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-R&D in
the FY 2002 Budget: Increases for NIH and DOD, Cuts for Other Agencies
-Highlights
of the Major R&D Funding Agencies
-The Budgetary
Context for FY 2002: Tax Cuts and Three Priorities Squeeze Out Other Programs
-Impacts of
Funding Trends on the Federal Research Portfolio
-Outlook
for the FY 2002 Budget Process
-Table 1. R&D
in the FY 2002 Budget by Agency
-Table 2. Research
in the FY 2002 Budget
-Table 3. Major
Functional Categories of R&D
-Table 4. "Federal
Science and Technology Budget" by Agency
PDF version
of this document
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(All figures in this analysis are preliminary
and will be revised in later AAAS releases. This analysis is a preview
of the forthcoming AAAS Report XXVI: Research and Development FY 2002,
a comprehensive look at the President's budget for R&D in FY 2002. More
tables and continually updated supplemental materials on R&D in the FY
2002 budget can be found on the AAAS R&D Web site at http://www.aaas.org/spp/R&D.)
On April 9, President Bush released a FY 2002 budget
request containing overall increases for the federal investment in R&D,
but cuts in most of the major R&D funding agencies. The full request
follows on a February 28 budget 'blueprint' offering the broad outlines
of his FY 2002 budget. The budget calls for a large tax cut of $1.6
trillion over ten years, $153 billion over ten years for Medicare, a
reserve for unanticipated needs, and the retirement of $2.0 trillion
in publicly held debt over 10 years. These expansive proposals, however,
leave little room for increases in discretionary spending.
Discretionary spending, the one-third of the budget
subject to annual appropriations decisions by Congress and the President,
is the part of the budget out of which nearly all federal R&D is
funded. The budget calls for overall discretionary spending to rise
4.0 percent or $26 billion in FY 2002 to $661 billion. But the entire
increase would go just to the top priorities of the Department of Defense
(DOD), the Department of Education, the National Institutes of Health
(NIH), and a reserve for emergencies, leaving all other discretionary
programs, including R&D programs outside NIH and DOD, with flat
or declining funding.
R&D in the FY 2002 Budget: Increases for NIH and
DOD, Cuts for Other Agencies
Because DOD and NIH are the two largest funding sources
of federal R&D, the special treatment given to them in the budget
would allow overall federal R&D to increase in FY 2002. But the
other R&D funding agencies would fare slightly worse than other,
non-priority discretionary programs and would decline in funding. (All
figures in this release are preliminary and will be revised in later
AAAS releases with revised agency data.)
- The request for total federal R&D in FY 2002 is a record
$95.3 billion, $5.2 billion or 5.8 percent more than FY 2001 (see
Table 1). The proposed increases for DOD
($3.6 billion) and NIH ($2.7 billion) account for more than the overall
$5.2 billion increase, leaving all other R&D funding agencies
combined with less money than in FY 2001.
- Seven of the 10 largest R&D funding agencies would see their
R&D decline in FY 2002 (see Figure 1). Only NIH, DOD, and
the Department of Transportation (DOT, because of guaranteed funding
from transportation trust funds) would see increases.
Figure 1. (click on the image to view or download a full-size
color PDF version)
- Nondefense R&D would increase by 3.6 percent or $1.6
billion to $46.7 billion, an increase greater than the expected rate
of inflation of 2.1 percent. NIH would receive a 13.6 percent increase
in its R&D funding to $22.4 billion; NIH would make up almost
half of the entire nondefense R&D portfolio. Excluding NIH,
however, all other nondefense R&D would fall by 4.2 percent
to $24.3 billion, a loss of $1.1 billion.
- Defense R&D would jump by 8.1 percent or $3.6 billion
to reach $48.6 billion. Although defense and nondefense R&D reached
parity in FY 2001 for the first time in twenty years, a Clinton Administration
goal, the Bush Administration would aggressively expand defense R&D
investments. DOD did not submit a full FY 2002 budget this week; the
agency is currently undergoing a major review of defense spending
priorities that is expected to result in a full FY 2002 request in
May. Most of the DOD request consists of placeholder figures assuming
the FY 2001 budget plus inflation, but there is also a special request
for an extra $2.6 billion in unallocated funds for DOD development.
