On December 8, 2004,
President Bush signed the fiscal year (FY) 2005 omnibus appropriations bill
into law and thus completed the FY 2005 federal budget process. The omnibus
bill bundled together 9 of the 13 FY 2005 appropriations bills; the other bills
providing funding for the Departments of Defense (DOD) and Homeland Security
(DHS) were signed into law earlier. The omnibus bill throws together $388
billion in discretionary spending and is filled with budgetary tricks to fit
under congressional budget targets, including a 0.80 percent across-the-board
cut for all programs in the bill. In FY 2005, domestic discretionary programs
face a new austerity of flat funding overall after several years of generous
Because of large increases for defense and
homeland security, the FY 2005 budget provides a record-setting $132.2
billion federal research and development (R&D) investment in FY 2005,
a $6.0 billion or 4.8 percent increase. 80 percent of the increase goes
to defense R&D programs, primarily for the development of new weapons
systems. The nondefense R&D investment rises by $1.2 billion or 2.2
percent to $57.2 billion, better than the 1 percent increase overall for
domestic programs but far short of increases in previous years. Most R&D
funding agencies see modest increases, but the National Science Foundation
(NSF) sees its recent gains reverse with a cut in its R&D funding.
Highlights of Federal R&D in FY
(All figures are adjusted to reflect an across-the-board cut of 0.80 percent
for most agencies, and additional across-the-board cuts for selected agencies
in the omnibus bill and other bills.)
Figure 1. (click on the image for PDF)
- The federal investment in R&D hits a new record of $132.2 billion in FY
2005, a $6.0 billion or 4.8 percent increase over FY 2004 (see
Table 1 and Figure 1). Congress provided $1.5 billion more than the
Bush Administration request, entirely on the defense side of the portfolio.
This is the ninth year in a row that the federal R&D investment has
increased in real (inflation-adjusted) terms (see Figure 1).
- The nondefense
R&D investment rises by $1.2 billion or 2.2 percent to $57.2 billion,
better than the 1 percent increase overall for domestic programs but far
short of increases in previous years (see Figure 1). After five years
of 15 percent increases that ended last year with a 3 percent boost, National
Institutes of Health (NIH) budget growth slows down even further to just
2 percent this year. Although the total NASA budget increases by 4.5 percent
to $16.1 billion, the bulk of the increase goes to returning the Space
Shuttle to flight, leaving NASA R&D up just 2 percent. But the National
Science Foundation (NSF) sees its R&D funding fall by 0.3 percent
to $4.1 billion, for the first cut in its R&D budget since 1996.
- Defense-related R&D in DOD, DHS, and the Department of Energy (DOE)
gets 80 percent of the $6.0 billion increase to federal R&D. Total defense R&D climbs 6.8 percent or
$4.8 billion to another all-time high of $75.0 billion and makes up
56.7 percent of the total federal R&D portfolio (see Table
3). Weapons systems development in DOD once again accounts for nearly
all of the increase (up $3.6 billion to $56.7 billion), but Congress also
rewarded DOD’s “S&T” activities in research and early technology development
with a nearly $1 billion or 7.9 percent increase to $13.6 billion. DOE
defense R&D increases a modest 1.2 percent to $4.3 billion; Congress
rejected DOE requests for funds to develop a new generation of nuclear
weapons, including ‘bunker buster’ tactical nuclear weapons.
- Homeland security R&D, spanning both defense and nondefense activities,
received large increases for FY 2005. The final DHS budget provides
$1.2 billion for DHS R&D activities in FY 2005, a 20 percent boost
over last year (see Table 1). Homeland security-related
R&D in the U.S. Department of Agriculture (USDA) and the National
Institutes of Health (NIH) also received increases to bring total homeland
security R&D to an estimated $4.1 billion in FY 2005.
- The total federal research investment (basic
and applied) increases 2.5 percent to an estimated $57.0 billion because
of large increases in the defense and homeland security research portfolios.
Growth in other agencies’ research portfolios slows down considerably
or reverses compared to recent years (see Table
2). The federal development investment, however, continues recent
trends with another dramatic boost (of 6.5 percent) to $70.5 billion,
almost exclusively in defense. Major construction projects in NASA, USDA,
and NIH boost the R&D facilities investment by 7.8 percent to $4.7
- The National
Science Foundation’s (NSF) budget actually declines in FY 2005 down to
$5.5 billion, $105 million or 1.9 percent less than last year. NSF’s
R&D programs decline 0.3 percent to $4.1 billion (see Table
1 and Figure 2).
There are some winners in the nondefense R&D portfolio. USDA
R&D does far better than expected at $2.4 billion, a 7.8 percent increase
in contrast to a requested cut because of new food safety and animal health
R&D investments and $239 million in unrequested R&D earmarks.
