America's Science, Innovation, and R&D Retreat is a $1 Trillion Economic Mistake

A quick fuzzy math exercise on some big economic consequences from the war against science

It's fair to say that, in 2025, the U.S. federal government isn't much of a champion for science and education. Outside of AI, and a few segments of military and defense spending, America is pulling back on research and development (R&D), science, and innovation investment in a big way.

While many of these cuts are proposed or preliminary, I want to walk through a quick, easy math exercise showing that — assuming they're carried out as planned — this brain drain will be a historic, trillion-plus dollar economic mistake.

First, the summary numbers and simple methodology. Using only four categories:

1. Government Science & Public R&D Losses
2. Immigrant Founder-Related Economic Losses
3. Lost Economic ROI from Education
4. Climate-Related Economic Losses

I can easily model $1.1 trillion in estimated economic losses, reduced GDP, and missed opportunities from America's retreat on education, science, and R&D.

I'll explain my napkin-math calculations below, but, first, I want to highlight one quick thing:

The reason I only looked at four indicators is that you don't need to go particularly deep or look that far — the directional trend is crystal clear. I'm sure my method is imprecise and significantly under-counts economic impacts and consequences. The logic, however, holds up.

2025-2026 U.S. Government Science, R&D and Education Budget Cuts

The U.S. government's fiscal year and its budget cycle begins October 1st and ends September 30th of the following year. In the October 2025 budget (the first FY budget under the Trump administration), the U.S. government is currently planning $48.5 billion in science and R&D spending cuts (-17% YoY), and approximately $12 billion in education and career development cuts.

Interestingly, while the U.S. government plans to increase total defense spending by $113 billion to around $1 trillion in total by 2031 ($933 billion in 2025), the defense budget will cut the topline figure for DOD research, development, test, and evaluation (RDT&E) by $14.4 billion. While some defense R&D will effectively be outsourced to private companies like Anduril, overall military science, R&D, and innovation spending is expected to decline in the neighborhood of 15%.

This matters for more than just hypersonic missiles, as U.S. military science and R&D efforts have historically produced breakthroughs like digital photography, GPS, EpiPens, glue and tape, 3D printing, and the original internet (ARPANET).

After DoD RDT&E, there are cuts to a lot of other departments, including:

• -$18 billion for the National Institute of Health (NIH)
• -$12 billion for the Department of Education (DOE)
• -$6 billion for NASA
• -$5.1 billion for the National Science Foundation

For example, the planned budget specifically guts approximately 2,100 NIH grants for existing and new health research, across areas like arthritis, alcohol abuse, Alzheimer's disease, and cancer.

Should we care more about what specific science and R&D cuts are happening? I'd argue no, because, much like venture capital, science and R&D runs on power laws and serendipity. Some research will yield nothing, while a much smaller segment delivers world-changing breakthroughs — and sometimes not even related to the original topic of study. Antibiotics, microwaves, vulcanized tire rubber, x-rays, and Viagra were all accidental scientific discoveries researchers more or less stumbled upon while testing other things.

Fund science — indiscriminately even (like a venture portfolio) — and good things happen.

At this point, for those of you keeping score at home, U.S. government cuts to science save somewhere in the ballpark of $60 billion dollars annually. While the overall "General Science, Space & Technology" budgetary line item decreases by around $740 billion in 2026, cuts to science, education, and R&D are envisioned and embedded throughout.

The problem is this science, education and R&D budget "strategy" represents a staggeringly negative ROI of something like -94.55%.

Here's how:

Government Science & Public R&D Losses

The Institute for Macroeconomic & Policy Analysis (IMPA) at American University gives us an initial framework for thinking about the economic costs and consequences of cutting public science and R&D funding.

Because the U.S. government is planning to cut overall non-defense R&D 17-18% (possibly as much as 25-26%), and annual 2025 U.S. GDP is forecasted at approximately $30.5 trillion, following the IMPA's methodology the U.S. economy is set to lose $823 billion from lost innovation, R&D, and commercial follow-through, roughly equivalent to a small-to-medium economic recession.

Other research estimates land you in a similar territory. For example, a recent National Bureau of Economic Research (NBER) paper estimates the gross social returns for non-defense public R&D to be between a 140% and 210% positive ROI.

