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Fed Stimulus 4 - How TX Should Position Itself

In previous blogs, we have discussed mechanisms for individuals, regional and state leaders to address problem solving through The Crucible Approach during and after the worst impacts of the current virus. This is a process with deep roots in the Austin start-up and overall IT community.

If the last federal stimulus package – a huge $2.2 Trillion (or nearly 40% of the current FY21 federal budget) was appropriated largely to prop up consumer demand and company payrolls in an American economy where 70% of the GDP is tied to consumer spending, the next stimulus should also look at how to stimulate hiring and rapid economic growth. The inverted curve (both its depth and length) can be flattened if discrete federal investments are made in an entrepreneurial ecosystem.

How should Texas leaders work with our powerful Congressional Delegation to best position our state and our country to stimulate high growth industries in a 4th (or 5th) Federal Stimulus package?

The Austin region is a special place where our ideas can change how the the world interacts with music, software, logistics and entertainment. The shelter-in-place orders have essentially closed Austin’s 36 co-working, incubator and accelerator spaces like Capital Factory and others. Some may not recover. Austin needs to create the new, agile companies who can work to reinvent sectors. Texas needs to accelerate the growth in start-up accelerators like Geekdom in San Antonio, Hx in Houston, Capital Factory in Dallas. Here are thoughts on priorities for Stimulus 4:

  • R&D for health innovation - The UT Austin Dell Medical School was created in 2012 to disrupt medical education and use technology to improve the delivery of health care to our most vulnerable. Texas voters in 2007 created the Cancer Prevention Research Institute of Texas (CPRIT) to invest billions in Texas-based cancer breakthroughs. The Army Research Lab South at UT-Austin is our only state military lab. How can discrete investments in R&D, commercialization and entrepreneurship expand the talent base and ensure continued American dominance in this field.

  • R&D for Rapid Training – In the last three weeks, 16 million people filed for federal unemployment. The worst is yet to come. The federal government not only needs to put funding in to triage the massive amount of dislocation which comes from business closures and personal assistance to those furloughed and unemployed, they also need to rapidly place non-dilutive investments into training providers to massively convert their content into on-line platforms, create healthy and safe training environments to reskill workers from hospitality into fields which are growing.

  • R&D for Education Technology – Austin is home of the most important education technology conference in the world…SXSWedu. They took a major blow when SXSW was cancelled. But in other ways, SXSWedu is best positioned to guide and accelerate the movement into effective education technology. We should be sure that the federal government puts significant resources into ARPA-E (Advanced Research Projects – Education). K12 & higher education spend less than 1 percent on R&D. We need major R&D work done in on-line instruction, interconnective materials, aligned public policy….all tracks provided by SXSWedu. We need to learn from local school districts like Austin, Harlingen and Eanes who have several years of programming and diffusion of devices at the later grades.

  • Ed Tech Leadership - We need to make e-learning a much greater component when higher education trains our educators CIOs, CHROs, curriculum experts and principals. They should partner with Texas State University, University of Texas and Austin Community College to host a research consortium similar to Sematech and MCC to supercharge this sector.

  • Medical Device Innovation – This virus has strained tensions between China and the United States. Reliance on China to fill components of the supply chain in pharmaceuticals, personal protective equipment, medical beds and technology have shown our weakness. $10M in funding could be sought for the nascent Medical Innovation District next to the UT-Austin Dell Seton Medical School to help start-up companies get access to university talent, match with investors, find wet lab and other shared laboratory equipment and partner with exciting innovation centers like the Texas Foundation for Innovation Communities, Army Research Lab South, Southwest Research Institute, Texas Research Alliance and the Austin Healthcare Council.

  • National Security Innovation - The "overmatch" which American Soldiers had achieved in post-Cold War generations have largely diminished. While the President and Congress have invested unprecedented dollars into American military innovation ecosystem – and the Army has located its Futures Command here in Austin, Texas – they can make $10M investments into new OTAs like the National Security Innovation Council to help connect national security problem owners with research and private sector problem solvers. This can also include seed funds to create SCIF R&D space in Austin for start-ups.

  • Research Consortiums – Austin built itself from a university and state government town in the mid-1980s through creation of global foundries for high-end software development and semiconductor chip design. Discrete federal investments of $20 million apiece can help Texas and the US jump start its competition with China on their "Belt and Road" Initiative, to have international supremacy by the 100th anniversary of the Chinese Community Party.

  • Broadband – The massive need for on-line learning will hopefully light the fuse on the need to invest in ubiquitous 5G bandwidth to empower large swaths of Austin to participate in the on-line world. Yes, local governments need to accelerate permitting and deployment – potentially in exchange for retraining and upskilling of newly un- and under-employed. But this type of deployment needs federal rule-making which can provide predictability and speed to companies who are trying to implement broadband in places like Del Valle, Manor, Pflugerville and other suburban communities who include and straddle the City of Austin and all the other rule-making authorities. Must include training.

  • Infrastructure: In stimulus 3, the federal government earmarked $14B for higher education support. Half of that was to be focused on rapidly converting traditionally analog instruction and management to virtual. While institutions like Western Governors University have been near fully virtual for years, conversion to digital learning at most learning institutions has been haphazardly shot out of a cannon. As mass transit revenue and passage fares have flat-lined, should part of potential Stimulus 4 be directed to conversion to autonomous vehicles? Scaled training of Metro Authorities in coding, web design, big data and other enabling human capital initiatives?

Even before our governments took COVID measures, our federal government already was carrying massive debt and running a trillion dollar deficit. Since then, we should anticipate federal tax revenues to plummet and spending to have increased that to a $3-5 Trillion dollar deficit. If we are going to recover jobs, incomes and tax revenues, we will need to BOTH continue income supports and make investments into high risk, high reward problem solving approaches and industry technologies. Yes, some of these will fail, but the ones who succeed can help America and Texas create advantages and job creation well in excess of simple income support.

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