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September 5, 2003

Defense and Homeland Security are R&D Winners

Table: Congressional Action on R&D in the FY 2004 Budget

Before leaving for the August recess, Congress made significant progress on fiscal year (FY) 2004 research and development (R&D) appropriations, proposing substantial increases for the overall federal R&D portfolio. The House of Representatives, taking the lead, would provide nearly $126 billion in R&D; however, 99 percent of the proposed increase would go to R&D programs in just three agencies: the Department of Defense (DOD), the new Department of Homeland Security (DHS), and the National Institutes of Health (NIH).

After Congress returns in September, it faces the daunting task of completing the FY 2004 appropriations process with just four weeks before the start of the new fiscal year. Before leaving Washington, the House drafted all 13 appropriations bills, and approved 11 of them. The Senate managed to draft 9 out of 13, but found time to debate and approve only four. None of the appropriations bills has been signed into law.

In the House plan, the federal R&D portfolio would reach another all-time high of $125.9 billion in FY 2004 (see table) representing an $8.4 billion or 7.2 percent increase over this year's funding level and $3.6 billion more than the Bush Administration's request of $122.4 billion. All the other R&D funding agencies collectively would see their R&D funding remain flat next year, with modest increases for some agencies offset by cuts in others.

The House would boost DOD R&D by $7.2 billion or 12.3 percent for a total of $66.0 billion, bringing DOD R&D to another all-time high. DOD weapons systems development would account for nearly all of the increase (up $6.1 billion to $53.6 billion), but the chamber would also reward DOD's "S&T" activities with a 9.7 percent increase to $12.3 billion. The newly created DHS would see its R&D portfolio surge by 57.5 percent or $385 million to $1.1 billion as DHS ramps up its S&T capabilities.

After five years of annual 15 percent increases, NIH budget growth would slow down considerably in FY 2004. The House would match the president's request exactly with a 2.7 percent increase for NIH's R&D portfolio. Though NIH R&D would rise modestly in percentage terms, the sheer size of the NIH portfolio means the House proposal would add $702 million to NIH R&D for a total of $26.9 billion.

The National Science Foundation (NSF) would enjoy a budget increase, but would fall well short of a five-year doubling plan signed into law in the 107^th Congress. The House would provide $4.2 billion for NSF's R&D activities (excluding education, training, and overhead programs), an increase of 6.2 percent. The agency's total budget of $5.6 billion would be nearly $1 billion short of the $6.6 billion authorized for FY 2004 by H.R. 4664, which put the NSF budget on a doubling track between fiscal years 2002 and 2007.

The remaining agencies in the federal R&D portfolio would receive some modest increases offset by steep cuts in other areas. The Department of Energy's (DOE) Office of Science would receive a modest boost to $3.2 billion for its R&D programs in the House, an increase of 4.3 percent; NASA's R&D portfolio would edge up 0.9 percent to $11.1 billion, but the House plan would mostly be a placeholder until the investigation of the Columbia shuttle disaster and subsequent restructuring of the NASA budget is complete. There would be steep cuts in the R&D portfolios of other agencies: R&D in the U.S. Department of Agriculture (down 9.8 percent), the Department of Transportation (down 15.0 percent), and the Department of Commerce (down 21.5 percent) would all fall sharply in the House appropriations bills.

The House's focus on defense and homeland security would result in overall defense R&D (including DOD, DOE defense activities, and a large part of the DHS R&D portfolio) to rise $7.4 billion or 11.8 percent to $70.5 billion for a record total driven largely by substantial boosts to defense-related development activities in DOD and DHS. After several years of near-parity between defense and nondefense R&D around the turn of the century, defense R&D would pull ahead decisively to 56 percent of total federal R&D.

The Senate would follow the House closely in providing large increases for defense and homeland security, modest increases for health, and flat funding overall for all other R&D programs in the appropriations it has drafted so far. The Senate has not yet acted on key R&D funding agencies such as NASA, NSF, EPA, and Commerce, but would stick closely to House action on the agencies it has completed. The Senate would provide $11.8 billion for DOD "S&T", a 4.7 percent increase that would be more modest than the House plan but in sharp contrast to the administration's request for steep cuts. The Senate would provide a modest 1.2 percent increase to R&D in DOE's Office of Science, again less than the House but in contrast to a requested cut in the Bush Administration budget. The Senate would provide slightly more than the House and the administration request for NIH R&D for a $1.0 billion or 3.8 percent increase to $27.3 billion.

Although the House, the Senate, and President Bush have agreed on an overall spending total for appropriations of $785 billion, the total is divided among the 13 bills in differing ways and there are thousands of program-level funding differences to resolve next month. If past years are any indication, the likelihood that Congress and the White House will be successful in reaching a uniform consensus by the end of September is slim. •••

—Kei Koizumi, Director, AAAS R&D Budget and Policy Program