Federal R&D Budget Testimony 1998

Dr. Albert H. Teich
Testimony for the Senate Science, Technology and Space Subcommittee

April 28, 1998


Contents

    • Table 1. R&D in the FY 1999 Budget by Agency
    • Table 2. Basic Research in the FY 1999 Budget
    • Table 3. Estimated Federal Support for Conduct of R&D at Colleges and Universities
    • Table 4. Trends in R&D, FY 1994-1999
    • Chart 1. Trends in Nondefense R&D by Function, FY 1960-1999
    • Chart 2. Trends in R&D, FY 1994-99
    • Chart 3. AAAS Outyear Analyses for Nondefense R&D, FY 1995-2002

Introduction

Mr. Chairman, members of the Subcommittee, my name is Al Teich. I am the head of the Directorate for Science and Policy Programs at the American Association for the Advancement of Science (AAAS). Founded in 1848, AAAS is the world’s largest federation of scientific and engineering societies, with nearly 300 affiliates. This year we are proud to celebrate our 150th anniversary. Thank you for inviting me to testify before you today.

Since 1976, AAAS has published an annual report analyzing research and development (R&D) in the proposed federal budget in order to make available to the scientific and engineering communities and to policymakers timely and objective information about the Administration’s plans for the coming fiscal year. I have been associated with the budget analysis efforts since 1980, initially as the principal budget analyst and for the past several years as head of the directorate that is responsible for it. The most recent of the program’s reports, AAAS Report XXIII: Research and Development FY 1999, is a collaborative effort involving contributions from 22 scientific, engineering, higher education, and industrial associations known collectively as the Intersociety Working Group. At the end of each congressional session, AAAS also publishes a report reviewing the impact of appropriations decisions on research and development, entitled Congressional Action on Research and Development in the FY 199x Budget.

My testimony today is designed to highlight trends in federal support for R&D in the current budget proposal, and to provide a look at the projections for federal R&D for the next several years.

Federal Investments in Research and Development

In the United States, unlike some nations, there is no overall, separately-identified budget for research and development (R&D) and no special treatment of R&D in the federal budget. R&D programs are contained within the budgets of various federal agencies, in some cases representing a major share of the agency’s budget and activities, in others, a relatively small portion of a much larger set of programs. The Office of Management and Budget (OMB), however, requires agencies whose annual R&D funding is greater than $10 million to submit data on their R&D programs as part of their annual budget submissions. The agencies provide data (reported on OMB Circular A-11, Exhibit 44A, “Research and Development Activities”) on funding levels for basic research, applied research, development, R&D facilities, and R&D support to universities and colleges. Although definitions for each category exist, the data ultimately reflect the agency’s judgments as to how R&D fits into the definitions for the character of their work.

Most of the federal government’s R&D is mission oriented; that is, it is intended to serve the larger goals and objectives of the agency that provides the funds. The level of importance assigned to these various missions, and the role of federal R&D in serving them, has varied over the years, reflecting changing national priorities. Figure 1 shows how priorities in nondefense R&D have shifted over the past four decades. Civilian R&D expenditures (shown here in outlays) reached their highest point in the mid-1960s, declining for several years thereafter. Despite significant growth during the past ten years, these expenditures, in constant dollars, have not returned to the levels of the 1960s. Space was the dominant budget function in the 1960s, driven mainly by the National Aeronautics and Space Administration’s (NASA) Apollo program. Energy R&D grew following the oil shortages of the 1970s then fell back as national attention turned elsewhere. Health R&D, meanwhile, has shown practically uninterrupted growth over these years and now represents the largest single share of the civilian R&D portfolio.

Although federal R&D data are less than perfect, the OMB figures, supplemented by data obtained directly from the agencies, do provide a good basic source of material for conducting an analysis of R&D budget trends.

Research and Development in the FY 1999 Budget

The President’s FY 1999 budget request would provide $77.7 billion for the federal investment in R&D, an increase of 2.2 percent or $1.7 billion above the current FY 1998 estimate (see Table 1). With 2.0 percent inflation projected over the next year, the total federal R&D portfolio would improve its purchasing power, albeit slightly. This is a rather different scenario than previous years when inflation was projected at a higher level and increases for federal R&D projected at levels below the rate of inflation.

