U.S. research: running on empty?

Today's N.Y. Times has a piece ("The State of Research Isn't All That Grand") discusses the implications for the U.S. economy of reduced R&D expenditures in both the public and private sectors. The balanced conclusion:

In global R.& D. rankings, the United States is still the clear leader in spending, with 34 percent of the total. In fact, about half of all such spending comes from just two nations: the United States and Japan.

But the United States falls down the list when it comes to more meaningful comparisons.

According to the Organization for Economic Cooperation and Development, the nation ranks seventh in R.& D. spending as a share of the economy, trailing Sweden, Finland, Japan, Switzerland, Iceland and South Korea. In spending on basic research as a share of R.& D., the United States ranks 11th. And when measuring nondefense research as a share of the economy, it’s 22nd.

Looking ahead, there is good reason to expect even greater pressure on R.& D spending in the United States. The federal government will be only more constrained in its ability to invest in research as large unfunded commitments like Social Security and Medicare come due. Corporate America will continue to face competitive global pressures, seeking investments that pay off in the short term. And fast-developing countries like China and India will strive to become even more powerful global forces.

It all leads to a question: Where will the innovation come from to drive the American economy of the future?