In spite of America's leadership position in global competitiveness, the new US administration under President Barack Obama is asking the US Congress to more than double the federal education budget this year, as part of its stimulus package. Some of the new spending will ensure that any reductions in education budgets by local and state bodies are more than offset by additional federal dollars.

International math and science test results have consistently shown for over a decade that Asian students from China, Japan, Singapore and Korea perform better than American students. In spite of such results, the US continues to excel in scientific and technological innovation as measured by the number of Nobel prizes and number of international patent filings. Most of the recent breakthrough innovations have come from the United States. Six of the top ten highest ranked universities are in the United States. America's workers continue to be amongst the most productive in the world. There is only one Silicon Valley in the world and it is in the United States. This valley represents more of a state of mind rather than a physical place. Why is it? Do Americans focus more on scientific reasoning than facts and content? Is there greater focus on rote learning in Asia? Do Americans foster more creativity and greater exploration? Does freedom of expression in America encourage more questioning and better reasoning? There have not been any comprehensive studies to answer these questions satisfactorily. But one thing is clear: In the "New Economy", the most important single asset for any nation is the intellectual capital it develops by educating its people well. Investment in education could not be better described than by the words used by the Chinese genius Kuan Chung centuries ago: "If you plan for a year, plant a seed; if for 10 years, plant a tree; if for a 100 years, teach the people. When you sow a seed once, you reap a single harvest; when you teach the people, you will reap a 100 harvests."

The Department of Education’s discretionary budget for the 2008 fiscal year was about $60 billion. The stimulus bill would raise that to about $135 billion this year, and to about $146 billion in 2010. Other federal agencies would administer about $20 billion in additional education-related spending. The new spending represents a dramatic boost in a country which already spends more than most of the industrialized nations on education.

In recent years the federal government has contributed 9 percent of the nation’s total spending on public schools, with states and local districts financing the rest. Washington has contributed 19 percent of spending on higher education. The stimulus package would raise those federal proportions significantly. Total public and private spending on US education is close to a trillion dollars a year, about 6.8% of the 14.5 trillion dollar GDP.

In higher education, the bill would increase spending on Pell Grants, the most important federal student aid program, to $27 billion from about $19 billion this year, according to the New York Times.

“It’s a very good idea to increase Pell Grants in the stimulus,” said Terry Hartle, a senior vice president for public affairs at the American Council on Education, which represents colleges and universities. But Mr. Hartle said that even he was having difficulty tracking all the new spending. “A lot of things will go through, and only later will we know exactly what happened,” he said.

The large increases in education spending may or may not be sufficient to guarantee a continuing edge for America in the brave new world of competition. But it is very likely to help, particularly if the spending boost is accompanied by a sound education policy that encourages new technology innovation, philosophy of peaceful coexistence with other nations, achieving breakthroughs to respond to the modern challenges of climate change, renewable energy, sustainable development and a new industrial and information revolution that makes life better for all citizens of the world.