National Oceanic and Atmospheric Administration (NOAA) R&D climbs
10.7 percent to $684 million because of congressional support for the
U.S. Commission on Ocean Policy’s recommendations to expand federal support
of ocean-related R&D. National Institute of Standards and Technology
(NIST) support of its intramural laboratory R&D increases 16.2 percent
to $328 million; NIST’s Advanced Technology Program (ATP) won another
reprieve from Administration plans to eliminate it but endures a 24 percent
cut in its budget.
- Overall, nondefense R&D does better than total domestic spending,
with modest increases for many agencies; still, some agencies face cuts
in R&D funding (see Figure 2).
The Department of Energy’s (DOE) Office of Science receives a boost
of 4.3 percent to $3.3 billion for its R&D programs, but DOE’s energy
R&D falls to $1.3 billion. R&D in the U.S. Geological Survey (USGS)
falls 0.3 percent to $545 million, although Congress reversed most of
the Administration’s proposed cuts. Congress rejected the Administration’s
proposal to eliminate the Advanced Technology Program, but R&D in
the National Institute of Standards and Technology (NIST) in Commerce
still declines 0.5 percent because of cuts to the ATP budget. R&D
in the Environmental Protection Agency (EPA) declines 2.8 percent; EPA
and NSF are funded through the VA-HUD appropriations bill, where increases
for veterans, housing and space priorities squeezed out other funding.
Figure 2. (click on the image for PDF)
- The current focus on defense and homeland security results in large increases
for defense and justice R&D, and modest increases or cuts for most
of the other national missions (see Table
3). Defense R&D (including DOD, DOE’s defense activities, and
a large part of the DHS R&D portfolio) rises $4.8 billion or 6.8 percent
to $75.0 billion for a record total driven by substantial boosts to defense-related
development activities in DOD and DHS. DHS R&D increases dramatically,
resulting in a 9.4 percent boost for justice R&D to $727 million.
After several years of near-parity between defense and nondefense R&D
around the turn of the century, defense R&D pulls ahead to 56.7 percent
of total federal R&D. Because of the tremendous growth in defense
and health R&D over the past few years, R&D for all other national
missions has steadily shrunk to less than 21 percent of the federal R&D
portfolio in FY 2005.
The FY 2005
R&D Budget in Historical Context
The FY 2005 budget leaves key
R&D programs with flat budgets for the better part of the past decade. As
Figure 3 and Figure 4 show, both the defense and nondefense R&D investments
are at record highs in FY 2005, but these totals disguise flat or declining
funding for several areas.
Figure 3. (click on the image for PDF)
Figure 4. (click on the image for PDF)
For defense R&D, Figure 3
shows that nearly all of the increases in the past few years to defense R&D
have been in weapons systems development, “6.4” or higher in the DOD
classification system. DOD’s S&T investments (“6.1” through “6.3”),
comprising basic and applied research and technology development, are just
barely at an all-time high in FY 2005, finally returning to late 1980s funding
levels after 15 years of post-Cold War cuts and recent increases. The S&T
accounts fund all of DOD’s investments in research, including key federal
contributions to the support of the physical sciences, engineering, and other
research fields. But DOD spending on weapons development has far outpaced
S&T budget growth in recent years, both in percentage terms and in dollars.
R&D, record-setting funding levels are primarily a legacy of the recently
completed campaign to double the NIH budget between 1998 and 2003, as
shown in Figure 4, and secondarily the addition of DHS to the R&D
portfolio two years ago. All the other nondefense R&D funding agencies
collectively have seen their budgets remain flat for more than a decade
(see the red bars in Figure 4), even as the U.S.
economy, the federal budget, and the U.S.
population have all boomed during that time. Recent increases in nondefense
R&D have served only to recover the lost ground of the mid-1990s when
discretionary spending declined in the push to balance the federal budget.
These non-NIH agencies, combined with DOD’s research investments, fund
nearly all of the federal investment in non-biomedical research, including
the physical sciences, non-medical life sciences, environmental sciences,
engineering, mathematics, computer sciences, and social sciences. The
addition of DHS to the R&D portfolio has had little impact on federal
research support so far since most of the DHS portfolio goes to development.
Figure 5. (click on the image for PDF)
Because of stagnant funding
for DOD research and non-NIH nondefense R&D, federal support for non-biomedical disciplines has remained stagnant for
more than a decade (see Figure 5), and the FY 2005 budget does little
to change the trend. Federal support of research in the physical sciences,
engineering, and the environmental sciences in particular has lagged far
behind U.S. economic growth, resulting in steady declines in support for
these disciplines as a share of the U.S. economy.