Defense R&D in the Department of Energy (DOE) would grow by a
modest 1.3 percent to $3.4 billion.
- The federal investment in basic research would grow by 6.1
percent or $1.3 billion to an all-time high of $23.4 billion, primarily
because of a 12.4 percent requested increase for basic research in
NIH (see Table 2). Because of annual
increases of over 10 percent for NIH for the past several years, NIH
has supported the majority of federal basic research since FY 2000
and in FY 2002 would provide 56 percent of all federal support. Although
other federal agencies have enjoyed smaller increases in their basic
research programs for the past several years, basic research excluding
NIH would decline 1.0 percent to $10.4 billion in FY 2002. Compared
to a more than 10 percent increase in FY 2001, the National Science
Foundation (NSF), the second largest funding source for basic research,
would see its investments barely increase by 0.1 percent in FY 2002.
- The total federal investment in research (basic and applied
research) would increase 5.0 percent to $44.9 billion in FY 2002 (see
Table 2), but again a large increase
for NIH (up 12.9 percent to $22.0 billion) is responsible. Without
NIH, total federal research would fall 1.5 percent or $357 million
to $22.9 billion.
- The high priority placed by the Administration on defense and health
is evident in Table 3, which shows
federal R&D by mission area. Defense R&D (up 8.1 percent)
and health R&D (up 11.8 percent) would increase substantially.
Space R&D would increase slightly by 1.1 percent to $8.8 billion
because of major shifts in the National Aeronautics and Space Administration's
(NASA) R&D toward space and away from aeronautics (transportation),
but R&D funding for all the other major mission areas would
decline. There would be particularly steep cuts to energy-related
R&D (down 19.0 percent), transportation R&D (down 21.8 percent),
and commerce-related R&D (down 17.6 percent).
- Two major multi-agency initiatives would receive increases in the
FY 2002 budget. After nearly doubling from $270 million to $446 million
in FY 2001, funding for the Nanoscale Science, Engineering, and
Technology Initiative would rise by 8.1 percent to $482 million
in FY 2002. Within a shrinking research budget, NSF's lead contribution
to the initiative would rise by $24 million or 16.1 percent to $174
million. After a nearly 30 percent increase last year, funding for
the Networking and Information Technology R&D initiative
would rise by a more modest 2.1 percent to $2.0 billion. Much of the
increase would be in NIH's contribution, while other agencies would
each receive a few million dollars more. The U.S. Global Change
Research Program would see its funding decline by 4.4 percent
to $1.6 billion, mostly because of steep cuts in NASA's Earth Science
program, the largest component of the initiative.
- The Office of Management and Budget (OMB) has introduced a new 'Federal
Science and Technology' (FS&T) budget in the FY 2002 budget (see
Table 4). The FS&T budget
is successor to the Clinton Administration's "21st
Century Research Fund" and contains most of the same programs.
FS&T is a collection of selected R&D and non-R&D programs
that emphasize basic and applied research and the creation of new
knowledge or technologies. It also includes some S&T education
and training activities but excludes most development, and is designed
to be an alternative measure for the federal investment in science
and technology. (This FS&T budget has a similar emphasis but different
definitions from the FS&T concept proposed in 1995 by the National
Academy of Sciences as a subset of federal R&D). FS&T would
increase 5.3 percent to $49.7 billion in FY 2002, but would fall 0.9
percent without NIH.
