| R&D Trends and Special Analyses
(R&D by Function; Character of Work; Outyear Projections to FY 2009; "FS&T" Budget)
The Outyear Projections section was revised in
May with new DOD data
- Defense R&D continues to gain prominence in the federal R&D portfolio because of the high priority given military defense and homeland security by the Bush Administration. Defense R&D would total 57 percent of the federal R&D portfolio in FY 2005 at a record-breaking $74.7 billion, from near-parity with nondefense at the turn of the century (see Table I-4). There would be large increases for defense R&D (up 5.9 percent) and space R&D (up 5.5 percent to $10.4 billion) as NASA plans for the Space Shuttle's return to flight, resumed construction of the Space Station, and a return to the moon.
- The total federal investment in research (basic and applied research) would stay flat at $55.7 billion in FY 2005 (see Table II-1), in contrast to an increase for R&D as a whole because defense development activities would increase dramatically. NIH research would increase by $671 million or 2.5 percent, leaving non-NIH research collectively down by 1.9 percent and down even further if a large boost in DHS research is excluded. Seven of the 12 largest R&D funding agencies would see their research funding decline (see Table II-1).
- The AAAS analysis of the outyear projections in the FY 2005 budget shows that while nondefense R&D would increase from $56.0 billion this year to $60.5 billion by FY 2009, this would be a 0.5 percent cut after adjusting for expected inflation (see Table I-15). Large planned increases in NASA and DHS would offset steep planned cuts in all other nondefense R&D agencies. Defense R&D would climb to $77.0 billion in FY 2009, a 0.5 percent inflation-adjusted gain over FY 2004.
- The "Federal Science and Technology (FS&T)" budget 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. The Office of Management and Budget (OMB) created the FS&T budget as a successor to the Clinton Administration's "21st Century Research Fund." The FS&T budget would fall 0.4 percent to $60.4 billion in FY 2005 (see Table I-7).
R&D BY NATIONAL MISSIONS (BUDGET FUNCTIONS)
The federal government divides the budget into 20 "functional" groupings to illustrate national priorities, each with a function number. (AAAS separates the general science, space, and technology function (function 250) into its subfunctions of General Science (251) and Space (252). AAAS also counts Department of Veterans Affairs R&D programs in the health (550) function instead of veterans affairs (700).) The congressional budget resolution divides the total budget "pie" into functional "slices," which serve as non-binding guides for appropriators in allocating funds to agencies and programs. Viewing the R&D budget by function sheds light on the funding priorities assigned to different areas over time, and allows for international comparisons with other nations' spending on R&D by objective. Table I-4 shows R&D by function in the FY 2005 budget. (Chapter 1 discusses historical trends in the functional distribution of federal R&D.)
Although there is much talk of homeland security becoming a major new federal mission, in the budget homeland security spending is a category that cuts across spending on traditional government missions such as national defense, transportation, and justice. R&D in the new Department of Homeland Security (DHS), for example, serves the four missions of defense, general science, justice, and transportation. (See Chapter 12 for more information on the new DHS.) A new government-wide cross-cut shows that federal homeland security R&D would climb 15.9 percent to $4.2 billion in FY 2005 (see Table I-17), encompassing funding in mission areas such as defense, health, and agriculture.
The Bush Administration would once again, as it has since it took office, place a high priority on defense R&D, and would follow the January 2004 announcement of its vision for a human return to Mars as a steppingstone to Mars with increased emphasis on space R&D. Meanwhile, growth in health R&D, a past priority, would moderate. Both defense R&D (up 5.9 percent to $74.7 billion) and space R&D (up 5.5 percent to $10.4 billion) would increase substantially. R&D funding for many other national missions would decline (see Figure 1).
Defense (050) R&D, which includes R&D activities in the Department of Defense (DOD), the defense-related atomic energy activities of the Department of Energy (DOE), and defense-related programs in the Department of Homeland Security (DHS), has accounted for the majority of R&D for the past two decades. Nondefense and defense R&D almost reached parity in FY 2001, but in the aftermath of the September 11 terrorist attacks defense R&D has climbed sharply.
The Bush Administration would continue to widen the gap between defense and nondefense by aggressively expanding defense R&D investments to build up DOD capabilities to fight current and future wars (see Chapter 6 for more on DOD; see Chapter 9 for more on DOE's defense R&D). At $74.7 billion for FY 2005, the defense R&D investment would be a record in inflation-adjusted terms, and would also represent 57 percent of the total federal R&D portfolio.