It is important to separate nondefense and defense R&D in any analysis since these two functions are generally separated by legislative “firewalls” established by the Budget Enforcement Act of 1990. The request for nondefense R&D would increase by 5.1 percent to $37.4 billion in FY 1999. Within the nondefense category many major civilian R&D agencies would enjoy an increase at or greater than the rate of inflation. R&D at the National Institutes of Health (NIH) would increase 8.1 percent, the National Science Foundation’s (NSF) R&D would increase 11.3 percent, and R&D at the Department of Transportation (DOT) would increase 14.6 percent. However, many of the agencies and programs under this Subcommittee’s jurisdiction would actually see decreases. For example, NASA would receive 3.2 percent less in FY 1999 than it has this year, and R&D in the National Oceanic and Atmospheric Administration (NOAA) would decrease 6.9 percent. On the other hand, the National Institute of Standards and Technology (NIST) — which, along with NOAA, is within the Department of Commerce — would see an increase of 8.0 percent in its R&D. Defense-related R&D would resume its downward trend after a small increase in FY 1998, with a reduction of 0.3 percent to $40.3 billion. Nevertheless, it would still account for 52 percent of all federal R&D. The Department of Defense’s (DOD) basic research account (6.1 category) and Department of Energy’s (DOE) defense R&D programs would both increase above the rate of inflation.

From our perch at the interface of science and government, AAAS maintains a close watch on basic research trends. Basic research is a key component of R&D because of the contributions it makes to expanding our knowledge and understanding of phenomena quite apart from any specific applications this understanding may yield. Basic research would do well under the President’s proposals. Total support in FY 1999 would grow to $16.9 billion (see Table 2), a 7.7 percent increase. NIH would continue to be the dominant supporter for basic research in FY 1999, increasing 8.4 percent to slightly below $8.0 billion. Basic research at NSF would increase even more, rising 12.8 percent to $2.4 billion in FY 1999.

DOE would support $2.2 billion worth of basic research, up 6.9 percent, in FY 1999. DOD would increase its support for basic research by 6.7 percent to $1.1 billion, after several years of decline from its peak funding level of $1.3 billion in FY 1993. Most other agencies would increase their support of basic research, many well above the rate of inflation. Two exceptions are the Department of Transportation (DOT, down 6.7 percent) and the Environmental Protection Agency (down 1.5 percent).

Despite their comparatively modest share of federal R&D funding, colleges and universities play a key role in the nation’s R&D effort. Academia serves as a primary site for the performance of basic research and the training of future scientists and engineers. Sixty percent of the R&D performed by colleges and universities is funded by the federal government, with most of the rest coming from the institutions’ own funds. Total federal support of R&D at colleges and universities is expected to increase by 6.1 percent to $14.5 billion in FY 1999, a larger increase than in recent years. Most of this growth is due to proposed increases in funding from NSF, NIH, Interior, and DOE. The growth in these agencies’ academic R&D support would be partly offset by declines at DOD, NASA, Agriculture and Transportation. An overview of the estimated federal support for conduct of R&D at colleges and universities by agency can be found in Table 3.

Research Fund for America

As I noted earlier, there is no overall “R&D budget” or special treatment for R&D within the budget. The “Research Fund for America” contained in the President’s FY 1999 budget is not an exception to this. The Research Fund is a means of highlighting several domestic R&D programs, underlining the President’s interest in them. It does not, however, provide any means of aggregating these R&D expenditures into a single appropriation or budget function or trading off among them.

The Research Fund for America is one of three special funds proposed by the Administration. It offers a means to allow increases that would otherwise exceed the cap on discretionary spending enacted in the Balanced Budget Act of 1997 by having them offset against special revenues. The Fund is a set of domestic discretionary programs which includes most (but not all) of nondefense R&D. The programs in the Fund total $28.9 billion in FY 1998. The budget proposes $31.1 billion for these programs in FY 1999, an increase of $2.2 billion or 8.0 percent.