Highlights of the Major R&D
Funding Agencies
- The National Institutes of Health (NIH) would receive $23.1
billion for its total budget in FY 2002, an unprecedented increase
of $2.8 billion (13.5 percent) that would keep NIH on track to double
its budget in the five years between FY 1998 and 2003. NIH R&D
would rise 13.6 percent to $22.4 billion. Most of the institutes would
receive increases between 11.5 and 12.5 percent. The NIH budget would
emphasize investments in R&D facilities, both for extramural research
facilities grants ($100 million, up from $78 million) and intramural
construction ($307 million, double the FY 2001 funding level). Funding
for the Office of Research on Women's Health within the Office of
the Director would more than double, and the new National Institute
of Minority Health and Health Disparities would receive a nearly 20
percent boost in its budget to $158 million. The new National Institute
of Biomedical Imaging and Bioengineering would receive $40 million,
up from $2 million.
- The Department of Defense (DOD), the largest federal sponsor
of R&D, did not submit a full FY 2002 budget this week; the agency
is currently undergoing a major review of defense spending priorities
that is expected to result in a full FY 2002 request in May. In the
meantime, most of the DOD request consists of placeholder figures
assuming the FY 2001 budget plus inflation, but there is also a special
request for an extra $2.6 billion in unallocated funds for DOD development,
presumably for national missile defense and other Administration priorities.
DOD R&D would increase 8.6 percent because of the special request,
for a total of $45.2 billion. The placeholder budget assumes for the
moment that basic research, applied research, and individual agencies
such as the Defense Advanced Research Projects Agency (DARPA) would
all grow by 2.1 percent in FY 2002. Much of the $2.6 billion special
request may end up eventually being allocated to the Ballistic Missile
Defense Organization (BMDO).
- Although the National Science Foundation (NSF) enjoyed a
nearly 13 percent increase in its budget and its R&D funding in
FY 2001, the total NSF budget would barely increase in FY 2002 and
NSF's R&D investments would actually decline 1.7 percent to $3.2
billion (see Figure 2). There would be an expansion of NSF's science
and mathematics education activities, but most of the research directorates
in Research and Related Activities (R&RA; down 0.5 percent to
$3.3 billion) would face budget cuts. Only astronomy, mathematics,
and nanotechology-related research would receive inflationary increases,
leaving research in nearly 30 other program areas such as information
technology research, physics, and the social sciences with flat or
declining funding. The budget would also cut NSF's investments in
research instrumentation by a third and Major Research Equipment by
more than 20 percent.
Figure 2. (click on the image to view or download a full-size
color PDF version)
- The National Aeronautics and Space Administration (NASA)
would see its total budget increase by 1.8 percent to $14.5 billion
in FY 2002, but NASA's R&D (two-thirds of the agency's budget)
would decline 3.3 percent to $9.3 billion. NASA proposes a major restructuring
of its accounts to incorporate formerly separate mission support costs
into program costs. While Space Science would increase by 6.2 percent
to $2.8 billion, there would be cuts totaling $200 million in the
Earth Science enterprise (down 11.7 percent to $1.5 billion). Biological
and Physical Research (formerly Life and Microgravity Sciences) would
decline 4.7 percent to $361 million. Aero-Space Technology would increase
7.3 percent to $2.4 billion because of a more than $200 million increase
to $475 million for the Space Launch Initiative to explore technologies
for reusable launch vehicles. While the budget contains a $2.1 billion
request for the International Space Station (down 1.2 percent), there
are no details for FY 2002 because the entire project is currently
undergoing a major review which will likely result in a heavily restructured
and scaled-down station.
- The Department of Energy (DOE) would see its R&D programs
decline 3.3 percent to $7.4 billion after a 12 percent increase last
year (see Figure 2). Most programs in the Office of Science would
receive level or slightly increasing funding, including Basic Energy
Sciences (up 1.3 percent to $1.0 billion), Advanced Scientific Computing
Research (unchanged at $166 million), Nuclear Physics (unchanged at
$361 million), and High Energy Physics (up 1.3 percent to $721 million).
