Cutting federal funding for scientific research could cause long-run economic damage equivalent to a major recession, according to a new study from researchers at American University.
In recent months, the Trump administration has sought to cancel or freeze billions of dollars in grants to scientists at Columbia, Harvard and other universities, and has moved to sharply curtail funding for academic medical centers and other institutions. Deeper cuts could be on the way. As soon as this week, the White House is expected to propose sharp reductions in discretionary spending, including on research and development, as part of the annual budget process.
Economists have warned that such cuts could undermine American competitiveness in areas like vaccine development, artificial intelligence and quantum computing, and could slow growth in income and productivity in the long term. The private sector can’t fully replace government dollars, they argue, because basic research is too risky and takes too long to pay off to attract sufficient private investment.
The study, by a team of economists at American University’s Institute for Macroeconomic and Policy Analysis, is among the first efforts to quantify the risks posed by Mr. Trump’s cuts. Because the full extent of the administration’s plans is not yet clear, the researchers studied a range of scenarios.
Even the mildest approach — a 25 percent reduction in public support for research and development — would correlate to a drop in economic output.
U.S. gross domestic product, adjusted for inflation, would be 3.8 percent smaller in the long term — a decline similar in magnitude to that in the Great Recession, which ended in 2009. The drop in output would be much more gradual than that downturn, taking place over years rather than months. But it would also be more lasting. Cuts to scientific research would sap innovation, leading to slower productivity growth and, as a result, permanently lower economic output.