Innovation and National Security

Executive Summary

The United States leads the world in innovation, research, and technology development. Since World War II, the new markets, industries, companies, and military capabilities that emerged from the country’s science and technology commitment have combined to make the United States the most secure and economically prosperous nation on earth. This seventy-year strength arose from the expansion of economic opportunities at home through substantial investments in education and infrastructure, unmatched innovation and talent ecosystems, and the opportunities and competition created by the opening of new markets and the global expansion of trade. It was also forged in the fire of threat: It was formed and tested in military conflicts from the Cold War to the war in Afghanistan, in technological leadership lost and regained during competition with Japan in the 1980s, and in the internal cultural conflicts over the role of scientists in aiding the Pentagon during the Vietnam War. Confronted with a threat to national security or economic competitiveness, the United States responded. So must it once again.

This time there is no Sputnik satellite circling the earth to catalyze a response, but the United States faces a convergence of forces that equally threaten its economic and national security. First, the pace of innovation globally has accelerated, and it is more disruptive and transformative to industries, economies, and societies. Second, many advanced technologies necessary for national security are developed in the private sector by firms that design and build them via complex supply chains that span the globe; these technologies are then deployed in global markets. The capacities and vulnerabilities of the manufacturing base are far more complex than in previous eras, and the ability of the U.S. Department of Defense (DOD) to control manufacturing-base activity using traditional policy means has been greatly reduced. Third, China, now the world’s second-largest economy, is both a U.S. economic partner and a strategic competitor, and it constitutes a different type of challenger.¹ Tightly interconnected with the United States, China is launching government-led investments, increasing its numbers of science and engineering graduates, and mobilizing large pools of data and global technology companies in pursuit of ambitious economic and strategic goals.

The United States has had a time-tested playbook for technological competition. It invests in basic research and development (R&D), making discoveries that radically change understanding of existing scientific concepts and serve as springs for later-stage development activities in private industry and government. It trains and nurtures science, technology, engineering, and mathematics (STEM) talent at home, and it attracts and retains the world’s best students and practitioners. It wins new markets abroad and links emerging technology ecosystems to domestic innovations through trade relationships and alliances. And it converts new technological advances into military capabilities faster than its potential adversaries

Erosion in the country’s leadership in any of these steps that drive and diffuse technological advances would warrant a powerful reply. However, the United States faces a critical inflection point in all of them. There is a great deal of talk among policymakers, especially in the Defense Department, about the importance of innovation, but the rhetoric does not translate fast enough into changes that matter. The Task Force believes that the government and the private sector must undertake a comprehensive and urgent response to this challenge over the next five years. Failure to do so will mean a future in which other countries reap the lion’s share of the benefits of technological development, rivals strengthen their militaries and threaten U.S. security interests, and new innovation centers replace the United States as the source of original ideas and inspiration for the world.

The major findings of the Task Force are:

• Countries that can harness the current wave of innovation, mitigate its potential disruptions, and capitalize on its transformative power will gain economic and military advantages over potential rivals.
• The United States has led the world in innovation, research, and technology development since World War II, but that leadership is now at risk.
• U.S. leadership in science and technology is at risk because of a decades-long stagnation in federal support and funding for research and development. Private-sector investment has risen, but it is not a substitute for federally funded R&D directed at national economic, strategic, and social concerns.
• Friends, allies, and collaborators tightly link technology ecosystems and create scale in a globalized system of innovation, and thus are a competitive advantage. Washington’s current trade policies needlessly alienate partners, raise costs for American tech firms, and impede the adoption of U.S. technology in foreign markets.
• A central strength of the U.S. innovation environment has been a steady pipeline of domestic STEM talent and the country’s ability to attract the best and brightest students, engineers, and scientists from around the world. A lack of strong education initiatives at home and new barriers to talented foreign students’ and workers’ coming to and remaining in the United States will have long-term negative economic and national security consequences.
• The Defense Department and the intelligence community will fall behind potential adversaries if they do not rapidly access and deploy technologies developed in the private sector.
• The defense community faces severe challenges in attracting and retaining tech talent.
• The defense community faces deteriorating manufacturing capabilities, insecure supply chains, and dependence on competitor nations for hardware.
• A persistent cultural divide between the technology and policymaking communities threatens national security by making it more difficult for the Defense Department and intelligence community to acquire and adopt advanced technologies from the private sector and to draw on technical talent.
• China is investing significant resources in developing new technologies, and after 2030 it will likely be the world’s largest spender on research and development. Although Beijing’s efforts to become a scientific power could help drive global growth and prosperity, and both the United States and China have benefited from bilateral investment and trade, Chinese theft of intellectual property (IP) and its market-manipulating industrial policies threaten U.S. economic competitiveness and national security.
• China is closing the technological gap with the United States, and though it may not match U.S. capabilities across the board, it will soon be one of the leading powers in technologies such as artificial intelligence (AI), robotics, energy storage, fifth-generation cellular networks (5G), quantum information systems, and possibly biotechnology.
• Although the Donald J. Trump administration has boosted the budgets of several technology-related organizations within the DOD and issued a number of executive orders, its efforts to accelerate innovation in critical frontier technologies such as AI are too incremental and narrow in scale.
• The United States is ahead of the rest of world in AI, but others are closing the gap—and U.S. failure to compete for global talent could result in the loss of its lead.
• In the race for the next generation of communications technologies, the Trump administration has developed only a few parts of what should be a multifaceted strategy. It has failed to coordinate a response to Huawei’s global expansion, muddied its message about the company’s economic and national security risks, and not sufficiently accelerated domestic efforts to deploy 5G.
• Beijing has often exploited the openness of the American system. Efforts to protect U.S. intellectual property are a necessary complement to, but not a substitute for, innovating faster than China. The administration is over-weaponizing trade and investment policy, with costs to U.S. innovation.

