(Figures in this analysis are revised from
earlier AAAS releases. This analysis is a preview of the forthcoming AAAS
Report XXIX: Research and Development FY 2005, a comprehensive
look at the President's budget for R&D in FY 2005, which will be released
at the AAAS S&T Policy Forum (April 22-23; www.aaas.org/forum);
data have been revised since the Preliminary Analysis of February 5 and
an update on March 5. More tables and continually updated supplemental
materials on R&D in the FY 2005 budget can be found on the AAAS
R&D Web site at www.aaas.org/spp/rd).
Just a week after the delayed conclusion
of the FY 2004 budget, President Bush released his FY 2005 budget proposal on
February 2. The focus of the budget continues to be record-breaking projections
of budget deficits, and the many budget proposals designed to bring them under
control or at least appear to do so. With a budget deficit expected to hit $521
billion this year, the Administration’s promise to halve the deficit within
five years would still leave the federal government with large deficits with no
surpluses in sight. In order to do so, the President proposes to hold domestic
discretionary spending to just a 0.5 percent increase while continuing to
lavish resources on defense and homeland security discretionary programs,
proposing $1.1 trillion in tax cuts over the next decade, and after signing
into law a new Medicare prescription drug benefit costing $539 billion over the
next 10 years. In a repeat of past budgets, the FY 2005 budget proposes record
funding for federal R&D due to large increases in defense and homeland
security R&D; but with tight constraints on other discretionary spending,
most federal R&D programs would see flat funding or cuts, and even favored
R&D agencies of past years would see increases barely above the expected
rate of inflation of 1.25 percent.
R&D in the FY 2005 Budget: DOD Development and Homeland Security R&D Up, Other Programs Down
or Even, Again
Every year for
the past few years, there have been record-breaking totals for the federal
investment in R&D because of enormous increases in the past few
years for defense weapons development, the creation of new homeland
security R&D programs, and the now-completed campaign to double
the National Institutes of Health (NIH) budget. In these flush times,
however, funding for other areas of federal R&D has remained stagnant
or declined, with increases in some agencies offset by steep cuts in
others. The FY 2005 budget for federal R&D would continue these
recent trends with large increases for weapons development and homeland
security R&D, but flat or declining funding for the rest of the
federal R&D portfolio. (All figures in this release have been revised
since the February 5 preliminary version of this analysis.)
- The request
for total federal R&D in FY 2005 is $132.0
billion, $5.5 billion
or 4.3 percent more than FY 2004 (see Table 1).
The entire increase would go to Department of Defense (DOD) development
of weapons systems and R&D in the new Department of Homeland Security
(DHS), leaving all other federal R&D programs collectively with
declining funding. Total research (basic and applied) would stay
flat (up 0.2 percent) at $55.7 billion, even including DHS’ expanding
research efforts (see Table 2).
- Outside of DOD
development and DHS R&D, the federal R&D portfolio would mostly
decline or stay even with this year’s funding, consistent with the 0.5
percent increase for nondefense, non-homeland security discretionary spending overall (see Figure 1).
- Even two favored
nondefense R&D agencies in recent years are adjusting
to diminished expectations. The
National Institutes of Health (NIH) budget, after doubling in the five
years between 1998 and 2003, would see an increase of 2.6 percent in
FY 2005. Although President Bush signed an NSF authorization bill
in December 2002 that called for its budget to double over five years,
the National Science Foundation
(NSF) budget would fall short of the mark with a budget of $5.7 billion,
up 3.0 percent after similar increases in the past two years but
well short of the $7.4 billion envisioned in the authorization. Most
NSF research directorates would see increases of about 2 percent in
FY 2005.
Figure 1. (click on the image to view
or download a full-page version of this chart)
- The Department of Homeland Security (DHS) would continue its dramatic expansion
of R&D capabilities with an R&D budget of $1.2 billion, up $163
million or 15.5 percent after an even larger increase last year
(see Table 1 and Figure 1). The department,
officially created less than a year ago in March 2003, would shift its
efforts away from near-term technology development this year to a more
balanced portfolio of research and development. DHS plans to more than
double its basic and applied research portfolio to $431 million (up
152 percent) with an emphasis on biological countermeasures.
