AAAS R&D Funding Update March 10, 2000 (revised March 23 - revisions in italics)

AAAS Analysis of Outyear Projections for R&D in the FY 2001 Budget

FY 2001 Budget Projects Future Increases for R&D Programs

Go to: -Highlights -Projections for Federal R&D to FY 2005 -Table 1. AAAS Analysis of the Outyear Projections for R&D in the FY 2001 Budget -Table 2. Discretionary Spending Proposals in the FY 2001 Budget Supplemental Materials: DETAILED TABLE. Projected Effects of President's FY 2001 Budget on Nondefense R&D (3/00) - DETAILED TABLE. Projected Effects of President's FY 2001 Budget on Defense R&D (3/00) PDF version of this document

(The figures in this analysis have been revised since the February release of a preliminary analysis of R&D in the FY 2001 budget and the original version of this analysis, and reflect final AAAS FY 2001 figures. Revisions since the original March 10 version of this analysis are in italics. This is a preview of AAAS Report XXV: Research and Development FY 2001, a comprehensive look at the President's budget for R&D in FY 2001, which will be released at the 25th Anniversary AAAS Colloquium on Science and Technology Policy, April 11-13, 2000. More information on the report and the Colloquium can be found at the end of this analysis.) In early February, President Clinton announced his proposed budget for fiscal year (FY) 2001. Included in the budget were his proposals for federal support of R&D (for details, please see the AAAS Preliminary Analysis of R&D in the FY 2001 Budget, and the forthcoming AAAS Report XV: R&D FY 2001). The budget request also contains detailed projections for federal spending to FY 2005. Although these projections are only extrapolations of current policies, they are a statement of current Administration priorities and their implications for the future. The AAAS analysis of these outyear projections reveals that the Clinton Administration is anticipating real increases for most nondefense R&D programs to FY 2005. By contrast, last year's budget projected declines in most R&D programs. Highlights Federal support for R&D is projected to increase from $83.3 billion in FY 2000 to $87.1 billion in FY 2005, which becomes a decline of 5.3 percent after adjusting for expected inflation (see Table 1). The overall decline is due to projected cuts in defense R&D over the next five years. By FY 2005, defense R&D would fall 13.7 percent in inflation-adjusted terms (see Figure 3). Nondefense R&D, however, would increase under the President's proposals from $40.8 billion in FY 2000 to $46.5 billion in FY 2005, a gain of 14.2 percent. After adjusting for expected inflation, the five-year gain becomes 3.4 percent, in contrast to a projected 6.7 percent cut over five years in last year's budget. Total discretionary spending would grow over the next five years in the President's budget, allowing for increases in most discretionary programs, including R&D. Discretionary spending would increase from $592 billion in FY 2000 to $668 billion in FY 2005, up 2.2 percent after adjusting for expected inflation (see Table 2). In past years, the Clinton Administration was constrained in drafting its discretionary proposals by discretionary spending caps signed into law in 1990 and extended in 1997. The FY 2001 budget proposes a new set of caps for FY 2001 extending to FY 2010. These new caps allow for sustained increases in discretionary programs over the next several years. Included in the projections for R&D are some surprising increases for agencies and programs long accustomed to declining outyear budgets. National Aeronautics and Space Administration (NASA) R&D would increase from $9.8 billion in FY 2000 to $11.5 billion in FY 2005 (up 6.1 percent after inflation; see Figure 1). The increase is even larger for key R&D programs: NASA plans a dramatic expansion of the Space Science program from $2.2 billion in FY 2000 to $3.6 billion in FY 2005 (47.8 percent after inflation), including a full complement of Mars exploration missions. R&D in Aero-Space Technology would double from $1.1 billion to $2.3 billion (up 85.4 percent after inflation) because of accelerated efforts to develop a new generation of reusable launch vehicles. Figure 1.