R&D Issues: Earmarks
Although the Bush Administration
made restraining congressional earmarks a high priority in its first few
budgets, this earmark-fighting zeal has dwindled to zero. President Bush has
never used his veto power, and has signaled his willingness to accept whatever
appropriations bills come his way as long as they meet his overall budget
targets. And until recently, his budget targets have left plenty of room for
earmarks. The President and the last two Congresses have also presided over
some of the largest increases in discretionary spending in history; for the
first three years of his term, discretionary spending has increased by more
than 10 percent a year. By most accounts, total earmarks have surged
dramatically during this time, including R&D earmarks. In FY 2005,
discretionary spending growth slows to nearly zero on the domestic side but
still surges on the defense side. Not surprisingly, perhaps, R&D earmarks
grow dramatically in DOD but fall slightly for all other agencies combined.
R&D earmarks total $2.1 billion in FY 2005, exceeding $2 billion for
the first time (see Table A). Although these projects amount to only
1.6 percent of total R&D, they are concentrated in a few key agencies
and programs (see Table A and Figure 6).
Four agencies (the U.S. Department of Agriculture (USDA; $239 million),
the National Aeronautics and Space Administration (NASA; $217 million),
the Department of Energy (DOE; $274 million) and the Department of Defense
(DOD; $1.0 billion) receive 85 percent of the total R&D earmarks.
Because of growth in DOD’s share, the ratio is higher than the 80 percent
share for these four agencies in FY 2004.
FY 2005 earmarks
are up 9 percent from $1.9 billion in FY 2004, after a 32 percent increase
last year compared to 2003 (see Table A and
Figure 6). Within a record R&D
investment of $132.2 billion in FY 2005, up 4.8 percent, R&D earmarks
grow far faster than R&D spending as a whole. The increase is due
to an explosion in R&D earmarks in the Department of Defense (DOD),
which sees its earmarked projects top $1 billion for the first time, up
25 percent from $825 million in FY 2004.
The share of the
R&D portfolio that is earmarked rises to 1.6 percent from 1.5 percent
last year. But because these earmarks are highly concentrated, earmarks
make up 1 out of every 5 program dollars in some R&D programs and
1 out of 4 in one USDA program.
The USDA earmarks include $148 million, up dramatically from last year,
for nearly 240 itemized extramural research projects, mostly in the Special
Research Grants program, with another $11 million allocated in the Agricultural
Research Service (ARS) for intramural research projects. R&D earmarks
total 24 percent of all extramural R&D in the Cooperative State Research,
Education, and Extension Service (CSREES), making these a significant
drain on resources that might have gone to competitively awarded research
grants. The NASA projects totaling $217 million are
up 12 percent from last year, and are found mostly in five programs within
the agency’s Science, Aeronautics and Exploration (SAE) account. Earmarks
make up 20 percent of total R&D in Academic Programs, and smaller
percentages in the other four programs. DOE
R&D earmarks decline slightly from last year but remain at a high
$274 million, double the FY 2003 total. The Office of Science (OS) budget
contains $78 million in R&D earmarks in FY 2005. All of these earmarks
are in the Biological and Environmental Research (BER) program; earmarks
account for 14 percent of the BER budget and leave core BER R&D programs
with little to no increase in FY 2005 even as overall OS R&D increases
by 4.3 percent.
Figure 6. (click on the image for PDF)
The DOD budget contains $1.0 billion in R&D earmarks, an enormous
increase of 25 percent over last year, but only 1.5 percent of the total
R&D budget because of the size of the DOD R&D investment. Clearly, in a
fiscal environment where defense spending is half of all discretionary spending
and the only mission to receive a large increase, DOD becomes an attractive target
for earmarks. The earmarks are mostly small ($10 million or less) projects, but
significantly most are for research rather than development, squeezing basic
research and applied research budgets. Earmarks for “6.1” (basic research)
programs total $34 million, or 2 percent of the total; “6.2” (applied research)
earmarks are $270 million, or 5 percent of the total because of a large number
of medical research projects; and “6.3” earmarks are $318 million or 4.7
percent of the total. Earmarks in the “6.4” or higher categories of DOD R&D
are $407 million, a large dollar total but only 0.7 percent of the total
Some agencies remain
earmark-free. The National Science Foundation (NSF), the National Institutes
of Health (NIH), and the new Department of Homeland Security (DHS) all
remain earmark-free in FY 2005. Traditionally, NIH and NSF’s research
accounts have been free of earmarks, although in some years NSF construction
projects are earmarked. FY 2005 is only the second year of appropriations
for DHS; so far, Congress has not earmarked R&D projects in DHS, although
this year earmarks appear in other parts of the DHS budget.
With the fiscal
situation on the nondefense side unlikely to get better in the FY 2006
budget, congressional appropriators will have to square constituent demands
for earmarked funds against tight spending targets. With the Bush Administration
unlikely to expend political capital against earmarking, the push for
earmarking the R&D budget will not abate in the FY 2006 budget; the
only constraint appears to be the balance between earmarks and other spending.
more agency details of R&D earmarks, please see the special R&D
Earmarks in the FY 2005 Budget analysis on the AAAS
R&D web site.)