I've got a simple answer: you bet you can! Partnerships linking government, universities, and private businesses are part of a long tradition of research support in the United States and have resulted in some of our most significant accomplishments from agriculture to medicine to aeronautics to the Internet. This Administration has made partnerships a central part of our management of Federal research resources. This approach has enjoyed, and deserved, strong bipartisan support for many years. It makes sense and it works.
The strength of partnership approaches is that they link the talents, the interests, the insights of many different communities. Most of the critical problems facing the U.S. today -- in health care, education, the environment, and many other areas -- can not be resolved by individual specialists working in isolation. They require finding new ways for people with different insights to learn from each other and move forward as a team in a continuous learning process.
We've thought about partnerships in several different ways and encouraged partnering with several different dimensions:
First of all, we have put our own Federal house in order by using the President's new National Science and Technology Council to ensure effective partnerships linking federal agencies. We're proud of our record in innovation and efficiency we have achieved by research projects that link agencies as diverse as DoD, EPA, and NIH. Agencies repeatedly find that they can achieve their mission objectiv es faster, and more efficiently by working in partnership with colleagues from other agencies.
We have encouraged and supported research partnerships joining government, universities, and the industry.
We have encouraged partnerships between federal research efforts and research and development conducted by states and localities.
And, we have encourage partnerships between organizations focused on difficult regulatory and other procedural issues with technical groups that can help regulators develop strategies which can encourage development and introduction of technologies that can achieve public goals in a way that minimizes cost and paperwork.
A variety of different approaches to partnerships have been used over the past 150 years. Much of what we have done builds on programs begun during the Bush Presidency. This Administration has refined and intensified earlier efforts and introduced several new approaches tailored to contemporary needs of U.S. research institutions. These experiments have given us a solid basis for thinking about what works and what doesn't. While perfection is beyond our grasp, we have lea rned a lot about how such partnerships work and how they can be most productive for both the business and university research teams involved, as well as for the public. It's clear, however, that we won't find a solution that works perfectly for all types of research or for all businesses.
Let me start by giving you some perspective on what we have done in the budget the President recently released. While submitting a budget that actually balances in 2002, the President's 1998 budget increases total Federal research and development funding by more than $1.6 billion over 1997, to roughly $75 billion. This is t he fifth year in a row that the President has proposed to increase research and technology funding. At the same time, he has led the efforts to reduce the annual deficit from nearly $300B in 1993 to about $110B in 1996 -- an extraordinary feat.
Our support of fundamental science, which is ultimately the source of all technological advance, is as strong as ever. The President's budget boosts funding for basic research by 3% to $15.3 billion. This includes, for example, a 3% increase for R&D at the National Science Foundation and NIH, 4% increase for fundamental work at the Department of Energy, and a 5% increase in defense related basic res earch. We're strengthening university-based research, which provides new knowledge and new technology while training the next generation of scientists and engineers. Under our proposal, university-based research increases by $289 million, to a total of $13.3. billion in FY98.
The President's FY98 budget also shows strong and consistent support of the investments in basic technologies that are essential for ensuring continued U.S. economic leadership and job creation. Funding for applied research increases 6 percent -- wi th strong growth in research partnerships.
The Partnership for a New Generation of Vehicles (PNGV) is increased 7% and construction and building technologies 15%. The budget provides a 22% increase (to $275) million for the Department of Commerce's Advanced Technology program (ATP). Funding for high performance computing and communications increase 9%. We feel that these investments are essential because basic technologies are the foundation of national prosperity and job creation. Studies suggest, in fact, that technology has been respons ible for about half of all U.S. economic growth for a generation.
You have heard about ATP from Laura Powell. ATP is a highly competitive, cost-shared program that assists in the development of high-risk technologies with significant commercial potential and which have crucial benefits to the nation which greatly exceed the benefits that can be captured by any individual investor. While it still must be considered an experiment, the project has earned high marks on early efforts to evaluate the partnerships that have been funded through this effort. Most Federal research partnerships are created to support specific agency missions in national security, space, transportation, or other areas. But ATP is alone in providing a source of support for partnerships aimed entirely at securing a broad technical base for the growth of the U.S. economy.
