The President's R&D Budget for FY 2015: A Summary and Charts

In a year in which discretionary spending is effectively standing still, increased R&D investments appear hard to come by.

Note: the numbers below are current AAAS estimates of R&D in the budget, and represent some updates from earlier OSTP figures. The most recent and final update to this post was April 24.

Officially released March 4, the President's budget makes clear the challenges currently posed by the Budget Control Act spending caps for R&D support. With hardly any additional room available in the discretionary budget above FY 2014 levels, and with three-quarters of the post-sequester spending reductions still in place overall, many agency R&D budgets would effectively stand still. Some R&D areas that have been featured in past budgets, including climate research and support for fundamental science, would not make much fiscal headway in this year's request. Nevertheless, the Administration has still managed to shift some additional funding to select programs in a reflection of recurring priorities, including renewable energy and efficiency, advanced manufacturing, and technology for infrastructure and transportation.

An added twist, however, is the inclusion of $5.3 billion in additional R&D spending above and beyond the current discretionary caps. This extra funding would make a significant difference for science and innovation funding throughout government, though Congress has not yet seemed eager to embrace it.

First, the basics: 

  • Current AAAS estimates place R&D in the President's request at $136.5 billion (chart at right). This represents a 0.7 percent increase above FY 2014 levels (bearing in mind a 1.7 percent rate of inflation). It also represents a 3.8 percent increase above FY 2013 post-sequester funding levels, though inflation means the R&D budget is in reality nearly flat from FY 2013.
  • Defense R&D would reach $70.8 billion, 0.3 percent above FY 2014 levels. This is due to boosts in R&D at the National Nuclear Security Administration (NNSA), as Department of Defense (DOD) R&D would be cut.
  • Nondefense R&D would reach $65.7 billion, a 1.2 percent increase above FY 2014 levels.
  • Total research funding (which includes both basic and applied research) would fall to $65.9 billion, a cut of $1.1 billion or 1.7 percent below FY 2014 levels, and only about 1.1 percent above FY 2013 post-sequester levels after inflation. This is in large part due to cuts in defense and NASA research activities, though some NASA research has also been reclassified as development, which pushes the number lower without necessarily reflecting a change in the actual work. Conversely, development activities would increase by $2.1 billion or 3.2 percent, due to increases in these activities at DOD, NASA, and the Department of Energy (DOE).

As covered elsewhere, however, the President has also proposed additional funding via the Opportunity, Growth, and Security Initiative (hereafter referred to as OSGI). Total OGSI funding amounts to $56 billion split between defense and nondefense, and includes $5.3 billion for R&D. To date, appropriators don't seem particularly willing to consider this extra funding, but including it alongside the base budget does make the picture somewhat brighter for many R&D agencies.

  • Factoring in OGSI funding, total R&D would actually increase by approximately $6.3 billion or 4.6 percent above FY 2014 levels. Both defense and nondefense R&D would increase by at least four percent before inflation. For more detail, see this analysis.

In historical terms, as a share of GDP and of the budget:

  • Total R&D outlays would amount to 11.1 percent of the discretionary budget, near the 30-year historical average.
  • However, the discretionary budget continues to decline as a share of the total budget, dropping to 30.4 percent of total outlays, and projected to fall to 24.6 percent in 2019. This is due to the continued constraints placed on discretionary spending by the Budget Control Act spending caps, and continued growth in the mandatory budget.
  • Accordingly, R&D outlays as a share of the budget would drop to 3.4 percent, a 50-year low, under the President's request in FY 2015.
  • Budget authority for federal R&D as a share of the economy would also reach at least a 50 year low, dropping to 0.75 percent (chart at right).
  • Factoring in the extra OGSI funding improves the picture slightly, but only slightly. Total federal R&D would remain at 0.78 of GDP, the same as FY 2014.

Next, a look at agency-level R&D funding. The chart at right has the basic breakdown, displaying percent change from FY 2014 R&D funding levels adjusted for inflation. It does not include extra OGSI funding.