Biological and Environmental Research would fall 8.2 percent to $443
million, mostly because of the deletion of congressionally designated
projects. Funding for the Spallation Neutron Source would rise $13
million to $291 million. Energy R&D, however, would suffer steep
cuts: solar and renewable energy R&D would drop by more than a
third, nuclear energy R&D would be almost halved, and energy conservation
R&D would fall by nearly 25 percent. In Fossil Energy, a new Coal
for Clean Power Initiative of competitive, cost-shared R&D grants
funded at $150 million would offset steep cuts in gas, oil, and other
fossil energy R&D program areas. In DOE's defense programs, construction
of the troubled National Ignition Facility would continue with a 24
percent boost to $245 million, while the Advanced Simulation and Computing
Initiative (ASCI) would receive $738 million, a slight decrease.
- R&D in the U.S. Department of Agriculture (USDA) would
fall 8.1 percent in FY 2002 to $1.8 billion, reversing a similarly-sized
increase last year (see Figure 2). Funding for competitive research
grants in the National Research Initiative ($106 million) and formula
research funds in the Hatch Act ($180 million) would stay even with
FY 2001; the Bush Administration would find savings by not renewing
more than $120 million in congressionally designated research projects.
Intramural research in the Agricultural Research Service would stay
even with FY 2001 at $852 million, but there would be $44 million
in cuts to projects in ARS Buildings and Facilities (down 27 percent
to $118 million), many of them congressionally designated. In addition
to the $1.8 billion shown in Table 1, USDA
will spend $135 million in mandatory funds for competitive research
grants in FY 2002, up $5 million from FY 2001.
- Department of Commerce R&D programs would decline 6.1
percent in FY 2002 to $1.0 billion. The budget would all but eliminate
the Advanced Technology Program (ATP) at the National Institute
of Standards and Technology (NIST) in FY 2002 (down 91 percent
to $13 million) and would allow FY 2001 funds to be used only to fund
existing ATP awards. Intramural R&D in the NIST laboratories,
however, would increase 11 percent. National Oceanic and Atmospheric
Administration (NOAA) R&D would increase by 2.2 percent to
$649 million, including program increases for Oceanic and Atmospheric
Research (OAR).
- R&D in the Department of the Interior would fall 6.2
percent to $593 million, but steeper cuts would fall on Interior's
lead science agency, the U.S. Geological Survey (USGS). USGS
R&D would fall 10.7 percent or $59 million to $491 million. Hardest
hit would be programs in Water Resources (down 21.6 percent as a result
of the elimination of some programs and dramatic reductions in the
National Water Quality Assessment program) and Biological Research
(down 7.0 percent because of the elimination of the National Biological
Information Infrastructure program).
- The Environmental Protection Agency (EPA) R&D budget
would fall 6.1 percent to $575 million, mostly because of the elimination
of dozens of congressionally designated research projects. EPA's core
research programs would mostly be held to level funding. The overall
EPA budget would decline from $7.8 billion in FY 2001 to $7.3 billion
in FY 2002.
- Department of Transportation (DOT) R&D funding would
climb 7.0 percent to $795 million. Many DOT programs do not compete
with other discretionary programs for funding because they rely on
guaranteed spending from transportation trust funds. Because transportation
tax revenues have been rising steadily, R&D funding would also
rise. Federal Highway Administration (FHWA) R&D would increase
by 27.6 percent to $374 million, including a 32 percent boost to $253
million for Intelligent Transportation Systems.
The Budgetary Context for FY 2002:
Tax Cuts and Three Priorities Squeeze Out Other Programs
The FY 2002 Bush budget proposes discretionary spending
of $661 billion in FY 2002, an increase of $26 billion or 4.0 percent
over FY 2001 (see Figure 3). But the entire increase and then some would
go to the Bush Administration's top three priorities in discretionary
spending, the Department of Defense (DOD, up $14 billion), the Department
of Education (up $5 billion), and the National Institutes of Health
(NIH, up $2.8 billion), plus a separate $5 billion contingency fund
intended to provide for emergencies such as farm aid or natural disaster
relief. This would leave all other discretionary programs with $1 billion
less than FY 2001, for a total of $277 billion. Non-NIH nondefense R&D
joins other programs such as foreign aid, immigration, justice programs,
national parks, and environmental protection in a competition for shrinking
resources. Not surprisingly, then, NIH and DOD R&D programs would
receive substantial increases while other agencies' R&D programs
would decline.