- Most of the other agencies in the federal R&D portfolio would see
steep cuts or at best modest increases in their R&D funding (see
Figure 1 and Table 1). The
Department of Energy’s (DOE) Office of Science would see its R&D
funding decline by 0.4 percent, with small increases for core R&D
programs offset by cuts in congressionally designated R&D projects.
Similarly, proposed cuts in R&D earmarks balanced by flat or declining
funding for core R&D programs result in cuts to R&D in the U.S.
Geological Survey (USGS; down 4.0 percent), the National Oceanic and
Atmospheric Administration (NOAA; down 1.1 percent), the basic research
programs of DOD (down 5.3 percent), and U.S. Department of Agriculture
R&D (USDA; down 3.5 percent). The Bush Administration once again
proposes to eliminate the Advanced Technology Program (ATP), a $171
million program in the Department of Commerce.
- The total federal investment
in research (basic and applied research) would stay flat (up just $22
million or 0.2 percent) at $55.7 billion in FY 2005 (see Table
2). A $671 million increase for NIH research would offset cuts in
other research programs, leaving non-NIH research down by 1.9 percent
from FY 2004. DHS research would more than double in FY 2005 to $431
million as DHS follows its strategy of expanding its research support
after concentrating on technology development in FY 2004. Other agencies
would follow the opposite strategy: NASA would reduce its research support
within an increasing R&D portfolio in order to focus its resources
on near-term development and construction of the International Space
Station; DOD would cut its support for basic and applied research substantially
even as its weapons development budget would see record increases. Looking
only at basic research, the federal portfolio would grow by a modest
1.0 percent or just $273 million to $26.8 billion, but federal support
of basic research excluding NIH would fall 1.8 percent (see Table
2).
- Defense
R&D continues to gain prominence in the federal R&D portfolio.
Defense R&D, which includes DOD, DOE’s
defense activities and defense-related activities in DHS, would total
57 percent of the federal R&D portfolio
in FY 2005 (see Table 4) at $74.7
billion, from near-parity with nondefense a few years ago. Table
4 shows federal R&D by mission area; homeland security is included
under several national missions including transportation, justice, and
defense. R&D for half the national missions would decline in FY
2005, but there would be large increases for defense R&D (up 5.9
percent). Space R&D would increase 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.
- Cutting
across traditional government mission areas, federal
homeland security R&D would total $4.2 billion in FY 2005, a
substantial boost of 15.9 percent or $575 million over this year’s funding
level across a dozen federal agencies (see Supplemental
Table to Table 4). In the aftermath of the fall 2001 terrorist attacks,
the federal investment will have nearly tripled since 2002. The majority
of the portfolio would remain outside DHS, with the largest part of
funding coming from NIH for its biodefense
research portfolio. NIH’s portfolio, mostly
in the National Institute of Allergy and Infectious Diseases (NIAID),
would total $1.8 billion in FY 2005, up 4.6 percent. Total homeland
security funding would rise $6 billion or 14.4 percent to $47 billion next year despite
fiscal austerity for other federal government missions.
- Nanotechnology R&D would be the top priority in the federal R&D
portfolio in FY 2005 among
multi-agency initiatives (see Table 5).
After increasing nearly $100 million last year, funding for the National
Nanotechnology Initiative would increase $21 million (or 2.2 percent)
to $982 million, for a doubling of the federal investment in just four
years. NSF’s lead contribution to the initiative would rise by 20.1
percent to $305 million. Funding for the other two initiatives would
decline in tough budget times. Funding for the Networking
and Information Technology R&D initiative would stay level at
$2.0 billion for the fourth year in a row. NSF's
contribution would be $761 million, mostly in the Computer and Information
Science and Engineering (CISE) directorate. Another multi-agency initiative,
on climate change R&D, would decline. The Climate
Change Science Program (CCSP), combining the longstanding U.S. Global Change Research Program (USGCRP)
with the new Climate Change Research Initiative (CCRI), would fall 2.1 percent
to $2.0 billion, still well above the funding levels of previous years.