According to the President’s plan, $27.1 billion of this request would be funded from regular discretionary spending subject to the cap, an amount less than the FY 1998 funding level. The remaining $4 billion would come from new offsetting revenues outside the cap. About $3.6 billion of that amount is projected to come from revenues resulting from a tobacco settlement. As you well know, the proposed settlement and the legislation associated with it are highly contentious and may not be in place in time to fund these offsets.

Impact of FY 1999 Proposals on R&D Trends

Despite the President’s proposed increases for FY 1999, many areas of federal R&D funding would continue their downward slide of the past several years. To provide some perspective on the proposals for R&D in the President’s FY 1999 budget, AAAS used R&D in the FY 1994 budget as a baseline for comparison. FY 1994 was the year just prior to the advent of the current strong focus on balancing the budget that began under the 104th Congress. Between FY 1994 and FY 1998, total federal R&D funding declined 2.1 percent in constant, inflation-adjusted dollars. Nondefense R&D fell by 0.5 percent, while defense R&D declined 3.5 percent. In fact, every federal agency except for NIH, NSF, and EPA has less to spend on R&D in FY 1998 than it did three years ago. As Table 4 indicates, some agencies have seen their R&D funding levels decline considerably over this period: DOE, down 15.0 percent; NASA, down 4.5 percent; and Interior, down 21.3 percent. NIH, bastion of basic biomedical research, and the beneficiary of remarkably favorable appropriations action in the last two congressional sessions, is the major winner among R&D agencies, showing a 14.4 percent increase above FY 1994. NSF, primary supporter of academic basic research in most non-biomedical fields, is also a winner, with 4.8 percent more to spend this year than it had in FY 1994, aided by a significant increase in last year’s appropriations cycle.

Figure 2 compares the proposed budget for FY 1999 with the same base year of FY 1994. Total R&D would still show a decline relative to inflation, losing 1.9 percent since FY 1994, the net of a continued decline in defense R&D (down 5.6 percent from FY 1994) and modest growth in nondefense R&D (up 2.5 percent during the same period due to proposed increases in FY 1999). NIH would continue to pull ahead of the pack, showing a 21.3 percent increase in constant dollars over the FY 1994-99 span. NSF would also benefit from the administration’s FY 1999 proposals, up 14.3 percent above FY 1994 levels. Transportation would improve its standing with an increase of 8.5 percent since FY 1994 due to new programs within the Federal Aviation Administration (see Table 4), and EPA would improve slightly at 0.1 percent above FY 1994. As the table and figure show, however, constant dollar R&D funding levels in other federal agencies would still remain lower in FY 1999 than in FY 1994.

The Outlook for Federal R&D to FY 2002

For the past three years, AAAS has analyzed the implications of various budget plans proposed by the President and Congress on future federal support of R&D. Figure 3 summarizes the changing picture we have seen during this time. The lines in the graph show the projected path of federal funding for nondefense R&D based on account projections in the past three Presidential budgets and the FY 1996 and FY 1997 budget resolutions from Congress. It shows that the outlook for federal R&D has improved markedly over the past few years. Projected funding for nondefense R&D in FY 2002, for example, has improved by $10 billion (in today’s dollars) between the FY 1996 budget resolution and the FY 1999 budget request.

Several factors have contributed to the marked improvement in the outlook for R&D programs. A balanced budget, once thought to be a distant and politically difficult goal, now seems to be at hand. Because the economy has performed far better than had been expected a few years ago, tax revenues have grown significantly faster than predicted and recent announcements by OMB project a surplus of $50 billion for FY 1998, four years earlier than projected just last year. As a result of these revenues and a significantly improved economic outlook into the next century, the President and Congress expect to be able to spend more money on discretionary programs than they did a few years ago while keeping the budget balanced. Projected nondefense discretionary spending — although still expected to decline — is about $50 billion higher in today’s dollars in the FY 1999 budget request than in the FY 1996 resolution. Thus, with each successive plan, projections for discretionary spending have gone up and R&D has shared in the improved projections.

Another reason for the improvement is the growing consensus that the federal investment in R&D, especially biomedical research, should be a high priority in the budget. Appropriations for nondefense R&D in fiscal years 1996, 1997, and 1998 were all higher than projected, partially because an improving economy has allowed discretionary spending to be higher than projected, but also because Congress and the President have worked together to boost funding for key R&D programs. For example, although funding for NIH was expected to decline in past budget plans, appropriators rearranged priorities to give NIH significant increases in each of the past three years.

