin Biotechnology and Medical Device Association.... Speakers came from state companies such as Cellectar (no SBIR), Platypus Technologies ($6M SBIR), Third Wave Technologies ($6M SBIR), and TomoTherapy ($1M SBIR)  [Kathleen Gallagher, Milwaukee Journal Sentinel, Oct 19]  The other companies prove that there was indeed help available for Quintessence, SBIR and the state had an active program in helping companies pursue federal funding. HHS, the natural source of SBIR for bio work, seems to have a good track record of helping young companies with markets in their eyes.

Dead Companies Scream. Companies doing research in biomedical and military fields say they should receive government research funds on the basis of the quality of their work, not on how they are financed. ... The biotechnology industry said N.I.H. statistics showed how the current classification system was squeezing research. Since 2004, there has been a 25% decline in the number of applications for its research funds, according to Congressional testimony by N.I.H. last June. And last year, only 26% of the applicants were new, the lowest percentage ever recorded for new research applications.  [Elizabeth Olsen, New York Times, Oct 25, 07]  As usual, the market -dead companies that get a large share of SBIR money want to exclude market-live competitors that can attract real finance if and when the technology succeeds. And just as they got Kerry to do in his latest SBIR press release, they twist the arguments into a plea that small company R&D is good for America. Which is true, but hardly sufficient for a blind government subsidy program.

Waffling on SBIR. Kerry wants to "strengthen" SBIR but his Oct 18 press release leaves vague what he means by "strengthen". He noted two criticisms but then offered the counters presumably provided by the SBIR advocates. Balanced? Sort of, but ignores the strongest criticism that SBIR has produced no demonstrable economic gain. On the criticism that the tax distorts agency R&D, he says that the backers of the programs say there is precious little objective evidence that has been unearthed to show this. And for the criticism that multiple award winners that produce little commercialization, he says that it is countered by SBIR's backers by pointing out that early identification of the commercial viability or lack thereof of innovations can create a stronger focus on productive R&D and potentially save a significant amount of taxpayer money. Both counter-arguments are blarney. We shall see what "strenghten" means when the details of the re-authorization become law. Don't expect any improvement in what is just politics.

More Energy R&D. Governments and the private sector are spending too little on research into a partial solution - technology to capture and store the carbon dioxide emissions from such plants,  said The study by 15 scientists from 13 nations, "Lighting the Way: Toward a Sustainable Energy Future," commissioned by the governments of China and Brazil. [AP, Oct 22] 

At their current rate, war appropriations could reach $1 trillion by the time Bush leaves office ... so far Democrats have been unwilling to refuse the president any money for the war. [Peter Baker, Washington Post, Oct 23]  And so far, neither President nor Congress have told us how we are going to pay for it. No, supply-side tax cuts are just a mirage.

Wanted: Pied piper for commerce secretary ... The [Wisconsin] Commerce Department, which ought to be among the state's most influential economic players, has sat on the sidelines while other states vie to recruit new businesses, she [resigning Secretary] said. [Milwaukee Journal-Sentinel, Oct 20]

Get Your Subsidy. California's solar initiative, better known as the million solar roofs program, is off to a sunny start, the state says.  ... Akeena Solar, based in Los Gatos, says that a new, residential solar-roof system in California that would cost $25,000 with no incentives would cost $17,000 after rebates and a tax credit.   [San Jose Mercury News, Oct 19] Oh yes, we need to cut taxes to pay for the subsidy.When Twice the Median Isn't Good Enough. What do you have when your income puts you in the top third of U.S. households? Not much, say some of those making an annual salary of at least $75,000. A recent survey conducted by the Pew Research Center asked more than 1,500 people to describe themselves as either "haves" or "have-nots" in American society. Of those in the upper third, 19%, almost one in five, said they were have-nots

Pays for Itself.  It used to be that when they proposed irresponsible or phantasmagoric tax cuts, Republicans at least went through the motions of coming up with some theory about how it would all be paid for. Supply-side economics -- tax cuts would pay for themselves by generating new economic activity -- often played this role. It made no sense, but it honored the tradition that you at least give the voters the material they need to fool themselves. It was the tribute that demagoguery pays to mathematics. Now, they don't even bother. [Michael Kinsley, Washington Post, Oct 20]

Lending through the SBA's loan programs hit a new record in Arizona during fiscal 2007. [Arizona Republican, Oct 19]

High-tech employers, pressing Congress for more visas for highly skilled workers, note three 2007 Nobel winners are foreign nationals in the US  [Wall Street Journal, Oct 19]

Save the Bush Tax Cuts. Letting rates rise again would be devastating to the economy. [Stephen Entin, Wall Street Journal, Oct 19] Sure, credit financing creates more prosperity. For a while. Just ask all the people with home equity loans. What a plan: Make a trillion dollar war, cut taxes!  The people with the most taxable incomes can always think of a great reason to cut their taxes. Daddy Dick Cheney has the rationale: Reagan proved deficits don't matter.

Doing Government Business. A GAO report found that in more than half of the 117 statements of work examined by auditors, DHS officials sought out contractors' help for planning, reorganization, policy development and other activities that are considered "inherently governmental."  [Robert O'Harrow, Government Inc blog, Washington Post, Oct 19] Before you take on contract tasks that look too easy, look first to see whether the government is asking you to do what only government can do. Because when the policy runs into the inevitable trouble, you will be blamed. Why does government do such things? Because Republicans want to shrink government while giving business to private enterprise. Government doesn't shrink, only the number of federal employees shrinks, to be replaced by profit-seeking incentives. Government is not a business.  Worse, the government actually made it easier for valuable federal employees to leave the service without much financial loss by removing the golden handcuffs of the Civil Service Retirement System.

Free Lunch Syndrome. If the Senate's new "renewable fuels" mandate becomes law, get ready for a giant slurping sound as Midwest water supplies are siphoned off to slake Big Ethanol. ... Heavily subsidized and absurdly inefficient, corn-based ethanol has already driven up food prices. [Wall Street Journal, Oct 17] Subsidies may be limitless, but water doesn't come from politicians, not even from the religious right.

Welcome, Texans, to the Hudson Valley. New York state and the University at Albany have been chipping away at Austin's grip on Sematech.... In 2003, Sematech created Sematech North at the NanoCollege's Albany NanoTech complex and now is expanding its presence there in a $760 million project that includes $300 million from New York state. ... The [Austin] American-Statesman story said Sematech employees not affiliated with ATDF are being told they must move to Albany if they want to keep their jobs. [Larry Rulison, Albany Times-Union, Oct 17]

Global Sloshing. Global growth today is being driven, in part, by the free flow of capital. It's increasingly easy for people and companies around the world to raise money through any of a number of credit channels. The exact form is not important  [Michael Mandel, Business Week, Oct 22] Which undercuts the SBIR premise that small high tech innovators need government handouts because they cannot get capital. It is true that the firms repeatedly funded by SBIR cannot get capital because their main business is getting government handouts rather than creating marketable products and services.  If Congress really wants to use SBIR to nurse competitive American technology, it needs some new structure for SBIR that gives the federal agencies an incentive to connect government money with downstream investment after the federal money reduces the technical risk. The present scheme has NO such incentive.

Loving Experience.   Scientific Systems (Woburn,MA; $50M+ SBIR) won a NASA JPL Phase 2 SBIR for Distributed Formation State Estimation Algorithms Under Resource and Multi-Tasking Constraints. Creare (Hanover NH; $120M SBIR) won four NASA JPL Phase 2 SBIRs. Intelligent Automation (Rockville MD; $100M SBIR) won three NASA JPL Phase 2 SBIRs. Physical Optics (Torrance, CA; $200M SBIR) won one NASA JPL Phase 2 SBIR. Radiation Monitoring Devices
(Watertown, MA; $90M SBIR) won one NASA JPL Phase 2 SBIR. Etc, etc, etc. A zillion start-ups all over America got letters saying there was not enough money to nurture their ideas.

On the day after Al Gore shared the Nobel Peace Prize, The Wall Street Journal’s editors couldn’t even bring themselves to mention Mr. Gore’s name. Instead, they devoted their editorial to a long list of people they thought deserved the prize more. ... For the truth Mr. Gore has been telling about how human activities are changing the climate isn’t just inconvenient. For conservatives, it’s deeply threatening. [Paul Krugman, New York Times, Oct 15]

Need a Friendly Press Conference? Bush also held, via satellite, a public meeting with soldiers in Tikrit, Iraq. The White House denied the event was scripted, though video footage was released showing a Defense Department official coaching the soldiers before the interview, and one of the soldiers was later revealed to be a public-affairs officer.  [Weekly Review, Harper's, Oct 18, 05]

The political tide has shifted against trade deals, and the Bush administration signaled it is changing in response.

Opinion polls show rising discontent with globalization among Republicans and Democrats alike.

Too Much President. In any country, if you don't have countervailing institutions, the power of any one president is problematic for democratic developmentAfter six years of serving the "unitary executive", Condoleezza Rice opined that The Russian government under Vladimir Putin has amassed so much central authority that the power-grab may undermine Moscow's commitment to democracy.  [M Lee, AP, Oct 13]  I guess she should know. Clifford Levy of the New York Times (Oct 14) notes that Strict new election rules adopted under Mr. Putin, combined with the Kremlin’s dominance over the news media and government agencies, are expected to propel the party that he created, United Russia, to a parliamentary majority even more overwhelming than its current one.  The system is so arrayed against all other parties that even some Putin allies have acknowledged that it harks back to the politics of the old days. W and his unitary executive advocates in the VP's office would love such "success".

In Washington higher taxes are always the solution; only the problems change. [economist Alan Reynolds, WSJ, Dec 06]

Investigating Each Other. In another bitter legacy of the policy disputes over handling stateless terror, the CIA Director is apparently investigating the agency IG whose investigations of agency operations have created resentment among agency operatives. ... The review is particularly focused on complaints that Mr. Helgerson’s office has not acted as a fair and impartial judge of agency operations but instead has begun a crusade against those who have participated in controversial detention programs. But the law that sets up IGs doesn't permit such conflict of interest by the agency head; if he/she has a gripe, take it to the agency specifically set up for such complaints. The Director's mouthpiece rationalizes that the Director's only goal is to help this office, like any office at the agency, do its vital work even better. Pravda couldn't have said it better. [story from Mark Mazetti and Scott Shane, New York Times, Oct 12]

A federal judge in San Francisco ordered an indefinite delay in the federal rule that employers would have to fire workers within 90 days after receiving a notice from the Social Security Administration that an employee’s identity information did not match the agency’s records. .. Judge Breyer found that the Social Security database that the rule would draw upon was laden with errors not related to a worker’s immigration status, which could result in no-match letters being sent to legally authorized workers. [Julia Preston, New York Times, Oct 11] The pontificating nativists howled “What part of ‘illegal’ does Judge Breyer not understand?” in an apparent attitude that anyone who might be illegal is guilty, as the administration does for alleged terrorists. They simply do not believe in the principle of benefit of the doubt because they are never wrong. 

A Political Fuel. The stalling ethanol industry wants Congress to mandate greater use of the biofuel. But many of the industry's former friends have turned against it amid soaring prices for corn and other grains. ... Oversupply has forced down prices and driven some ethanol producers into trouble. ... the Renewable Fuels Association, says ethanol is "still a young and developing industry."  [Lauren Etter, Wall Street Journal, Oct 11] If market demand won't give you enough income, get a government subsidy (while screaming for tax cuts). Shades of SBIR!

Four Houston-area health science companies became the latest recipients of a state program designed to help get startup products to market and keep new technologies from leaving Texas. ... Emerging Technology Fund awards ranging from Bellicum Pharmaceuticals $1.5M,  Laser Tissue Welding $160K, Thrombovision $1.5M,  Visualase $750K ... Gov. Rick Perry and the Legislature created the fund in 2005 to stop the flow of intellectual property out of Texas. ...Since then, 40 companies and universities have received $95M ... Companies must commit to stay in Texas for at least 10 years or repay the money.  [Brad Hem, Houston Chronicle, Oct 10] None needed SBIR. What might keep the companies in Texas is not the money but the proximity to the huge Houston medical complex. If the technology sells, the $1M would be no problem to give back with interest.

Tech Policy Wonks Alert. The Technology Administration folded Sep 30. More than 50 reports are still available for free download at It is unknown how long much longer these reports will be available.

silicon sales pitch. Executives and economic development officials from the Capital Region and beyond are in Germany this week promoting New York state to the global semiconductor industry. ...about 30 Capital Region officials toured the world headquarters of M+W Zander, the German engineering and construction company that has led construction projects for the world's largest computer chip manufacturers. The company, which has an office at Watervliet Arsenal, also has led projects at the Albany NanoTech complex. [Larry Rulison, Albany Times-Union, Oct 10]

An Attaboy From Mississippi. The Trent Lott National Center of Excellence for Economic Development & Entrepreneurship (a mouthful of title), operated by the University of Southern Mississippi, announced its first Excellence in Technology Based Economic Development Research award to Dr. Edward Feser of the University of Illinois. An annual pork award should follow.

“the sky’s the limit.” Mr. Romney mentioned Michigan’s “one-state recession,” but he said that if Republicans wanted to regain voters’ trust on the economy, they had to avoid doom and gloom. When Mr. Giuliani was asked about the billions of dollars being made by private equity firms, he replied, “Well, I mean, the market is a wonderful thing.” Thanks to the free market, he added, “the sky’s the limit.”  [David Leonhardt, New York Times, Oct 10]

Republican National Committee spokesman Danny Diaz said although [Hillary] Clinton is talking about prosperity for the middle class, she would increase spending dramatically and raise taxes. "Clinton's tax-and-spend express makes it clear once more that she truly believes the government knows best how to spend our money, run our health care, and raise our children," he said. "Luckily, the American people know better."  [Nedra Pickler, AP, Oct 8] Meanwhile another candidate waffles competitively, Even as he decried what he described as Washington's dependence on pork-barrel spending last week, he reversed position after touring an Iowa ethanol plant, saying he now supports subsidies for alternative fuel.  [Amy Schatz, Wall Street Journal, Oct 8] Comes the election we will have to decide between a party that spends without new taxing or a party that spends while lowering taxes. But there's is little evidence that the electorate will face up to the free lunch problem of high deficits to pay for continued government programs from war to Social Security.  We will once again get the government we deserve.

government statistics took a leap into the 21st century. The Bureau of Economic Analysis, with the National Science Foundation, has put out a greatly improved estimate for U.S. gross domestic product: It takes full account of research and development spending--including, for the first time, flows into and out of the country. ... the new (still experimental) numbers treat R&D as an investment  [Business Week, Oct 15]

"It has been seven years since this initiative was enacted into law and the SBA has yet to implement it, costing women business owners billions of dollars in lost contracting opportunities," said Rep. Nydia M. Velazquez (D-N.Y.), chairwoman of the committee. "The administration's lack of action on this is unacceptable."  ... The agency has said the delay has been caused in part by its complex duty to find constitutional justification for the gender-based program that it said was required under recent Supreme Court decisions and congressional mandate. [Cyndia Zwahlen, LA Times, Oct 4]

a fraying of Republican Party orthodoxy ... By a nearly two-to-one margin, Republican voters believe free trade is bad for the U.S. economy, a shift in opinion that mirrors Democratic views and suggests trade deals could face high hurdles under a new president. [John Harwood, Wall Street Journal, Oct 4] The core problem is the belief by so many voters in a free lunch that rejects the reality of world competition and the need for fiscal responsibility. Conservatism has become unconservative and obsessed with Puritanical social issues that have no impact on the economic life of the nation. One overlooked aspect is that US dominance has roots in a few one-time events: exploiting minerals resources and World War II. It's increasingly clear that the U.S. isn't any longer the sole engine of global growth -- that other economies have, in effect, decoupled from it. [Justin Lahart, Wall Street Journal, Oct 4]

The Senate passed the DOD Authorization Bill that includes an SBIR reauthorization to extend the program through FY-2010.  It also includes a provision to extend the DoD's Commercialization Pilot Program (CPP) ... a stop gap measure, leaving the SBIR program "as is" while Congress buys time to do a comprehensive reauthorization of the program in the near future. ... It will need support when it hits the House or it could get scrubbed.  The House Armed Services, Small Business, and Science & Technology committees will weigh in, as will government organizations such as the SBA, and agencies that have SBIR programs. ... Some special interest groups (yep, the big VC lobbyists) are already looking at this as an opportunity to get what they want, or threaten to let the program die. [Rick Shindell, SBIR Insider, Oct 2] It would help SBIR if its advocates could make some kind of more convincing case than their "fair share" blather. After two decades Congress should ask whether it is worth the trouble to enable and manage it. Without that, it's just raw politics.

Philanthropist Jerry Bisgrove's foundation has donated $25 million to Science Foundation Arizona in a move that technology interests hope secures $25 million in state funding next year for the non-profit group charged with spurring the state's technology efforts. ... The Arizona Legislature this year approved $100 million over four years in funding for the startup private, non-profit group formed by the state of Arizona and private business groups. State legislators approved the funding on the condition that the foundation secures an equal amount from private donors. [K Alltucker and M Benson, Arizona Republic, Oct 2]

Buy Now, Tax Now?  three senior House Democrats Tuesday offered a long-shot plan to raise taxes to pay for the $150 billion bill for the war in 2008 ... would require low- and middle-income taxpayers to add 2 percent to their tax bill. Wealthier people would add a 12 to 15 percent surcharge ... The tax surcharge sponsors said the idea is similar to policies put in place to pay for the Vietnam War and World War II. For Vietnam, surcharges equal to between 5 percent and 7.5 percent were in place between 1968 and 1970. [AP, Oct 2]  Heavens, no, taxes to pay for present wars are something to defer to the future which doesn't vote in the next election.

It's October, GFY 2008; do you know where your federal tax money is going?

Their argument is now the national deficits don't matter so much anymore in strong economies because there's a global market for money. And since other countries are running a surplus, they have to do something with the money and we're actually doing them a favor by taking it off their hands. ... My argument back is that there's a limit to how long you can grow the economy on real estate and consumption fueled by second mortgages and maxed-out credit cards. [Bill Clinton, WSJ Interview, Oct 1] Do you believe that we can grow our way out of any deficit, and if so, where is that growth to come from? The market impact of using SBIR for rocket plume models? Or do you think that SBIR should be indifferent to national economics, especially if you are a maker of rocket plume models?