We have asked the Congress to provide a 36% increase for the Manufacturing Extension Partnership program operated in close cooperation with state governments to ensure that small and mid-sized companies in all 50 states are able to compete worldwide with state-of-the-art technology. The Manufacturing Extension Partnership has established a nationwide network of manufacturing extension centers to assist small and medium-sized manufacturers in modernizing their production capability. By the end of 19 96, manufacturing technical assistance was available in all 50 states and Puerto Rico, from more than 2,800 manufacturing engineers and business experts -- none are Federal employees -- through more than 300 sites around the nation. As a result, small an d medium sized manufacturers are gaining new insights, finding more efficient ways to produce and improve their products, and retaining and adding new jobs. Based on surveys returned by 610 companies served by 13 centers in 1994, firms reported anticipat ed benefits of $167 million resulting from sales increases and cost savings attributable to MEP. That translates into an $8 return on each Federal dollar invested in MEP.
The Partnership for a New Generation of Vehicles is a unique partnership linking a half dozen Federal agencies, the auto industry and its suppliers, universities, and government laboratories. This remarkable partnership has worked remarkably well over the past 3.5 years and has proven it was designed to tackle an extremely tough technical challenge: to develop within ten years a production prototype car with three times the efficiency of today's autos, with no sacrifice in c ost, comfort or safety. PNGV has the potential to boost economic growth and meet important national goals such as air pollution and safety. Because one in every seven jobs in the United States is automotive related, the global competitiveness of this industry is extremely important to our economic well being. At the same time, we must be wary of our increasing reliance on foreign oil, and the warming effect of greenhouse gases that comes in part from vehicular exhaust. PNGV is a great example of how government and industry meet these challenges by working together to mutual benefit.
Industry, university, government partnerships were responsible for many of the achievements in computers and communications that have played such a dramatic role in the U.S. and world economy during the past decade. Partnerships allowed us to meet the five year goal of our High Performance Computing and Communication consortia: namely, gigabit communication networks and teraflop computers. The Next Generation Internet initiative build on this foundation and help invent networks that will serve the 21st century, increasing communication rates by 100-1000 times and achieving major improvements in the quality of service. We have increased the budget for these areas by 9% to 1.1 billion dollars.
This Administration has made an unprecedented commitment to research aimed at providing the U.S. with a sustainable energy system and technologies that lead to environmental improvements in other areas. We are asking for more than 20% increases in fu nding for the energy efficiency and renewable energy programs in the Department of Energy -- most of which are funded through research partnerships.
Technology for cleaning up the environment has become a critical part of the economy as well as being essential for giving us the tools we need to clean the nation's land, water, and air at a cost we can afford. Technology in these areas is critical both because it is essential for finding affordable ways to clean up the enor mous amounts of dangerous pollution produced during the past few decades and because the business of environmental cleanup is itself a major employer. The global market for environmental technologies now exceeds $400 billion, and is growing at rates of 15 -20 percent per year in some places, creating enormous opportunities for American business.
Technology advances achieved through research partnerships are also essential to provide Americans with the safe, efficient, sustainable transportation services that we will need in the next century. Responding in part to recommendations made by the President's Commission on Aviation Safety and Security, the FAA and NASA have launched an unprecedented research partnership that will ensure that rapid growth in world air travel doesn't translate into growing numbers of accidents and fatalities. This is a daunting chore, given the already exce llent safety record of existing airlines. We have launched a new $500 million program designed to create a major innovation in air traffic control that will use GPS satellites, and advanced digital computation and communication systems to achieve this go al. The system will combine innovations in publicly managed operations and in privately owned aircraft equipment. All parties recognize that close partnerships in research and implementation will be essential to make this complex hybrid of public and pr ivate systems operate effectively.
Similarly, we must look to technology partnerships to improve safety and improve efficiency in highway transportation. Businesses lose $40 billion a year due to traffic. The Intelligent Transportation System programs authorized in the new Surface Transportation legislation we're introducing this week will provide an unprecedented commitment to research partnerships in transportation. It provides str ong support for advanced communication and computer technologies, sensors, in-vehicle navigation systems, and other technologies that can help reduce highway congestion, improve safety, and save Americans time at much less cost than new highway constructi on.
