At the present time, Congress and the Obama administration are addressing two important issues, the progressive deterioration of the nation's physical infrastructure and the enormous sums of money that are being held offshore by U.S. corporations unwilling to pay federal taxes on these funds. Any repatriation of these offshore funds will inevitably involve some compromise on taxes. It is rumored that the administration would like to use any taxes gained in such a compromise agreement to address the nation's physical infrastructure challenges.
It is my view, and that of my fellow members of the Lincoln Project of the American Academy of Arts & Sciences, that our nation's public higher-education infrastructure is in a similar state of deterioration and should be part of any such tax agreement. The letter below — from Mary Sue Coleman, president emerita of the University of Michigan, and myself, chancellor emeritus of UC Berkeley — addresses this issue.
In our letter we do not make any specific financial proposals. However, to make this concrete, I would like to propose one possible use of new tax revenues gained from the repatriation of corporate funds held offshore. I welcome other ideas.
Here is my proposal: The funds currently held offshore by U.S. corporations total approximately $2.1 trillion. A tax of 1 percent committed to public higher education and, specifically, to our country's great network of public research universities, would yield $21 billion. If this were distributed to all 145 public research universities in proportion to the population of their respective states, the University of California would receive approximately $2.4 billion.
How would we spend this money? Surely, it should go first to our faculty and our students. I propose that we follow the very successful model of UC Berkeley's Hewlett Chairs, using the funds for challenge grants, with a 1-to-1 match, to support faculty chairs and student scholarships. If $1 billion were devoted to senior faculty chairs, this would create a thousand $2-million chairs, along with 1,000 graduate fellowships across the UC system.
I would propose that we commit the next $500 million as challenge grants for junior-faculty chairs. This would create 500 $1-million junior-faculty chairs and 500 more graduate fellowships funded at $25,000 each.
The remaining $900 million would be for challenge grants, again on a 1-to-1 basis, to create a $1.8 billion UC-wide endowment for financial aid for low and middle income undergraduates. If the state were to provide a match as well, all of the above numbers would be increased by 50 percent. The impact of such a program on the University of California – and public research universities across the country — would be transformational.
Letter to key members of Congress and the Obama Cabinet
As Congress and the Executive branch consider new ways to fund improvements in the nation's physical infrastructure, including its highways, we respectfully urge policy makers to consider new ways to support the nation's intellectual infrastructure, including its public research universities.
We write as citizens, scholars, and administrators who have dedicated our professional lives to the nation's leading public research universities. These institutions are engines of innovation, growth, and opportunity for Americans of all backgrounds, yet we are concerned about their future prospects. Every state in the union has now reduced its investment in higher education, and budget constraint appears to be the order of the day at the federal level as well. Our country's leadership in the realm of ideas — in education, in research and innovation — is now in jeopardy. If we allow these institutions to deteriorate the way that our physical infrastructure has deteriorated, we will have neglected a vital public good, one that affects the whole society.
Many organizations are addressing aspects of this national problem. In particular, we strongly recommend the work of The Lincoln Project, an initiative of the American Academy of Arts and Sciences that is developing strategies to ensure that these institutions survive and thrive as centers of education and innovation.
The Lincoln Project is named for Abraham Lincoln, the president who signed the Morrill Act to establish public universities in every corner of the union. Even at a perilous time in our nation's history, Lincoln understood that an investment in infrastructure — intellectual as well as physical — was an investment in the future. He signed the Morrill Act on July 2, 1862. A day earlier, he signed The Pacific Railroad Act, initiating the construction of the transcontinental railroad. The railroads made it easier for Americans to develop new territory; public universities helped Americans decide what to do with the newly-accessible land, offering opportunities for nascent industrialization and spurring economic development.
As a result of Lincoln's foresight, there is now at least one public research university in every state. Each is a center of education and cultural activity. Each expands knowledge in the sciences, social sciences, humanities, and the arts. Together, these institutions educate four million students annually. They award 60 percent of the nation's doctoral degrees. As defined by the federal government, 41 percent of degrees granted are in areas of national need.
Every American benefits from these institutions, not just those who attend them as students or work for them as employees. Public research universities encourage and support our creativity, help us to understand the mysteries of science and technology, advance the research that enhances our lives (at home and abroad), and prepare us for the jobs and responsibilities of the future. Indeed, no governmental initiative unrelated to national defense has ever achieved as much, as efficiently, for so many people as our network of public research universities.
It has been reported that Congress and the Executive branch are contemplating several plans to incentivize the return of corporate earnings from abroad; at least one such plan contemplates a modest tax on returned earnings to create a new fund for infrastructure projects. As these and other proposals are considered, we urge policy makers to follow President Lincoln's lead and include public research universities in any plan to fund our nation's imperiled infrastructure.
If America is to remain internationally competitive as a hub of research as well as education, our public research universities will require an increased public/private investment. In essence, we need a 21st century version of the Morrill Act and, in addition, reconsideration of a new National Defense Education Act that Congress passed over half a century ago in the wake of Sputnik to spur science, math, and international studies. We would be pleased to suggest specific funding mechanisms for consideration, but in writing this memo we are less concerned with the details of programmatic approaches than we are with the principles at stake: the most important being that a great nation requires a great system of public higher education and a sustained commitment to basic and applied research.
Public research universities, after all, are key elements of our technological ascendancy and democratic vitality. They are critical components of the infrastructure that supports the intellectual life of the nation. And they require our steadfast support.
Robert J. Birgeneau, University of California, BerkeleyMary Sue Coleman, University of Michigan