Only Kentucky Matches. Kentucky has been running full page ads in Science magazine (and who knows where else) trumpeting its SBIR award matching of both Phase 1 and Phase 2 in its low stress, low cost-of-living communities, high quality of life amid unrivaled beautyThe solicitation open until 30 May 2008 or until funds are exhaustedInfo.

Subsidy and Sunshine. An unending supply of sunshine (at least for the next several billion years),  a hot reception for the slew of solar IPOs, and a projected 344% PV market growth by 2016. But the solar stocks trading on Wall Street are priced more on promise than profits. [Smart Money, Sep 25] Either the subsidy keeps on giving or the naked cost of solar energy will suppress the market until the fossil fuel runs out.

The Camel's Nose. Jere Glover of the SBTC called this "the worst piece of small-business legislation I've seen in 25 years." as the House admitted VCs into SBIR by 325-72.  Ms. Velazquez's final comments after passage was to thank all those involved, including those who were "invaluable" from the outside, including: the Biotech Industry Organization (BIO), the National Venture Capital Association (NVCA) and several other large financier industry groups.   [SBIR Insider, Sep 27]  Senate hasn't acted yet.

South African Nobel peace laureate Desmond Tutu told Reuters he was "devastated" by the human rights abuses of Mugabe's government and he struggled to understand how Mugabe had changed so drastically after steering the former British colony to independence. [Claudia Parsons, Reuters, Sep 26]  "Power corrupts and absolute power corrupts absolutely" - British historian, Lord Acton. In the US, the drive towaord absolute power was thwarted at least temporarily by a federal court ruling that the Fourth Amendment of the Constitution still bars a warrantless government search of an Oregon suspect under the terms of the Patriot Act.  [Reuters, Sep 26]

San Jose's 3-year-old BioCenter, designed to help biotechnology entrepreneurs get started, is crammed with companies and needs a $2.5 million expansion, according to city officials.[San Jose Mercury News, Sep 25]

Anti-VC Panic. The SBIR Insider raises an alarm call that H.R.3567, will be voted on in the House on Thursday, September 27, and if passed would allow the VC nose under the SBIR tent - devastating, he says. Shindell urges opponents to shriek at their Congresscritters.

Matches for Money A company has a technology need for work/services to be done - and lets us know what they're looking for . . .  The Connecticut SBIR Office broadcasts this information out to our database of businesses . . .When a business finds a fit they email us with a description of how they can help ... We Match them!  ... open to ALL STATES that wish to work with a CT company

Grab Your Politician for Plus-Up. Smaller and more transparent earmarks of federal funds for favored domestic projects are returning after a one-year moratorium on the controversial practice. ... a bit less than 1% of total R&D appropriations (3% for DOD) ... The Senate Top 10, are mostly smaller states with senators in key committee chairmanships—Mississippi, New Mexico and Tennessee are at the top. ... search AAAS's new database of 2008 earmarks [AAAS Newsletter, Sep 07] But for small business, even 1% is a big honey pot. In the list (August version): Electro Energy  (CT; SBIR), Ocean Power Technologies (OR, SBIR in NJ),  DBS Energy CT, Eikos (MA; $8M+ SBIR), Cellular Bioengineering HI, Cerematec  (UT; SBIR), Ramgen WA, Advanced Radar Technologies WY, Compact Membrane Systems (DE; $20M SBIR), SD Catalyst Group SD.  Your story is that high-tech small business will create jobs, and they don't know whether your claim is valid or just wishful thinking. Like the federal mission agencies who then have to award and supervise the contract, they don't seem much to care.

Efficient Ears. On average, companies generated roughly $28 in earmark revenue for every dollar they spent lobbying. By any standard, that's a hefty ratio: The companies in the Standard & Poor's 500-stock index brought in just $17.52 in revenues for every dollar of capital expenditure in 2006. ... Says Keith Ashdown, chief investigator for the watchdog group Taxpayers for Common Sense: "The lion's share of these projects is about politics and jobs, rather than real needs." [Business Week, Sep 17]  The earmark efficiency champ is an SBIR company, Scientific Research (Atlanta GA and others; about $15M SBIR), that got $344 in earmarked funds per dollar of political "investment".Other SBIR investors: Isothermal Systems (KY and WA; $2M SBIR) at $221 per lobbying dollar; Prologic (Fairmont WV; $2M SBIR) at $133 per dollar; Trex Enterprises (San Diego CA; $7M SBIR) at $116 per dollar. From an efficiency viewpoint, politicians make a good investment. You just have to learn how to kiss frogs.

Nina Fedoroff was chosen for the nation's highest scientific honor, the National Medal of Science. It's the first time in 4 years the list includes women. Recently, the plant molecular biologist accepted a new job advising U.S. Secretary of State Condoleezza Rice [Science, Jul 27]

One of the recipients of The National Medal of Technology was Paul G. Kaminski - Technovation, Inc., Fairfax Station, VA, who as an Asst SECDEF in the early Clinton administration actually tried to improve SBIR by demanding more attention to commercialization. But, like almsot all political appointees, he soon passed on and his "improvements" were ignored.

Use-fee patent funding. Stoel Rives patent attorney Kassim Ferris recently told clients that federal examiners wouldn't get to their patent application for 72 months. ... Rep. David Wu, who worked as a high-tech lawyer before joining Congress in 1999, is trying to improve the patent process. The Portland Democrat's proposal is simple: allow the U.S. Patent and Trademark Office to keep all of the fees it collects and use it to hire more staff and upgrade its technology [Jeff Kosseff, The Oregonian, Sep 21]  Direct use-fee funding of federal agencies sounds better in theory than it probably acts in reality. It would favor large, well-financed entities and help suppress innovation by small entities like individual inventors.  If innovation is good for the country, the government should bear the cost of awarding timely patents without regard to the financial strength of the applicant. Let's see SBTC take on this issue which does affect small firm innovation instead of wasting everyone's time pleading for more "fair-share" SBIR.

Dry in the West? So's the humid East. In anticipation of a prolonged drought, the city of Raleigh plans to ask all major water users to prepare conservation strategies for water emergencies. ...  Ajinomoto AminoScience, a manufacturer of amino acids for pharmaceutical and food applications, hopes to cut water use by about 18 million gallons this year, or nearly 10 percent, said Gary Faw, Utilities Department Manager at the company's Raleigh plant. The company already saves 11 million gallons a year by no longer diluting heated waste water.  North Carolina's drought is expected to stretch until February (of some unspecified year) [Raleigh News&Observer, Sep 21]

VC Alarm. The Defenders of Mediocrity are in panic again as the idea of VCs getting into SBIR, and even into other SBA-sheltered small business programs, has re-entered Congress.  The new bill H. R. 3567 was just introduced Tuesday, Sept 18, and is being rushed to mark up by the full House Committee on Small Business, Thursday, Sept 20.  How's that for speed?  Perhaps some feel they don't need to hear from you.  This bill, entitled "Small Business Investment Expansion Act of 2007" contains the VC language at the end, Title V, Sec. 501 [Rick Shindell, SBIR Insider, Sep 20] The SBIR junkies don't want to compete with real entrepreneurs who can show third party validation of their ideas. If SBIR is ever to succeed at its goal of seeding future economic contributors, it has to inject some entrepreneurial spirit from some market-driven source, and VCs specialize in early technology. The latest proposed law tries to inject VC without handing the business over to large corporations. On the other hand, the fear is overdone since the decisions for most SBIRs are in the hands of government technocrats who don't care about economic growth and are more likely to continue funding rocket plume models than to discover any interest in national economic growth.

Selling Something to Buy Oil. Middle Eastern governments announced a series of billion-dollar deals Thursday that would give them stakes in financial institutions at the heart of Western capitalism, raising concerns in Washington about sensitive foreign investments. [TM Tse, Washington Post, Sep 21] The government of Abu Dhabi is buying 7.5% of private-equity Carlyle Group and the government of Dubai 20%  of NASDAQ. Meanwhile, China bought 9.7% of private-equity Blackstone Group and Qatar 20% of the London Stock Exchange. The oil flows in and the dollars flow out; latest Euro rate $1.40 and rising. But the recipients of the dollars have to do something with them as they steadily lose value, and buying US Treasury notes just puts off the reckoning while supporting the US government's spending.

Where There's Cheese, Rats Will Come.   Four men charged in a bid-rigging scheme to win $79 M in contracts from the Army Medical Command have reached plea agreements that include prison time, federal prosecutors in San Antonio said. The authorities said the men made $3.6 M in profits by tainting contracts to take advantage of laws that give minority-owned and small disadvantaged businesses a leg up on contracts for Army hospitals. [New York Times, Sep 21]

Greenmail lawyer William Lerach is set to plead guilty to one count of conspiracy in the criminal case involving his former law firm, The law firm escapes criminal charges. [Wall Street Journal, Sep 17]

Thanks to a confluence of factors—a federal tax credit, an uptick in federal funding for renewable energy R&D, the enactment of renewable electricity standards in many states and public antipathy toward greenhouse gas-belching coal-fired power plants—the sun is making a comeback. Concentrating solar power (CSP) is suddenly looking interesting again. [The Economist, Sep 13]  But only government subsidy keeps it afloat.  Electricity from the new plant in Nevada costs an estimated 17 cents per kilowatt hour (kWh), but projections suggest that CSP power could fall to below ten cents per kWh as the technology improves. Coal power costs just 2-3 cents per kWh. 

An Import. A prominent Australian scientist was named Friday to run California’s $3 billion stem cell research program, filling a leadership vacuum that had threatened to rob the program of recently gained momentum. The new president, Alan O. Trounson, 61, is director of the immunology and stem cell laboratories at Monash University in Victoria, Australia. [Andrew Pollack, New York Times, Sep 15]

Going to the Pool. "The incubators are filling up and there's a lot going on, but when it comes time to graduate out of the incubator, we lose the businesses, to Massachusetts, North Carolina, even Michigan."  ... the recent loss of a Long Island biotech company to San Diego because it couldn't find the technicians it needed. [Eric Anderson, Albany Times-Union, Sep 15] State and local venture programs that subsidize high tech firms should expect jobs to flow in to a tech success. It's too easy for the company to go where the talented worker pool lives and they can find an intellectual support environment.

More Lipstick for a Bigger Pig.  SBTC, the political arm of SBIR, is planning another showcase for SBIR companies that live on  government contracts - part of a campaign to convince Congress that the nation needs more SBIR. It is to be the updated SBIR in Rapid Transition Conference Oct 10-12 in Washington (where else will they find Congresscritters).  With a focus on the new, Congressionally-mandated, DoD SBIR Commercialization Pilot Program, we will feature many important speakers representing key DoD and defense industry stakeholders who are redefining the practice of technology transition.  That seems to be code for "since we can't show any economic gain from SBIR, let's trumpet the continued use of the companies by the government since sole-source contracting makes it easier for the government to avoid open competition".

The Cheney Way.  a five-member committee agreed in secret to offer as much as $2.5 M to the business, Turbomeca Manufacturing, to lure 180 jobs to Union County, near Charlotte. ... the process -- and power -- of the Economic Investment Committee, which oversees one of the state's most lucrative incentives programs, deciding which companies get aid and how much they get. ... Some taxpayer advocates say that should change. [Jonathan Cox, Raleigh News & Observer, Sep 15]

Ever Windier. Texas will hold what state officials call the nation's first competitive sale of leases for offshore wind-power facilities. The state is seeking bids for four offshore tracts with a combined 73,098 acres, The wind in the offshore area "is not super-strong, but it's steady," said Jim Suydam, a spokesman with the land office. [Houston Chronicle, Sep 14]

Multiple SBIRs to Mills. The Energy Department loves SBIR experience so much that it again gave many and multiple Phase 2 SBIR and STTR to companies that have been feeding from that trough for two decades.  Opportunity cost: dozens of innovative companies with innovative and even disruptive ideas are systematically denied a chance. Congress should find ways to pry the dead fingers of the bureaucrats who want safe and predictable results from the levers of award power to SBIR mills.

Keeping Brains in Maine. A bill designed to keep new Maine graduates living and working in the state after college became law last week with Gov. John Baldacci’s signature. The Opportunity Maine bill, LD 1856, creates a tax credit to assist graduates with their student loan payments and enables employers of graduates to pay off the student loans. [SSTI, Jul 11] One of the great SBIR advocates once opined that more SBIR should be spread among the "flyover states" so that Nebraska, for example, can keep more of its graduates. Perhaps a nice thought for Nebraska, but not an objective of a federal program which must be neutral on inter-state competition.

Phone calls from suitors have dried up at Jim Lasswell's small firm. Potential buyers have gotten cold feet because of new SBA rules that make it likely that the San Diego federal contractor, if acquired, would no longer qualify for government work aimed at small businesses.  "I had a number of companies that were actively pursuing us, and they all ran away," said Lasswell, president and senior engineer of Indus Technology (no SBIR), which posted $20 M in revenue last year. Merger-and-acquisition activity nationwide is being slowed by the uncertainty over the rules, which went into effect June 30, experts said. [Cyndia Zwahlen, LA Times, Sep 13]

Colorado also has entered the arena with the launch of the Eighth Continent Project, hosted at the Colorado School of Mines Center for Space Resources. The project has assembled an array of services, including a trade association, a planned incubator and venture fund, and a collaborative research program for private space enterprises. Project Director Burke Forke believes the program will help position Colorado as a leader in 'Space 2.0' in which the industry will be dominated by venture-backed entrepreneurs instead of large government projects. [SSTI, Sep 12]

A nonprofit education organization backed by Exxon Mobil Corp. has awarded the state of Connecticut a $13.2 million grant for science and math education. The National Math and Science Initiative, which is based in Texas, has awarded the six-year grant [Mass High Tech, Sep 11]

Getting Real. Senate Republican leaders are planning to ignore White House talking points about the strength of the economy under President Bush and press a more forward looking agenda. The idea, according to a leadership strategist, is to embrace the idea that the economy is in trouble and that spending restraint and tax cuts represent the solution. If GOP leaders follow through, that will allow them to swim with the tide of public opinion rather to buck it. [Wall Street Journal, Sep 12] No matter the economic problem, tax cuts is the Republican answer because lots of people want to believe that a cut for themselves is good for everybody else. 

First Minister Alex Salmond is working to make Scotland the country with the lowest business taxation in the U.K. Like all countries that want to remain competitive, Scotland also recognizes the additional need to recruit the best and brightest to our shores. We understand that the catalyst of business is innovation and diversity and so we actively seek out those eager to come live and work with us. ... Its population has been growing over the past five years, mostly due to immigration, and we continue to welcome new Scots. This is due in part to the Fresh Talent Initiative, a program that has helped thousands of overseas students to study at Scottish universities and introduces them to the opportunities that exist after graduation. The Scottish government is also exploring creative and practical ways to make it easier for talented people to come live and work in Scotland, taking advantage of its strength in areas like financial services and life sciences. [Lorna Jack, President of the Americas Scottish Development International, New York, Wall Street Journal, Sep 11]  Note that Scotland does not mention direct government VC funds, only building an attractive infrastructure that will attract and hold the right kind of entrepreneurs. 

The general appeared in the public hearing and said what his CINC wanted to hear - he succeeded at his limited mission. But then no general or other executive who aspired to be the head of his part of a large enterprise would do anything else. Although he protested that the White House had not reviewed his testimony, his CINC showed up in the general's office last week and has made no secret of his "new strategy" - to give as little ground as possible in conceding that we cannot prosecute the war forever and that we cannot "win" with the available Army.  Ah well, we can do whatever works to ratchet down the death and maiming rate among the cream of young Americans willing to risk themselves for their country in a meat grinder war. Attrition worked for America in WW II, but works against us in this insurgency among a huge population that promises martyrs heaven and recruits them by extortion. Besides, as Richard Lugar observes, the Iraqis don't really want an Iraq; each major group wants autonomy and control of as much of the land and wealth as they can get. The American model of a unified, democratic Iraq is a myth. We have to leave sometime, and soon, because we do not have enough volunteers to serve in the Army as a permanent occupation force among a people who reject our model. And we have far too many politicians favoring more war who have no moral authority for it because they rejected their chance to volunteer for such duty when we last faced a strong insurgency in a foreign land - Vietnam. 

Go Big, Go Long, advises Norman Podhoretz in his new book World War IVThe premise of "World War IV" is that we are in a global conflict that will not end any time soon. To win it, we will have to make radical changes to our military, diplomatic and legal theory and practice. Whereas terrorism was formerly treated as a problem for the police and "first responders," the scale of the threat today -- and the technologies potentially available to evildoers -- demand a long-term, large-scale military commitment. [Christopher Wilcox, reviewing Podhoretz, Wall Street Journal, Sep 11]  But where will the volunteer Army come from to risk life and limb in the cause? Opinionators seem to outnumber willing warriors. Hey, maybe the hard-rock nativist Republicans can make some deal with the mass of illegal immigrants who want to stay in the US as citizens. We have the demand and they have the supply!

Can't Depend on Future Government U.S. space officials, after several attempts to help resuscitate a private space venture led by closely held Rocketplane Kistler Inc., have issued a default letter effectively cutting off future federal assistance for the proposed $1 billion reusable rocket project, industry officials said. ... Commercial investors have balked at making final commitments partly because NASA hasn't locked in a future spending stream to support commercial rocket ventures.  [Andy Pasztor, Wall Street Journal, Sep 10]  Remember: an Executive Branch agency cannot make lock-ins of future appropriations. Only Congress appropriates money.

The giant computer maker regarded as China's single largest exporter is bringing 1,400 jobs to suburban Indianapolis. Foxconn plans to hire the workers during the next two years at its Q-Edge computer assembly plant in Plainfield. ...Indiana has pledged $6.1M in incentives, while Plainfield has offered property tax cuts for 10 years. ...  Foxconn is part of Hon Hai Precision Industry Co., based in Teipei, Taiwan. Hon Hai, with annual sales surpassing $40 billion, is owned by Terry Gou. He launched his career making plastic parts in his garage in 1974, just in time to expand as the market for personal computers took off. [Indianapolis Star, Sep 8]

Southern California's stem cell companies, eager to get a piece of the state's $3 billion funding for stem cell research, seem willing to do whatever they must to qualify for state grants. ... Under the institute's current policy, which only pertains to nonprofit research institutes, grant recipients who license discoveries they make with state research grants must give 25 percent of their profits over $500,000 to the state. [San Diego Union Tribune, Sep 8] They should all remember that profits are not countable at the door since they are only an accounting entry.  It'll be just like the movie industry where profits are manipulated to cheat contingent contract deals. At least SBIR doesn't get into that mess because the feds don't care about profits.

