President Trump’s tariffs can raise prices. His efforts to reduce the federal labor force may increase unemployment. But, asking economists what they care about most is what government policies, many point to federal support for scientific research.
In recent weeks, the Trump administration has canceled or frozen billions of dollars in federal grants to researchers through the National Institutes of Health and has significantly reduced funding for academic medical centers and other institutions. It also attempts to fire hundreds of workers at an independent federal agency, the National Science Foundation, through an initiative called the Government Efficiency Department. It revoked visas for hundreds of foreign students.
For economists, policies have the potential to undermine the U.S. competitiveness in emerging fields such as artificial intelligence and reduce Americans’ overall poverty, health, and productivity in the coming decades.
“University is a very important engine of innovation,” said Sabrina Howell, a professor at New York University. “It really kills the spawning goose.”
Scientists warn that the United States has the potential to lose its position as a leader in cutting-edge research and its reputation as a magnet for advanced scientific thinking around the world.
Laboratories across the country have begun firing workers and canceling programs — in some cases stopping clinical trials that are already underway — and top universities, including Harvard and Pennsylvania, announced recruitment freezes. France and other countries have begun recruiting American scientists and promise a more enthusiastic environment.
Economists in a wide range of ideological fields believe that investment in scientific research, especially that basic, early research, cannot attract private investors, is one of the most effective uses of taxpayers’ dollar. The study found that every dollar invested in R&D returns about $5 in economic gains, a figure that could underestimate the real returns because it does not state measures in GDP, such as longer lifespans and increased leisure time.
“It’s like a machine – you make a dollar on the machine,” said Benjamin F. Jones, an economist at Northwestern University. “From a social perspective, it’s an incredibly high-reward activity that we’ve done too little.”
Accidental discovery
Hudson Freeze began helping his professor Thomas Brock learn about microorganisms living in Yellowstone National Park Hot Springs in the 1960s, supported by the National Science Foundation. He recalled the excitement shock when he first looked through a microscope and saw one of the microorganisms. Hot aquatic plants, Growing at temperatures previously thought impossible.
“I have goose bumps,” he said. “I’m the first person in the world to see this under a microscope.”
Twenty years later, the organism was proven to be crucial to the development of polymerase chain reaction or PCR, the process of replicating DNA, which is the basis of almost all genetic sciences. Dr. Freeze continues to pursue his own research career – also strongly supported by federal grants – examining biological processes that play a role in dozens of rare genetic diseases.
Dr. Freeze’s work is an undergraduate and professional scientist, both illustrates the unique role of the government in scientific research. Few private investors will become interested in the disease that affects only a few patients, let alone projects that study yellow mucus growing in national parks. However, this study has produced huge dividends.
“Some of them do pay off, some don’t — it’s science,” Dr. Fritz said. “The federal government has the ability to seize the opportunity.”
The U.S. R&D system traces its roots to World War II, when the government poured funds into universities and private companies to make advances in flight, communications and atomic weapons. Over the next few decades, these relationships deepened as the federal government funded projects related to the Cold War and the Space Race, as well as basic science and medical research.
This study paves the way for many technologies at the heart of the modern economy. The Internet was originally a university computer network funded by the Department of Defense. Google was originally a graduate research program at Stanford University, which was funded by a grant from the National Science Foundation. Almost all modern medicine relies on federal funding to some extent on research. The same is true for most commercial agriculture.
Together, these findings help drive rapid economic growth in the United States and improved living standards in the 20th century. The latest paper published by the Federal Reserve Bank of Dallas found that government investment in R&D accounts for at least one-fifth of U.S. productivity growth since World War II.
“This has had a huge impact on the people’s living standards,” said Andrew Fieldhouse, an economist at Texas A&M University. “It has driven economic growth to a large extent.”
Fear of our leadership
Federal investment in science has declined since the end of the Cold War, as part of the economy, and Dr. Fieldhouse’s work shows that this is part of the reason for slowing productivity growth.
Researchers warn that the Trump administration’s policies can keep us science behind. For example, the National Institutes of Health proposed limiting the speed at which the government can repay “indirect costs” to universities and other research institutions, such as facilities and staff have no relationship to a specific research project. In a working paper published Monday by the National Bureau of Economic Research, a group of economists found that the policy would result in massive funding cuts and have a disproportionate impact on institutions through the most successful research programs.
Daniel P. Gross, an economist at Duke University, “Sometimes, you don’t realize its value until it disappears.”
In artificial intelligence, concerns about the loss of science’s foundations are particularly acute, and experts believe that technologies that are most likely to increase productivity in the coming decades. American companies dominated the early stages of the AI revolution, partly because much of the basic work was done at American universities.
But this year, DeepSeek is a high-level AI model developed by Chinese companies, which some U.S. technology leaders see as a new “Sputnik moment”, suggesting that the U.S. needs to double its efforts to avoid lagging behind.
White House officials reject the notion that administration’s policies are undermining the U.S. leadership in science and technology. In a speech in Paris in February, Vice President JD Vance called for relaxation of restrictions on AI development, among other steps, to ensure the United States remains ahead of China and other competitors.
A White House official spoke in the context that the government’s move to freeze grants and reduce reimbursement rates reflects efforts to make federal investments in research more efficiently, rather than reducing support for the science overall.
Space for improvement
Experts say there is enough room to reform the federal grant development system. Over the years, the application time for federal funds has gradually become longer and researchers spend more time on paperwork to ensure government funds are not wasted.
“When I heard the initial concept, I thought, maybe the momentum or motivation to do something here,” said Stuart Buck, director of Good Science Project, a nonprofit and newsletter who is critical of federal research and development systems.
But, so far, Dr. Barker is disappointed. He said that by focusing on alleged waste, removing projects that are inconsistent with the administration’s political priorities (such as studies related to race, gender, or climate change), the efforts of the Governor and other Trump administrations may make researchers more risk averse.
“What puzzles me is that many of these efforts seem to be paranoid about any fraud or any potential wasteful activity,” Dr. Buck said. “There are many examples of a study that looked rash at some point in time that ultimately led to later breakthroughs.”
Scientists have similar concerns about some of the government’s recent actions on immigration, including revoking visas for students participating in political protests.
Immigration has long played a disproportionate role in the scientific and technological advances in the United States. A 2022 study found that since 1990, immigration has accounted for 36% of the country’s total innovation, and although 20% of the population, it is measured by patents. They are also more likely to start a company and work in a startup than native-born Americans.
“Immigration is really crucial, they weigh more than they weigh,” said Britta Glennon, an economist at the University of Pennsylvania, who studied the role of immigration in innovation.
She added that even without a formal immigration policy shift, the United States may be less attractive to global talent if foreign students and scientists no longer view the country as passionate. A recent working paper by Dr. Glennon and three co-authors found that Chinese students were less likely to study in the United States in the first Trump administration, even before formal restrictions were established.
“We know how international students think about the labor market in the United States and how well they accept immigration,” she said. “It’s obvious that it’s not super acceptable right now, so that’s going to have a effect.”