Immigrant Founder-Related Economic Losses

An aggressive retreat on both science and education funding and international student visa allocations, means — generally — a lot fewer immigrants are going to come to the U.S., attend American universities, and enter the workforce.

That's a real problem for Silicon Valley (or Alley), innovation, and U.S. economic growth, because the data shows immigrants make great founders. According to the Stanford Venture Capital Initiative, 44% of evaluated 'unicorns' (startups valued at >$1 billion) had an immigrant founder.

Stripe's founders, the Collison brothers, are Irish. Instacart founder Apoorva Mehta hails from India. Iranian Databricks founder Ali Ghodsi wouldn't otherwise even be allowed in the country right now. Or, lest we not forget about Elon.

Collectively, unicorn and high-growth startups create over $1 trillion in economic value and innovation. If we simply assume half of the next generation of immigrant founders start their venture somewhere else — due to visa restrictions, lack of academic opportunities and funding, and America's declining global reputation — the U.S. economy loses out on at least $264 billion.

And again, this figure is a lazy, gross under-counting, as I'm currently on an Amtrak with lackluster WiFi and couldn't be bothered to include the positive economic contributions of non-unicorn immigrant entrepreneurs and small business owners.

Nonetheless, research from MIT and other sources indicate immigrants:

• Found about 20% of U.S. small businesses
• Are statistically more likely to start businesses
• Create slightly more jobs per company than 'native' founders

Given that there are over 3.3 million U.S. immigrant entrepreneurs who employ millions of people and generate hundreds of billions in annual sales — and tax revenue — each year, the real economic consequence of reducing immigration is far greater.

Lost Economic ROI from Education

Some of the planned education cuts envisioned include:

• Programs that help disadvantaged students (low-income, first-generation, students with disabilities) with higher education and advanced degrees (Upward Bound, Talent Search, Student Support Services)
• Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), which supports college prep for low-income middle and high school students
• Fulbright scholarships and Pell grants (a cohort that includes multiple Nobel Prize winners, government heads of state, Pulitzer Prize winners, and successful entrepreneurs)

While I have plenty of constructive criticism for our overall approach to funding and delivering education, I'll again return to my venture "just fund it" ethos — because education investment clearly returns positive ROI.

Nobel Laureate economist James Heckman estimates every dollar invested in early childhood education returns $7 to $13 in long-term economic benefit. In fact Pell grants — which are actively being defunded — deliver a two-year +140% ROI in local economic development, which is higher than military spending.

After reviewing the research, I settled on a conservative 1.4-1.5 economic multiplier for education spending, meaning $12 billion in education funding cuts costs the economy at least $17-$18 billion. In reality, the negative impact is probably more like $25-$30 billion+.

Climate-Related Economic Losses

Finally, I added $5.7 billion in data-related economic losses linked to climate risk and natural disasters. This is also a "modeled" (re: made up) number following this logic:

• Until January 2025, FEMA tracked and analyzed detailed climate risk data related to wildfires, storms, and other severe weather incidents. Then the current administration pulled the plug.

• The National Oceanic and Atmospheric Administration (NOAA)'s research division is also scheduled to be eliminated. This will also close NOAA's weather and climate labs, decommission data sets and databases, and disrupt its ability to forecast and staff appropriately

These, in addition to other cuts, will significantly undermine America's ability to forecast, preemptively mitigate, and respond to climate-related natural disasters. Using data from NOAA (before it was shut off), Swiss Re and other sources, the United States faces a range of $38 billion (bare minimum), $64 billion (average), and around $180 billion (higher base case) in annual, climate-related economic risk.

Assuming cuts to FEMA, NOAA, and other climate programs reduce federal, state, and local ability to reduce, respond, and manage climate risk by 2-3%, we could well be looking at $5 to $6 billion in economic losses. Again, this feels conservative and the real downside impacts are likely higher and will increase over time the longer we fail to address climate change.

In sum and to recap, all in, the Trump administration's retreat on science, R&D, innovation, and education is likely to cost the U.S. economy well north of $1 trillion, a negative -94.55% ROI.

While I remain generally supportive of thoughtful, strategic fiscal responsibility and policy-making, sabotaging American scientific innovation — for what alleged gains exactly?? — is a historic economic mistake. And, the accompanying loss of international reputation and legacy may well be priceless.