Putin will cooperate with OPEC because high oil prices make it easier for him both to provide Russia’s people with butter and his military with guns. ... Mexico won’t allow American capital in, but wants to ship unlimited numbers of its workers out to the United States. The Bush administration acquiesces. ... But it will take decades for the current fleet of cars to be replaced by more fuel-efficient vehicles. ... Meanwhile, the American economy remains dependent on its enemies for its fuel, its politicians refuse to take meaningful steps to reduce that dependence, and America sleeps. [Irwin Stelzer, The Times, Sep 9]

We've written in the past about the French boondoggle of a plan to create a government-subsidized search engine to compete with Google. Marc Andreessen points out that Japan is the latest country to try to compete with Google using government subsidies. Apparently, a consortium of large Japanese companies will divide up the task of developing a Google-killer, with the whole project overseen by government bureaucrats. Somehow, it's unlikely that Google is worried. [Tim Lee, blog, Sep 7] When government competes with private entities in things that private entities do profitably, the result is usually a useless drain on the Treasury and benefit only to the people in the agency and any uncompetitive firms chosen to do the work. 

What's the King Up To Now?  Andrew Sullivan opines on the prospects that the president-king will acquiesce to a winter draw-down of US troops in Iraq, but only so as to remove them as potential targets in the war he is planning to launch against Iran (if the military don't revolt). Could the king possibly believe the Air Force six-decade line that strategic bombing wins wars?  What obvious basis does he have for challenging such a myth?  But the nation's patience for war as the international relations policy of choice may soon run out as death counts and regular $50B bills for extras pile up with no noticeable improvement in security.

The European Union's trade chief raised the prospect of world trade talks going "into the freezer" and not coming back out for at least two years. [Seattle Times, Sep 4] The politics of home-cooking subsidies and present jobs, not economics, dominate trade deals that affect the future. One reason is that we elect politicians who are not well versed in economics, and especially in explaining economics to their voters.

Solar power, which is much more expensive than other forms of power generation, would become more competitive if lawmakers tax or price carbon-dioxide emissions. "Electricity prices could go up 50 percent over the next 10 years. Then solar will be cheaper than the grid," said Jesse Pichel, a senior analyst at Piper Jaffray. ... For now, solar relies heavily on government subsidies, including a $2,000 federal tax credit for installations, supplemented by generous aid in places like Austin and California. [Steve Mufson, Austin American-Statesman, Sep 3]  Remember that government subsidies depend on politics, not on economics.

InternetVoting writes "California has passed a bill banning companies from requiring employees to have RFID chips surgically implanted. Already one company has been licensed by the federal government, implanting more than 2000 people. At least one other company —, a Cincinnati video surveillance company — already required RFID implants in some employees. [, Sep 3]

More Free Lunch. Presidential hopeful Bill Richardson said a portion of college loans should be forgiven if graduates complete a year of national service. [AP, Sep 2]  Oh sure, the SBIR free lunch also deserves expansion so we can get more small business technology picked by the government agencies with no stake in national economics.

Hundreds of companies in Silicon Valley are offering every imaginable service, from writing tools to elaborate dating and social networking systems, all of which require only a Web browser and each potentially undermining Microsoft’s desktop monopoly. [John Markoff, New York Times, Sep 3] If you are going to use SBIR for any application that competes with Microsoft or Google, think again, regardless of what the government says it thinks about the commercial potential. The government neither knows nor cares about your real commercial potential.

The Triumph of "Voodoo economics" American politics has been hijacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane. The scope of their triumph is breathtaking. ...  that cutting taxes for the very rich is the best response to any and every economic circumstance or that it is perfectly appropriate to turn the most rapacious and self-interested elements of the business lobby into essentially an arm of the federal government--are now so pervasive, they barely attract any notice. ... The result has been a slow- motion disaster. Income inequality has approached levels normally associated with Third World oligarchies, not healthy Western democracies. The federal government has grown so encrusted with business lobbyists that it can no longer meet the great public challenges of our time. Not even many conservative voters or intellectuals find the result congenial. Government is no smaller--it is simply more debt-ridden and more beholden to wealthy elites. [Jonathan Chait, The New, Sep 3]  Bob Dole, who has his own museum now in Lawrence KS, used to bemoan that a (hypothetical) supply-siders' bus than went over a cliff still had some empty seats. Let's face the political reality that the public wants to believe that cutting taxes is good for the economy. They have not the economic understanding to question the specifics, and want to believe the idea that a rising tide lifts all boats - otherwise called "trickle-down" when the tax cuts come at the top. And the people's representatives? If you try to discuss economic theory with most politicians, their eyes will glaze over.

The Oregon legislature appropriated $28M for "investments" in seven new industry initiatives and the creation of two new signature research centers. [SSTI, Aug 1]

North Carolina's budget appropriates $5 million to establish the North Carolina Biofuels Center. The action plan, Fueling North Carolina’s Future: North Carolina’s Strategic Plan for Biofuels Leadership, outlines nine strategies for the coming decade to strengthen the state’s future in biofuels development and use. [SSTI, Aug 1]

The Small Business Administration announcement about reforms last week didn't sit well with the very vocal American Small Business League.

Feeble Excuses. the SBA issued its first ever report card on how well agencies are doing in meeting mandates for awarding contracts to small businesses. As part of its announcement, agency officials drew attention to their efforts to ensure that agencies no longer claim contracts are small business-related when in fact they're run by big contractors. In a statement yesterday, American Small Business League, an advocacy organization, took issue with the SBA's contention that data miscoding was a primary reason for the "diversion of billions of dollars in federal small business contracts to some of the nation's largest defense contractors."  "The SBA has had 10 months to review this data and for them to come out and say that there is still miscoding is unacceptable," the president of the ASBL, Lloyd Chapman, said. "After 5 years, it is an insult to the intelligence of every American and every member of Congress, that the SBA thinks that people still believe that billions of dollars a year in awards to some of the nation's largest defense contractors are the result of random data entry errors. It is absurd and ridiculous."  [Robert O'Harrow, Washington Post, Aug 22]

"Montana Democratic Senator Max Baucus wants free college tuition for US math, science, and engineering majors conditional upon working or teaching in the field for at least four years. [, Aug 22] Oh great, a politician has another "solution" that will cost a lot of money for questionable benefits. First question, as for SBIR: Where's the solid proof of market failure that justifies government intervention? Is there any proof that youngsters who want to pursue science and engineering are prevented by lack of finance?  How much of the money, which we don't have without more taxes, will go to people who would have paid real money anyway?  Will the main beneficiaries be the colleges who can then give out less student aid as they raise prices to absorb the government handouts?

When Subsidy Is the Only Raison d'Etre. The loss of a short-lived incentive for Texas biofuel producers is threatening to tip some producers into the red and may put Texas at a disadvantage with states that offer sweeteners to attract ethanol and biodiesel plants, biofuel producers said. [Brett Clanton, Houston Chronicle, Aug 15] SBIR rules writers should find a way to discourage companies who would not exist except for the subsidy. They drink the medicine and produce no lasting return.

"DARPA has selected thirty-six teams as Urban Challenge semifinalists to participate in the National Qualification Event. Both the webcast and press release can be found on the official site. Dr. Tony Tether reports that only 1 of the top 5 previous teams was rated in the top 5 of teams this year and 3 of the top 5 were not in the challenge finals last year. 'The semifinalists will compete in a final qualifying round at the site on October 26th and be whittled down to 20 teams. Those teams' vehicles will have to perform like cars with drivers to safely conduct a simulated battlefield supply mission on a 60-mile urban course, obeying California traffic laws while merging into traffic, navigating traffic circles and avoiding obstacles -- all in fewer than six hours. The team to successfully complete the mission with the fastest time wins.'"  [, Aug 9]

others, noting current [agency] efforts to patch such holes, are skeptical that [R&D program] is needed. "[It's] completely pointless," says Joseph Romm, head of [agency]'s ?????? office during the Clinton Administration and no fan of the agency's current performance. "I don't know what [agency] isn't doing that [R&D program] would be doing." Some observers also doubt that the new agency will help bring new discoveries to the market. "What it can do to further commercialization is harder to see," says Robert Fri, a former deputy secretary of [agency] who has led several National Academies' studies of [agency]'s activities. "[agency]'s skills in managing large science programs and large applied-technology programs are not necessarily the right ones for the [new] job." [Science, Aug 10]  Question: would SBIR fit into this description of an R&D program proposed by a Congresscritter as the solution for advancing national interests in technology? Do Congresscritters understand technology development and commercialization or do they just advance the interests of constituents?  

Bush has the not unexpected answer on how to pay for his war and subsidize economic growth - cut corporate taxes. His sponsors will love it. While SBIR benefits only a small population of marginally profitable companies, cutting taxes benefits the whole universe of profitable companies. Who loses? No one, if you believe in supply-side economics.

Consider a set of policy interventions targeted on a loosely-defined set of market imperfections that are rarely observed directly, implemented by bureaucrats who have little capacity to identify where the imperfections are or how large they may be, and overseen by politicians who are prone to corruption and rent-seeking by powerful groups and lobbies. What would your policy recommendations be? [Dani Rodrick's blog, Aug 7]  Before SBIR is continued, much less expanded, the advocates should have the burden of proof to show that there is a market failure at all in innovation investment that would be remedied by the intended intervention. We have had two decades to discover that there is no market failure in small business innovation and even less remedy from the ointments and bandages supplied by the federal agencies who do their own rent-seeking in the SBIR's administration. Indeed, in the 1990s we found that excessive small business innovation investment that helped lead to a collapsing bubble in the info tech industry.

State officials have hung their hats on the life-sciences sector to revamp Indiana's flagging industrial base. ... The state has 18 officially sponsored tech parks, from Evansville to Merrillville, and more on the drawing board. ... The parks support startups that have great ideas but lack the business know-how to turn an idea into a successful product. [Chuck Bowen, Indianapolis Star, Aug 7]

Only Proved Innovations. the cultural and religious contexts that shaped the Cunard Company's commitment to safety and reliability rather than to speed, luxury, or technological display. ... by the third quarter of the nineteenth century Cunard's line of steamers had acquired a reputation for safety and reliability unique among shipowners competing for passengers and mail on the dangerous North Atlantic routes.  ... "It was always the policy of the Company that others should experimentalise," he affirmed, "and when the novel principle had been proved by indubitable tests, then, and not till then, to introduce it into their next vessel."  [Crosbie Smith and Anne Scott, Technology & Culture, Jul 07]

Financial Fantasy. The House passed a $460B DOD appropriation bill (serious money) and a $16B new oil tax to help pay for it. Want to guess the President's response: $460B is short by $100B and we don't need new taxes to pay for our necessary war. No surprise at this Washington disease; even the SBIR advocates want a bigger free lunch.  Why should folks in Albuquerque or Cincinnati believe any claims from Washington?

Governments have good reason to foster innovation, for it is the mainspring of economic growth. ... rich nations have already built up big capital stocks. If they are to sustain growth in the years ahead, they must be economic pioneers, pushing out the technological frontier through advances in knowledge. ... But what matters for economic innovation is turning scientific discoveries into new products and smart processes. [The Economist, Aug 2]

Subsidies, Just Because. a bipartisan parade of politicians warning of foreign competition and insisting that duties remain for another five years. ... The ITC is now required to lift the 2001 duties unless the steel industry can show it will be injured without them. ... Senator Jay Rockefeller (D., W.V.) instructed the commission not to pay any attention to how the steel industry is doing, "nor to speculate as to how the maintenance of the subject orders is likely to affect other industries." In other words, forget the U.S. economy, just protect his friends. [Wall Street Journal, Aug 6] Sounds just like the SBIR pleadings.

If a Little is Wasted, Try a Lot. Senator Bayh (IN) bid for popularity by proposing to double the funding of SBIR over the next five years.  The Senate SB Committee made the usual cooing noises over its constituency as The Lemonade Report was being unveiled. At some point, the oversight committees of the spending departments will ignore such bidding since the SB Committee gets a free ride on appropriating money. They could propose that SBIR get a Bushie surge of 30,000 more DOD SBIR projects. Meanwhile, Chair Kerry expounded some vote-seeking fiction, Massachusetts is leading this country in innovation, and that’s in large part thanks to SBIR.

The NRC SBIR Lemonade Report noted that the goal of more minority and woman-owned was not doing well One way to deal with that situation is to bias Phase 1 proposal acceptance to first-time firms instead of a bias toward experienced firms who write better proposals but do not therefore have better ideas. Treat Phase 1 as a chance for a smell test of new ideas from new firms.

The Lemonade Report. Seven years after Congress legislated an assessment of SBIR, the National Academy produced a review of the best aspects of the lemonade made from the SBIR lemon without ever admitting its lemonicity. After facing up to the politics of SBIR and realities of agency management, extensive consultations with both Congress and agency officials, the NRC addressed two questions: 1. how well do the agency SBIR programs meet four societal objectives of interest to Congress; and 2. can the management of agency SBIR programs be made more effective?  The safe report should be enough to keep SBIR afloat for another eight years regardless of no answers to questions such as: Is SBIR better than no-SBIR? Does any agency find SBIR worthwhile enough to do it without an unavoidable mandate? Are there any measures of the economic benefit to the nation that would be much greater than letting the agencies manage their innovation efforts as they see fit? Is "does no harm" a sufficient criterion for a government program? Are the collected data subject to a survivor bias that buries the failures? Is surveying beneficiaries a reliable route to hard data? Does the present management structure guarantee that national economics can never be a dominant factor in selecting and funding awardees?  Are the free-marketers right in claiming that government has no business picking winners and losers among competing technologies in private companies? Is there any management structure that would consider economics as a major criterion? Do the conditions of 1980 that led to SBIR still obtain today or is it another government program that once started cannot be ended? How should the control group be chosen for comparison? Is a federal agency capable of thinking of Return on Investment like a venture capitalist or investment banker? Is it an insult to the competitiveness of SBIR winners to assume that they would not have won government business if SBIR had never existed since it is well established that SBIR was merely a substitution for previous small business contracting? Then with the study's scope confined to safe ground, Extensive NRC commissioned surveys and case studies were carried out by a large team of expert researchers. In the end, the findings were Washington predictable: the program did some good, the management could be improved, more money wouldn't be bad, and more research is needed. A next interesting step would be to let the American Enterprise Institute do an assessment.

Read the report? An Assessment of the Small Business Innovation Research ProgramCharles W. Wessner, Editor.  A free PDF from The Senate will hold a hearing today Aug 1 where you can see the smiling SBIR cheerleaders.

I have seen that when the government runs recreation facilities, it almost never spends enough money on capital maintenance and refurbishment.  The reason seems to be that legislators, given the choice, would much rather spend $X on a shiny new facility they can publicize to their constituents than spend $X maintaining facilities that already exist.  I laugh when I here progressives argue that private industry is too short-term focused and only the government invests for the long-term.  In practice, I find exactly the opposite is true. [coyote blog, Jul 18]The same rule applies to state, and often federal, "investment" in what the states call venture capital.

Want to ping your Congresscritter for SBIR re-authorization? The Greenwoods, who feed on SBIR consulting, are providing some help on how to ping. Go to The Greenwoods, click on the SBIR button to find a brief intro to the reauthorization (the second item on that page).  You can then click on a link in that paragraph that takes you to the full reauthorization page.  It might help your credibility if you had some strong evidence beyond your enjoying the feast. Evidence like taxes your company has paid from post-SBIR profits, permanent jobs created, number of sick people cured, size of campaign contributions, number of votes influenced, etc.  Don't spout the usual drivel about small business as the heart of the American economic miracle, nor that small business deserves a legislated fair share of the R&D spending in the country. David Wessel observes: Most of the policy briefs, working papers and trade-association reports that cross a columnist's desk slide easily into the trash can or onto the read-someday pile.[Wall Street Journal, Jul 26]  Unfortunately, the Greenwoods' page doesn't offer anything that would convince an intellectually curious Congresscritter (which are a minor species anyway).  Remember that Congresscritters represent voters who have other things on their minds than an efficient federal government.

This fall, DOD will launch a grants program to fund researchers with innovative ideas for tackling important security challenges, modeled on the NIH Director's Pioneer Awards, which support blue-sky, interdisciplinary research in biomedicine. DOD plans to make about 10 awards, each good for $3 million over 5 years. ... The challenges, not yet chosen, are likely to be similar to those identified last year by DOD's Quadrennial Defense Review: biometrics; social, cultural, and behavioral modeling; tracking of enemy targets; countering improvised explosive devices; and extracting information about suspicious activities and events from large data sets. [Yudhijit Bhattacharjee, Science, Jul 20] Added research needed: how to keep politicians from starting wars with no end, how to stretch a volunteer Army into endless combat, how to run a war with contractors in the war zone, how to avoid getting military forces into a "war on you-name-it", how to avoid a national hubris of self-sufficiency and omniscient superiority, ...

Jobs for the other Washington. The Washington Technology Center gave half a million dollars to five companies engaged in these diverse realms, $100,000 each. The funding is expected to generate some 200 jobs in Washington, The grant winners are:Artemisia BioMedical Inc, of Newcastle, which seeks to develop therapies for cancer and other diseases;  dTEC Systems (3 Phase 1 SBIRs) , a developer of environmental monitoring systems, to create low-cost chemical sensor technology;Kronos Air Technologies,(2 Phase 2 SBIRs)  with operations in Redmond, to make an energy-efficient electrostatic air pump;  Hummingbird Scientific, (2 Phase 1 SBIRs) of Lacey, to make a high-temperature heating element for use in the transmission electron microscope; MagicWheels Inc., of Seattle, to test a wheel manufacturing process for its wheelchairs. [Angel Gonzales, Seattle Times, Jul 25] It's a long road from $500K to 200 jobs in that it's only five jobs at $100K per year per job. But the politicians will never remind the voters that the 200 jobs never happened.

