Instapundit has a long post on this report in which the National Acadamy of Science claims that the U.S. advantages in science and technology have begun to erode.
There are a lot of good points in the Instapundit post, some made by Glenn and others by email contributors.
Let me say first, I think scientific research is a good thing, and we should do more of it. There is a definate place in this for Government funding, particularly in the 'foundational science' arena that has few, if any immediate applications.
While I think more science is a good thing, I don't necessarily think that our 'losing our advantage' is necessarily a bad thing. First off, to the extent that we are losing our advantage because other countries are doing more science, that is a good thing. Scientific knowledge is not a zero sum game. If a Pakistani scientist discovers or invents something that is likely to help, not hurt, our economy. More science is better, no matter who is doing it and some of our advantage in the past has been not many other people were doing it. I would rather have less 'advantage' and more science being done in total.
The other thing about this study that is interesting to think about is that probably not all 'science' is covered by it. We have in some ways a very narrow definition of science. At it's core, science is two things, understanding how the world works and then taking that understanding and using it to benefit us. From that perspective, we all do science all the time.
Earlier this week I encountered this Skeptical Optomist post about Paul Romer, with links to some of his interviews and articles. Paul Romer is the New Growth Theory guru, and I think well worth paying attention to. The core of Paul's theory is that economic growth is primarily a function of ideas, better ways of doing things. While a lot of those ideas are 'scientific' a lot of them are not, or at least not very fundamental science. One of Romer's examples of a new idea that promotes economic efficiency is the redesign of coffee cups at your local Starbucks so that all sizes have the same lid. This didn't take groundbreaking science, but increased a efficiency a little in a lot of places. Thousands of similar small new ideas have as much effect, perhaps more, as the big flashy new ideas that get all the press.
I think it is pretty obvious that the U.S. is the world leader on small simple new ideas by an even greater margin than it is in the area of 'big flashy' scientific ideas. As an example of this, while Japan is lauded as a technological and manufacturing leader it's economy has stagnated. This is largely do to massive inefficiencies in its domestic markets, for example, the ubiquity of 'mom and pop' stores, which are protected by the Japanese political system. In contrast, the U.S. invented Wallmart (which, love it or hate it, is an incredibly complex and technological invention.) This increase in domestic efficiency has more than offset Japan's manufacturing edge. Inventing Wallmart probably wouldn't be counted as 'science' by the National Academy, but it's contribution to our economy has been incredible.
One of the things brought up in Instapundit's post is that it is hard for research scientists to get jobs, and even when they do the pay isn't that great. Some of this is a valid problem, but there is another perspective here as well. Some, probably most, of the generation of Romer's 'new ideas' is in areas that aren't really science, as I have talked about. For example, the technological aspects of generating a functional MP3 player isn't really all that hard. What is tough, is building an MP3 player that the people will love.

I would guess that the technicians behind the iPod were compensated less than the designers and marketers of the Ipod. I would also be willing to state that they deserved that compensation.
Another example is the Internet. While the scientists and technicians (and Al Gore) who developed the fledgling internet did a great thing, the real heroes of the internet are a different group of people. They were the guys who figured out that the internet is a really great way to exchange porn. Without them, I am convinced that the internet would be a minor tool for academics, rather than the extremely useful tool for ordinary people that it is today. They didn't invent the technology of the internet, what they did was create a compelling reason for lots of us to start using the internet. They were basically in marketing, and as the usefulness of the internet increases dramatically with the number of users of the internet, their simple, non scientific idea has made a huge difference.
Science is good, and we should definately fund it. Our economy is more dependent on lots of simple, some would say trivial, new ideas than it is on hard scientific advancement though.