GUIDE TO R&D FUNDING DATA-
THE PRESIDENT'S PROPOSED FY 2007 BUDGET

Current Headlines

President Bush Proposes $2.8 Trillion Budget for Fiscal Year 2007

On February 6, President Bush released his proposed budget for fiscal year (FY) 2007 and offered the same themes as in previous years: big increases for defense and homeland security, trims in some entitlement programs, proposed extensions of expiring tax cuts, and a promise to reduce the budget deficit by cutting domestic discretionary spending. But in a striking change from the flat or declining funding of recent years, the President proposes substantial increases for key physical sciences and engineering programs. The AAAS Analysis of R&D in the FY 2007 Budget offers details of the President's budget for FY 2007 and R&D funding in the budget.

The AAAS R&D Budget and Policy Program also offers an online tutorial on the U.S. federal budget process. This tutorial is adapted from an "Introduction to the Federal Budget" seminar presented by Kei Koizumi, Director of the R&D Budget and Policy Program, to various audiences. The tutorial is designed to introduce audiences to the U.S. federal budget process, especially as it relates to federal R&D funding. The tutorial will be updated soon with the latest FY 2007 budget information

Click here to begin the budget tutorial

- March 8, 2006

August 22 - Online Tutorial on the U.S. Federal Budget Process (will be revised soon)

Budget Highlights:

President Bush released his proposed fiscal year (FY) 2007 budget on February 6. This budget goes to Congress for approval. Below are selected tables and charts based on data from the FY 2007 budget documents. (FY 2007 begins on October 1, 2006.)

The data below are for the proposed budget only, and do not reflect congressional action. The complete set of budget documents is available on-line from the Office of Management and Budget in the Executive Office of the President, or in printed form from the Government Printing Office. This page presents data only for the overall federal budget. Please see our FY 2007 R&D page for our analyses of R&D funding proposals contained within the federal budget. For information specifically on R&D in the federal budget, please go to the next section of the Guide.

The first table presents an overview of the FY 2007 budget by broad category of spending (discretionary, Social Security, Medicare, etc.), including comparisons of the FY 2007 budget with the most recent estimates for FY 2006. It shows that two-thirds of the budget is for mandatory programs (net interest and entitlement programs), leaving just one-third of the budget for discretionary spending (annually appropriated programs) out of which nearly all federal R&D is funded.

-Table I-2. The President's FY 2007 Budget (2/06)

The chart below displays the same information in pie chart form.

-Chart. The President's FY 2007 Budget by Category (2/06)

The chart below shows that the majority of federal revenues come from individuals through payroll taxes and income taxes. Revenues do not cover all spending, so the government will run a deficit and borrow money.

-Chart. The President's FY 2007 Budget by Source of Funds (2/06)

The FY 2007 budget also contains projections for spending in budget categories out to FY 2011. Growth in entitlements is expected to continue unchecked, while discretionary spending would decline in real terms. Interest on the national debt, once expected to disappear, would continue to be a large expense because the government will continue to run deficits.

-Chart. Federal Budget by Category, FY 2005-2011 (2/06)

The budget proposes to cut overall discretionary spending in FY 2007, in sharp contrast to rapid growth in recent years. But the FY 2007 proposals allot nothing for future costs of occupying Iraq and Afghanistan and restrain nondefense, non-homeland security spending with a cut of nearly 1 percent in FY 2007. The Bush Administration proposes to restrain spending growth in future years, also.

-Chart. Trends in Discretionary Spending, FY 1976-2011 (2/06)

Historical data in the budget show that mandatory programs have grown steadily as a share of the federal budget, and discretionary spending declined until recent years, but the discretionary share of the federal budget is now increasing (especially defense) and is expected to continue to increase moderately to FY 2011.

Table I-3. Historical Trends in R&D and Federal Outlays (2/06)
Chart. Distribution of Federal Outlays by Category, 1970-2011 (2/06)

Other historical data in the charts below highlight budget deficits or surpluses, the national debt in dollars and as a share of GDP, and federal spending and revenues as a share of the economy. In the past several years, budgets have gone from deficits to surpluses, but because of the recession, tax cuts, homeland security costs, and wars in Iraq and Afghanistan, the federal budget deficit has hit all-time highs in recent years. Future projections exclude many costs, such as future costs of the occupation of Iraq and Afghanistan and extensions of expiring tax cuts. The government had begun to pay down the national debt to the public in the late 1990s, but with the return of deficits the government is adding to the national debt again. The government will continue to accumulate government-held debt, mainly debt held by the Social Security trust fund.

At the same time, federal spending as a share of the economy has increased in recent years, while federal revenues have declined as a share of the U.S. economy because of increased spending on one side and proposed and enacted tax cuts on the other. Cuts in personal income taxes have contributed the most to recent declines in federal revenues.

The discretionary portion of the budget funds programs with a variety of missions, though the largest single mission remains national defense. Discretionary spending is appropriated each year through 11 appropriations bills of varying sizes. The chart below shows discretionary spending by appropriations bill.

-Chart. Discretionary Spending by Appropriations Bill, Proposed FY 2007 (2/06)

R&D is a significant but declining part of the federal budget. Nearly all federal R&D is funded through the discretionary portion of the budget, and although R&D has remained relatively constant as a share of all discretionary spending, R&D has declined as a proportion of the total budget as the discretionary share of the budget has declined. (For more information on R&D in the federal budget, please go to the next section of this Guide.)

-Chart. R&D as Percent of the Federal Budget: FY 1962-2007 (2/06)
-Chart. R&D as Percent of Discretionary Spending: FY 1962-2007 (2/06)

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