20 Kentucky high-technology “start-ups” will share nearly $1.9M in state matching funds as part of an initiative to attract and support high-tech small businesses that bring in federal SBIR money. Up to $500K Phase 2 match.  ECM Biosciences, customKYnetics,  Sequela, Wilson’s Cedar Point Farms, Oraceuticals, Lumenware, Adaptive Intelligent Systems, ParaTechs, Mersive Technologies, Topasol, Neathery Technologies, Advanced Dynamics, Naprogenix, Potentia, SureGene, ApoImmune, SCR, Regenerex,, Scout Diagnostics. Advanced Dynamics, a high-tech start-up from Utah, is the first to move to Kentucky. The company specializes in integrated and high-fidelity modeling and simulation for aerodynamics, structural mechanics, and other applications.  [Kentucky Governor's press release, Jul 25] Other states have tried the matching gambit but quit when they could not show any quick returns. Beneficiaries are the federal government and the companies both of whom get a subsidy for doing what the federal government wants done. Such autopilot programs prove the temporary political appeal of throwing money at a problem. The Kentucky governor, in particular, is in a tough battle for re-election. [thanks to for the story]

A new business support program sponsored by the N.C. Biotechnology Center used startup loans and expertise from regional businesses to help introduce spinout companies from two University of North Carolina system research laboratories. N.C. A&T State University's spinout company, Provagen, was formed to commercialize protein technology developed by Dr. John Allen. Sirga Advanced Biopharma, a spinout from N.C. State University's College of Agriculture and Life Sciences, plans to use Dr. Paul F. Agris' technology to identify therapies for drug-resistant diseases and other health conditions, including HIV and autoimmune diseases. [Raleigh News & Observer, Jul 26]

Moral Hazard. about a half-dozen states are setting up funds to help homeowners with high-risk subprime mortgages refinance to more-affordable loans. [Thad Herrick, WSJ, Jul 23] Like the S&L bailout in the Bush 41 administration, the government steps in to bail out the losing gamblers among banks and hedge funds.  He who would rob Peter to pay Paul can depend on the support of Paul.

No surprise that the Dole-Shalala commission recommends better military and veterans health care from a system it calls insufficient for the demands of two modern wars and called for improvements, including far-reaching changes in the way the government determines the disability status and benefits of injured soldiers and veterans. costing only about $1B a year, [New York Times, Jul 26]  but that estimate will change after years of politics and budgeting long after the wars are over. The political battles over the cost of war forget the long follow-on for the veterans many of whose problems don't start for years.

Political Science, As Usual.  [Sen] Stevens was directly involved in funding contracts with the NSF, for example, which went to support arctic research. But there is no evidence he sought to influence the award of contracts to VECO (a company accused of bribery), officials at the NSF said. Congressional records show that Mr. Stevens on several occasions added extra funding to the budget for arctic research above what the agency sought. [John Wilke, Wall Street Journal, Jul 25]

The "More Money" Solution.   the Senate Finance Committee approved a major expansion of the Children’s Health Insurance Program, with a majority of Republicans joining all Democrats on the panel in supporting  ...  Bush has repeatedly denounced the bill as a step toward “government-run health care for every American,” describing it as a “massive expansion of the federal role” in health care, financed by “a huge tax increase.” [New York Times, Jul 20] Whether it is health or technology or Iraq, the politicians lean toward the one policy they know how to apply - throw more money at the problem. They ignore the downstream effects of more government intrusion and ever-increasing need for revenue to pay for those programs. They are the credit card abusers writ large. And among the advocates for such abuse are the SBIR pushers who cannot even demonstrate that the money has any differential economic effect. The SBIR burden of proof is to show that SBIR produced an economic effect that would not have happened if the agencies had been left alone to decide their own R&D priorities. But since the agencies have been allowed to use SBIR for what they would have done anyway, there is no way SBIR could ever show any differential effect. Government as VC. The State of Wisconsin Investment Board has withdrawn its commitment to the successor company to one of the most active early-stage venture capital funds in the state. ... because it viewed it as a first-time fund with a lack of team depth ... "We do need another substantial early-stage venture capital fund based in the state because of the nature of the growing business in this state," said Leonhart, executive vice president of the Wisconsin Biotechnology and Medical Device Association. [Milwaukee Journal-Sentinel, Jul 19]

The SBTC trumpets the productivity of SB:  high-tech small businesses generate 5 times more patents per R&D dollar than large businesses. Although small firms spend only 3% of the amount that large corporations devote to R&D, they produce 15% of all company patents. And it's even better against universities: 20 times more productive than universities in generating patents per R&D dollar. ... while SBIR companies received only 2.5% of the Federal extramural R&D funds they generated over 1.5 times as many patents as universities which received over 30% of the funds. [A semantic nicety often confused in SBIR proposals: a ratio of 20:1 means 19 times more productive or 20 times as productive.] All those stats interesting but nearly irrelevant to SBIR because the federal agencies put so little of their SBIR in companies and ideas that can and will exploit the advantage that patents offer. And there is certainly no evidence that SBIR makes the least difference in productivity of federal R&D. Market-driven small businesses great; SBIR unnecessary. Besides, there is lots of capital sloshing around the world for incremental and predictable innovation; where government could make any difference is in nursery technology where the technical uncertainty is too high for investment by early ROI seekers.

Manna for Science. AAAS cheers that draft House appropriations for 2008 have the greatest levels of science funding since 2004.  No mention of how it would be paid for.

Tech Revolution Day: July 16, 1945. The first atomic bomb developed by Robert Oppenheimer and his team at Los Alamos was exploded in nowhere NM. A grateful nation's politics soon denigrated Oppenheimer for having a nuanced opinion on how such a bomb should be used. Gratitude in politics extends only to what you will do for me next.  Jul 16 (622) is also the beginning of the Islamic Era, when Mohammed began his flight (the Hejira) from Mecca to Medina.

With the shift of NASA SBIR management to the Ames Research Center, which Pete Worden runs, anything could emerge. Pete had an education in SBIR at SDIO where he was SBIR's boss's boss but stayed out of the management details. In an interesting twist, NASA is limiting companies to 10 SBIR and 10 STTR proposals with a further limit of 5 SBIR and 2 STTR contracts to any company.  Latest NASA solicitation closes Sep 6, plenty of time left.

NIH has a new SBIR commercialization effort: a virtual space Pipeline to Partnerships (P2P) where SBIR/STTR Awardees and NIH Licensees and Strategic Partners, Licensees, and Investors and can plump their technologies and product development for an audience of potential strategic partners, investors, and licensees, and a searchable database highlighting strategic partnering, licensing, and investment opportunities for pipeline technologies developed by NIH SBIR/STTR awardees and NIH licensees. No info on how to control false advertising.

Designed to Intimidate. military contractors are in a race to deploy a new generation of combat vehicles that are more capable of protecting troops. Add more and more armor to a Hummer and it becomes an APC; add yet more it's a tank. But irregulars who don't even wear helmets are not intimidated, especially irregulars whose high dream is martyrdom. Never mind, American military will keep seeking ways to turn technology and material into fighting advantages over a regular enemy. And American business will keep offering more ideas for products because that is what American businesses do well. No, SBIR has no special answers either for the military mindset since small businesses do the same thing that large businesses do when it comes to feeding technology to the military.

Hate Those Low Prices. "The overall trade deficit and the one we have with China is unsustainable," said Sen. Charles Schumer (D., N.Y.), chairman of the Senate Joint Economic Committee. "The American economy and consumers are getting pummeled."  Huh? Consumers buy goods for less when cheap imports displace home-made goods for "Everyday Low Prices", although the long term effects may be bad for their employment. But Americans don't think that much about long term effects, as in "cheap gasoline now".  One effect is that the Asians have over $3T of foreign reserves - other people's cash - with which they have to do something.  If they decide to buy many fewer US bonds, Americans will pay higher interest rates which would drive up the national deficit. But then most Americans pay no attention to the national deficit which they see as a mere abstraction as they demand more and more government services while complaining about their tax rates.

More Walls, Less Opportunity.  Public support for international trade has fallen sharply in the United States, and that could mean many lost opportunities ... Within Congress, former strong advocates of trade are now skeptics, and people who were once skeptical are now hostile ...the president's Trade Promotion Authority "expired like the last episode of the 'Sopranos,' " said Sen. Patty Murray  [Kristi Heim, Seattle Times, Jul 3]

If One is Good. the fourth business park in the state run by Purdue's research arm, which has won national recognition for building its Purdue Research Park in West Lafayette into a thriving collection of more than 140 companies with about 2,750 workers. ... [Indianapolis] will give a $5M grant for the park's first building. "The potential here is so large it just makes sense" to provide assistance, said Jim Garrard, director of economic development for Indianapolis. ... The state will chip in $2 million from its Certified Technology Park Fund to help develop the park and pay to run it. To get the full grant, the park must create at least 2,000 jobs.  [Jeff Swiatek, Indianapolis Star, Jun 29]  Let's see if Indiana's CoDel can wangle some federal pork for such a worthy economic cause.

Tax Flight. the middle classes have been fleeing California for years. High house prices have been the main culprit. Long commutes and deteriorating public services are two more reasons.  But the flight of millionaires is something new. The reason? You guessed it. Taxes. [Rich Karlgaard, Digital Rules blog] Well, maybe. Not surprising that someone who works for Steve Forbes can find taxes at the root of everything wrong with the economy. But those millionaires will have to hunt hard and heavy to find a richer font of what it takes to make entrepreneurial companies anywhere else in the USA. If they have lost the spirit of technology competition and just want to retire, the Silicon Valley traffic alone could push them out.  When they get to the lower tax haven Karlgaard seems to dream of, who will pay for the public services they expect?  Taxes are, after all, the price of civilization.  Without taxes, where would all the big programs that sponsor SBIR come from? If government were efficient, SBIR would not exist.

If you have ever wondered how much of the official story of the last fifty years is correct, Higgs makes it clear: your worst suspicions are correct. The official statistics are little more than fiction. The level of corruption in the warfare state is egregious. The liberty and property taken from you in the name of "security" is just as objectionable as that taken in the name of "social welfare."  [ blog, reviewing Robert Higgs's Depression, War, and Cold War, Jan 07]

More Political Science. Former Bush Surgeon General says that the White House repeatedly tried to weaken or suppress important public health reports because of political considerations. [New York Times, Jul 10]  It is part of general trend, essentially started by Nixon, to collect all power in the White House instead of in the Cabinet Departments where the career experts live. The result is that policies are not well thought through beyond the immediate political impact.

The Siren Song of Walls. Governments from Canada to China are considering or implementing restrictions on foreign purchases of companies, factories, real estate and natural resources in their countries, moves that U.S. officials fear could harm global economic growth if they proliferate. [Deborah Solomon, Wall Street Journal, Jul 5] The moves are usually cloaked in "strategic" areas and  "economic security."  Although the Great Depression had many roots, one that most economists accept is the growth of worldwide tariffs (like Smoot-Hawley) to protect home economic activities. A similar pandering to home economic fantasies is a suggested law to allow US entities to sue OPEC for raising the price of oil by collusion - an idea that sems more likely to raise the price of oil rather than lower it. But pandering Congresscritters don't deal well with unintended consequences.

A Zero-Sum World? Politicians can't help themselves. They live in a world defined by limits. There is only one President and 100 senators and 435 congressmen. One blowhard's win is another blowhard's loss in the lowlands east of the Potomac.  [A blowhard advocates something you oppose; a visionary agrees with you.] ... the zero-sum virus lives! You can find it today lurking inside these political canards: Energy is running out. Earth is burning up. Immigrants take American jobs. Imports wreck American industries. Taxes must go up to balance the budget. Americans spend too much on health care. Nor is corporate management immune to zero-sum thinking. Consider these oft-heard sayings: Our market is mature. Let's build a patent wall. Let's sue, sue, sue. What do you think? Send your favorite zero-sum fallacies to [Rich Karlgaard, Forbes]

The defeat last week of the immigration bill is the most obvious manifestation of how economic anxiety and a loss of faith in the federal government's competence have conspired to make it far easier for politicians to say no than yes, to reject compromise on difficult questions and to assume that voters will respond to big initiatives with mistrust. ... The belief that government action is futile ultimately killed the immigration bill, and it could block large-scale reform efforts for a long time to come. A cranky nation rarely undertakes great tasks, especially when achieving them demands a degree of trust and hope. [EJ Dionne, Washington Post, Jul 3] We should remember that what made America great did not come from the federal government whose growing intervention in American affairs came relatively recently.  Unfortunately, SBIR is one of those interventions that was unnecessary and has had no discernable effect on economic nor technologic progress. It might have had some small effect if the government had actually managed it for progress instead of for government self-service. We'll never know.  

Wethinks to Protest.  Intense competition for scarce contracts is making it much more common for defense contractors to take a previously rare step: challenging the Pentagon over big-dollar programs they failed to land. ... Cost issues are at the heart of repeated protests over Boeing's victory in the Air Force's contract for a helicopter capable of rescuing downed pilots. [August Cole, Wall Street Journal, Jun 29] SBIR protesters take little heart! Cost is not a competitive factor in "innovation research", although it could be in the several DOD schemes to award SBIR contracts for effectively buying services and lab hardware.

When given a chance to say what DOD SBIR had achieved, the DOD witness told the House S&T committee how the program functioned. After 25 years (a June 25th anniversary that the chair noted) they probably already know how it works.  He did note that 53% of Phase II projects from 1995 to 2005 have resulted in sales and/or investment which sounds good on the surface but provides practically no quantitative data of return except for a figure that over time DoD/Prime sales nearly equal private sector sales. Although he mentioned Fast Track, he gave no figures on how well the department recognizes the validation power of third party money at risk. He noted that MDA's Tech Applications program helps SBs with commercialization. Read his testimony if you just want to know how bureaus focus on process. 

The other agencies chimed in with the same kind of story - we worked on the program. None of them talked about how they gave the money to the projects most likely to attract downstream capital that would carry the technology into a marketplace, any marketplace.

The NIH defender told much the same story with a mild assertion of payoff that  the number of awardees receiving additional non-SBIR funding or capital increased 33%; the number of awardees with FDA-approved projects increased 51%; and the estimated cumulative sales of those awardees increased over 200%. Probably an understatement of ROI for NIH SBIR which would look great if the agency would ask how much public capital has been invested in the companies and their technologies.  The daily stories from the stock markets of the many public companies would make excellent economic reading and give NIH some clues on how to orient their selection and funding scheme to maximize such investment in the future. She could listen to Jeff Bond's ideas on measuring ROI from SBIR companies gone public.  Read her testimony.

We Capitalists Need Government.  Medical imaging equipment makers (GE, Alliance Imaging and more) are lobbying to overturn Medicare cutbacks after weathering some of the worst sales numbers in recent memory. Congress made the cuts following criticism that some health care providers were performing more tests than necessary simply to boost revenue. ... For now, it appears there is little sympathy on Capitol Hill for the imaging industry, which had close to $25 billion in revenues last year, [AP, Jun 25]

When There is No Law. Venezuela and Russia are expropriating the foreign oil investments in their countries in a naked power grab. Resource-rich countries with dictator rulers have no respect for contracts or for any other restraint on their power. After luring foreign oil companies with lucrative contracts in the 1990s, Venezuela is taking advantage of today's tight energy market to claw back ownership in projects funded by the foreign companies. ... Russia, which already has whittled down the energy contracts of various Western companies, Tuesday signaled a clash may be coming with Exxon over the massive Sakhalin 1 project in eastern Russia. [Russell Gold, Wall Street Journal, Jun 26] One result, The frigid Canadian province of Alberta has become one of the world's fastest growing enclaves of Venezuelans. ... Many are oil-field veterans who have taken positions in Canadian refineries at salaries topping $100,000 a year. Canadian bosses prize the Venezuelans' ability to apply techniques pioneered in South America, where oil deposits in Venezuela's Orinoco region are mined much like Alberta's gooey oil sands. [Joel Millman, Wall Street Journal, Jun 26]

Are medical device makers protected from lawsuits by the government approval process? Medtronic argues that it is pre-empted from being sued because the device was first cleared for sale by the Food and Drug Administration (FDA). Lower courts have agreed.  [Janet Moore, Minneapolis Star Tribune, Jun 25] Check back next year for the Supreme Court's ruling.

NSF raised its ceiling for STTR Phase I awards to $150K. Why? Fewer awards for more money requires less admin effort, and the real NSF constituency is academics anyway who want a bigger slice of everything.  It also stopped requiring Annual Commercialization Reports for Phase II awards for 5 years after the completion of the award. Maybe the data were too embarrassing to be worth the effort. 

If you're raking in big money, we have a tax for you, say Congressional Democrats (who are in charge now).  It will, of course, be a fair tax (as if any two people of different economic standing could agree on what a fair tax is).  The catch for small entrepreneurs is that VCs may get swept in with the hedge fund magnates. Advocates of the idea -- including former Treasury Secretary Robert Rubin, who remains influential among Washington Democrats -- say "carried interest" in the targeted partnerships is more like regular compensation than investment income, and that there should be greater consistency in the tax code.  [Sarah Lueck, Wall Street Journal, Jun 23]  But whether a higher tax rate incentivizes or disincentivizes investment or work is a social question disguised as an economic question by the rich who want to avoid taxes. Unfortunately for them, their big protector lost his clout by starting a war he didn't know how to handle.

June 21, 1788 The US constitution came into force, when ratified by the 9th state - New Hampshire. And we have been arguing ever since about what it says, which was part of the architecture to constrain power. As George Bush is finding out as the electorate installed a seriously competing power center in the Congress and the courts grind to attending the issue of executive power.

Caveat Emptor. The Supreme Court gave Wall Street a wide exception to antitrust laws, throwing out an investor lawsuit against broker syndicates that allegedly colluded to drive up initial public offering prices during the so-called Internet bubble of the 1990s. The ruling marks another milestone in the court's recent movement to free markets from the cost and complications of plaintiff lawsuits. [Jess Bravin and Aaron Luchetti, Wall Street Journal, Jun 19] Before giving up your day job and becoming a day trader, consider that you are not an expert player in a complicated game with a huge advantage to insiders. But you can always make a little money on Wall Street by starting with a lot of money.

Keep Our Pork. The Congressman called on Congress's agriculture committees to "circle the wagons" against efforts by lawmakers who want to redirect the money to other priorities. [Dan Morgan, Washington Post, Jun 20]  SBIR multiple beneficiaries expect the Small Business committees to have the same "what's our is ours" approach to SBIR re-authorization.

