By Kritika Agarwal
America’s national security innovation base will falter without stronger commitments to basic science, public research and development, and a more robust talent pipeline, says a new “report card” from the Ronald Reagan Presidential Foundation and Institute.
Founded in 1991, the Reagan Institute works to advance President Ronald Reagan’s legacy and the principles he cherished – “individual liberty, economic opportunity, freedom and democracy, peace through strength, and national pride.”
Since 2003, the institute has been publishing an annual report card measuring the effectiveness of the United States’ national security innovation base, i.e. the ecosystem of federal agencies, research laboratories, universities, private-sector firms and investors, and foreign partners, working together to keep America secure and ahead in the global race for technological and defense innovation.
This year’s report card argues that, while the United States currently continues to lead in this area, there are several “glaring areas of weakness that whittle away at America’s advantage, and provide openings for its adversaries.”
Eroding U.S. Innovation Leadership
The report finds that, despite continued U.S. leadership, “China is rapidly closing the gap in critical areas, including next-generation telecommunications and AI.” Further, “China has seen a boom in high-quality research output, with Chinese research universities quickly climbing global rankings…”
- For example, eight of the top 10 global research institutions on the 2025 Nature Index are now Chinese. Harvard University, in second place, is the only American institution in the top 10.
- China has also surpassed the United States, the report notes, “in high-quality scientific publications across critical domains” and produces a significantly greater share of high-quality scientific publications in fields such as advanced materials, hypersonic detection, nanoscale materials, and electric batteries than does the United States.
- The report card also finds that China is “rapidly accelerating pharmaceutical development” and now leads the world “in clinical trials and is on pace to reach 35% of global clinical trials by 2040.” This has led to a surge in the monetary value of drugs licensed from China.
- One bright spot for the United States is its continued leadership in the fields of quantum computing and in the development of notable machine learning models. Even here, however, China is closing in and is, in fact, outpacing the United States in AI adoption.
Declining Public Investments in Basic Research
While the United States continues to lead the world in government spending on R&D, the Reagan Institute finds that “inflation-adjusted spending has stagnated since 2010, with China narrowing the gap.” The institute estimates that the United States spent $197 billion in R&D in FY25 – an increase of 1.5% from FY24, but a real-dollar decrease of 1% when accounting for inflation. Some important observations from the report include:
- Especially troubling is the decline in federal funding for agencies such as the National Science Foundation and NASA, which conduct early-stage basic research. Cuts to basic research, the institute notes, “can impact longer-lead research cycles” and are unlikely to be offset by private capital, which focuses more on late-stage innovation.
- Investments from private defense technology venture capital firms have become especially concentrated recently on AI, causing gaps to emerge in other critical areas.
- The report card emphasizes the importance of public spending on R&D, noting that it enables innovation across a range of priorities. “70% of U.S. R&D funding flows to universities and labs, enabling private sector R&D that drives leadership across critical tech areas (e.g., semiconductors, AI),” it notes.
- Cuts to federal R&D spending are also “expected to weaken [the] STEM workforce and reduce [the] quantity of patented technology, threatening early-stage startups.”
- As federal spending on R&D declines, universities are stepping up to backfill that research with their own funds; the institute finds that “university R&D spend increased to $118B in 2024, a +8.1% increase over 2023.”
Shrinking Talent Pipeline
The institute gave the U.S. talent base only a D+, noting that the nation continues to face “persistent talent attraction issues.”
- The institute finds that China is graduating twice as many STEM PhD graduates annually as is the United States.
- Further, the number of “top researchers at U.S. universities fell from 36,599 to 31,781 (2020-2024), whereas China’s nearly doubled to 32,511 in the same period.”
- The United States is also losing its status as a magnet for international talent – restrictive immigration policies are causing a decline in the number of STEM graduate students in the United States, while other nations are stepping up “poaching initiatives.”
- To address these concerns, the institute recommended updating and implementing a national talent strategy that includes “new criteria for Schedule A workers and expansion of EB-1 visas” to enhance the ability of the United States to attract and retain high-skilled international talent and reverse America’s PhD “brain drain” to other countries. (Schedule A occupations are jobs predesignated by the Department of Labor as having a shortage of qualified U.S. workers.)
Taken together, the report’s message is clear: if the United States wants to continue leading the world in innovation and to remain ahead of adversaries, it must increase investments in public R&D and basic science and widen its talent base. These priorities are core to the national security strategy and crucial in maintaining a resilient innovation base.
Kritika Agarwal is assistant vice president for communications at AAU.