(click on the chart to view a full-screen PDF version) Most other programs' projections generally show growth in FY 2001 and smaller increases at the rate of inflation thereafter, consistent with the pattern for discretionary spending as a whole (see Table 1 and Figure 1). The National Science Foundation's (NSF) R&D would jump by almost 20 percent in FY 2001 but would increase only slightly thereafter to end up 15.0 percent above the FY 2000 level after adjusting for inflation. National Institutes of Health (NIH) R&D would increase by nearly $1 billion between FY 2000 and FY 2001 but would take four years to increase by another $1 billion, for a five-year increase of 1.6 percent after inflation. Projections for Federal R&D to FY 2005 Federal support for R&D is a high priority for the Clinton Administration in the FY 2001 budget. After several years of projections of declining R&D, this year's projections show that most nondefense R&D programs would either increase or at least stay even with inflation to FY 2005. Although these projections are only extrapolations of current policies, they are a statement of current Administration priorities and their implications for the future. The AAAS analysis of these outyear projections reveals that, because of the expectation of growing surpluses and a decision to use some of these surpluses for additional discretionary spending, the Clinton Administration is anticipating real increases for most nondefense R&D programs to FY 2005. By contrast, last year's budget projected declines in most R&D programs. Federal support for R&D is projected to increase from $83.3 billion in FY 2000 to $87.1 billion in FY 2005, which becomes a decline of 5.3 percent after adjusting for expected inflation (see Table 1). The overall decline is due to projected cuts in defense R&D over the next five years. By FY 2005, defense R&D would fall 13.7 percent in inflation-adjusted terms even as total defense spending would rise, consistent with past Clinton Administration budgets which also called for declining defense R&D. Nondefense R&D, however, would increase under the President's proposals from $40.8 billion in FY 2000 to $46.5 billion in FY 2005, a gain of 14.2 percent. After adjusting for expected inflation, the five-year gain becomes 3.4 percent, in contrast to a projected 6.7 percent cut over five years in last year's budget. To understand these projections, one must view them in the context of the entire federal budget. Nearly all federal R&D is funded through the discretionary one-third of the budget subject to annual appropriations. The FY 2001 budget proposes to increase total discretionary spending by 5.2 percent in FY 2001 and at a rate high enough to keep pace with expected inflation thereafter, from $592 billion in FY 2000 to $668 billion in FY 2005, a 2.2 percent inflation-adjusted increase (see Table 2). Defense spending would rise from $294 billion in FY 2000 to $332 billion in FY 2005 (up 2.4 percent after inflation). Nondefense discretionary spending would rise from $298 billion in FY 2000 to $335 billion in FY 2005 (up 2.0 percent after inflation), with real increases for most nondefense program areas. Transportation spending is projected to rise 11.4 percent after inflation over five years, while education and training spending would rise 10.0 percent after inflation. Figure 2 (click on the chart to view a full-screen PDF version). These projected increases in total discretionary spending are a marked improvement from last year's budget projections because for the past several years, the Administration's proposals were constrained by discretionary spending caps enacted in 1990 and extended in 1997 that mandate tight restrictions on discretionary spending. The caps are law until FY 2002, but instead of maneuvering to fit his discretionary proposals under them, the President proposes new discretionary spending caps in the FY 2001 budget that would provide room for discretionary increases (see Figure 2). Although increases in defense spending would be reserved for non-R&D programs, on the nondefense side R&D programs would share in the overall increases. Because of favorable budget projections, the President's budget anticipates that even after increasing discretionary spending, providing tax cuts, and expanding Medicare, the federal government would continue to run budget surpluses for the foreseeable future. Included in the projections for R&D programs are some surprising increases for agencies and programs long accustomed to declining outyear budgets. NASA R&D would increase from $9.8 billion in FY 2000 to $11.5 billion in FY 2005 (up 6.1 percent after inflation). The increase is even larger for key R&D programs because the International Space Station would see its R&D budget halved over the next five years as development and construction are completed, leaving more room for other programs. NASA plans a dramatic expansion of the Space Science program from $2.2 billion in FY 2000 to $3.6 billion in FY 2005 (47.8 percent after inflation), including a full complement of Mars exploration missions. NASA R&D in Aero-Space Technology would double from $1.1 billion to $2.3 