When Cheap Matters Most. China manufactured every one of the 24 kinds of toys recalled for safety reasons in the United States this year. [New York Times, Jun 19]

Well Wired. Recently a study of broadband penetration rates around the world was in the news, because the US has fallen to 24th place worldwide, at 53%. Now comes word that the Australian Prime Minister has announced a $1.68 billion (US) plan to move Australia to 99% penetration within two years. If they accomplish this goal they will be the most-wired nation (South Korea currently occupies the top spot with 90%). The Prime Minister's plan was attacked by his political opponents because it would create a two-tier system with the country's vast (and almost empty) interior served by wireless at "only" 12 Mbps. [, Jun 19]

DHS pre-released its newest SBIR solicitation which actually sounds like they are open to innovation rather than just buying a specific piece of hardware or software.  In one topic, H-SB07.2-006  Robust Algorithm Development for Multidimensional Chemical Analysis they want to forego a big fox for wiring together a variety of single minded hedgehogs into a central brain. Software geeks will be all over that topic except that the geeks may not know much about a system design that minimizes and maximizes all the things that DHS wants.

government funding has not kept up with the rising costs of research at the same time that the corporate-funded research lab system has collapsed. As a result, US scientific productivity has stagnated at a time when funding and output are booming overseas. The report makes a series of recommendations that it hopes will get US physics research booming again.  [John Timmer, Ars Technica, Jun 15] NAS Report

Progress Has a Price. The good news: a [$1.4B] biotechnology research center linked to the nearby Johns Hopkins Hospital. It will also include 2,200 new and renovated housing units and generate 6,000 jobs and millions of dollars in tax revenue for the city and state. [Melody Simmons, New York Times, Jun 17] The bad news: 400 families live in that neighborhood.

Government Wants to Know.  macduffman writes "Congress and the Department of Homeland Security are considering several new visa restrictions, including forcing some foreign travelers to register their travel plans online 48 hours in advance. Business advocacy groups are worried about both foreign relations and the economic impact of such legislation, while privacy concerns see this as another possible 'in' for identity thieves. From the article: 'Along with online registration, the updated program would require new and existing member countries to improve data-sharing; more rigorously report lost and stolen passports (not just blank passports); and guarantee they will repatriate nationals if those people are ordered out of the United States. "It's really a 21st-century model," said James Carafano, a Heritage Foundation analyst who specializes in homeland security. "It'll all be done electronically and biometrically. And it really doesn't compromise your privacy."'" [, Jun 15]  The nativists will love it until government starts wanting them to pre-register their guns.

Don't Like Them Now?  Months after 2006 election breakthrough, Democrats disapprove of Congress's performance by 57%-29%. Independents disapprove by 66%-21%, Republicans by 74%-17%. [Wall Street Journal, Jun 15] Just wait until they start tackling the real government finance dilemmas instead of the emotional issues like abortion and illegal immigrants that are handy for political ends.

Smart Capital Works. companies that received investment from venture capital firms grew three times more quickly than their non-venture-backed counterparts between 2003 and 2005. With 10 million employees, venture-backed companies account for 9 percent of U.S. private sector employment.[SSTI, Mar 26] Note that no such claim is being made for SBIR, mainly because the government doesn't care about the company, only the technology and usually only for government purposes. The coming SBIR re-authorization gives the Congress its fourth chance to invent an SBIR that does something economically useful.

On Wisconsin. The Wisconsin Technology Council proudly announces that In 2006, early-stage risk capital activity reached $102.9 million, a 54 percent increase over the previous year. .. To put that in perspective, the Center for Venture Research at the University of New Hampshire reports that angel investing in the U.S. increased only 11 percent last year. [SSTI, Jun 11]  Of course government measures success by input rather than output which takes far too long in the case of VC. The consultant's report pretty much tells the government what it wants to hear about why the increase happened - all those programs were put in place. But the report does not establish cause and effect. So everyone is happily ignorant of what is really happening.

Rep. Duncan Hunter yesterday defended his role in helping steer tens of millions of dollars to a La Jolla-based aerospace firm to develop a military jet the Pentagon did not want. [San Diego Union Tribune, Jun 12] If Mississippi can do it with ship building, why can't San Diego do it with airplanes? Earmark politics also gave DOD and the agencies another program they did not want - SBIR.

If the Thai government would overrule international patents for Efavirenz, an anti-retroviral drug made by Merck, and switch to a Thai-made generic copy at half the price, [The Economist, Jun 7], how safe will your patent be in international markets?

Engineers figure out how to harness the power of technology; economists figure out how to harness the power of incentives. Our prosperity relies on both. ...King Henry VIII would have traded half his kingdom for modern plumbing, a lifetime supply of antibiotics and access to the Internet. [Steven Landsburg, Wall Street Journal, Jun 9]

Newt said that Republicans must offer a more dramatic platform for remaking government that focuses on private-sector innovation. Good thinking, Newt! Only lobbyists and politicians think that American innovation needs direct government intervention. It merely needs a stable economy, a rule of law, and open competition. Handouts that come from special pleading usually benefit only the beneficiaries and only for the duration of the handout.  

NIST SBIR is trying a pilot program that is somewhat unusual.  NIST's SBIR Program is asking small business owners to examine NIST patents as well as other NIST-developed technology for commercial viability, and to identify technological gaps that impede the patent's transition to the marketplace. NIST intends to incorporate technologies of special interest to industry in its 2008 SBIR research and development solicitation for proposals. [SBIR Insider, Jun 4]

DHS and New York's major utility, Con Ed, will invest $39M over the next three years to connect two Manhattan substations by American Superconductor superconducting cable at two secret undisclosed locations, allowing each to take over for the other in the event that one burns out.  [MIT Tech Review, May 29]

The Federal government spent $92 billion in direct and indirect subsidies to business and private-sector corporate entities in fiscal 2006. [Stephen Slivinski, The CATO Institute] Whether it goes to large or small business, it's still corporate welfare except for the true market failure where a societal benefit would otherwise go unrealized because there is no market incentive to invest in the development. Few subsidies, including SBIR, meet the market failure test. The subsidies go on because the beneficiaries shamelessly work the political levers.

Ethanol Costs Money. If the current [ethanol] tax credits, grants and loan guarantees are extended, the package would cost taxpayers $140 B more over the next 15 years. New proposals under consideration in Congress could raise that tab to $205 B. ...  Neither the White House nor Congress has spelled out how they plan to square the costs with other budget priorities.[Steven Mufson and Dan Morgan, Washington Post, Jun 8]  Which SBIR advocates will volunteer to pay a share of the ethanol subsidy while pleading for more SBIR subsidy?

Election Science. Sen. Hillary Clinton said she will sharply increase spending on energy research and basic sciences if elected president ... Her plans include the creation of a $50B Strategic Energy Fund to be funded from oil company earnings and increases of 50% in spending on basic research by the National Science Foundation and other federal agencies, to be offset by cut-backs in other areas. [Wayne Rash, eWeek, Jun 1] $50B here and $50B there, pretty soon you're talking real money.

Parks Proliferate. States and localities love to build. "invest" taxpayers' dollars to create high tech industry. While many of these parks are merely real estate developments, research parks often are constructed around universities and laboratories and are designed to house tenants that will utilize the resources and create new jobs and spin-offs. “Building A Stronger America Act,” if passed in its current form, would authorize $7.5M in federal grant funding for feasibility studies and up to $50 M in loan guarantees for science and research park construction and expansion. ...  new facilities coming at NCA&T, UNC Greensboro, Old Dominion U, Southern Miss, Oklahoma State, Stennis Space Center, Notre Dame U, Northern Arizona, Albany County NY, Oak Ridge TN. [SSTI, Jun 6]But where will the eager and talented researchers and the long term money come from? Do state legislatures have the patience for continuing budget spending with no obvious ROI?

Needs More Than Technology. Jimmy Carter, 82, announced his most audacious crusade yet: to eliminate malaria, an elusive and ever-changing killer, from this ancient African nation of 75 million people [, Jun 6]

Congress wants independent third-party testing of whether the Army bought the best body armor for its soldiers. In an all-too-frequent episode, commercial equipment seems better than the stuff the Army paid gazillions to develop, test, buy, and issue. ... NBC News testing showed that Dragon Skin, made by privately held Pinnacle Armor Inc., outperformed Interceptor, the Army's standard-issue armor. [AP, Jun 6] The Army disputes the results. The Army might get a better R&D result if it changed its attitude toward controlling all the aspects and funding of development and applied just seed money to a group of competitors with a plan to buy the best resulting product. SBIR is a readily available vehicle for seed funding competitors who can attract third party financing for development and perhaps even production.

if upstate New York were considered a separate state, it would rank last in in-migration of adults aged 30 to 64 with four or more years of college, Deitz said. ... and  Of those moving to upstate during the 1990s, a third came against their will as prisoners. [Eric Anderson, Albany Times-Union, Jun 7]

The worry stories are starting for SBIR's possible demise when the current authorization expires next year. SBIR Insider presents seven worry points but ignores one of the most worrying: no showing that SBIR has been any better than letting the agencies do their R&D programs without micro-management for the benefit of political interests. Any additional national economic benefit is certainly invisible as all attempts for economic evaluation have been undermined.

Technology is about taking risks. Government bureaucracy is about avoiding mistakes. ... worries about a procurement process in which as much as 40 percent of the military services' science and technology funding is devoted to congressional pet projects known as "earmarks." ... What's hobbling the country is a zero-defect political culture that makes even these bold men and women worry that America is losing its edge. [David Ignatius, Washington Post, Jun 3] And somewhere out of the sunshine, the NAS is working on a report to justify the government's bureaucratic approach to SBIR.

Spreading the blame. what has now become the most powerful and pervasive excuse for pulling out of Iraq: "It's the Iraqis' fault." [Robert Kagan, Washington Post, Jun 3] War mongers can always find the elements that stabbed them in the back. And if the electorate buys into the fantasies, they keep making the same mistakes for which the youth pay with their bodies.

Something for EverybodyHillary Rodham Clinton will call for a big boost in federal spending for research and technology in a campaign trip to California's Silicon Valley today.  .. [her] "innovation agenda"  packages familiar and new initiatives that are sure to be popular with her audience ... Also like then-Gov. Bush, Sen. Clinton calls for doubling the budget of the National Institutes of Health. ... increase the research budgets of the National Science Foundation and the Energy and Defense departments' research offices by 50% over 10 years; direct federal agencies to award lucrative prizes for innovation; triple to 3,000 a year the number of National Science Foundation fellowship [Jackie Calmes, Wall Street Journal, May 31] And the best part, not a word about how to pay for the handouts. Ah, call them investments to justify borrowing the money.

Who is a Defense Ministry's best friend?  The People's Liberation Army in China is building up its cyberwarfare capabilities, even creating malware that could attack enemy computer systems in first-strike attacks, according to a report from the Department of Defense. The PLA, which is the largest standing army in the world, has established information warfare units geared to developing viruses that can attack enemy computer systems and networks, the Defense Department reported. [Sharon Gaudin, TechWeb, May 29]   The Defense Ministry of the presumed opponent!

The VHSEC program will provide up to $53M in funding over the next several years.  The consortium is being led by Allen Barnett, principal investigator and research professor in UD's Department of Electrical and Computer Engineering, and ....    The DARPA VHSEC program is the largest in the history of solar energy research, according to Rhone Resch, president of the Washington, D.C.-based Solar Energy Industries Association.  [PRNewswire, Emcore Corp, Feb 21] Solar energy and liquid phase epitaxy and SBIR people will remember Alan Barnett as the founder of AstroPower (much SBIR) which unfortunately died of bankruptcy into the arms of General Electric. The most recent development in the financial collapse is a judge's ruling that fraud allegations against Barnett should be referred to the FBI, a judge ruled.[Steven Church, Bloomberg News, May 10]

Posturing and pontificating reigns. All other senators had left the chamber, as had all but three or four staffers. This left Sessions as the sole spokesman for what he repeatedly referred to as "the American people." [Dana Milbank, Washington Post, May 22] The subject was the compromise immigration bill that perfectionists on both ends love to hate. Expect a long fight before anything gets passed since the White House no longer has much credibility on any subject and Congressional district architecture encourages ideological positions.

IN 1572 the Privy Council of Elizabeth I, the queen of England, refused to grant patent protection to new knives with bone handles because the improvement was marginal. ... This week America's Supreme Court decided likewise. ... the addition of electronic sensors to car-accelerator pedals, the court said that the combination of two existing technologies was not sufficiently “non-obvious”  [The Economist, May 5]  If you were a patent examiner, how would you lean on close calls, knowing that whichever way you decided, the case would ultimately be decided in court?

Corn Squeezin'. One of the centerpieces of Iowa Gov. Chet Culver’s campaign last year was his pledge to "develop the next-generation energy economy in Iowa" through a $100 million state fund  .. new Office of Energy Independence will make grants and loans that will accelerate in-state R&D and knowledge transfer and will improve the economic competitiveness of the state’s renewable energy industry [SSTI, May 7]

A delegation of Chinese business leaders on Wednesday committed to buying $4.3 billion in U.S. technology, hoping to soften a political backlash to the massive trade imbalance ... leaders will try to tackle the United States' $232 billion trade deficit with China ....  Bah!  "They are not going to change their ways. This is all part of a political smoke screen," said Peter Morici, a business professor at the University of Maryland and the former chief economist for the U.S. International Trade Commission. [Michael Liedtke, AP, May 9]

Spending a lot of energy -- and tax money -- to produce lots of little businesses that make or sell already-existing goods or services may be politically appealing, but it isn't a strategy for faster economic growth. [David Wessel reviewing "Good Capitalism, Bad Capitalism", Wall Street Journal, May 10] Likewise, government's using SBIR for ordinary service contracts generates no "creative destruction" on which entrepreneurial capitalism thrives.

Capitalists Want Subsidy.  Oil and gas financial executives say government subsidies are necessary to spur development of renewable energy initiatives in light of declines in accessible oil reserves, according to a survey by the accounting firm KPMG. [Kristen Hays, Houston Chronicle, May 11]

President Bush and Treasury Secretary Henry Paulson are embarking on a campaign to convince other nations that the U.S. remains open to foreign investment, despite recent fights over attempted international takeovers. [Wall Street Journal, May 10]  Right on; we need to sell the family silver to pay for our international spending, including war-making.

eighth successful intercept in ten flight tests for the Aegis BMD, the Navy short-range version. 

Governor Patrick proposed yesterday $1 billion in funding for scientific research, a package designed to cement the state's reputation as a global powerhouse of medicine and biotechnology. ... The 10-year initiative would fund academic research and start-up companies, as well as create a stem cell bank at the University of Massachusetts [Boston Globe, May 9] The politicians made their usual noises without saying how they would raise the money. Meanwhile the neighbors are saying New York Loves Bio. ... New York companies, universities and economic development agencies combined forces this year to occupy a 3,000-square-foot pavilion in the middle of the 10-acre exhibition floor [in Boston]. ...Massachusetts, the host state, had by far the largest pavilion, one that was several times the size of New York's [Albany Times-Union, May 9]

Death by Iraq. The Army says that Due to lack of FY07 funding and the imminent start of the Army’s Commercialization Pilot Program (CPP), the Phase II PLUS program has been suspended indefinitely and new applications will not be consideredThat doesn't mean no hope; it means that any Army guy who craves your stuff will have to find mainline money for it. It can still sole-source you.

Efficiency gets more politically attractive as gasoline prices rise again. Against the auto industry's wishes, the Senate Commerce, Science and Transportation Committee is expected to approve a bill that would increase fuel-efficiency standards to 35 miles a gallon, on average, fleetwide, by 2019.  [Wall Street Journal, May 8]

Hot Cold Fusion News. a recently published academic paper from the Navy's Space and Naval Warfare Systems Center (Spawar) in San Diego throws cold water on skeptics of cold fusion. Appearing in the respected journal Naturwissenschaften, which counts Albert Einstein among its distinguished authors, the article claims that Spawar scientists Stanislaw Szpak and Pamela Mosier-Boss have achieved a low energy nuclear reaction (LERN) that can be replicated and verified by the scientific community. [Steve Kovsky (Blog) , May 5]

The U.S. Supreme Court sided with software and technology companies in two major patent rulings that could leave them less vulnerable to infringement lawsuits.  The high court moved to curb the liability of firms for infringing products sold overseas and in another case loosened a key legal standard making it easier to invalidate some patents on the grounds they are obvious inventions. The decisions were applauded by software and technology companies. [Peter Kaplan,, May 2]

[Army] Land Warrior was saved only by a crash 12-week program to replace military-spec equipment with commercially available technologies, including parts bought off the shelf from Fry's Electronics, the big California consumer retailer. That lowered the price and weight dramatically, [Noah Shachtman,, Apr 19] The best laid plans oft need a dose of connection to the real world.

CorMine Intelligent Data has recently developed and deployed a new on-line tool for retrieving SBIR-related information called SBIRScout (see

just a bunch of stuff we don't use.   mattnyc99 writes "Land Warrior, the Army's wireless equipment package featuring helmet cams, GPS, laser range-finders and a host of other state-of-the-art electronics, is finally ready for deployment on a global battlefield network in Iraq after 15 years of R&D at the Pentagon. But in a report for Popular Mechanics, Noah Shachtman not only tries on the new digital armor—he talks to troops who don't like it at all. As if that wasn't disheartening enough for the future of tech at war, the real Land Warrior system doesn't even match up to its copycat gear in Ghost Recon 2."  [, Apr 19]

Competitive Bribery. The $150 M plant, to be built by Evergreen Solar in Westborough, will receive more than $44 M in state and private grants and loans. Massachusetts out-bribed (invested) Oregon, New York, North Carolina and other states, and Mexico to get a possible 375 jobs. "The message to the state and the nation is clear," Patrick said. "We want Massachusetts to be ... what?  Why, of course: the home of clean energy technology." The economic future for compensating tax collections? The Marlborough company was founded in 1994 with venture capital money and has yet to become profitable. [Megan Woodhouse, Boston Globe, Apr 18] The governor's prospects for re-election? Few voters will recognize the state's loss if Evergreen's profit and payroll pay little taxes. 

Best Metros for Business and Careers Raleigh NC ; Provo UT ; Boise ID ; Des Moines IA ; Knoxville TN ; Albuquerque NM ; Durham NC ; Fayetteville AR; Nashville TN ; Olympia WA [Forbes, Apr ]

Wannabe a DOD Subcontractor? The Coast Guard's decision to drop Lockheed Martin  and Northrop Grumman  from overseeing the service's modernization program is the latest signal that the government wants to reassert control over defense contractors in complex weapons development. [J Karp and R Block, Wall Street Journal, Apr 17] DOD's disillusion with contractors who cannot give it something for nothing runs in cycles. At first DOD loves the unrealistic estimates that induce Congress to allocate the funds (for District jobs) and then despairs when the reality hits. It's an old game. Shocked: Rep. Bennie Thompson (D., Miss.) said yesterday, "Millions of taxpayer dollars have been misspent on boats that are not operational and we must ensure that this type of waste and abuse never happens again." Much of that waste and abuse on unneeded ships happened in Mississippi at the behest of the MS Congresscritters.