The FY 1999 budget outlook would continue recent trends that favor NIH and to a lesser extent NSF. At the same time, most other nondefense R&D funding agencies would increase only slightly or decline, and DOD would decline sharply, just as these agencies have over the past few years. The net result would be a federal R&D portfolio in the 21st century that would look significantly different from today: defense R&D would be less than half the total portfolio for the first time since before World War II, while the NIH’s R&D effort would be almost as large as those of all other nondefense R&D funding agencies combined.

Conclusion

The U.S. R&D enterprise contributes enormously to the quality of American life, to the nation’s health and security, and to our world leadership in many areas of industrial technology. The United States today faces many challenges that will require continued strength in science and technology. In a very real sense, today’s R&D is helping to create a better world for future generations. Most political leaders in both parties in Congress and the administration recognize this and support a strong R&D enterprise. Yet the continuing limits on discretionary spending, (which are intended, paradoxically, to serve the very worthwhile purpose of protecting future generations against the burden of a growing national debt) may well have the unintended effect of weakening U.S. science and technology and thus diminishing the prospects for those generations. Fortunately, biomedical research seems placed as a uniquely high national priority, and given apparently partial immunity from these spending limits. However, those who advocate increases in this very worthwhile area of R&D also must recognize that neither the advancement of the nation’s health, nor the many other important national goals to which S&T contributes will be served if it is the only area of R&D that receives strong government support in the years ahead.

Mr. Chairman, AAAS believes it is essential that those involved in policy decisions that will affect the future of government-supported science and technology have a solid understanding of the impact of their decisions on the S&T enterprise. AAAS conducts its analyses in order to help promote that understanding. I am pleased to have had the opportunity to present these highlights of our work to you here today and to contribute to your efforts to assure the long-term health of our nation’s science and technology.


AMERCIAN ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE

Founded 150 years ago, AAAS is the world’s largest federation of scientific and engineering societies, with nearly 300 affiliates. AAAS counts more than 143,000 individual scientists, engineers, science educators, policymakers, and interested citizens among its members, making it the largest general scientific organization in the world. The continuing objectives of AAAS are to further the work of scientists, facilitate cooperation among them, foster scientific freedom and responsibility, improve the effectiveness of science in the promotion of human welfare, advance education in science, and increase the public understanding and appreciation of the importance of the methods of science in human progress.

ALBERT H. TEICH

Albert H. Teich has been Director of Science and Policy Programs at the American Association for the Advancement of Science (AAAS) since 1990. AAAS, founded in 1848, is the world’s largest federation of scientific and engineering societies as well as a professional organization with over 143,000 members and the publisher of Science magazine. Dr. Teich is responsible for the Association’s activities in science and technologypolicy (including the AAAS R&D Budget and Policy Program, the Congressional Science and Engineering Fellows Program, and a new Research Competitiveness Program) as well as programs in science ethics and law, human rights, a Program of Dialogue between Science and Religion, and a Center for Science, Technology, and Congress. His directorate has a staff of 35 and a budget of approximately $3 million a year.

Prior to joining the AAAS staff in 1980, Dr. Teich served on the faculty and in research and administrative positions at George Washington University, the State University of New York, and Syracuse University.

Dr. Teich is author of numerous articles and editor of several books, including Technology and the Future, a widely-used textbook on technology and society, the seventh edition of which was published by St. Martin’s Press in September 1996, and Science and Technology in the USA, volume 5 of Longman’s “World Guides to Science and Technology,” published in 1986.

Dr. Teich is a Fellow of AAAS, and a member of the editorial advisory boards to the journals, Science Communication; Prometheus; and Science, Technology, and Human Values. He has been a consultant to government agencies, national laboratories, industrial firms, and international organizations. He served as chairman of the advisory committee to the National Science Foundation’s Division of Science Resources Studies from 1987 through 1990 and is currently a member of the Advisory Boards of the School of Public Policy at Georgia Tech, the School of Management and Technology of the University of Maryland’s University College, and the Loka Institute, as well as the Policy Council of the Association of Public Policy Analysis and Management. He holds a B.S. in physics and a Ph.D. in political science, both from M.I.T.