  • According to current AAAS estimates, only a handful of agencies' R&D budgets would remain ahead of inflation under the President's request in FY 2015. These would include DOE, the U.S. Geological Survey (USGS), the National Institute of Standards and Technology (NIST), and the Department of Transportation (DOT). Still, funding at many agencies would remain well above post-sequester levels.
  • It's important to remember that even though many agencies would see real-dollar R&D reductions, many of those agencies are still ahead of the broader discretionary spending curve. Recall that the December budget deal only allowed an increase of 0.2 percent in discretionary spending in FY 2015, well below inflation. That means even the National Institutes of Health (NIH) is slightly ahead of this curve: the NIH R&D budget would increase by half a percentage point more than the rest of the discretionary budget subject to the spending caps. The fact that the NIH R&D budget is ahead of this curve and yet still more than $200 million smaller in inflation-adjusted dollars, as shown at right, illustrates how truly tight the fiscal situation is. The FY 2015 spending caps are still much closer to sequestration levels than otherwise, after all.
  • The extra OGSI funding would make a big difference for many of these agencies, even adjusting for inflation. For instance, it would turn a 1 percent cut at NIH into about a 2 percent increase or so. NASA would likely receive an increase of a few percentage points above FY 2014 levels with that extra funding, and some agencies — like USDA or the National Science Foundation, for instance — would receive substantially more.

A closer look at some of the largest base-budget gainers:

  • The chart above makes clear that DOE made out best among R&D agencies. But fitting with the Administration's well-established preferences, different programs fared very differently (chart at right: total program budgets in nominal dollars, including non-R&D spending). On the nondefense side, efficiency, renewables, and grid technology programs would receive major increases, as would the innovative Advanced Research Projects Agency-Energy (ARPA-E). The Office of Science would basically stand still, while nuclear and fossil energy technology programs would be cut. Interestingly, the overall NNSA budget would not increase as fast as NNSA R&D, suggesting a greater focus on R&D activities.
  • The Space Technology Directorate at NASA, which seeks rapid public-private technology development, is among the largest programs for budgetary gains. It's a similar story for NASA's Commercial Crew program, which supports industry partnerships, and is included in the Exploration Systems program at right. The program budget would decline due to cuts in development funding for the next-generation crew vehicle and launch system.
  • USDA extramural research would receive a large increase even as the agency's intramural research funding is trimmed, though significantly more funding for both is contained within the OGSI.

And a few agencies that may not be as happy:

  • The DOD science & technology budget — which includes basic and applied research, advanced technology development, and medical research funded through the Defense Health Program — would be cut by $1.4 billion or 10.3 percent below FY 2014 levels. The largest driver of this decline is a 57.8 percent cut to medical research, though other activities would be cut as well. The medical research reductions are a recurring theme in Administration budgets and are added back in by Congress, though the other cuts are something of a departure from recent years. DARPA, however, would receive a modest funding increase.
  • While NIH is ahead of the discretionary curve as described above, the agency's budget remains on a steady downward trajectory. The President's request would leave the NIH budget 12.5 percent, or about $4.1 billion in constant dollars, below the FY 2004 peak. This decline is greater when accounting for the higher rate of inflation in biomedical research compared to the rest of the economy. Some of the few areas seeing increased funding at NIH would include translational science, neuroscience and the BRAIN Initiative, and mental health. The additional OGSI funding would nearly, but not quite, return the NIH budget to pre-sequestration levels.
  • Lastly, while the Department of Homeland Security (DHS) would receive a large apparent cut in R&D funding, this is largely due to a reduction in funding for construction of the National Bio and Agro-Defense Facility, a Biosafety Level 4 facility in Kansas. Other DHS R&D activities would not be cut by quite so much, and the Domestic Nuclear Detection Office would receive a funding increase.

In the big picture, the President's R&D budget does get slightly ahead of the overall discretionary curve, even excluding the extra OGSI funding (chart at right). But in the current environment, it's difficult to see how much more will be possible without Congressional interest in lifting the discretionary spending caps. Still, science and innovation appropriations were ahead of the curve in the final FY 2014 outcome, which may bode well for R&D funding this year, but expectations will need to be tempered.

Going forward, discretionary spending returns to sequester levels in FY 2016 and remains there for the rest of the decade, meaning continued challenges for R&D investment. The Congressional appetite to tackle this situation is an open question.