Lemonade Maker Returns. Vinny Schaper who guided the Navy to make lemonade out of its SBIR lemon, is returning to government to run the Homeland Security SBIR apparently at the request of his former admiral boss at ONR who now runs R&D at DHS. Vinny and his deputy John Williams realized that since the Navy SBIR deciders would never put national economics high on the selection criteria (even if he cared), it could use the non-compete clause in the SBIR law to get the technology into Navy use faster than an open competition for contracts would allow. And it could get some good press on Capitol Hill.  What he can do with the DHS SBIR lemon remains to be seen. Good luck, Vinnie. [Apr 07]

Great Jobs Program. Oregon Health & Science University has backed away from the economic development projections that it sold to legislators between 2001 and 2003 when seeking $200M to build a bioscience research building and recruit scientists. ... the creation of a biotechnology industry with $1B in annual sales by 2006 -- a forecast billed as conservative  ... OHSU has added 625 employees [and ] has spun off 27 companies since 2001, a marked rise from previous years. But most have no revenue, and just half are in Oregon. [Ted Sickinger, The Oregonian, Apr 15] 

Tax the Visible Capitalists. Talk has begun on Capitol Hill that one way to reduce the deficit would be to raise the tax rate paid by venture capitalists. The chatter has sent a shudder through the industry, .. And the industry is becoming more political, in particular seeking policies that benefit its alternative energy investments. [Matt Richtel, New York Times, Apr 13]

Mississippi VC. In 2006, almost 60 % of VC investment was in California and Massachusetts. ...Mississippi had only two venture investment deals and only $8M  ... Now MS will start a $4M fund to assist start-up, seed and early-stage Mississippi-based businesses. ... the companies must have a business plan, reach a collaborative agreement with a state institution of higher education or community college, and secure a match from an accredited investor. The fund will provide loans for up to $100,000 per year in qualified expenses, for a total of $200,000. [SSTI, Apr 9] No word in the story on how the winners will be picked, but if the Mississippi attitude of pork-barrel spending holds in the state as well in its Congressional delegation, expect politics to rule the fund and results to be laughable.

Politics Pays Well.  In per capita personal income, the District of Columbia led the nation from FY 2003-06 with an average of $56,307 per person in FY06. Just think how well they could do if they had a vote in Congress. SSTI's table at:

A Peek Inside DARPA ... a tutorial with comments

The Small Business Technology Coalition is offering transcripts of its Sept conference SBIR in Rapid Transition

Bubble Bills Still Due. Back in 1999, when Marshall launched her venture capital fund, Axxon Capital, all trees were growing to the sky. ... Axxon, like many other firms, partnered with the SBA, which offered matching funds for every dollar qualified firms raised privately. When the dot-com bubble burst, the SBA suspended the venture-capital financing program and shut down a number of firms, including Axxon. It got worse. The SBA had invested $11 million with Axxon, and under the terms of the program had the right to sue the other investors to get its money back. This week a long list of those investors -- many of them Marshall's prominent women friends (and some ex-friends)-- were writing big checks to settle the SBA claim  ....  some of the city's elite business people and financial institutions writing checks this week -- more than $5 million in all  [Steve Bailey, Boston Globe, Mar 23]

Nice Idea, but. two administrative law judges urged the Minnesota Public Utilities Commission to deny the plans of Excelsior Energy, a newcomer power company.. to buid a coal-to-gas plant... because energy and environmental costs of building and operating the plant outweigh the economic benefit.  [Mike Meyers, Minneapolis Star Tribune, Apr 12] The age of companies ignoring externalities is mostly over, and new ideas have to account for their full costs. Old companies get as many grandfather exemptions as they can hire lawyers and politicians to defend.

Anti-Republican  Science Warrior Chris Mooney has a paper in Science that should be a must read for the intended victims of his book The Republican War on Science. It is pretty bland stuff if you have been following History Of Science  over the years , as it apples the hoary  dicta of the sociology of science to the Climate Wars  His commonplace observations about how scientists are embedded in society , and how their views are 'framed ' by political peer group pressure have none the less raised the hackles of the highly embedded principals of RealClimate, who are trying valiantly to pretend it ain't so. Here is Mooney's take and RealClimate's rebuttal. [Russell Seitz, Adamant blog, Apr 12]

Special Interests Love Apathy. NOBODY has a good word for apathy. Arnold Toynbee, a historian, thought it defined the penultimate stage of decadence. Civilisations proceed, he said, from bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to apathy; from apathy to dependency; and from dependency back to bondage. Apathy is also anti-democratic: democracy requires the informed consent of the governed, and will not last if voters can't be bothered. [The Economist, Mar 31] BTW: SBIR qualifies as a special interest - a political favor for which there is neither need nor general benefit. 

Even the military has limits. Unable to agree on terms for containing costs, the U.S. Navy have canceled a Lockheed Martin contract to develop a new type of warship designed to prowl coastal waters ... demanded that Lockheed accept a fixed-price contract, which places more cost risk on the company, in order to resume work. Lockheed at least made them an offer. [Jonathan Karp, WSJ, Apr 12] A fixed price contract for a military development contract is a recipe for bankruptcy because the requirement makers keep changing their minds. SBIR companies should not take a fixed price contract for any deliverable more than a final technical report.

Are Your Proposals Safe? Department of Defense led a group of eight agencies that received failing marks for computer security. [Washington Post, Apr 12]

Political Attitudes Matter More. citizens do not use the news media as scientists assume ... selecting news outlets and Web sites whose outlooks match their own  ... as unnatural as it might feel, in many cases, scientists should strategically avoid emphasizing the technical details of science when trying to defend it [Matthew Nisbet and Chris Mooney, Science, Apr 6]

Your Ad Here. California Rep. Ken Calvert, the ranking Republican on a House Science subcommittee overseeing NASA programs, [has] plans to introduce a bill that would make "NASA space assets available for commercial advertising and marketing opportunities.... the NASA official in charge of manned-exploration programs, said, "Any idea like that deserves conversation."   [Wall Street Journal, Apr 11]

Two powerful champions of biomedical research blasted the White House's proposal to cut funding for the National Institutes of Health (NIH) in 2008 and invited research leaders to vent their own frustrations at a Senate hearing .. of what would be the fifth consecutive year of subinflationary budgets for NIH ... More surprising was an impassioned speech by [NIH Director] Zerhouni about the need for federally funded human embryonic stem cell research. [Science, Mar 23] Since Zerhouni serves at the pleasure of, and represents, the President, what is going on?  The NIH budget for 08 won't be settled until the next snow season in Washington. But under Democratic PAYGO rules, increases have to be funded by slicing somewhere else or raising new revenue, or what's likely - just pretending that the government can do everything and cost almost nothing. It is the philosophy of the Executive Branch in Iraq. 

NASA scientists plan to announce a new open-source project this month called CosmosCode -- it's aimed at recruiting volunteers to write code for live space missions, Wired News has learned. The program was launched quietly last year under NASA's CoLab entrepreneur outreach program, created by Robert Schingler, 28, and Jessy Cowan-Sharp, 25, of NASA's Ames Research Center in Mountain View, California. Members of the CosmosCode group have been meeting in Second Life and will open the program to the public in the coming weeks, organizers said. [Aaron Rowe, Wired News, Apr 9] I'm not surprised that new Ames Director Pete Worden would back new ideas.

The Dems Are Back. ATP expects to have approximately $60M for cost-sharing awards from a new competition closing May 21.  Get info.

President Bush is seeking to obscure his growing political isolation in Congress by backing an “ethical alternative” on stem-cell research [The Times (London), Apr 10]

Conservative for Spending. Republican Mitt Romney believes the United States needs to increase its defense spending, refocus its alliances on terrorism and reduce bureaucracy so U.S. organizations can do good works across the globe. [AP, Apr 10] Every politician has a great idea that costs money but no great ideas for obtaining the money. "reduce bureaucracy" is just so much talk because they don't know how to have programs that run themselves without being pirated by corruption.

The Pentagon has formed a partnership with private investors, commercial-satellite operator Intelsat and Cisco Systems to deliver high-speed Internet connections to military units on the move. ... Private investors are gambling the military will make long-term commitments to support technical breakthroughs and new acquisition procedures. .. "We get to test something for a fraction of what it would cost" if the Air Force funded it, said Mike Florio, the military's manager for the program.  [Andy Pasztor, Wall Street Journal, Apr 9]  It's possible, just remotely possible that the DOD could apply the same reasoning to reducing its R&D costs by directing its SBIR investments to companies and projects with the greatest potential to attract downstream investment in the new technologies. Although twenty years of short-termism is hard to reverse.

Farmers love it because it provides a new source of subsidy. Hawks love it because it offers the possibility that America may wean itself off Middle Eastern oil. The automotive industry loves it, because it reckons that switching to a green fuel will take the global-warming heat off cars. The oil industry loves it because the use of ethanol as a fuel additive means it is business as usual, at least for the time being. Politicians love it because by subsidising it they can please all those constituencies. Taxpayers seem not to have noticed that they are footing the bill.  [The Economist, Apr 7]

shot down a Scud-type missile in this year's second successful test of a new technology meant to knock down ballistic missiles in their final minute of flight, the Missile Defense Agency said [AP, Apr 8]

NASA JPL will host a workshop "Doing Business With the Jet Propulsion Laboratory" April 18 at the Point Loma Nazarene University in San Diego. Free, reservations required.  Online registration .

Federal regulators said they are preparing to toss out three key patents related to human embryonic stem cells, a move that could ease concerns over commercial control of the work. ... n January, the university [of Wisconsin] waived some of its fees after receiving complaints that its policies were stifling research. [Wall Street Journal, Apr3]

The US Congress moves to help the National Science Foundation teach scientists to communicate what science is all about, while a visit to England suggests that the US has a long way to go in terms of science outreach [John Timmer, ars technica, Apr 1]

Ditching Purdue. "I have to make a choice between putting people into space or having the ability to put people into space or supporting them in a better means when they are in space.  To do the second prior to the first seems to me to be logically bankrupt," [NASA Administrator Mike] Griffin said. Purdue is experiencing the funding cut first hand.  Purdue's NASA Specialized Center of Research and Training in Advanced Life Support will close at the end of this year." [] With tax cuts and a trillion for the Iraq adventure, talk about space will be more and more just talk.

Be Careful About What You Sell to Whom. The chief executive of an electronics supply company is due in federal court today in the District to answer charges of shipping closely guarded U.S. computer technology to India for use in missiles and other weapons systems. [Washington Post, Apr 3]

I find it absolutely astonishing that anyone could be against missile defense, in today’s world. [DEPSECDEF England at Annual Missile Defense Conference]  A classic attack tool: when someone questions your means, accuse them of opposing your end.

SBIR Alarm Bells. Rick Shindell of SBIR Gateway is reporting that the Iraq stand-off in the Congress is forcing DOD to re-allocate money from other programs, including SBIR, into the war. The squeeze could get intense on any program that can legally be re-programmed and some that cannot be legally re-programmed. DOD Appropriations are not just one big pot to be allocated as the SECDEF sees fit.  Since the Congress and the President have different strongly held ideas about how to prosecute the Iraq action, a stalemate could possibly develop in which troops will have to be withdrawn for lack of financimg. The politics would then get ugly  ugly and a program like SBIR would be a natural victim since DOD cares little about it.  DOD's SBIR website doesn't yet mention such a cutback possibility.

Protection.  Bush Inc panders to anti-China screams of unfair trade competition by slapping sanctions against Chinese paper imports. That's the way trade wars start when politicians need a shot of native support as popularity declines.

Export-focused  The New Zealand Venture Investment Fund (NZVIF), a government fund focusing on early-stage venture investments, has committed $14.45 million to Pioneer Capital Partners' New Zealand Innovation Fund. The private fund will invest between $80 million and $100 million over the next five years in export-focused information technology and manufacture and design companies, according to the New Zealand Herald.

Austin, San Jose, Berkeley, Pasadena and Boston have been singled out for their efforts to promote cleantech industries by SustainLane Government, a nonprofit Internet-based organization that provides current practices and news about municipal sustainability. These cities have all found novel approaches to assisting start-ups and commercializing research in one of the fastest-growing industries for venture capital investment. [SSTI, Mar 30]

Austin's efforts to encourage the high-tech industry could get a boost next week when the City Council considers decreasing electric rates for a select group of big users. [Austin American-Statesman, Mar 28]

Hold That Innovation. NIST banned Microsoft's Vista operating system from its internal computing networks. DOT and FAA have also imposed similar blackouts on Vista plus Microsoft Office 2007 and IE7.  [Tech Web, Mar 12]

When SBIR Isn't Enough. $2M Explanation: Then-House Majority Whip Roy Blunt (R-Mo.) obtained this for Carbon Nanotechnologies  and Brewer Science [9 Phase 2s] for work to be done on failure-resistant electronics at Missouri State University's Roy Blunt Jordan Valley Innovation Center. The Washington lobbying firm of Fabiani and Co. represents Brewer Science. .... $5M   Explanation: This earmark for Rocky Research [9 Phase 2s] of Boulder City was obtained by Nevada Sens. Harry M. Reid (D) and John Ensign (R). The company's lobbyist is Stirling Strategic Services.  [Washington Post, Mar 4] non-SBIRs listed: $1M  C9 Corp. in Kingston NY; $2.25M Nanomaterials Discovery Corp. of Cheyenne WY; $4.5M Minnesota Thermal Science; $1.6M Rex Systems of Chippewa Falls WI. Data from Taxpayers for Common Sense. Other SBIR firms on TCS's list: Onyx Optics (Dublin CA). The list also shows where to find a lobbyist to help you dip your ladle in that soup.

Corn Stalks, Not Kernels. "the future of biofuels is not based on corn," says Deputy Energy Secretary Clay Sell as the grand pronouncements in speeches like State of the Union give way to the economic realities of limits on agriculture and the true cost of fuel. 

Intron writes "Perhaps you have been lying awake worrying that your software patent on bubble sort might spend too much time being "examined" or "peer reviewed". You will be pleased to know that the US Patent and Trademark Office has launched their accelerated review process. "Applicants' submissions enjoy a presumption of patentability" says the patent office. Applicants are also responsible for disclosing any prior art." [, Mar 29]

Free Trade Has a Price. a growing band of economists and policy makers who say the downsides of trade in today's economy are deeper than they once realized. ... now [Alan Blinder] is saying loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two. That's more than double the total of workers employed in manufacturing today. [David Wessel and Bob Davis, Wall Street Journal, Mar 28] The easy answer is protectionism which has an even higher price, and the hard answer is adaptation at which the American system is supposed to be the world-beater  Meanwhile, The Asian Development Bank raised its growth forecast for developing Asia in 2007 to 7.6% and cut its expectation for inflation.. All that growth brings new competition and customers.... Also meanwhile, Prospects for Congressional approval of several pending trade pacts received a surprising lift on Tuesday when Democrats in the House proposed a series of revisions that won guarded praise from both organized labor and the Bush administration. [New York Times, Mar 28]

The pioneer free-market economist Adam Smith has made his appearance on the new £20 Bank of England notes. ... The new notes feature a profile of Smith, and an illustration illustrating his famous pin-factory example to show the enormous productivity of specialization.  [Eamonn Butler, Adam Smith Institute, Mar 21]

Wonks for Science. Annual AAAS Forum on Science & Technology Policy, 3-4 May,  a two-day forum in Washington ... recognized as the major US public meeting on S&T policy. This year’s meeting will cover up-to-date R&D budget information and policy issues. For detailed information and advanced registration at discounted rates, go to

Beyond Technology. We’re dealing with a small, nearly invisible enemy--an enemy without a country, a government, an army, a navy, an air force, or missiles. Yet our enemy is armed with suicidal determination, and motivated by our meddling in their regional affairs ... Only with the complicity of Congress have we become a nation of pre-emptive war, secret military tribunals, torture, rejection of habeas corpus, warrantless searches, undue government secrecy, extraordinary renditions, and uncontrollable spying on the American people. The greatest danger we face is ourselves:  [Ron Paul, US Representative, Texas]  Moreover, terrorism is essentially a technique of killing people and not the enemy as such. If one wages war on an invisible, unidentifiable phantom, one gets into a state of mind that virtually promotes dangerous exaggerations and distortions of reality. [Zbigniew Brzezinski, Mar 8]

A Billion Here, A Billion There, ... Ohio's governor is talking "real money", a billion in alternative and renewable energy technologies over four years, tax exempt bond cap allocation  to leverage billions of additional investment dollars in energy projects ... to ensure energy will be an economic development leader in Ohio. [SSTI, Mar 19] Of the many silent asssumptions being made: Ohio can afford a billion new spending (always of course called investment), the taxpayers are willing to pay another billion for another government program, Ohio's government can pick winners without political consideration, a billion government dollars will make any difference in Ohio's economy or energy.  Ah well, the voters picked a Democrat for their new governor and he has to be seen doing dramatic things. If the federal government's SBIR is any measure of what a billion government investment here, and there, can do, Ohio is in for a disappointment that will need a cover story in the coming years.

A Congressional committee has asked Purdue University for copies of its findings in an investigation of a Purdue scientist who claims to have generated nuclear fusion in a desktop experiment.  ...Rusi P. Taleyarkhan said that by using sound waves he could generate temperatures hot enough for hydrogen atoms to [fuse] [New York Times, Mar 23]

South Dakota is learning the hard way about government investment programs. Instead of offering assistance to new firms through small, targeted programs, the state will reallocate the funding for these smaller programs into a larger fund with fewer restrictions on how the money can be spent.  Ended were programs that made $50K loans for startups and provided a 4-1 match up to $1M.  All the high-tech stuff will devolve to the long-standing REDI fund which claims creation of 33000 jobs over the 20 years. [SSTI, Mar 19] The federal SBIR in contrast seems incapable of learning because there is no one entity with any accountability and the national legislature has bigger fish to fry as it tries to buy votes by handing out money to every possible interest group with no need to balance the budget. The basic problem is that government is a poor vehicle for investing in private enterprises; its priorities are different and its methods insensitive to ROI. The Libertarians have a strong intellectual case for leaving the market alone on business creation and not wasting taxpayers' money trying to make magic.