Health (550) R&D would continue to be the dominant mission on the nondefense side as a result of the now-completed campaign to double the NIH budget between FY 1998 and FY 2003. Health-related R&D would total $30.0 billion in FY 2005, a modest increase of 2.7 percent coming after nearly 15 percent increases for each of the five years of the doubling campaign. Health R&D would make up a majority of the nondefense R&D portfolio and 22.8 percent of the total R&D portfolio, reflecting consistent growth in NIH's budget over the past few decades.
Space (252) R&D would be a beneficiary of the Bush Administration's January 2004 announcement of a space exploration vision to return humans to the Moon within the next decades and then possibly on to Mars. In FY 2005, NASA's space R&D would increase 5.5 percent to $10.4 billion, but most of the increase would be unrelated to the moon-and-Mars efforts but would reflect resumed construction of the Space Station in FY 2005 after the Space Shuttle returns to flight.
R&D funding for most of the other national missions would decline
or at best fall behind expected inflation (see Figure 1). There would
be steep cuts to commerce R&D (370; down 9.7 percent to $463 million)
because of the proposal to eliminate the Advanced Technology Program
(ATP) in the Department of Commerce. There would also be steep cuts
to environment (450) R&D (down 3.5 percent to $2.2 billion) and
agriculture (350) R&D (down 4.0 percent to $1.8 billion). Environmental
R&D would decline because of cuts to a broad portfolio of R&D
funding agencies including the Environmental Protection Agency (EPA),
the U.S. Geological Survey (USGS), and the National Oceanic and Atmospheric
Administration (NOAA). Agriculture R&D would decline primarily because
the Administration would not renew congressionally designated research
Statistics on federally funded R&D generally make distinctions among basic research, applied research, development, and R&D facilities and capital equipment-terms that describe the "character of work" in R&D programs. (See Appendix 2 for definitions.)
The figures shown in Tables I-5, I-6, and II-1 represent agencies' best attempts to classify basic and applied research, development, and R&D facilities within their R&D portfolios. The data reported here are imprecise and reflect the agencies' judgments as to how their R&D fits into the definitions for character of work. Table II-1 shows that basic research would increase 1.0 percent or $273 million to $26.8 billion in the FY 2005 budget, primarily because of a $480 million requested increase for basic research in NIH. NIH would provide the majority (57 percent) of federal basic research. Basic research excluding NIH would fall 1.8 percent or $207 million to $11.6 billion in FY 2005.
The total federal investment in research (basic and applied research) would increase an even more modest $116 million, or 0.2 percent, to $55.7 billion (see Table II-1), but excluding an increase for NIH all other federal research would fall 1.9 percent. NIH's research would increase modestly by 2.5 percent, but most other agencies would see cuts. DHS funding of research would increase dramatically by 152 percent to $431 million as DHS prepares to shift from a heavily development focus so far to a more balanced research and development strategy in the future. Seven out of the 12 largest R&D funding agencies would see their research funding decline.
Development would increase 7.4 percent to a record-breaking $71.4 billion
in FY 2005 because of an enormous infusion of funds for DOD's development
of weapons systems, including national missile defenses, new fighter planes,
and an array of other expensive future weapons systems (see Chapter
6 for more on DOD development).
The composition of the federal R&D portfolio has been shifting dramatically
over the years, as shown in Table I-5, primarily
because of declines in defense development in the post-Cold War era and
increases in NIH support of basic research. At the height of the Cold
War, development (mostly in DOD) made up nearly two-thirds of the federal
R&D portfolio, but now makes up only 54 percent, though that share
has been increasing in recent years. Basic research, meanwhile, has expanded
its share of the federal R&D portfolio from 14 percent in FY 1980
to 17 percent in FY 1990 to 20 percent in FY 2005, though not steadily;
in recent years, as DOD development has grown substantially, the share
of basic research in the total portfolio has declined slightly.
The FY 2005 budget also contains detailed projections for federal spending, as required by law, to FY 2009; they provide the detailed assumptions behind the Bush Administration's budget goal of reducing the deficit in half over the next five years. Although these projections are mostly extrapolations of current policies, they are a statement of the Bush Administration's budgetary priorities and their implications for the future of federal R&D. The AAAS analysis of these outyear projections reveals that the Bush budget would cut R&D funding for most agencies over five years in the drive to reduce the federal budget deficit, and that the steepest cuts would fall in FY 2006 after this year's elections.
Federal support for R&D is projected to increase from $126.5 billion this year to $137.5 billion in FY 2009, a slight (0.0 percent) increase after adjusting for expected inflation (see Table I-15). But the increases would be concentrated in the three high priority areas of national defense, homeland security, and NASA's space program. Most other R&D programs would see their funding decline dramatically over the next five years, with even modest increases in FY 2005 reversed the next year and remaining below current levels after that.