Tables & Charts

Table 1. R&D in the FY 1999 Budget by Agency
(budget authority in millions of dollars)

FY 1997
FY 1998
FY 1999
$ Chg.
% Chg. FY 98-99
Actual
Estimate
Budget
FY 98-99
Current $ Constant $*

Total R&D (Conduct and Facilities)
Defense (military) 37,238 37,430 37,010 -420 -1.1% -3.1%
S&T (6.1-6.3) 7,493 7,800 7,181 -619 -7.9% -9.7%
All Other DOD R&D 29,745 29,630 29,829 199 0.7% -1.3%
Health and Human Services 12,912 13,809 14,888 1,079 7.8% 5.7%
Nat’l Institutes of Health 12,217 13,097 14,163 1,066 8.1% 6.0%
NASA 9,352 9,816 9,504 -312 -3.2% -5.1%
Energy 6,217 6,288 7,142 854 13.6% 11.4%
Nat’l Science Foundation 2,424 2,568 2,857 290 11.3% 9.1%
Agriculture 1,556 1,553 1,549 -4 -0.3% -2.2%
Commerce 964 1,081 1,083 2 0.2% -1.8%
Interior 591 609 629 21 3.4% 1.4%
Transportation 612 676 775 99 14.6% 12.4%
Environ. Protection Agency 595 672 657 -15 -2.3% -4.2%
All Other 1,471 1,536 1,640 104 6.8% 4.7%
______ ______ ______ ______
Total R&D 73,934 76,038 77,735 1,697 2.2% 0.2%
Defense 40,047 40,409 40,289 -120 -0.3% -2.3%
Nondefense 33,886 35,629 37,446 1,817 5.1% 3.0%
.
Basic Research 14,961 15,710 16,917 1,207 7.7% 5.6%
Applied Research 14,425 15,572 16,137 565 3.6% 1.6%
Development 42,338 42,415 42,236 -179 -0.4% -2.4%
R&D Facilities and Equipment 2,210 2,341 2,445 104 4.5% 2.4%
.
“FS&T” 1 43,340 45,557 47,057 1,500 3.3% 1.3%

Source: AAAS, based on OMB data for R&D for FY 1999, agency budget justifications, and information from agency budget offices.
* Constant dollar estimates based on OMB’s GDP deflators.
1 An alternative measure for the federal investment in science and technology proposed by the National Academy of Sciences. This measure includes all federal R&D except for advanced development, testing and evaluation work in DOD and DOE.
April 20, 1998 – FINAL.

 


 

Table 2. Basic Research in the FY 1999 Budget
(budget authority in millions of dollars)

FY 1997
FY 1998
FY 1999
$ Chg.
% Chg. FY 98-99
Actual
Estimate
Budget
FY 98-99
Current $ Constant $*

Total R&D (Conduct and Facilities)
Health and Human Services 6,852 7,361 7,978 617 8.4% 6.3%
Nat’l Institutes of Health 6,851 7,360 7,976 616 8.4% 6.2%
Nat’l Science Foundation 2,056 2,165 2,442 277 12.8% 10.6%
Defense (“6.1″) 1,032 1,042 1,111 69 6.7% 4.6%
Energy 2,043 2,093 2,237 144 6.9% 4.8%
NASA 2,051 2,073 2,123 50 2.4% 0.4%
Agriculture 582 595 624 29 4.9% 2.9%
Commerce 34 34 37 3 9.1% 6.9%
Interior 57 58 67 9 15.9% 13.6%
Transportation 21 45 42 -3 -6.7% -8.5%
Smithsonian 137 141 149 8 5.7% 3.6%
Environ. Protection Agency 59 60 59 -1 -1.5% -3.4%
Veterans Affairs 14 14 15 1 7.1% 5.0%
Other 23 30 32 2 6.7% 4.6%
______ ______ ______ ______
Total Basic Research 14,961 15,710 16,917 1,207 7.7% 5.6%

Source: AAAS, based on OMB data for R&D for FY 1999, agency budget justifications, and information from agency budget offices.
* Constant dollar estimates based on OMB’s GDP deflators.