Figure 3. (click on the image to view or download a full-size
color PDF version)
Since the appearance of federal budget surpluses in
FY 1998, lawmakers have been able to award substantial increases to
discretionary spending. Between FY 2000 and 2001, discretionary spending
grew by more than 9 percent, an increase in which federal R&D fully
shared. Although budget surpluses are expected to continue, the FY 2002
budget aims to slow down this growth overall and reverse it for most
programs.
Holding overall discretionary spending growth to 4.0
percent in FY 2002 and the rate of inflation thereafter allows President
Bush to spend the bulk of projected budget surpluses on tax cuts
and debt reduction. The FY 2002 budget projects baseline budget
surpluses of $5.6 trillion over ten years (FY 2002-2011; the baseline
projection is one which assumes no changes in current tax or entitlement
policies, only inflationary growth in discretionary spending, and moderate
economic growth and inflation over the next decade). The FY 2002 budget
proposes to allocate this 10-year surplus as follows: $1.6 trillion
in tax cuts, $0.4 trillion in additional debt service costs resulting
from tax cuts and additional spending, $153 billion for Medicare reform
and a possible prescription drug benefit, a $0.8 trillion reserve for
contingencies (future priorities, emergency spending, etc.), and just
$30 billion for additional discretionary spending over ten years above
inflationary growth. This would leave $2.6 trillion in surpluses from
the Social Security trust funds, all of which automatically become Social
Security-held debt. Of the $2.6 trillion, the President proposes to
use $2.0 trillion to pay down the national debt to the public, and $0.6
trillion to keep as a cash reserve for Social Security reform, including
possible use for private Social Security accounts.
Figure 4 shows clearly the effects of the tax cuts
and other proposals on budget surpluses. The steady trend of fiscal
improvement from FY 1992 to FY 2001 would, without policy changes, continue
in a straight line upward in future years. The Bush proposals for tax
cuts and Medicare reform would cause surpluses to dip beginning in FY
2002 and then rise more slowly than the status-quo scenario. By bipartisan
agreement, all Social Security surpluses (the area between the two lines
in Figure 4) would be dedicated to paying down the national debt to
the public, although Bush proposes to use some of these surpluses for
Social Security reform. As a result, the Bush Administration is committed
to balancing the budget without the Social Security surpluses, meaning
preserving the non-Social Security (or on-budget) surplus (the lower
line in Figure 4). The area under the lower line represents the $0.8
trillion reserve for contingencies, money that has not yet been allocated
but which the budget assumes could be spent if necessary.
Figure 4. (click on the image to view or download a full-size
color PDF version)
As Figure 4 shows, the Bush budget has little to no
margin for error. On-budget surpluses are expected to total only $30
to $60 billion a year for the next several years, and even these small
surpluses will shrink or disappear if any of the contingencies should
materialize, or if discretionary spending rises above the request level.
For example, even within the next two months several events could vaporize
the surpluses: defense observers expect DOD's strategic review to result
in even higher DOD requests in FY 2002 and future years than in the
current budget; there is growing pressure in Congress to spend billions
immediately on aid to farmers; and unforeseen natural disasters have
in each of the past several years added far more to spending than the
$5 billion set aside for FY 2002. There is also widespread agreement
that even a minimal prescription-drug benefit for Medicare will require
more than double the $153 billion over ten years set aside in the budget,
and many Republicans in Congress would like to expand tax cuts beyond
$1.6 trillion; even the Bush proposal, if enacted as is, will probably
require alternative-minimum tax (AMT) reform of $400 billion or up over
10 years to prevent middle-class families from becoming having to pay
the AMT.
The FY 2002 budget also depends crucially on continuing
economic growth to keep the budget in surplus. Even a slight economic
slowdown in a $10 trillion U.S. economy would lower tax revenues enough
to easily wipe out projected on-budget surpluses. Although the U.S.
budget shifted to surplus because higher-than-expected economic growth
resulted in unexpected tax revenues, this year the process could shift
into reverse and plunge the U.S. budget back into deficits. With a U.S.
economic slowdown looking increasingly likely this year, projections
of a $59 billion FY 2002 on-budget surplus could easily disappear even
before additional spending and tax cut proposals can be considered.
