The 1957 launch of the Russian satellite Sputnik shocked America into a major scientific, technological, and educational effort to protect the United States' place in the world. It became apparent then and must be understood again, in our time, that research and development (R&D) is essential for U.S. economic strength, technological leadership, and national security and that the risks from shortfalls and misallocations are great. Unfortunately, there is growing evidence that America is not currently funding the right kinds of R&D. The underfunding of basic research in the physical sciences--such as physics, mathematics, and engineering -- puts U.S. strength at risk. Although the damage might not appear for years, America is not now making the R&D investment decisions needed to sustain its strength and competitiveness. In many areas, the U.S. scientific establishment is foremost in the world. America's "soft infrastructure"--the laws, capital markets, and culture that turn research into innovation and innovation into economic and military strength -- gives the United States a serious advantage over competitors. But there are disquieting trends. The United States leads, but its lead shrinks every year. This report identifies these trends, describes their implications for the long-term national interest in a period of strategic competition and national security challenges, and discusses potential remedies.