While the end of the Cold War has dramatically changed many of the nation's defense challenges, technology is no less important in assuring U.S. security in an increasingly complex and uncertain world. Lee Buchanan has told you about the strong rec ord of dual-use defense partnerships in DoD. The Defense Department has streamlined procurement in ways that have broken the gap separating defense and civilian manufacturing B a gap that served neither civilian business or the military. Both industry and the defense department are the winners. Firms that once found DoD regulations a prohibitive barrier to partnering are now operating successfully as parts of research teams. And many of these are precisely the kind of fast-moving, technology-smart companies we must depend on t o stay at the state-of-the-art in defense technology.
The Federal government's technology partnerships with industry are designed to ensure that the United States has a rich base of emerging and enabling technologies to serve as building blocks for new products, new services, and technology-driven produ ctivity gains. During the past decade, the process by which Federally funded technology makes its way to the private sector for commercial use has been substantially improved.
The 1986 Federal Technology Transfer Act, for example, established the framework for partnerships between Federal laboratories and the private sector. Since passage of the act, Federal agencies and their laboratories have worked hard to make technology sharing to the private sector an integral part of their laboratory functi on.
Today, 13 Federal agencies are engaged in more than 3,500 cooperative research and development agreements (CRADAs) with the private sector, an increase of 177 percent since 1992. Between 1992 and 1994 the number of licenses on Federal patents granted to industry nearly doubled, and royalties paid to the Federal government jumped 77 percent to $24.5 million per year.
Thus far, I've talked primarily about partnerships linking government, university, and business research teams. Before I close, I'd like to touch briefly on two other important dimensions of partnerships.
First, we recognize that state and local governments are an increasingly important part of the nation's research enterprise. The nation's governors formally recognized this when they met here in Washington earlier this year and created a formal structure for linking Federal and state research teams in partnership. We hope that this new group, which will be chaired by the Governors of Maryland and Connecticut, will enable us to strengthen the already growing links connecting Federal and state research enterprises. These kinds of partnerships are essential because states are much closer the practical needs of local busines ses and citizens through the work of their state colleges and universities, departments of commerce, and transportation.
Second, we have worked hard to ensure that the regulatory and other policy operations of the Federal government are informed by good technical analysis and that regulations act to encourage innovative technical solutions instead of discouraging them. We have worked hard to improve the technical basis of regulatory decisions and we have succeeded in moving regulatory actions away from proscriptive standards to performance objectives which encourage innovations which serve both business purposes and p ublic interests in environment, safety, and other goals. EPA's project EXCEL is an example -- challenging businesses to find ways to improve on environmental goals. FDA's new streamlined approval process for drugs is another.
We all face enormous opportunities and risks in the complex, highly interdependent, fast paced world we're creating. Prospering in this world, and protecting ourselves and our children from new risks, will require breaking down the barriers that have artificially divided the research community in the US. We have got to w ork together to build on the collective -- and highly distributed -- base of knowledge and creativity this nation offers. We are pleased by the strong bipartisan support we have found for these concepts.
Partnerships are a good idea. The reason for them is clear, and our success is already evident. Business can not be expected to make all the investments needed to keep the nation on the technological trajectory so essential to the nation's future pr osperity. Most new businesses fail but it often takes 7 or more years to find out whether a technology will be successful. The benefits of high-risk investments in basic science and technology are very large, but this is true on the average. Individua l investors take enormous chances with long-term research and run the additional risk that the benefits will be so widely shared that they may not be able to fully recover these benefits. Clearly there is a role for Federal policy in such cases.
The Administration has worked hard to forge new partnerships focused on research that serves critical national needs. Our strategy needs to be constantly reviewed in light of what we have learned from earlier partnerships, new technical opportunities, and new domestic and international business conditions. But the question should be how can we make partnerships work better, not whether we shoul d undertake them. Again, the answer to your question is yes, you can count on the Clinton Administration to support research partnerships. They have a proud tradition and we're convinced that they are a critical part of America's future. I hope we can count on your advice and council to improve them in the years ahead.