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Budgetary Impacts of the Candidates’ Technology and Innovation Policies

The New York Times wrote a cover story, “Rivals’ Visions Differ on Unleashing Innovation“, last Friday that compared the budgetary impacts of the Presidential candidates’ technology and innovation policies.

Using data provided by the Information Technology and Innovation Foundation to chart the budget impacts of the candidates’ spececific proposals, the Times reported that Senators Obama and McCain would commit approximately $85.6 billion and $78.8 billion annually, respectively, in resources towards science and technology policy.

About $70.6 billion, or 90 per cent, of the budgetary impact of McCain’s policies would stem from tax expenditures in the form of extending research and development tax credits and allowing firms tax deductions for investments in equipment and technology in their first year. McCain proposes about $8 billion in new federal funding for science, technology, innovation initiatives.

Obama’s approach features new outlays in federal expenditures to support new science, technology, and innovation initiatives, especially through his proposals to double federal research and development funding for basic research, to fund $150 billion (over 10 years) for clean and alternative energy research, and $50 billion (over five years) for health information technology. Eighty-three percent of the budgetary impact of Obama’s proposals stem from over $71 billion worth of new direct expenditures for science, technology, innovation programs, and only 17 percent ($14.5 billion) from tax revenue forgone by extending corporate research and development tax credits – roughly the inverse of McCain’s proportions.

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