CCRI research, aimed at answering key gaps in knowledge in climate science
and initiated last year with $40 million, would climb to $238 million
in FY 2005, offset by cuts in the USGCRP program.
- Later
this spring, Congress will begin the task of writing the 13 FY 2005
appropriations bills, which provide funding for all discretionary programs
including federal R&D. The federal R&D investment is scattered
among 10 of the 13 appropriations bills, as shown in Table
3. Each appropriations bill is normally signed into law separately
from the others. Four appropriations bills (Defense, VA/HUD, Labor/HHS,
and Energy/Water) fund 94 percent of the total federal R&D portfolio;
in each of these subcommittees, R&D funding makes up more than 15
percent of all discretionary spending within that bill.
The FY 2005 R&D Budget in Historical Context
The FY 2005 budget request leaves key R&D programs with flat or declining
budgets for more than a decade. As Figure 2 and Figure 3 show, both
the defense and nondefense R&D investments
would be at record highs in FY 2005, but these totals disguise flat
or declining funding for many areas.
For defense R&D,
Figure 2 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 still well below the funding levels of the late 1980s
and have received relatively modest increases compared to weapons development.
The FY 2005 request would cut DOD S&T by nearly $2 billion or 16
percent. 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.
Figure 2. (click on the image to view
or download a full-page version of this chart)
Figure 3. (click on the image to view
or download a full-page version of this chart)
In nondefense
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 3. All the other nondefense
R&D funding agencies collectively have seen their budgets barely
increase over the past decade, with even the modest increases in the
past few years coming mainly from the creation of the DHS. 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 the
non-biomedical sciences, including the physical sciences, non-medical
life sciences, environmental sciences, engineering, mathematics, computer
sciences, and social sciences. Because of stagnant funding for DOD research
and non-NIH nondefense R&D, federal support for these disciplines
has remained stagnant for more than a decade, and the FY 2005 budget
does little to change the trend.
Highlights of the Major R&D Funding Agencies
(Complete coverage of the
major R&D funding agencies will be available in the forthcoming
AAAS Report XXIX: R&D
FY 2005 and on the AAAS R&D web site
in agency updates.)
- The National Institutes of Health (NIH) would
receive $28.8 billion for its total budget in FY 2005, an increase of
$729 million or 2.6 percent. NIH R&D would rise 2.6 percent to $27.9
billion. Most NIH institutes would receive increases in a narrow range
between 2.8 and 3.3 percent; there would be no clear favorites, unlike
the past two years when biodefense research
was heavily favored. The largest percentage increase would go to the
Office of the Director (OD; up 10.0 percent) because of $60 million
in new money for the NIH Roadmap for Biomedical Research, NIH Director
Zerhouni’s initiative to reinvigorate NIH’s
clinical research, interdisciplinary research, and new research tools.
Another $177 million would come from institute budgets. NIH again proposes
to discontinue an extramural construction program in the National
Center for Research Resources
(NCRR), leaving NCRR the only NIH institute to see its budget decline
(down 7.2 percent to $1.1 billion). The total number of Research Project
Grants (RPGs) would barely increase by 1.4 percent; the number of
new grants would rise slightly but only to the FY 2003 level after falling
this year. The average grant size would rise 1.3 percent, just at the
expected rate of inflation for the economy as a whole, but well below
the 3.5 percent expected inflation rate for biomedical research. The
size of the average new grant would actually fall in 2005, and the proposal
success rate would fall to 27 percent in 2004 and stay there in 2005,
down from 30 percent last year.
- The Department of Defense (DOD) would see
its R&D budget grow again to $69.9 billion, an increase of $4.0
billion or 6.0 percent, with all of the increase going to the development
of weapons systems, after similar multibillion dollar increases the
past four years. The big winner, again, would be the missile defense
program, a high priority for the Bush Administration. Missile Defense
Agency development funding would jump 20 percent to $9.1 billion in
FY 2005, in preparation for deployment of missile defenses beginning
this year. Funding for other big development projects would also climb.