Impacts of Funding Trends on the
Federal Research Portfolio
Figure 5. (click on the image to view or download a full-size
color PDF version)
Increases for NIH over the past few decades have resulted
in a dramatic expansion in federal support for life sciences research,
nearly three-quarters of which is funded by NIH (see Figure 5). Other
disciplines, funded by agencies with stagnant or declining budgets,
have not fared as well; while the Clinton Administration called for
a 'balanced research portfolio' of large increases for non-NIH agencies
explicitly to reverse these trends, the FY 2002 budget would reverse
the Clinton Administration goal by awarding large increases for federal
funding in the life sciences and cuts in funding for most other sciences.
The upward trend in federal support for life sciences
research (see Figure 5) mirrors the steady growth in the NIH budget
over the past three decades. The last two years of the chart show an
even sharper upward spike in life sciences funding as a result of the
first two years of the NIH doubling effort; because of a similar NIH
increase in FY 2001 and the proposed boost for FY 2002, future data
should show further increases along this new trajectory. This trend
is remarkable when contrasted with how other disciplines have fared
during this time period. Federal support for engineering research, which
was greater than life sciences support in FY 1970, has stagnated for
three decades and would decline even further in the FY 2002 budget because
of cuts in NASA, NSF, and DOE. Support for the physical sciences (physics,
chemistry, astronomy, etc.) showed slow but steady increases until the
early 1990s, but has declined since then due to cuts in DOE, NASA, and
especially DOD. Cuts in DOE and NASA in the FY 2002 budget would further
reduce physical sciences support in FY 2002. Even smaller disciplines
which have shown early 1990s growth, such as environmental sciences,
and recent growth, such as computer sciences, would most likely drop
in FY 2002 because of cuts to non-NIH R&D funding agencies.
Outlook for the FY 2002 Budget Process
The FY 2002 budget now moves to Congress. Currently,
Congress is debating the FY 2002 budget resolution, Congress' own blueprint
of its budget priorities for FY 2002 and beyond. The House passed a
budget resolution sticking to the Bush proposals for tax cuts and discretionary
spending, but the Senate last week passed a budget resolution trimming
the tax cuts to $1.3 trillion and boosting discretionary spending for
areas such as general science. With the slim margins between parties
in the House and especially the Senate, approval of a final, compromise
budget resolution could be a protracted affair. Whether the final budget
resolution sets discretionary spending at the President's level or at
a higher level, many Republicans, especially those on the Appropriations
Committees, would like to see more discretionary spending and will likely
draft appropriations bills providing far more than the request for domestic
programs, including NSF, DOE, and USDA. With so little room for error
in the budget and a commitment from the Administration to settle for
nothing less than $1.6 trillion in tax cuts, it remains to be seen whether
appropriators will be successful in boosting discretionary spending.
For federal R&D programs, the only thing certain
is that NIH will eventually receive its requested $23.1 billion, and
perhaps even more. For other agencies, congressional appropriators may
disagree with the President, and the flat or declining funding for most
nondefense R&D programs may change before the FY 2002 budget process
is over. But with momentum building for some form of a large tax cut
and the real possibility of an economic slowdown depressing tax revenues,
R&D and other programs will face steep competition in the annual
race for funding.
Go to Tables
1-4
- April 12, 2001
(More materials on R&D in the
FY 2002 budget, historical data and charts, and more information on
AAAS Report XXVI: Research and Development FY 2002, can be found
on the AAAS R&D Web site at http://www.aaas.org/spp/R&D,
or by calling 202-326-6607. )
AAAS R&D Budget and Policy Program
American Association for the Advancement of Science
1200 New York Ave, NW
Washington, DC 20005
(202) 326-6607
science_policy@aaas.org
http://www.aaas.org/spp/R&D
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