The vast majority of economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it.
There's a good reason politicians don't like to talk about the nation's long-term fiscal prospects. The subject is short on political theatrics and long on complicated economics, scary graphs and very big numbers. It reveals serious problems and offers no easy solutions. Anybody who wanted to deal with it seriously would have to talk about raising taxes and cutting benefits, nasty nostrums that might doom any candidate who prescribed them.
[CBS News, Oct 28, 06] commenting on Comptroller General David Walker's Fiscal Wake-Up Tour.  We get the government we deserve. The comments from the public show that everyone is looking for the villain everywhere except in the mirror.  Waste, fraud, and abuse is any program that benefits someone else.

NIMBY Ethanol.  Fights have broken out in Indiana, Illinois, Missouri, Nebraska, Kansas and Wisconsin. Opponents complain that ethanol plants deplete aquifers, draw heavy truck traffic, pose safety concerns, contribute to air pollution and produce a sickly-sweet smell akin to that of a barroom floor. [Joe Barrett, Wall Street Journal, Mar 23]

Helping Angels. The Access to Capital for Entrepreneurs Act would provide a 25% tax credit to investors with a net worth of at least $1 million who make equity investments in early-stage small businesses -- the first time an investor would get a break for investing at the front end. ... According to the Center for Venture Research, in 2005, U.S. angels invested $23.1 billion in just 49,500 ventures, or about $470,000 a deal. Venture capitalists invested $22.1 billion in 3,008 deals, or about $7.4 million a deal.  [Wall Street Journal, Mar 19]

Rule of Law v. Unitary Executive. US News is offering up the latest information on the Freedom of Information Act, with links to filing FOI requests to US states, the federal government, and 67 other countries. 'Often the records can be obtained by simply asking for them, but since 9/11, federal agencies have grown increasingly stubborn about what they release. A just-released survey by the National Security Archive found that only 1 in 5 federal agencies meets congressionally mandated requirements for online information access. There's hope, though: A new bill is making its way through the House of Representatives, with bipartisan backing, that would strengthen the FOIA, one of a host of open government measures being looked at by the new Congress.'"  [, Mar 17]  BTW, an SBIR proposal in possession of the government is a government document subject to FOIA. Be sure to mark its proprietary parts, but blanket marking of the whole document will not be honored. Protect what you treasure, and keep your real treasure out of the document altogether. You only have to tell the government enough to convince the agency that you have the most competitive proposal.

Not So Fast With That Innovation. A federal judge temporarily halted the planting of genetically engineered alfalfa across the country. U.S. District Judge Charles Breyer ruled last month that federal authorities had failed to fully consider the consequences before allowing the sale of the herbicide-resistant alfalfa. [Washington Post, Mar 13]

The suits want more pizzazz in NSF by funding more wild-eyed ideas that could revolutionize science and threaten the comfort and livelihood of the peers. The National Science Board  issued a draft report ENHANCING SUPPORT OF TRANSFORMATIVE RESEARCH AT THE NATIONAL SCIENCE FOUNDATION (no pizzazz in our titles, please). But the stilted language and the hopeful looking backward at scientific breakthroughs gives little guidance to the NSF process that depends on peer review by already established scientists. Step One could be for the suits to use some graphic Anglo-Saxon language to say what they mean and go out on a limb by naming some ideas worth funding. Revolutions like cold fusion, for example. The Congress could pay more attention to what NSF actually does and how its work is evaluated. One idea: give a half-dozen Nobel laureates a pile of money each to fund whatever they think might light up the sky. BTW, SBIR at NSF and otherwhere could use some pizzazz too as measured by downstream impact. 

Meanwhile, Congress wants to double the bet with another $16B even if the first bet isn't working. The America COMPETES Act, a sprawling bill drawn from the recommendations of a 2005 National Academies report on how to strengthen the U.S. scientific enterprise (Science, 21 October 2005, p. 423). The proposal would authorize a doubling of funding for the National Science Foundation (NSF) and the Department of Energy's (DOE's) Office of Science [Science, Mar 9] No mention, of course, where the new money would come from, just ad it to the national cuff and wait for the resultant growth to swamp the debt. If wishes were horses, ....

If at First, ...  Homeland Security officials are testing a supersnoop computer system that sifts through personal information on U.S. citizens. ADVISE (Analysis, Dissemination, Visualization, Insight and Semantic Enhancement) uses the same data-mining process that was developed by the Pentagon's Total Information Awareness (TIA) project that was banned by Congress in 2003 because of vast privacy violations.  ... Relevant data 'can include credit-card purchases, telephone or Internet details, medical records, travel and banking information.  [Audrey Hudson, Washington Times, Mar 8] The relevant question to the administration is "What part of NO did you not understand?" Sounds like another test of Cheney's "unitary executive" theory" about to hit the political airwaves.

If not history, not math either.  The Kentucky plan to pay more for math and science teachers ran afoul of all the other subjects' teachers complaints. [Raviya Ismail, Lexington Herald Leader, Mar 8] So, either the plan dies or the other teachers will have to be bribed.

The Snoop-in-Chief of Snooping Unlimited is discovering that democracy eventually recovers its principles and that a dictatorship of a "unitary executive" is not welcome. Bush said the FBI has addressed problems that led to improper prying into personal information, but said "there's more work to be done."  [Wall Street Journal, Mar 11] The steady drip of discovery of government snooping has taken its toll, first in the electoral turnover of the Congress and now in admissions by the Justice agencies that they ignored the law in their zeal to snoop wherever and whenever they pleased. An unrestrained government will always find a justification for expanding its powers. Historian Niall Ferguson, among many others, describes the downward spiral in Russia after 1917 in his recent (2006) The War of the World: History's Age of Hatred.  Note: snooping is not just a Bush-Cheney obsession: "People who refuse to give up their bank records, tax records & details of any benefits they've claimed, and the records of their car movements for the last year, or refuse to submit to an interrogation on whether they are the same person that this mountain of data belongs to — will be denied passports from March 26th. The Blair government has already admitted that this and other data will be cross-linked so that the Home Office and other officials can spy on the everyday lives of innocent Britons. Britons were already the most spied upon nation in Western Europemore so even than Sweden. Data-mining through this unprecedented level of mass-surveillance allows any future British government to leapfrog even countries like China and North Korea." [, Mar 10]

The net effect of the state’s investment has been to increase the academic and nonprofit share, while decreasing industry’s share substantially, says Maine's Comprehensive Research and Development Evaluation 2006, a self-evaluation of the state's $296M in R&D funds since 1996. The overwhelming finding from this report is that the academic and nonprofit sectors are not commercializing very much of the new knowledge acquired through the state-funded R&D, while industry is commercializing at a high rate. Another nice theory impaled on an ugly fact - giving R&D money to non-profits doesn't do much for making profits and economic activity beyond the money directly spent. The Congress could take a lesson from Maine about how to evaluate SBIR before re-authorizing it in its present form. BTW: the term "non-profit" extends nicely to companies that merely do service work for federal bureaus. And the question not asked: what would the $296M have produced if not taken in taxes to hand out to 'winning" entities picked by the state? For SBIR the answer is a little clearer since the lion's share of the "taxed" funds was re-cycled to the same work that would have been done without SBIR. Any gain to either the government or the economy is merely a convenient myth. [thanks to SSTI for pointing out the report]

N.C. State University is seeking $2M from the General Assembly to pull together campus programs designed to help students develop as entrepreneurs in the classroom and after they graduate.  [Raleigh News & Observer, Mar 7]

The government is about to start opening up the process of reviewing patents to the modern font of wisdom: the Internet. The Patent and Trademark Office is starting a pilot project that will not only post patent applications on the Web and invite comments but also use a community rating system designed to push the most respected comments to the top of the file, for serious consideration by the agency's examiners. A first for the federal government, the system resembles the one used by Wikipedia, the popular user-created online encyclopedia. [Alan Sipress, Washington Post, Mar 5]

The Navy reports that Team Sub surpassed the $1 billion mark in Phase III awards when Trident Systems was awarded a $50 million contract in May, for delivery of a Shipboard Mobile Computing Engineering Model. The Navy sponsors an enthusiastic bulletin on Transitions that showcases follow-on sales of SBIR supported technology to the Navy. Whatever the negatives of focusing the Navy SBIR program on incremental government technology, it is at least fostering small business entry into Navy business.

"No situation is so bad that Congress can't make it worse," said Rep. Tom Feeney (R-Fla.) about needs for patent law changes.

Wood chips and orange peels are among the candidates for DOE's plan to subsidize six outfits (one is its own Renewable Energy Lab) in the hunt for ethanol from detritus. Two are foreign companies who will get a piece of the $385M. Anyone remember ERDA and the birth of the Energy Department and the 1970s craze for alternative fuels? [story from Wall Street Journal, Mar 1]

Love That Home Cooking.  The House voted unanimously 423-0 to be against foreigners making profitable deals in America. There is Congressional election coming up in only twenty months in which foreigners do not vote. 

It's On, It's Off, It's ON!  NIST now says there will be an ATP competition this year, to be announced in the spring. No news on where the money will come from or whether first funding promises to complete the project. Democrats like such programs and they run the Congress these days.   

The Maine Technology Institute handed out $2.6M in grants to eleven companies to be matched with $4M of other money. The award amounts varied widely, an indication that someone is thinking about how much is just enough, unlike the favored cookie-cutter approach of federal grants that encourages applicants to propose the maximum amount allowed. The feds would rather pass out large amounts anyway to reduce their administrative burden. And since the feds don't care about SBIR's efficiency or ROI, they have no incentive to try to maximize ROI. Maine, however, needs all the economic return it can get for every dollar spent.

The Texas governor wants $300M to recapitalize the state’s Emerging Technology Fund (ETF) as part of an 11% increase over FY 2006-07 money for business and economic development, No great surprise that the ETF isn't yet (if it would ever be) self-financing, since innovation ROI is by its nature a slow payoff. But politicians want to be seen doing something and passing out money that pays for jobs is so-o understandable. [story from SSTI, Feb 19]

We Need a Government Grant. A coalition of farm groups, hunters, environmentalists and some business interests (the 25X'25 Renewable Energy Alliance), favoring expanded use of ethanol and other so-called renewable fuels is lobbying for $64.5 billion of new federal incentives to achieve their goal over the next five years.   [John Fialka, Wall Street Journal, Feb 28] Note that there are other approaches to help ethanol, like an oil import tax that helps government finances rather a handout than bleeds them. Which is the worse disease - taxes or subsidies?

Three Euroresearchers question the efficacy of Bayh-Dole's giving patents to universities on the theory that the universities will then have the incentive to make money from them. Apparently two-thirds of patents from US university research  go to the university but only 20% do so in Europe. Yet Euros only lag US commercialization performance by 15% suggesting that universities are just not business oriented enough to know how to profit from the ownership. University IPRs and Knowledge Transfer: Is the IPR Ownership Model More Efficient?

The economics of making fuel for our vehicles from wood chips and weed stalks revolves around how much government money will have to be mixed with the cellulose and political hot air before a profitable industry could get going.  Probably a lot of money. But as happens in nature, when a new species arises, further new species will arise to feed on it. The subsidy will do for cellulose what it did for SBIR - raise up companies that feed on the government money with little prospect of ever becoming economically self-sustaining. One difference with cellulose is that the projects will so big that political corruption and sending good money after bad will soon affect the program. Kevin Bullis [MIT Tech Review, Feb 26] discusses the economics part of the issue.

mgh02114 writes "The new US stealth fighter, the F-22 Raptor, was deployed for the first time to Asia earlier this month. On Feb. 11, twelve Raptors flying from Hawaii to Japan were forced to turn back when a software glitch crashed all of the F-22s' on-board computers as they crossed the international date line. [, Feb 25]

Since SBIR will officially expire in 2008, and the federal agencies would applaud if it did, the advocates are banging their drums to get it re-authorized. SBIR Insider Feb edition reviews some of the questions with cheerleading. SBIR's problem is that more people in Washington are noticing the twenty years of mediocrity and the advocates have no compelling arguments beyond the "fair share" politics that got it started in 1982.  Well, if pork by Republicans is bad politics, pork for small companies is no better.

They should commit to sunsetting government programs every four years unless continuing them can be justified. ... Republicans need a spirited, intellectually based rebuttal to every piece of Democratic legislation and an alternative to every policy. [Frank Luntz, former Republican pollster, Washington Post, Feb 25]  Suppose you were a Republican Congresscritter who wanted to apply Luntz's advice. What would you do with SBIR and why?

Government investment in research, strong intellectual property laws and efficient capital markets are among the reasons that America has for decades been best at transforming new ideas into successful businesses. [Bill Gates, Washington Post, Feb 25] Although Gates listed government investment in research, his essay focused on education. But in the SBIR debate, Congress has to remember that a vote for SBIR is NOT a vote for government investment in research; that investment is going to happen anyway. SBIR merely steers a piece of that research into a preferred class of US firms by a program that micromanages part of the federal agency R&D spending. If investing in any of those firms is a good idea, the agency is always free to do it without any coercion from Congress.

Minnesota enacted a law requiring utilities to generate a fourth of their power from renewable sources by 2025 way up from today's 5% renewables. Said the Gov: ''We have to break our addiction to fossil fuels,''  [AP, Feb 23] Meanwhile, SoCal  Power signed up for enough Utah wind power for 43000 homes in Burbank and Pasadena [Salt Lake Tribune, Feb 23]  provided those in-touch Californians turn OFF (not just stand-by) their juice-eaters when not actually in use. 

Keep Up Demand, Shift Supply.  Bush, in  lab coat and protective glasses,  sniffed ethanol to show his great interest in shifting from oil to ethanol fuel. No mention made of carbon emission per mile nor of reducing demand for fuel. Folks still want a magic bullet technology solution that doesn't threaten their present lifestyle, which is good news for sci-tech which will get ever more money to search for the silver bullet. Politicians know they can keep people happy by spending money without asking for any sacrifices.

the Brookings Institution and Boston think tank MassINC suggest that the old mill towns could provide the Boston area's high-tech employers with needed workers, affordable housing and a model for growth that doesn't involve suburban sprawl. More broadly, their findings make a case for directing more of the nation's high-tech investments beyond hot spots like Silicon Valley to lower-cost locales, including older manufacturing centers like Detroit and Cleveland, which offer the potential for more-sustainable growth. [Thaddeus Herrick, Wall Street Journal, Feb 26] The politicians will love an excuse to pump Other Peoples' Money into depressed communities  on any good sounding theory. What they cannot do is force private investment to follow them, and without private investment, commercial growth will not happen. Silicon Valley is more than nice sidewalks. BTW, it's the same situation with SBIR - pumping mission agency money into life-style companies produces little economic benefit and what's worse for the agency, no outside support for the technology that the agency claims to want. 

Pork in the SnowAn effort by Rochester General Hospital and two local biotechnology firms [neither had SBIR] to develop a new cardiac support device is getting a $1M infusion of federal funding, Rep. Louise Slaughter, D-Fairport, announced today. ... Slaughter secured federal money to help fund Myo-Vad development from the 2007-’08 Defense Appropriations Bill. [Rochester Business Journal, Feb 21] Hey, isn't such research a boon for humanity?  Sure, but does everything good have to be done by the government, and if so, where will the government get the money? Will Ms Slaughter propose a tax increase to cover the added government expense? Not until the US voters accept that there never was a free lunch.

Guard Your Wallet - Congress Wants to Fix Something. Laura Peter [Wall Street Journal, Feb 20] opines: in its quest to modernize the antiquated and under funded system for protecting our inventions, Congress has trotted out an easy target -- so-called "patent trolls" -- to justify changes that would stifle innovation, benefiting large technology companies at the expense of smaller ones. ... some reform proposals cast too wide a net, and would hurt small technology companies' ability to benefit from their own inventions. Since patents are saleable, there's an active economic market by various kinds of opportunists. Which is what makes capitalism tick.

You can no longer just be nobody with an idea. Now you have to be a registered and numbered nobody to propose an SBIR. Although the SBIR law does not require you to be a business entity capable of contracting with the  government until the time of actual award, the federal agencies have generally added a requirement that you register with Dun & Bradstreet and various other entities BEFORE you submit a proposal. Rules vary among agencies and Fred Patterson, the SBIR Coach, advises that Registration on both websites is a royal pain, and can take up to two weeks to complete PRIOR to submission. and that the rules have become complicated and vague. Fred is a great source for SBIR administrivia at all stages.

Real Energy R&D Way Down. Forget State of the Union blather and look at the numbers. The White House's 2008 budget, released on Feb. 5, asks for just a 1% increase in real R&D spending in energy, transportation, and the environment. The total amount, $7.5B , looks paltry compared with what was spent in the past. In real terms, it is almost 19% lower than in 1994 and about 40% less than its 1979 peak. Here's how the amount measures up historically as a share of GDP. [Michael Mandel, Business Week, Feb 26]

small business establishment births are the single-largest determinant of the growth rate of gross state product (GSP), state personal income, and total state employment using data from the years 1988-2002. Unsurprisingly, such a finding comes from an SBA study. Well, "determinant" is a mighty powerful claim of cause-and-effect from a study that I'll bet did no more than correlate the two statistics. But it will no  doubt activate the drum pounders for new SB programs like what resulted from the  same kind of vague correlation that got SBIR started. Reminder: a correlation is NOT prima facie evidence of anything until a convincing underlying mechanism is proven. More small businesses getting born when large firm jobs are disappearing is no surprise and the good economic activity could have come from any combination of factors unrelated to business size. Decide for yourself whether the story hangs together. Remember the role of the SBA Office of Advocacy includes a steady drumbeat of reports and recommendations for more SB programs. More than one former head of that gaggle went on to become a main drumbeater for SBIR on the outside. Beware of more political science from soft data when studies shuttle from "simultaneity" and "regression" to "determinant" and "effect". 

California's stem cell agency doled out nearly $45M in research grants to about 20 state universities and nonprofit research laboratories, far exceeding what the federal government lays out annually to study stem cells. ...  Connecticut, Illinois, Maryland and New Jersey also fund stem cell research. [Washington Post, Feb 17]

Consumer Funded R&D. But Congress is unlikely to boost taxpayer-funded energy research by enough to develop the necessary technologies [for global warming emissions], says Jeffry Sterba, chairman of the [Electric Power Research Institute], who is expected to present the study today at an energy-industry conference. One option he said utilities are considering proposing: that the government allow them to tack an additional modest charge onto consumers' electric bills to raise roughly $2 billion a year to cover the cost. [Wall Street Journal, Feb 15]

ConnectLA. Mayor Antonio Villaraigosa outlined plans to blanket Los Angeles with wireless Internet access in 2009, in what would be one of the nation's largest urban Wi-Fi networks.  [LA Times, Feb 14] Once more, public demand for a service convinces politicians to bypass the private market and do it "free" (which of course it is NOT). This way, even the non-users get to pay a share in their taxes. The politicians will of course argue that the rising tide will lift all boats, and like public education, gives a large net benefit to the community.  For which the politicians expect votes in the next election.