The United States needs a national security innovation strategy that ensures it is the predominant power in a range of emerging and foundational technologies over the next two decades. This Task Force report offers policy recommendations for the federal government, industry, and academia. Progress on this issue will require contributions and creativity from all three sectors if the United States is to maintain its ability to lead the world in the scientific and technological innovations necessary to its security and economic vitality. Some of the recommendations can be implemented in the short term; others will require more systemic change.

A new U.S. innovation strategy should be based on four pillars: funding, talent, technology adoption, and technology alliances and ecosystems. Action is required over the next five years.

The major recommendations of the Task Force are:

Restore Federal Funding for Research and Development

• The White House and Congress should restore federal funding for research and development to its historical average. This would mean increasing funding from 0.7 percent to 1.1 percent of gross domestic product (GDP) annually, or from $146 billion to about $230 billion (in 2018 dollars). Only the government can make the type of investments in basic science that ignite discoveries; such investments are too big and risky for any single private enterprise to undertake.
• Federal and state governments should make an additional strategic investment in universities. The investment, of up to $20 billion a year for five years, should support cross-disciplinary work in areas of pressing economic and national security interest.
• The White House should announce moonshot approaches to society-wide national security problems. This would support innovation in foundational and general-purpose technologies, including AI and data science, advanced battery storage, advanced semiconductors, genomics and synthetic biology, 5G, quantum information systems, and robotics.

Attract and Educate a Science and Technology Workforce

• The White House, Congress, and academia should develop a twenty-first-century National Defense Education Act (NDEA), with the goal of expanding the pipeline of talent in science, technology, engineering, and mathematics. A twenty-first-century NDEA would support up to twenty-five thousand competitive STEM undergraduate scholarships and five thousand graduate fellowships.
• Universities, federal and state government, and business should address the underrepresentation of minorities and women in STEM fields through mentoring, training, research experience, and academic and career advising. They should also provide financial support for room and board, tuition and fees, and books, as well as assessments of job placement opportunities in STEM fields, highlighting employers with clear track records of fairness in hiring, promotion, and pay.
• Federal agencies, the private sector, and universities should work together to support debt forgiveness for students going into specialized technology sectors.
• The United States needs to make it easier for foreign graduates of U.S. universities in scientific and technical fields to remain and work in the country. Congress should “staple a green card to an advanced diploma,” granting lawful permanent residence to those who earn a STEM master’s degree or doctorate. Congress should also pass the Development, Relief, and Education for Alien Minors (DREAM) Act.
• Congress should pass legislation that permits immigrants to live and work in the United States if they can raise funds to start new companies.
• The federal government should make targeted—rather than sweeping—efforts to prevent the theft of scientific knowledge from American universities.

Support Technology Adoption in the Defense Sector

• Federal agencies and each of the military services should dedicate between 0.5 and 1 percent of their budgets to the rapid integration of technology. The heads of each agency should also hire a domain specialist deputy for fast-track technologies (for example, data sciences, robotics, and genomics) from outside the government for a two- to four-year assignment.
• Congress should establish a new service academy, the U.S. Digital Service Academy, and a Reserve Officer Training Corps for advanced technologies (ROTC-T) to foster the next generation of tech talent.
• Lifelong career paths should be complemented with more short-term, flexible options. The White House and Congress should bring people from the technology industry into all three branches of the government for temporary rotations. They should also develop new fellowships to encourage the circulation of technologists, military officers, and federal officials between the technology sector and the Defense Department.

Bolster and Scale Technology Alliances and Ecosystems

• The State and Treasury Departments should create a technology alliance to develop common policies for the use and control of emerging technologies.
• The Department of Commerce should work with major trading partners to promote the secure and free flow of data and the development of common technology standards.
• The Department of Commerce and the U.S. International Development Finance Corporation should encourage American start-ups in AI and data science, genomics and synthetic biology, quantum information systems, and other frontier technologies to invest in, export to, and form R&D partnerships with firms in emerging technology ecosystems. The goal would be fostering early adopters, developers, and customers who will build on U.S. technologies.
• The Department of Energy (DOE), Department of State, National Institutes of Health (NIH), National Science Foundation (NSF), Office of Science and Technology Policy (OSTP), and other relevant agencies should develop a network of international cooperative science and technology partnerships, open to governments and the private sector, to apply frontier technologies to shared global challenges, such as climate change. Federal agencies should not only fund efforts that will include cooperation with other nations’ science organizations but should also provide R&D and tax incentives for tech firms to form international collaborative partnerships.

During the early years of the Cold War, confronted by serious technological and military competition from the Soviet Union, the United States invested heavily in its scientific base. Those investments ensured U.S. technological leadership for fifty years. Faced with the rise of China and a new wave of disruptive technological innovation, the country needs a similar vision and an agenda for realizing it. The United States must once again make technological preeminence a national goal.