Thank you, Dr. Lowry for that very kind introduction. I'm delighted to be here this morning. And as a David Lipscomb University alumnus, I am honored that you invited me to take part in your inaugural week events.
Our portfolio at the Department of Commerce is very broad, and one of the most diverse in the federal government. We have 13 different bureaus and agencies that do everything from taking the U.S. census, to promoting American products overseas, to forecasting the weather.
Yet our mission is very clear and focused. Everything we do supports the U.S. economy. Our goal is to create the best environment possible for our businesses and our workers to compete and prosper.
This is increasingly important as we face the challenges of globalization. This is a powerful trend, and it's forcing all of us--local, state and national leaders--to reassess our economic policies and priorities.
How do we grow and create jobs in this new 21st century reality? What is the appropriate mix for tax and spending policies? How do we deal with higher energy and health care costs? How do we respond to rising economic powers, such as China and India? I was in Brussels two weeks ago for meetings with officials and business leaders from across the European continent. We've built strong economies and alliances over the last 60 years since the end of World War II. But Europe's economies are flagging. And reinvigorating Europe's economies is now a major issue.
Our economy remains strong and very diverse. But like Europe, we also have to reinvent ourselves to remain competitive in order to grow, to create the private sector jobs that our workers need--and to raise living standards.
Merely maintaining the status quo is synonymous with stagnation.
To spark the discussion this morning, I want to share a few thoughts and specifics on the approach President Bush is taking, and the policies we're using to prepare our people and our economy for the 21st century.
As President Bush sees it, innovation and competitiveness are what drive our economy. Throughout our history, America has relied on the ingenuity and optimism of our entrepreneurs and workers. It's in our cultural DNA.
The Context for American Competitiveness We're very fortunate today. We have an economy with steady growth, moderate prices, and relatively low interest rates.
We're growing faster growth than any other major industrialized nation--growing by 4.2% in 2004 and 3.5% in 2005. And our unemployment rate, at 4.8 percent, is one of the lowest.
Payrolls are growing in almost every single U.S. state (47 out of 50). We've added nearly 5 million new jobs during the last two-and one-half years. And despite the headlines about our trade deficit, U.S. exports are up over 12% in the past 12 months, running at a record annual rate of $1.4 trillion.
One of the major reasons for our success is the enormous improvement in worker productivity. In fact, U.S. productivity has had one of the fastest five-year periods of growth in almost 40 years (averaging 3.3 percent).
And the underlying reason for our economic strength is that we remain a nation of innovators. We have a reputation for coming up with new technologies and ways of doing things that make us more productive.
Today more than ever, the United States is a knowledge-based economy. In fact, you might call us knowledge-dependent.
A recent study shows that as much as 75 percent of the value of publicly-traded U.S. companies is derived from "intangible" assets, namely ideas and innovation. That's up from just 40 percent in the 1980s.
The challenge we face is keeping our economic leadership and our competitive advantage by encouraging innovation in a very dynamic global economy. This is no time for complacency.
American Competitiveness Initiative We're attacking the problem on a number of fronts. President Bush has a new and very ambitious pro-growth agenda to focus our efforts. He launched the American Competitiveness Initiative in January.
Its core principles are: lower taxes and a more predictable tax structure--less regulation of our businesses--and a more open, rules-based world trading system. This is how you craft the conditions for the private sector to innovate, invest, and create jobs and wealth.
A key part of President Bush's new plan calls for increased federal R&D spending from the current $132 billion per year to $137 billion. That would be a huge increase, especially compared to the $91 billion we were spending in Fiscal Year 2001.
The President also proposes doubling innovation research funding government-wide for physical science and engineering over the next ten years. Let me give you a specific example that explains where we're putting our research dollars.
At the Department of Commerce we have a world-renowned research lab, the National Institute of Standards and Technology (or NIST). The President's budget calls for a 24 percent increase in funding for NIST, over $104 million, for core laboratory programs.
This will allow scientists at NIST--who have won three Nobel Prizes in recent years--to advance research in promising fields. Some $72 million would go for such cutting-edge areas as nanotechnology, hydrogen fuels, and quantum information.
These initiatives might one day lead to new cancer therapies, fuel cells for pollution-free cars, or unbreakable codes to protect electronic transactions. Nanotechnology alone has the potential of becoming a $1 trillion market in 10 years.
This is the kind of basic research that we believe government should be supporting.
As for the private sector, which accounts for two-thirds of R&D spending, President Bush wants to make permanent our R&D tax credit. This would be worth $86 billion over the next ten years, and would give companies the confidence they need to invest.
The Patent and Trademark Office--one of the oldest federal agencies and first headed up by Thomas Jefferson--is part of the Commerce Department.
To help innovators and entrepreneurs cope with the rapid pace of R&D, we've taken a number of major steps in recent weeks to make it easier and faster to get a patent. These include a new training academy for patent examiners and a new on-line patent filing system.
Another critical area is education. We've been graduating fewer and fewer engineers and scientists in recent years. To reverse the trend, we need to enhance math and science skills in Kindergarten through the 12th grade.
The President's plan proposes funding for 70,000 newly trained teachers with advanced math and science skills. And it would create a corps of 30,000 math and science professionals to assist regular teachers.
This will help give us the highly skilled people we need to keep creating and developing the newest and the best technologies.
A final area I want to highlight is protecting intellectual property. This is a hot-button issue. Many of our industries depend, as I said, on their technologies, trademarks, software and brands to stay in business. It's their lifeblood.
And pirates know what a gold mine this is. Intellectual property theft is costing U.S. companies some $250 billion a year in lost sales and hundreds of thousands of lost jobs. That's why we are so aggressive about enforcing patent and copyright laws.
As we see it, our competitive advantage is only as good as our ability to protect our ideas.
We have an active dialogue underway with the Europeans on protecting IP. My boss, Secretary Gutierrez, is in China this week for talks with officials about why China continues to allow rampant IP theft despite new laws against it.
In closing, let me say I can think of no better way of summing up the American experience than as the pursuit of finding a better way of doing things. We are a nation of optimists and risk-takers.
We believe in individual freedom and democracy for all. Granted, it's sometimes messy, but it has created an environment that has provided more opportunity and more prosperity for more people than any other system of government in history. We believe in our innate abilities to innovate, whether it's inventing the Internet or putting a man on Mars, as the President has proposed.
And as an economic policy, we believe that innovation that leads to higher productivity and rising living standards is the best, if not the only sustainable competitive advantage for the 21st century.
I look forward to working with all of you to build that competitive advantage for our citizens.
Thank you very much.
Source: U.S. Department of Commerce
