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Saturday, February 12, 2011

Biomedical research and entitlements

During my professional lifetime I have seen the ebb and flow of funding for biomedical research. I have been involved in this world, being supported by Federal grants and mentoring younger physician scientists. I remember watching the pay lines in the mid-90's drifting down briefly into single digits, driving many young researchers into private industry or some non-research career. The economy recovered, federal tax receipts soared, and funding for the NIH essentially doubled (although not in inflation adjusted dollars). 
While everything looked rosy for almost a decade, the underlying trends in the growth of entitlement programs were slowly but inexorably crowding out discretionary spending, including spending on biomedical research. 

A series of economic and political bumps distracted us from the entitlement time bomb. We balanced our federal budgets in late 1990's, although this was partly due to the dot-com bubble which collapsed at the end of the decade.  The global war on terror served as a major distraction starting in 2001, and siphoned off money into defense spending. Any concern regarding entitlement growth during this time of the Bush presidency was deftly deflected by assumptions that all could be made well by simply paring defense expenditures. despite the general long term trend toward decreasing defense spending. 

In the mid 2000's the economy grew rapidly rapidly, much like Bernie Madoff's investment scheme, both based upon faulty fundamentals. However, when the real estate bubble burst, the day of reckoning grew nearer.  Tax receipts plummeted and federal spending exploded. Furthermore, the prolonged recession exposed profound weaknesses in state and local government finance, also saddled with exploding entitlement and pension costs. 

The obvious truth is that the Federal government cannot be all things to all people, despite the desire of politicians to wish it so. Entitlement programs such as Medicare and Social Security served as excellent mechanisms for politicians to purchase votes in current elections while deferring the actual costs to future times. However, the future is arriving with a vengeance. 

We can disagree whether investment on biomedical research is an appropriate use of Federal tax dollars. I think it has proven to be a good investment both in terms of the impact of the discoveries on care and in terms of creating robust sources of new tax revenues. Similarly, basic and applied programs such as the space program spun off a host of innovations which fundamentally changed our world. Some may argue that all of these investments would be better coming from the private sector. I may be biased but I look at the explosion of biomedical research driven by the NIH in the latter part of the 20th century was unlike anything in history.  

What is not contestable is that we will have no reason to have these discussions in the future when the entirety of discretionary spending has been swallowed up by the growth of entitlement spending. Defense spending can basically disappear entirely and do nothing but defer the day of reckoning by less than a decade.  We can raise our tax rates to near 100%. Historical data has shown that this does not result in major changes in collections as a percentage of GDP. All our passionate pleas on Capital Hill for commitment of more resources to noble endeavors such as biomedical research will fall upon deaf ears when the tax receipts are not there and whatever that is collected is already committed before the budgeting process has begun. 

We simply cannot have both robust discretionary spending needed to support our NIH model of biomedical research and uncontrolled growth in entitlement spending. If we want to be advocates of Federal investment in biomedical research, we have to be harshly critical of the out of control entitlement programs which are completely consuming the pool monies which have historically supported these activities . 

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