By contrast, once again the Pentagon proposes to cut basic and applied
research funding. Basic research (“6.1”) would fall 5.3 percent to $1.3
billion, while applied research (“6.2”) would fall 12.3 percent to $3.9
billion in FY 2005. DOD “Science and Technology” (S&T), which includes
research, medical research, and technology development, would fall an
even steeper 15.5 percent to $10.6 billion (see Table
1 and Figure 2); at 2.64 percent of the regular DOD budget, this
falls far short of the Pentagon-endorsed target of 3 percent of the
DOD budget. The Defense Advanced Research Projects Agency would see
its R&D funding increase to $3.1 billion in FY 2005, an increase
of 9.1 percent.
- Within
the total National Science Foundation
(NSF) budget, up 3.0 percent over FY 2004, most research directorates
would receive increases of about 2 percent. The exception among the
directorates would be for Social, Behavioral, and Economic Sciences,
up 10 percent. The NSF budget would total $5.7 billion in FY 2005, well
short of the $7.4 billion FY 2005 authorization signed into law a year
ago as part of a plan to double the NSF budget in the five years to
FY 2007. Excluding NSF's non-R&D education activities, NSF R&D
would be $4.2 billion, a boost of 3.6 percent over this year (see Figure
2). The Major Research Equipment and Facilities Construction account
would enjoy a sizeable increase, going from $155 million to $213 million
because of three proposed starts. The budget proposes to move funding
for the Math and Science Partnerships from Education and Human Resources
directorate to the Research and Related Activities (R&RA) account,
and cut its funding from $140 million down to $80 million. The small
increases for the research directorates would squeeze NSF funding of
competitively awarded research grants. The total number of NSF research
grants would fall by 72 down to 1,645 in FY 2005, and the competition
for them would get harder: NSF expects to make awards to less than one
in four applications this year and next year.
- With the recent
presidential announcement of plans to send humans to the moon again
on the way to Mars, the National Aeronautics and Space Administration
(NASA) embarks on a new era in its history, but most of the FY 2005
budget would go to the Space Shuttle and the International Space Station,
two current projects. Near-term projects take clear precedence over
the long-term investments necessary to get to the moon and Mars. The
FY 2005 total NASA budget of $16.2 billion would be 5.6 percent more
than this year, but nearly all of the increase would go to returning
the non-R&D Space Shuttle to flight (up 9.5 percent to $4.3 billion)
and resuming construction of the Space Station (up 24.3 percent to $1.9
billion). NASA R&D would increase by a smaller 3.9 percent to $11.3
billion, but basic and applied research funding would actually decline
(down 3.3 percent) as development and R&D facilities construction
activities take priority. In Space Science (up 4.2 percent to $4.1 billion),
there would be large increases for Mars Exploration (up 16.1 percent
to $691 million) to build the next generation of robotic explorers,
and a new Lunar Exploration account of $70 million to begin preparations
for the return to the moon. Other NASA research efforts would decline
steeply, including investments in earth science, aeronautics research,
and physical sciences research. In technology development for the moon
and Mars missions, NASA would close out the Space Launch Initiative
and its projects such as the Orbital Space Plane, and begin work on
developing a Crew Exploration Vehicle.
- The Department of Energy (DOE) would see its
R&D funding increase a modest 0.9 percent to $8.9 billion in FY
2005. The entire increase and more would go the Radioactive Waste Management
program for a tripling of R&D activities in support of the Yucca
Mountain nuclear waste disposal site; the $275 million R&D investment
(up from $69 million) would depend on congressional approval of a new
source of dedicated revenues. On the nondefense
side, funding for most other DOE R&D programs would fall. R&D
funding for the Office of Science (OS) would decline slightly by 0.4
percent to $3.2 billion, marked by flat funding for core R&D programs
and the proposed elimination of FY 2004 R&D earmarks, leaving OS
R&D flat or declining for the fifth year in a row. The few increases
within the OS portfolio would be focused on nanoscale
science and hydrogen research. Within Fusion Energy Sciences, funding
for the International Thermonuclear Experimental Reactor (ITER) project
would ramp up, requiring offsetting cuts in domestic fusion research.