billion (up 85.4 percent after inflation) because of accelerated efforts to develop a new generation of reusable launch vehicles. Other programs slated for dramatic increases include: Industrial Technology Services in the National Institute for Standards and Technology (NIST; up 60.8 percent after inflation) because of a new Institute for Information Infrastructure Protection and increases for the Advanced Technology Program; and the Department of Energy's (DOE) Energy Supply R&D (up 23.3 percent after inflation) for solar, renewable, and nuclear energy R&D. Most other programs' projections generally show growth in FY 2001 and smaller increases at the rate of inflation thereafter, consistent with the pattern for discretionary spending as a whole. NSF's R&D would jump by almost 20 percent in FY 2001 but would increase only slightly thereafter to end up 15.0 percent above the FY 2000 level after adjusting for inflation. NIH R&D would increase by nearly $1 billion between FY 2000 and FY 2001 but would take four years to increase by another $1 billion, for a five-year increase of 1.6 percent after inflation. DOE Science programs would see a large increase in FY 2001 and flat funding thereafter, for a 2.2 percent increase after inflation to FY 2005. R&D programs in other agencies would increase over five years but would fall slightly behind the expected rate of inflation, including R&D in the Environmental Protection Agency (down 0.1 percent after inflation) and the Department of the Interior (down 0.7 percent). In contrast to projected cuts for most R&D programs in past budgets, only a few are projected to decline in the FY 2001 budget. USDA R&D would decline 6.1 percent after inflation because a $120 million a year mandatory competitive grants program would expire before FY 2005, offsetting projected increases for appropriated R&D programs. NOAA's R&D would decline 3.9 percent over five years because modest increases in the budget would fail to keep pace with inflation; NASA's Earth Science program budget would fall by 18.0 percent after inflation because money would flow toward other NASA priorities. For defense R&D, the long post-Cold War slide in R&D funding is projected to continue. DOD's priorities for the next few years include military personnel pay, operational readiness, and procurement of new weapons systems. All are projected to receive inflation-adjusted increases over the next five years within a DOD budget that would grow from $281 billion in FY 2000 to $317 billion in FY 2005 (up 2.3 percent after inflation). While DOD's basic research (down 5.8 percent) and applied research (down 11.3 percent) programs would fare somewhat better than its development programs, total DOD R&D would fall 14.6 percent after inflation to $37.0 billion (see Figure 3). DOE's defense R&D would decline by 2.8 percent after inflation. While DOE's nuclear weapons R&D in Weapons Activities would see increases from $2.2 billion to $2.4 billion, the increases would fail to keep pace with inflation, resulting in a 0.8 percent cut by FY 2005 in real terms. Figure 3. (click on the chart to see a full-screen PDF version) Projections, of course, are always wrong. They are not predictions. The FY 2001 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. At best, projections are statements of one Administration's current priorities, and priorities always change in the give-and-take process of federal policymaking. They are especially likely to change by next year, when a new President will submit a budget reflecting a new set of priorities. The FY 2001 budget shows that the importance the Administration assigns to defense spending and domestic discretionary spending is higher than in past years, and that favorable budget surplus projections make increased spending in these areas possible while still fulfilling the Administration's promises to boost Medicare, cut taxes, and pay down the national debt. As a result, federal R&D investments have room to grow in FY 2001 and future years. - March 10, 2000 (revised March 23) (The detailed analyses of defense R&D and nondefense R&D cited in this analysis, updates to the data presented in this analysis, more information on the 25th Anniversary AAAS Colloquium on Science and Technology Policy, and information on AAAS Report XXV: Research and Development FY 2001, can be found on the AAAS R&D Web site at 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

Table 1. AAAS Analysis of the Outyear Projections for R&D in the FY 2001 Budget
(budget authority in millions of dollars)

March 22, 2000 - Revised - FINAL

Table 2. Discretionary Spending Proposals in the FY 2001 Budget
(budget authority in millions of dollars)