Tanks or Horses? When Hitler invaded the Soviet Union, his army used more horses, and more horses per soldier, than did Napoleon's over 100 years earlier. [Prospect, Feb07]

Let the Sick Die. Of all the thankless jobs that economists set for themselves when it comes to educating people about economics, the notion that society is better off if some industries are allowed to wither, their workers lose their jobs, and investors lose their capital -- all in the name of the greater glory of globalization -- surely ranks near the top. ... Protectionism is seductive, but countries that succumb to its allure will soon have their economic hearts broken. [Edward Prescott, Wall Street Journal, Feb 15] Do the same ugly laws of economics apply when government protects life-style R&D companies by handing them no-risk grants that have no economic payoff?

Still buying more than we sell as The Bush administration pledged to keep pursuing its free-trade policies, and said the wider deficits were primarily a factor of faster growth in the US. [Boston Globe, Feb 14] One immediate consequence is that we have to sell some of the family silver to pay the difference on top of running up our national external debt. But that doesn't go down well politically when we deny the problem while buying more foreign products. The House legislation would broaden the types of deals reviewed for security risks by a high-level Bush administration panel — the Committee on Foreign Investment in the United States — to include those affecting homeland security, and sales involving power and water plants. [Houston Chronicle, Feb 14] One contributor to re-balancing would be to tap our innovation advantage by using SBIR to start high potential ideas instead of merely servicing government thirst for defensive research (understanding what it has and knows).

One government department that seems to get it right is NIH whose SBIR beneficiaries have a long string of public capital investment and a steady stream of IPOs. Maybe the Congressional small business committees should ask why and how DOD cannot or will not focus on innovating small businesses that will help solve the larger national security problem.  Congress can have its politics and economic success by handing out the set-asides but only to companies and ideas that have demonstrable futures. But it won't be easy to design a program that gives the federal agencies autonomy and an incentive to do economic good. One helpful step would be to cut the program down to where it goes off the mission bureau's radar and can then be administered for its own good. 

Evolution and religion are facing off in Kansas once again today, as the board of education there — for the fourth time in eight years — decides just what students should be taught about how things came to be. [The Lede blog (New York Times), Feb 13] Posted comment includes: They don’t call it blind faith for nothing. and It also never ceases to amaze the twice-born to find that Darwin is buried in Westminster Abbey.

Test Small First. The National Academies said NSF should experiment with prizes before considering spending big bucks like the grand scheme of former Science House Chair Wolf of a billion for the oil dependence solution. with a handful of prizes ranging from $200,000 to $2 million and raise the payout to as much as $30 million if the concept proves successful. As always, beware of big government programs that solve a big political dilemma.  Politicians should first understand the basic laws of thermodynamics before looking to magic ways to spend energy without buying it.  Meanwhile, a $25M prize is on offer to anyone who can find a way to remove a billion tons of CO2 from the atmosphere a year.  Not a government prize, but from British entrepreneur Richard Branson, founder of the Virgin enterprises and tormentor of British Airways. The prize judge - Al Gore. Conditions: No adverse environmental impact and $5M when the system is put into place and the remainder after ten years of continuous use. [story from Washington Post, Feb 10] At the current rate of decline of the dollar against the British pound, Branson will be paying out only a fraction of what $25M would cost him today. Now think what you could do with ten billion tons of CO2.

Thinking about doing science in Kansas?  Remember that the laws of nature there are subject to voting and the balance if close and shifting. The last election shifted the education board from 6-4 religion to 6-4 science and the religionists don't give up.

DOD SBIR was judged Not Performing by OMB's because it has poor controls on unproductive spending, and continues to provide funding to companies with track records of poor performance. Waste no time. Submit your proposals for your share of the honeypot before Congress wakes up. But Congress doesn't need to do anything because the power to fix the problem lies in the Executive Branch completely within the present law. OMB says "we" are taking action by Tightening eligibility requirements for accepting proposals from companies and individuals that repeatedly fail to sell resulting products in the marketplace;  Changing the way companies' past performance is assessed to ensure that it more closely matches the intent of the law (Section 638 of Title 15, USC) that the program support product commercialization;  Seeking to get highly successful awardees to enter the mainstream of Defense contracting. 

Commerce SBIR also got a failing grade. No other SBIR program received a grade either way. 

Much Mouth, Little Money. an ethanol trade group, said the president's proposal represents "a step in the right direction [Wall Street Journal, Feb 7]  after Bush's budget proposalSimilarly, from Congress: Biotechnology firms were thrilled in December when Congress, on its way out the door, agreed to set up a $1 billion fund to spur private-sector development of remedies for bioterrorism-related illnesses and pandemic flu. But lawmakers didn’t appropriate the money, and now they might not do so anytime soon. [WSJ Washington Wire, Feb 7] And  Bush administration budgeteers have provided a few examples of programs they say Congress should kill this year, including one called the “Red Planet Venture Capital Fund” that’s aimed at giving NASA more access to cutting-edge technology needed for future Mars missions.

More for everybody in the Pentagon. A 25% rise in buying military hardware, especially airplanes and ships. An overall 11% rise which is good news for the many companies that feed every year on DOD SBIR. The Congress may take a more responsible attitude toward balancing national priorities than the Republicans who never met a weapons system they didn't like since the taxes to pay for it come less and less from their richest supporters. The Pentagon will have to expand as well since it takes a lot of people to actively spend $623B a year.

The Squeeze Tightens. the president’s budget for biomedical research is basically flat. He is requesting $28.9 billion for the health institutes in 2008, an increase of $232 million, or less than 1 percent. [Robert Pear, New York Times, Feb 4]  The SBIR advocates always have an answer: we deserve more of that shrinking pie.

More for us, faster.  SBTC, the SBIR lobby, has the solution for DOD technology troubles: more and faster money for small business. Its newest White Paper makes the usual arguments for more SBIR money. It opens with the fantasy claim that  Small technology firms with less than 500 employees now employ 54.8 percent of all scientists and engineers in US industrial R&D. However, these nearly 6,000 scientists and engineers are able to obtain only 4.3 percent of extramural government R&D dollars. This deficit may help explain the signal failure of most major defense programs to realize advanced technology goals. In a parallel to the latest Iraq strategy, when a policy isn't working, what we need is more of it.  One route to snagging more money for the SBIR companies doing defense work is provide DoD Program Managers with matching R&D funds for each dollar of Program R&D committed to a Phase III contract with a SBIR company to continue development and/or insertion of SBIR-developed technology which sounds like it would add money to Defense programs just for using small firms. No mention of course of where the new money would come from which is typical for handout beneficiaries who don't have to collect taxes or make budgets balance. And not satisfied with fantasy small business handouts, it wants to manage Defense as well,  Weapons systems should be remodeled every 36 to 48 months, with incremental improvements, Output from three such cycles over the current 10-year cycle will exceed the sought “revolutionary” improvements.  The whole thing is another naked grab for more money through political influence without regard to any measures of efficiency nor any recognition of the experience of the two decades of SBIR history. 

A better philosophy for an SBIR that will accomplish something substantially more than leaving federal R&D to manage itself is: the insatiable avarice of mankind leaving nothing unattempted to attain Gold from Theatrum Orbis Terrarium 1575 by Abraham Ortellius. Displayed in the London Docklands Museum exhibition on the Jamestown expedition to the New World. With no government support and a lot of lying advertising, the expedition eventually resulted in Jamestown becoming a boom town by the end of its century.

The executive order ... sets a new standard for formal rulemaking that requires agencies to find a "market failure" before proceeding with formal regulation. [John McKinnon, Wall Street Journal, Jan 31] Fortunately for SBIR, the program is already enshrined in law for it would fail the "market failure" test. Unless Congress were to take a closer view in the next re-authorization cycle.

It's Out; It's (Probably) In.  In their newest quest for financial probity, the Democrats will take a spade to more than $186M in such research grants, which have quadrupled in the Agriculture Department since the 1980s. But not to worry too much, this argument is only about who will distribute the money for the much loved farmers and land-grant colleges: Most of the earmarked funds will be redistributed back to the colleges through federal aid programs.   [Wall Street Journal, Jan 29]  The SBIR base for USDA should stay pretty much unchanged.

Let the Neighbors Pay. If you are wondering where to locate a business that serves local residents, look first to states with low or no income tax.  Some states will buck the trend by growing rapidly despite a high tax, but your odds are better in a no-tax state.  If you're wedded to your present location, start talking up tax reform to shift taxation from income to consumption. [Bill Conerly, Businomics blog, Jan 24]

Can Anyone Here Define Obvious? The war is over what inventions are patentable. ... whether the Federal Circuit's obviousness standard is too lax, resulting in the issuance of numerous patents of dubious validity ... SCOTUS Judge Scalia called the lower court's criteria Gobbledygook. [Science, Jan 12] NanoGuard. The Cambridge City Council is considering a law to regulate the use of super-small nanoparticles in research and manufacturing. If the council decides to act, it will make Cambridge the second city in the United States, after Berkeley, Calif., to regulate nanotechnology. [Boston Globe, Jan 26]

[Pete] Worden, [now chief of Ames and ]a self-proclaimed NASA basher who jokes that the agency's initials stand for "Never a Straight Answer." Instead, Worden remains bent on radical changes for the troubled lab. Ames and its famous neighbor, Google, last month agreed to an innovative technology-sharing deal that will make NASA's enormous archives of Earth and space data accessible to the public. [Science, Jan 19]

Coal v. Corn. The political battle for dominance of the not-oil fuel business will be between liquid coal and liquid corn. While administration officials have assured coal-industry lobbyists that coal-to-liquid fuels are embraced in the president's proposal, Mr. Bush has kept the focus on more environmentally popular options, such as corn-based ethanol and ethanol produced from farm wastes, including corn stalks. [John Fialka, Wall Street Journal, Jan 26] Neither is likely to admit that the net energy at the pump offers little advantage per unit cost over just plain foreign oil and can only be price competitive with a hefty subsidy from the taxpayers.

Big Ideas, Little Money. Even as President Bush proposed to make a serious commitment to renewable and alternative fuels, ... DOE announced that it might have to cancel or delay plans to open a pair of biofuels research centers -- one of which Minnesota scientists had hoped would be located at the University of Minnesota -- because of a lack of funding. [Matt McKinney, Minneapolis Star-Tribune, Jan 25] Renewables the answer?  The National Renewable Energy Laboratory still does not have a cafeteria ... The lab’s fitful history reflects a basic truth: Americans may have a growing love affair with renewables and the idea of cutting oil imports and conserving energy, but it is a fickle one. ... But even additional money for renewable energy will be going up against government tax policies that encourage more energy consumption.  [Clifford Krauss, New York Times, Jan 25] Everybody's got a great idea that someone else should pay for, and as long as government keeps offering magic solutions, no one need sacrifice comfort to actually fix the problem. We tell our politicians what we want to hear, and guess what? 

Deficit Joke Again.  While advocating further tax cuts and a larger scale Iraq war, the administration continues the deficit joke by OMB's Portman, But, it will be consistent with the broad theme of reducing deficits and [reaching] balance by 2012. SBIR advocates play their part by calling for more R&D and a larger share of it as a favored political constituency.

Through a Rosy Lens. Cheney, on the other hand, rejected the idea that there has been any failure ... said yesterday that the administration has achieved "enormous successes" in Iraq but complained that critics and the media "are so eager to write off this effort or declare it a failure" that they are undermining U.S. troops in a war zone  [Peter Baker, Washington Post, Jan 25]

Do you have political opinions and an adoring audience?  "Under Senate Bill S.1, political bloggers with a readership of over 500 who comment on policy matters or hope to incite 'grassroots' action amongst their readers would be forced to register with the Federal Government as lobbyists."  [, Jan 18] Somehow I doubt that such registration would get past the First Amendment.

War and Mars Over Climate.  The NAS says that NASA's earth science budget fell 30% since 2000 and will fall even more as funding shifts to the moon and Mars.   And NOAA's program has fallen off the rails, said panel co-chairman Berrien Moore   [Marc Kaufman, Washington Post, Jan 16]  Then the administration will continue to criticize climate predictions that lack hard data. More political science.   Meanwhile, the same attitude toward science: the Intelligence Science Board examines several aspects of broad interrogation methods and approaches, and it finds that no significant scientific research has been conducted in more than four decades about the effectiveness of many techniques the U.S. military and intelligence groups use regularly. [Josh White, Washington Post, Jan 16]  The interrogation study.  Beware of omniscient governments that disdain scientific data while collecting endless data through eavesdropping under "inherent authority". [Ellen Nakashima, Washington Post, Jan 16]  Of course, no government can afford to to every good thing , especially while reducing the tax burden on the people most able to pay.

If Data Exist ... A giant database of people's personal details could be created at Whitehall under government plans which ministers say will help improve public services. [BBC News, Jan 14] And Dick Cheney says the USG can do whatever it pleases with any data it can find. Libertarians of both parties have a lot of trouble with that claim.

The retrospective sage.  Eric Shinseki told the National Command amateurs that their grand plans for Iraq would need several hundred thousand soldiers. Goodbye, general!  Larry Lindsey said it would take $200B. Goodbye, Larry! John Abizaid who speaks fluent Arabic and George Casey said more troops would probably make the situation worse rather than better. Goodbye, generals.  So,  the amateurs decide that what the failing situation needs is a bigger dose of the same thing. Lessons learned: we get the government we deserve, and if you want to be a big general, learn to say "Yes, Sir." to people in expensive suits.  The whole mess is a lesson that we cannot expect sensible international strategy from presidents who get elected on the basis of attack ads and a disdain for international affairs.

In a surprising concession for the neo-con, unitary authority, Bush administration, the Navy agreed to be regulated by California's environmental rules in the matter of honking their sonar in the ears of whales. The CRS says that the Navy's sonar exercises have been responsible for at least six cases of mass death and unusual behavior among whales in the past decade [AP, Jan 11]  It also helps that al-Qaeda doesn't yet have submarines. It might also help if for every test the Navy had to submerge an unprotected randomly picked admiral as an animal observer.

Good free market politics, bad policy. The NRC bunko squad blew the whistle on political science. In what could be a first for the Bush administration, a panel of outside scientists has overturned a White House policy initiative. Officials withdrew proposed changes in the way that federal agencies do risk assessments.  .. NRC derided the administration plan as “too simplistic” and “fundamentally flawed.”  [Washington Wire, Wall Street Journal, Jan 11] With a 34% approval rating, no president can get away with telling its critics to pound sand, especially when the critics are the National Academy of Science which is effectively the highest science court. Wait! Do we hear a cry of "activist unelected judges"?

The Supreme Court weakened intellectual-property protections by making it easier for legal challenges to patents. The 8-1 decision put the justices on the side of those who have complained that existing rules stifle innovation, [Wall Street Journal, Jan 10]

DOD SBIR. Yawn. DOD had RAND, one of its several think-tanks, study its SBIR. RAND found that it appears that the DoD SBIR program generally accomplishes the goals set out in the program’s enabling legislation and that within DoD the SBIR program is managed more as a tax and burden to be borne than as an R&D resource to be leveraged  . Amen. It doesn't even try to make tasty lemonade of the lemon handed it by the law. The recommendations for improvement emphasized making the awards even more applied with more attention to transitioning the results into DOD programs. And the interesting idea of getting the DOD prime contractors more directly involved. Real commercialization and private sector economics were unsurprisingly completely ignored.

Copy MITI Again? The Big Three auto makers have asked the federal government to spend roughly $500 million over five years to subsidize the development of advanced batteries  ... the auto industry  last month submitted a white paper to a White House technology adviser saying the U.S. is trailing Japan in development of batteries for fuel-efficient automobiles and could suffer economically if the government doesn't help accelerate domestic research efforts in this area, [Neal Budette and John Stoll, Wall Street Journal, Jan 9] Shades of the semiconductor industry 1980-1995 where industry wanted to do what Japan had allegedly done with its MITI. With a war to pay for and taxes to cut, the free market idealists in the administration will not look kindly on subsidy requests for uncompetitive industries. But them, there's an election coming up. Government on financial auto-pilot for 2007 until the Democrats decide how to untangle the appropriations mess. Such CRA financing usually means that agencies slow way down on SBIR commitments since SBIR holds no immediate demands for the agency survival and mission.

Pay to Play.  A contribution to an influential politician's campaign needs (never the personal life) can connect to generous contracts. MTS Technologies, an Arlington VA defense contractor that recently secured $8.9M in federal funds to expand its Johnstown facility. MTS's lobbyist, the PMA Group, has disclosed some $300,000 in fees from the company since 1998. And PMA has returned the favor: Since 1989, the firm's employees have given Murtha $107,500. [Jonathan Weisman, Washington Post, Dec 25]  MTS also had two Army Phase 1 SBIRs last year, one of which will develop the methodologies and modeling tools for predicting reliability, performance, and cost as integrated functions within a system framework.  Want a juicy Phase 2 SBIR that wouldn't compete on its own, or an even juicier sole-source no-limits Phase III DOD contract?  Learn the geography of DC lobbying.  Or team with  MTS which boasts of  In keeping with the ever changing methods that Federal and State government use to procure products and services, MTS has secured several Government-wide contracting vehicles.  Select a contracting vehicle of interest below for additional information.    GSA Vehicles IT – Schedule 70, MOBIS – Schedule 874; Professional Engineering Services (PES) – Schedule 871; Logistics Worldwide (LOGWORLD) Schedule. Governmentwide Acquisition Contracts (GWACs); Image World 2; ECS III (teamed with SAIC; CIOSP2i (teamed with UHD); SeaPort Enhanced TIPSS-3. Just the right kind of SBIR target company with infant technology in a company needing help finding an entry point into government?  Ah, but the Army doesn't see SBIR that way.

 Alarm! Steady Science. a crisis in science financing that threatens to close major facilities, delay new projects and leave thousands of government scientists out of work, federal and private officials say.  [William Broad, New York Times, Jan 7] Well, someone has to help balance the federal books, and scientists could keep many of their hobbies going by taking less pay.

Want to improve government efficiency? Stop micro-managing the Army by telling it how much of its R&D must go to handout programs like SBIR. Turn SBIR from a mandated handout (a quota program) to an allowed program which has competition in infant technology and follow-on sole source procurement.

helping small high-tech companies get from idea to market