22 Oct Feingold, Ryan share visions at Wisconsin biotech conference
Waukesha, Wis. – U.S. Senator Russ Feingold says no federal program receives as many compliments as the small business innovation research grant program.
That alone makes it stand out in the menu of federal money pits, but it’s not the only reason his E-4 Initiative calls for significant new funding for the small business innovation research (SBIR) program.
Feingold, a Democrat, outlined his plans to boost small business innovation Wednesday during the Wisconsin Biotechnology and Medical Device Conference. He was followed by Republican Congressman Paul Ryan, who has outlined a series of cost-saving proposals as part of his Roadmap for America.
Biotech executives and employees gathered for the conference in a more challenging economic landscape this year. They were told about market cap decline, IPO droughts, and increasing restructuring and bankruptcies in the industry. They have some comforting news on the venture capital front, as 2008 is likely to see as much or more capital deployed in the industry as the $30 billion that was committed globally ($7.4 billion in the U.S.) in 2007.
However, 2009 has executives holding their breath, and the nation’s economic situation was difficult to ignore for either Feingold, who is serving his third term, or Ryan, who faces a re-election bid this fall.
As part of his E-4 initiative, Feingold has introduced legislation to increase the pool of money in the SBIR grant program.
Feingold noted that small businesses are the primary source of new employment, especially in central cities, where they generate 80 percent of all new jobs.
Despite the contributions of small businesses, less than three percent of federal agency research and budgets are allocated to them.
“That’s not good enough,” he said. “We need to increase the support of the nation’s small businesses to stimulate innovation.”
Under legislation he has proposed, Feingold would reauthorize the program for another14 years and increases the percentage to small businesses from 2.5 percent to 10 percent over a three-year period for the SBIR program, and 0.3 percent to one percent for the small business technology transfer (STTR) program. He also would increase the levels of Phase I and Phase II awards beyond adjustments for inflation to $300,000 and $2.2 million, respectively.
The proposal would increase total grants from approximately $2 billion to approximately $8 billion, and seek to allocate them for maximum impact.
Feingold noted that Wisconsin has strengths in all of the national priority areas identified in the initiative.
“It’s time for us to seriously invest in the engines that drive our long-term job creation,” Feingold said.
Asked whether increasing the small business outlay to 10 percent is realistic, Feingold noted that a competing bill would increase that pool to 3.5 percent over many years, which he called “tremendously slow.”
“If it ends up being 9.3 percent, I’m not going to call it a loss,” he added.
Feingold said the specifics of his plan are based on conversations he’s had with people in Wisconsin, including entrepreneurs and innovators.
Ryan, who is serving his fifth term, is part of the House budget committee that oversees entitlement programs like Medicare, Medicaid, and Social Security. He talked in alarming terms about what he called America’s fork in the road, saying the federal government is “not good enough for our problems.”
“Our greatness is not something you can take for granted and just assume,” he said. “That greatness is being challenged.”
Medicare, Medicaid, and Social Security are going bankrupt, he said, and the federal government now consumes 18.3 percent of GDP. Due to an aging population, escalating healthcare costs, and inflation, the nation is getting to the point where our children will have to pay 40 cents out of every dollar to support federal programs.
Ryan said his roadmap does three things: it fulfills the mission of these programs; it pays off debt so the tax burden is not doubled for the next generation; and makes the country more competitive.
“I don’t want to just survive globalization,” he said. “I want to win and set the terms.”
Most of these numerical problems, he noted, are due to healthcare costs and inflation. Healthcare inflation is growing at a six percent annual rate, which is unsustainable, he asserted.
The nation now spends about $4.5 trillion anually on healthcare, which is 2.5 times more per person than most other industrialized nations, yet more than 40 million people are uninsured and fewer businesses offer coverage to employees. Echoing elements of the McCain healthcare plan, Ryan said consumers should be allowed to shop for health insurance with a $5,000 tax credit regardless of whether they pay taxes. He said the system also should include fully financed high-risk pools that are set up in different states.
“Let’s take that $4.5 trillion and let’s spend it more wisely,” he said.
The problem with single-payer (government) healthcare systems is that it takes choice out of the system, and consumers cannot fire their insurer, Ryan said. Health insurers should have to compete for the business of individual consumers.
Noting that healthcare represents 16 percent of the economy, he said a government takeover would result in global budgets with caps on spending, rationed care, and fee schedules that are based on feedback from lobbyists that testify before Congressional committees.
“Let the market and patients decide what they need,” he said.
In Ryan’s view, the healthcare piece of the economy does not operate like the rest of economy, which is governed by price and quality. He called these the fundamental building blocks of a market economy, and said they are missing from healthcare.
In metropolitan Milwaukee, he said a bypass operation costs between $40,000 and $120,000, with the highest quality coming in the $65,000 area. In the same geographic region, an MRI ranges from $600 to 5,000, yet few people have the information they need to evaluate price versus quality.
All stakeholders – consumers, hospitals, insurers – should come up with the quality metrics for everything from stent procedures to hip replacements, he said.
“Consumers need to see what things cost and who does things badly,” he stated.
While he warned against a government directed system, Ryan acknowledged that government needs to play an integral “Let’s have consumers and patient be the drivers, not some distant bureaucrat in insurance or government,” he said.
Under this road map, he said actuaries tell him that Medicare, Medicare, and Social Security would be permanently solvent, and the federal tax burden would remain at or below 20 percent of GDP.
Ryan asked the Congressional Budget Office what the tax rates on his children would be when they turn his age, 38, if the country remains on its current track. He said it took them a month to run the numbers, but what they came up with was chilling. The lowest income bracket today, which pays at the 10 percent rate, would have to go to 25 percent; on the flip side, the top tax bracket would have to go from 35 percent to 88 percent.
He said the nation couldn’t be a winner in globalization with tax rates like that. “America has got to get her groove back, and we’re slipping,” he said.
Washington needs to move into a bolder era where such proposals are not considered too risky to one’s re-election prospects, Ryan said. The typical mindset is not to make a bold proposal because your opponent will use it against you in an election year. “In the House, it’s an election year every other year,” he said.
The roadmap plan includes four or five good ideas from Democrats, he said, noting that one party does not have to dominate the other in order to get things done.
Ryan said the plan has gotten great reaction around the country, including from some Democratic colleagues. However, people in both parties are plagued by fear and “we’ve got to get through the fear.”