Overall funding for energy R&D (excluding the Yucca
Mountain project) would decline
steeply in FY 2005. Proposed increases for hydrogen R&D ($228 million,
up from $159 million) would be offset once again with steep cuts in
other renewables, increases for coal R&D would be offset with
steep cuts in other fossil fuels R&D, and increases in fuel cell
technologies would be offset with cuts in other energy conservation
R&D. DOE’s defense R&D programs would increase 2.1 percent
to $4.3 billion, including increases for advanced scientific computing
(up 6.6 percent) and a quadrupling of research efforts on the controversial
Robust Nuclear Earth Penetrator ($28 million,
up from $7 million).
- The Department of Homeland Security (DHS) is
once again the big winner in the R&D budget; after a nearly 50 percent
increase this year, the DHS R&D portfolio would increase 15.5 percent
to $1.2 billion in FY 2005. DHS would continue its budget growth with
a shift in emphasis from near-term technology development toward more
basic and applied research in FY 2005. The DHS research portfolio would
nearly triple from $171 million to $431 million as DHS looks more toward
the long-term knowledge base instead of immediate technology needs.
The majority of DHS R&D would continue to be in the new Directorate
of Science and Technology with an R&D budget of $987 million in
FY 2005, including the new Homeland Security Advanced Research Projects
Agency (HSARPA). The total DHS budget would be $40.2 billion in FY 2005,
up 9.9 percent from FY 2004. In addition, DHS has $885 million in FY
2004 and $2.8 billion in FY 2005 in already-appropriated funds for the
non-R&D Project Bioshield to procure biodefense
countermeasures, which could provide a big boost to private-sector biodefense R&D. The DHS R&D portfolio would also be
heavily oriented toward biodefense; the $407
million biodefense countermeasures investment in FY 2005 would be
the largest program area in the portfolio.
- R&D
in the U.S. Department of Agriculture (USDA)
would fall $77 million or 3.5 percent to $2.2 billion in FY 2005. USDA
proposes to eliminate $220 million in FY 2004 R&D earmarks, and
hold other USDA R&D funding flat overall. Research funding would
take a big hit, however, in order to provide $178 million to complete
animal research and diagnostic facilities at the National Centers for
Animal Health in Ames, Iowa,
that would be the heart of a USDA-wide food and biosafety
initiative. There would also be $37 million in new intramural research
on food and agriculture defense. Extramural research funding would fall
sharply, mostly because of the proposed elimination of earmarks, but
funding for the competitively awarded National Research Initiative grants
would climb 10 percent to $180 million.
- Once
again, the Bush Administration proposes to eliminate the Advanced Technology
Program (ATP) at the Department
of Commerce. The ATP has a budget of $171 million in FY 2004.
The savings would allow for a 30 percent boost for intramural research
at the National Institute of Standards and Technology (NIST) laboratories.
The budget would also keep funding for the non-R&D Manufacturing
Extension Partnership at NIST at $39 million, well below the $106 million
level of last year and previous years. National
Oceanic and Atmospheric Administration (NOAA) R&D would decline
by 1.1 percent to $610 million. The Oceanic and Atmospheric Research
(OAR) account in NOAA would fall 10.1 percent in FY 2005 because of
proposed eliminations of earmarks and reductions in core OAR programs.
- The Department of Veterans Affairs (VA) has once again reorganized its
budget accounting structure to fully report all costs associated with
its R&D portfolio, including support and personnel costs. VA federal
R&D would be $770 million in FY 2005, a decline of 6.1 percent,
but planned increases in funding from other sources would result in
a slight increase in the overall VA R&D portfolio to $1.7 billion.
