2 - Overview of R&D Trends

2

Overview of R&D Trends (continued)

Figure 1.

Figure 2.

Trends in Total R&D

Table 1 summarizes congressional action on R&D funding by agency. Six-year trends between FY 1994 and FY 2000 are discussed to illuminate the impacts of the 104^th, 105^th, and 106^th Congresses on R&D (see Table A and Figure 2). FY 1994 was chosen as the starting point because it is the last fiscal year before the new Republican-controlled Congress and the President began cutting discretionary spending in earnest to balance the budget. Most civilian R&D funding agencies saw their R&D budgets peak in that year, although increases in the past three years have allowed them to inch back toward peak funding levels.

Total federal support for R&D in FY 2000 increases substantially to $83.3 billion, $4.0 billion or 5.0 percent more than FY 1999, primarily because of large increases for the Department of Defense (DOD) and the National Institutes of Health (NIH). There are increases in R&D funding for most agencies, but some receive increases less than the rate of inflation or even cuts in their R&D programs (see Figure 1 and Table 1). The National Institutes of Health (NIH) receives its largest dollar increase in history, a nearly $2.2 billion or 14.4 percent increase in its R&D budget to $17.1 billion, but $3 billion is withheld until the end of September 2000. Department of Defense (DOD) R&D totals $39.1 billion, an increase of $1.1 billion or 3.0 percent, including an 11.0 percent increase to $8.7 billion for DOD's "S&T" programs ("6.1" through "6.3").

The FY 2000 R&D total is $5.4 billion above the President's request. Final FY 2000 appropriations for DOD's R&D exceed the request by more than $4.0 billion because of strong congressional support for increased defense spending after more than a decade of cuts. Congress awarded NIH $1.8 billion more for R&D than it had requested. Most other agencies received less for their R&D programs than requested.

· Nondefense R&D totals $40.9 billion, an increase of 7.1 percent or $2.7 billion over FY 1999, the first time the federal civilian investment exceeds $40 billion. Nearly all of the substantial increase is due to a $2.2 billion or 14.4 percent boost for NIH R&D. Excluding NIH, however, nondefense R&D rises only 2.4 percent or $555 million to $23.7 billion, barely ahead of the expected inflation rate of 2.0 percent. Funding for nondefense R&D in FY 2000 is 12.1 percent higher than the FY 1994 level in inflation-adjusted terms, but this is due to increases for NIH. Figure 2 shows that if NIH is excluded, nondefense R&D is 4.4 percent below the FY 1994 level because most non-NIH civilian R&D funding agencies¾ except for the National Science Foundation (NSF)¾ have less in FY 2000 in inflation-adjusted terms than they did in FY 1994.

· After a decade of cuts or only modest increases, total defense R&D increases $1.3 billion or 3.1 percent to $42.5 billion. The "Science and Technology" portion of DOD's budget (encompassing basic and applied research plus exploratory technology development) increases by 11.0 percent to $8.7 billion, including $274 million for congressionally designated medical research. The FY 2000 increase begins to reverse years of decline in DOD S&T, which provides significant portions of total federal support for engineering and physical sciences research.

Basic research is a high priority in FY 2000 appropriations. Table 2 shows that federal support for basic research is expected to total $19.1 billion in FY 2000, an increase of $1.8 billion or 10.6 percent. The increases, however, go mostly to life sciences and medical research funded by NIH. Although the total for basic research is $1.0 billion higher than the request, the President's plan would have spread increases more evenly among the agencies. Nevertheless, NSF, the second-largest supporter of basic research and the largest supporter of most non-life sciences disciplines, sees its basic research increase by 6.0 percent to $2.5 billion. The National Aeronautics and Space Administration's (NASA) basic research increases by 18.0 percent to $2.5 billion, but mostly because of a reclassification of existing work from applied to basic research. DOD, the primary supporter of basic research in engineering, mathematics, and computer sciences, sees its basic research ("6.1") rise by 5.4 percent to $1.2 billion.

In FY 2000, NIH provides, for the first time, a majority of federal support for basic research. NIH also provides two-thirds of all federal support for R&D at colleges and universities, a proportion that will almost certainly increase in FY 2000.

FY 2000 appropriations show a clear priority for health-related R&D when the total federal R&D portfolio is considered by national mission (see Table 3). Health R&D surges by 14.1 percent to $18.7 billion because of large increases not only for NIH but for other R&D funding agencies in the Department of Health and Human Services (HHS). Defense-related R&D increases by $1.3 billion or 3.1 percent to $42.5 billion; once again, it accounts for a majority of the federal R&D portfolio, although the Clinton Administration's FY 2000 request would have made nondefense R&D more than half of the portfolio for the first time since FY 1980. Energy-related R&D increases significantly by 9.3 percent to $1.3 billion because of last-minute boosts to DOE support of fossil energy and energy conservation R&D. Other mission areas receive modest increases or cuts; natural resources and environment R&D declines 0.9 percent to $2.1 billion because of cuts in R&D funding in the Environmental Protection Agency (EPA) and the Department of the Interior.

The Clinton Administration presented a "21st Century Research Fund" in the FY 2000 request, as it did in FY 1999, to highlight programs that it considers important to the nation's science and technology enterprise. The Fund highlights both R&D and non-R&D items while excluding large parts of the nation's R&D portfolio (primarily in development). Table 1 summarizes appropriations for the Fund, which total $39.9 billion in FY 2000, 7.9 percent or $2.9 billion more than FY 1999. "FS&T," another alternative measure of the federal investment in science and technology developed by the National Academy of Sciences, totals $52.1 billion (up 7.7 percent; see Table 1).

Information technology (IT) research was a high priority for the Clinton Administration in the FY 2000 request. The Administration proposed $366 million for a new six-agency Information Technology for the 21st Century (IT²) initiative to support long-term fundamental research in IT. Though not labeled as IT², new fundamental IT research activities receive $235 million, including $126 million for NSF and $60 million for DOD. DOE, however, did not receive any funds for IT² or similar activities, although it requested $70 million.