The nondefense R&D portfolio would increase from $56.0 billion this year to $60.5 billion in FY 2009, but after adjusting for expected inflation this would be a 0.5 percent cut. Excluding large proposed increases for NASA and DHS, however, and the remaining nondefense R&D portfolio would fall 6.7 percent over the time period. DHS would see its R&D budget climb from $1.1 billion this year to $1.2 billion next year, with small increases each year thereafter, resulting in a 25.0 percent boost over five years after adjusting for inflation.
NASA is in store for large increases over the next few years, but only for selected programs. Other NASA funding areas would see their R&D funding decline dramatically. 1/ NASA R&D would increase from $10.9 billion in FY 2004 to $14.4 billion in FY 2009 (up 21.9 percent after inflation). NASA plans a dramatic expansion of the Space Science program from $4.0 billion this year to $5.6 billion in FY 2009 (up 28.9 percent after inflation). NASA's new Exploration Systems program, which will begin to develop technologies necessary to return to the moon, would double from $1.6 billion to $3.3 billion over the next five years (up 85 percent after inflation). And the Space Station project would go from $1.5 billion this year to $2.1 billion in FY 2009 (up 30 percent). But other NASA programs would decline steeply over the next five years, including Earth Science (down 15.9 percent), aeronautics R&D (down 16.2 percent), and Biological and Physical Research (down 11.8 percent after inflation).
Nine out of the 12 largest R&D funding agencies would see their budgets fall in real terms in the Bush budget plans, with only DOD, DHS, and NASA staying ahead of inflation.
Every other R&D funding agency would see its funding fall, often dramatically, in the drive toward a reduced budget deficit. Even a past favorite such as NIH would see its R&D funding rise modestly in FY 2005 to $27.9 billion, but then fall to $27.4 billion in FY 2006 and increase only slowly thereafter, never returning to the FY 2005 funding level. Over five years, NIH R&D would fall 5.8 percent after adjusting for inflation; because NIH's biodefense research would increase during that time, non-biodefense NIH programs would lose more than 7 percent over the next five years. NSF R&D would also rise slightly next year to $4.2 billion, but then fall to $4.1 billion in FY 2006 and never recover lost ground, ending up 4.7 percent below this year's funding level by FY 2009 after inflation.
Other agencies would see even more dramatic reductions in their R&D portfolios. DOE's Office of Science, which has already seen its budget stagnate for the past four years, would see its R&D portfolio decline from $3.2 billion to $3.1 billion in FY 2009, a cut of 9.5 percent after inflation. U.S. Department of Agriculture R&D would fall 11.3 percent; Commerce R&D would fall 13.6 percent; R&D in the U.S. Geological Survey would fall 13 percent; and EPA's R&D portfolio would plummet 15.0 percent over the coming five years.
Projections, of course, are always wrong. They are not predictions. The
FY 2005 appropriations process is just now getting under way in a Congress
with different priorities than the President, and future appropriations
will be decided one year at a time. But the projections illustrate the
real costs associated with reducing the budget deficit almost exclusively
by restraining growth in domestic discretionary spending rather than a
balanced mix of entitlements reductions, increasing revenue, domestic
spending cuts, and defense / homeland security cuts. While the specific
reductions contained in the budget are not inevitable, cuts of similar
scale will be almost inevitable if Congress follows through on the general
outlines of reducing the deficit by cutting domestic spending while refusing
to consider other budget options.
THE "FEDERAL SCIENCE AND TECHNOLOGY (FS&T)" BUDGET
Three years ago, the Office of Management and Budget (OMB) introduced a new "Federal Science and Technology" (FS&T) budget in the FY 2002 budget, and continues to advance this concept in the FY 2005 budget (see Table I-7). The FS&T budget is successor to the Clinton Administration's "21st Century Research Fund" (see previous editions of this report) 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 and an alternative way to track federal S&T investments in the budget process. (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 (NAS) as a subset of federal R&D; thus, the data in Table I-7 differ from NAS discussions of its version of FS&T in previous editions of this report.)
Because of the tight situation for domestic discretionary programs
in the FY 2005 budget, FS&T would fall 0.4 percent to $60.4 billion
in FY 2005; excluding a $729 million increase in the NIH budget, funding
for all other FS&T programs would collectively fall by 3.0 percent
in the FY 2005 budget proposal.
1/ For a program-by-program look at the outyear projections, please see the detailed analysis of projected R&D, available on the AAAS Web site at http://www.aaas.org/spp/rd in the "Guide to R&D Funding Data - Outyear Projections" section.