In the past presidential debate, Republican challenger Mitt Romney made his now infamous comment regarding Big Bird by stating he would end subsidies for the Public Broadcasting Service because he's "not going to keep on spending money on things to borrow money from China to pay for." This was a curious comment coming from a man who has made a vast fortune using the money of others to feather his own nest.
There are many government programs for which a small investment up front can yield big benefits downstream. PBS and National Public Radio, for example, offer wonderful education and news programs that benefit the youngest to the oldest of our citizens. Using cheap yuan borrowed from China to maintain U.S. education programs that will be paid back many times over in the increased economic health and industrial vitality of our country seems a very cheap price to pay.
Other government programs that Romney could well cancel due to their perceived dependence upon Chinese loans are those of basic energy, biological and medical research. The budget of, for example, the National Institutes of Health, is just over $30 billion a year, money which could easily be construed as part of our $1.1 trillion deficit and thus paid for by borrowing from China. About 80 percent of NIH money is distributed to researchers at universities, medical schools and other research institutions to fund basic biomedical research.
In 2010, the University of Utah received $166 million NIH dollars to support such research.
Money spent for NIH research projects has proven to be a huge economic engine. In a 2010 study authored by Dr. Everett Ehrlich, he found that $26.6 billion spent on research grants ended up directly or indirectly creating 488,000 jobs and generated $68 billion in new economic activity for just that year alone. But the big payoff for such research is not in the funding year, but years later as new products and processes are generated by the myriad of spinoff projects and companies that commercialize basic science discoveries.
One example of the downstream effects of basic research is found by quantifying the effect of the human genome project, a research initiative whose focus was to decipher the genetic code of humans and other species. A government investment of $3.6 billion from the years 1988-2003 generated an overall economic output of $796 billion, a staggering 14,000 percent return on investment (see specifics at http://scienceprogress.org/2011/05/investing-in-innovation-pays-off/). And this estimate does not include the many "non-quantifiable" benefits of enhanced medical care that improve the health of the world's population.
How many Bain Capital investments generated that kind of return?
Romney's haste to appease the tax rates of the wealthy and the demands of the tea party could end up scuttling a wide range of government-supported programs that have proven to generate huge benefits for the citizens of this country. From a business perspective, how many investment capitalists would walk away from a loan from China at today's low-interest rates to fund a project with a 14,000 percent return on investment?
If Romney believes that he would make a better president than the current occupant due to his past business experience at Bain Capital, he should tell us why buying low and selling high is not a sound economic strategy.
John H. Weis is a resident of Millcreek Township and a professor of pathology at the University of Utah School of Medicine.