- R&D
in the Department of the Interior
would fall 4.0 percent to $648 million, with a similar cut to $525
million for R&D in Interior’s lead science agency, the U.S. Geological Survey (USGS). There would be cuts to nearly every USGS
program, in areas such as mapping, earth sciences, water resources,
and biological research.
- The Environmental Protection Agency (EPA)
R&D budget would fall 7.1 percent or $44 million to $572 million
in FY 2005. Although some of the cuts would be due to the proposed elimination
of R&D earmarks, funding for many R&D programs would also decline.
The extramural Science to Achieve Results (STAR) program would see its
budget fall to $65 million, a steep drop from the $100 million annual
funding levels of the past several years. EPA would eliminate STAR grants
entirely in four research areas. EPA’s overall budget would fall a steep
6.9 percent down to $7.8 billion in FY 2005 with particularly steep
cuts to state and tribal assistance grants and the Science and Technology
program.
- Department of Transportation (DOT) R&D
funding would rise 6.7 percent to $755 million. There would be a big
boost in highway R&D, due to a perennial proposal to shift some
resources away from state highway grants to highway research; similar
proposals have been rejected by Congress in past years. R&D in the
Federal Aviation Administration (FAA) would decline 10.4 percent to
$222 million as aviation security-related R&D continues to shift
from the FAA to DHS.
The Budgetary Context for FY 2005: Record Deficits,
New Entitlements, and Tax Cuts
The FY 2005 Bush
budget proposes discretionary spending of $818 billion
in FY 2005, a 3.9 percent increase over the non-emergency FY 2004 level.
But with regular defense spending proposed for a 7 percent boost and
homeland security a 10 percent increase, everything else would be up
just 0.5 percent.
The budget projects a record-breaking deficit of $521 billion in the current
fiscal year (FY 2004), far above the $374 billion deficit last year.
The budget was in surplus as recently as three years ago (FY 2001).
The budget foresees a $363 billion deficit in FY 2005, declining to
$237 billion by FY 2009. To get there, however, the budget allots nothing
for future costs in Iraq
and Afghanistan.
Figure 4 includes all such war, occupation, and reconstruction costs
up to FY 2004, including the $87 billion supplemental approved last
fall that could run out this year. At least $50 billion would be needed
by the end of 2004, but President Bush has promised to postpone any
further requests until after the November elections.
Figure 4 also
shows that over the past several years, there have been dramatic increases
in both defense and nondefense discretionary spending after nearly a decade of
relative restraint in the 1990s. On the defense side, there have been
large increases in the regular DOD budget topped off in the last four
years by Iraq
and Afghanistan
costs. The FY 2005 budget achieves its deficit targets in part by assuming
these costs end this year. On the nondefense
side, there have been large increases in the relatively new category
of homeland security spending over the past four years along with some
additional funds for foreign aid to Iraq and Afghanistan; the FY 2005
budget achieves its deficit targets by assuming no further Iraq and
Afghanistan aid, and by holding domestic spending increases below the
inflation rate every year.
Figure 4. (click on the image to view
or download a full-page version of this chart)
While discretionary spending is proposed for cuts, spending on
entitlement programs would increase dramatically. Even with recent
increases, discretionary spending as a share of the U.S.
economy is still well below the levels of the 1980s and early 1990s when the
budget deficit was last a big concern. The real growth in federal spending has
been in entitlement and other mandatory programs, now two-thirds of the federal
budget. Last December, President Bush signed into law a prescription-drug
benefit for the Medicare entitlement program that is now estimated to cost $534
billion over the next decade; spending on existing Medicare, Social Security,
Medicaid, and other entitlements would continue to grow far faster than the
rate of inflation. In addition, mandatory payments of interest on the national
debt would also climb because the national debt is growing rapidly from the
accumulation of record annual deficits.