 

Table 3. Estimated Federal Support for Conduct of R&D at Colleges and Universities
(budget authority in millions of dollars)

FY 1997
FY 1998
FY 1999
$ Chg.
% Chg. FY 98-99
Actual
Estimate
Budget
FY 98-99
Current $ Constant $*

Total R&D (Conduct and Facilities)
Health & Human Services 7,147 7,972 8,651 679 8.5% 6.4%
Nat’l Institutes of Health 7,040 7,861 8,541 680 8.6% 6.5%
Nat’l Science Foundation 1,935 1,996 2,233 237 11.9% 9.7%
Defense (Military) 1,310 1,293 1,208 -85 -6.6% -8.4%
NASA 807 830 810 -20 -2.4% -4.3%
Energy 614 620 640 20 3.2% 1.1%
Agriculture 416 427 408 -19 -4.4% -6.3%
Environ. Protection Agency 140 193 192 -1 -0.5% -2.5%
Interior 46 47 49 2 4.1% 2.0%
Transportation 52 50 43 -7 -14.0% -15.7%
Commerce 82 86 82 -4 -4.7% -6.5%
Education 142 123 158 35 28.5% 25.9%
Veterans Affairs 2 2 2 0 0.0% -2.0%
Nuclear Reg. Comm. 3 3 3 0 0.0% -2.0%
Postal Service 4 5 5 0 0.0% -2.0%
Social Security 1 5 5 0 0.0% -2.0%
______ ______ ______ ______
Total R&D at Colleges
and Universities 12,701 13,652 14,489 837 6.1% 4.0%

Source: AAAS, based on OMB supporting data for R&D and agency budget justifications.
* Constant dollar conversions based on OMB’s GDP deflators.
FINAL April 20, 1998.

 

Table 4. Trends in R&D, FY 1994-1999
Change in Constant Dollars

FY 1994
FY 1998
FY 1999
% Chg. FY 98-99
Actual
Estimate
Budget
FY 94-98 FY 94-99

Total R&D (Conduct and Facilities)

Dept. of Defense
35,5510 37,430 37,010 -3.6% -6.5%
DOD 6.1-6.3 8,283 7,800 7,181 -13.8% -22.2%
NASA 9,406 9,816 9,504 -4.5% -9.4%
Dept. of Energy 6,771 6,288 7,142 -15.0% -5.4%
Nat’l Institutes of Health 10,474 13,097 14,163 14.4% 21.3%
NSF 2,243 2,568 2,857 4.8% 14.3%
Agriculture 1,528 1,553 1,549 -7.0% -9.1%
Interior 708 609 629 -21.3% -20.2%
Transportation 641 676 775 -3.5% 8.5%
EPA 588 672 657 4.6% 0.1%
Commerce 1,022 1,081 1,083 -3.2% -4.9%
All Other* 2,185 2,248 2,365 -5.8% -2.9%
______ ______ ______
Total R&D 71,074 76,038 77,735 -2.1% -1.9%
Defense R&D 38,299 40,409 40,289 -3.5% -5.6%
Nondefense R&D 32,775 35,629 37,446 -0.5% 2.5%
Basic Research 13,693 15,710 16,917 5.0% 10.8%
.
“FS&T” 1 43,002 45,557 47,057 -3.1% -1.8%

Source: AAAS Report XX, OMB R&D data, and revised agency R&D estimates. Adjusted for inflation according to OMB’s GDP deflators.
* – Includes non-NIH programs in Health and Human Services.
1
- An alternative measure for the federal investment in science and technology proposed by the National Academy of Sciences. This measure includes all federal R&D except for advanced development, testing, and evaluation work in DOD and DOE. The DOD 6.1-6.3 categories represent the DOD contribution to the FS&T budget. DOE S&T includes nearly all DOE R&D; the changes to DOE FS&T are -16.0% (FY 94-98) and -4.7% (FY 94-99).
Complete historical data (86-99) tables are available at http://www.aaas.org/spp/dspp/rd/rdwwwpg.htm in the “Guide” section.

98-04-28_chart1

98-04-28_chart2

98-04-28_chart3