Even in times of record budget deficits, the FY 2005 budget proposes more
tax cuts. As a result of large tax cut laws enacted in each of the
last three years, the federal government is expected to take in less
than 16 percent of the U.S. Gross Domestic Product (GDP) in tax revenues
this year, down sharply from nearly 21 percent just four years ago in
2000. These reduced revenues, primarily from tax cuts but also from
slumping tax collections in a slowing economy, are the primary reason
for record deficits. In order to make the total costs of past tax cut
laws appear smaller, nearly all of the tax cut provisions enacted over
the last three years expire over the next several years, with some lower-income
income tax provisions expiring as early as 2005. The FY 2005 budget’s
tax proposals would reduce revenues by $175 billion over the next five
years, mostly from extending expiring tax provisions.
But the real
costs of the FY 2005 budget lie beyond 2009. The Bush Administration
proposals to extend expiring tax provisions would reduce revenues by
$1.1 trillion over the next decade, with more than 80 percent of the
revenue losses in the second five years. Similarly, two-thirds of the
Medicare drug benefit’s ten-year costs come in the second five years.
The fiscal impacts of these proposals would come just as current budget
law already foresees enormous increases in Social Security, Medicare,
and Medicaid costs as the Baby Boom generation begins to hit retirement
age within the next decade.
The four years
of surpluses between FY 1998 and FY 2001, backed up by bipartisan promises
in the last presidential election to keep the federal budget balanced,
now seem like a distant mirage. There is little appetite in Washington
for making the hard choices necessary to get the budget back in balance.
Only in the area of domestic discretionary spending, out of which nearly
all the R&D funding agencies get their budgets, do lawmakers advocate
some fiscal restraint.
Proposals to trim domestic discretionary spending over the next five years
would result in steep cuts to most agencies in the federal R&D portfolio.
Not surprisingly, the trends in Figure 4 for overall discretionary spending
mirror the trends in Figure 2 and Figure 3 for federal R&D; federal
R&D investments have always tracked discretionary spending. Over
the next five years, only DHS, DOD, and NASA would see their R&D
funding increase in the Bush Administration budget plan; all other R&D
funding agencies would see their R&D budgets shrink. (The
AAAS analysis of the five-year outlook for federal R&D will
be released at the AAAS S&T Policy Forum on April 22, and as part
of AAAS
Report XXIX: R&D FY 2005.)
Outlook for the FY 2005 Budget Process
The FY 2005 budget
now moves to Congress, where prospects for smooth passage are bleak.
Although President Bush faces a Congress controlled in both chambers
by his fellow Republicans, the same combination last year still resulted
in a FY 2004 budget process that ended nearly four months late at the
end of January. The FY 2005 budget process takes place in an election
year when the stakes are higher, increasing the temptation for lawmakers
to postpone the difficult decisions needed to restrain discretionary
spending until after the November elections. Complicating matters is
a fracturing of the Republican party, with
a vocal group of fiscal conservatives in Congress in open revolt against
the President over recent spending increases, particularly the Medicare
drug benefit. This group may push for reductions in domestic spending
even steeper than those proposed by the President, making the task of
completing FY 2005 appropriations even harder.
The next step for
Congress is to approve an FY 2005 budget resolution setting spending
and revenue targets for the FY 2005 budget debate. If Congress sticks
to the President’s discretionary spending targets, then the always-difficult
task of writing the discretionary appropriations bills will be even
harder. In the President’s request, many domestic agencies would see
cuts in their budgets. In such an environment, providing additional
funds for nondefense R&D programs would
involve taking money from other programs that are already proposed for
cuts. While there is more flexibility for defense R&D, the unwillingness
of the Pentagon to budget for Iraq and Afghanistan costs could result
in a fiscal squeeze for DOD and could present appropriators with a difficult
situation if they want to boost DOD basic and applied research funding,
as they have done in past years. Thus, this FY 2005 budget proposal
appears to be just the first step in a long budget battle that could
stretch into next year.
- March 16, 2004 (revised from February 5 preliminary
analysis)
(More materials on R&D in the FY 2005 budget, historical data and
charts, and more information on AAAS Report
XXIX: Research and Development FY 2005, can be found on the
AAAS R&D Web site at www.aaas.org/spp/rd.
The information in this analysis will be continually updated with revised
agency data, and revisions.)
