American Association for the Advancement of Science

AAAS R&D Funding Update January 4, 2006 -
FY 2006 Final Appropriations:

Congress Caps Another Disappointing Year for R&D Funding in 2006

(A Preview of Congressional Action on Research and Development in the FY 2006 Budget)

Go to:

-Highlights of Federal R&D in FY 2006

-The FY 2006 R&D Budget in Historical Context

-R&D Appropriations for Key Agencies

-Budget Outlook: On the Downward Slope

-Table 1. Total R&D by Agency

-Table 2. Estimated Research by Agency

-Table 3. Major Functional Categories of R&D


PDF version of this document

Full Text of Congressional Action on R&D in the FY 2006 Budget

Complete set of 20 agency funding tables (20pp; PDF)

Detailed agency tables of final FY 2006 appropriations (PDF):

- Table. U.S. Department of Agriculture R&D

- Table. Department of Commerce R&D

- Table A. Department of Defense by Program

- Table B. Department of Defense by Agency

- Table C. Department of Defense S&T

- Table. Department of Energy R&D

- Table 1. National Institutes of Health R&D

- Table 2. Department of Health and Human Services R&D

- Table. Department of Homeland Security R&D

- Table. Department of the Interior R&D

- Table. Department of Transportation R&D

- Table. Department of Veterans Affairs R&D

- Table. Environmental Protection Agency R&D

- Table. National Aeronautics and Space Administration R&D

- Table. National Science Foundation R&D

Detailed agency updates on final FY 2006 appropriations (including agency tables):

U.S. Department of Agriculture

Department of Commerce

Department of Defense

Department of Energy

Department of Homeland Security

Department of the Interior

Department of Transportation

Department of Veterans Affairs

Environmental Protection Agency

National Aeronautics and Space Administration

National Institutes of Health and HHS

National Science Foundation

Special Report on R&D Earmarks in the FY 2006 Budget

Supplemental Tables and Full-Color Charts (PDF):

Historical Table 1. Federal R&D by Agency, 1976-2006 (current dollars)

Historical Table 2. Federal R&D by Agency, 1976-2006 (CONSTANT FY 2005 dollars)

Table A. "FS&T Budget" by Agency

Table B. Congressional Earmarks for R&D by Agency and Program

Chart. Trends in Federal R&D, FY 1976-2006 (Figure 1)

Chart. FY 2006 R&D Appropriations (Final vs. Request) (Figure 2)

Chart. Trends in Federal R&D as % of GDP, FY 1976-2006 (Figure 6)

Chart. Trends in Nondefense R&D, FY 1976-2006 (Figure 4)

Chart. Trends in Defense R&D, FY 1976-2006 (Figure 3) - ( Data Table )

Chart. Trends in DOD S&T, FY 1994-2006 - ( Data Table )

Chart. Trends in Research, FY 1995-2006 (Figure 5) - ( Data Table )

Chart. Trends in Basic Research, FY 1975-2006 - ( Data Table )

Chart. Trends in Federal R&D, FY 1990-2006 (DOD, NIH, NASA, NSF, DOE) (Figure 7)

Chart. Trends in Federal R&D, FY 1990-2006 (USDA, DOC, DOI, DOT, EPA)

Chart. R&D Earmarks in Appropriations, FY 2002-2006

Chart. Trends in Federal Research by Discipline, 1970-2004 - ( Data Table )

Chart. Defense and Nondefense R&D by Character of Work, FY 2006 Final

Chart. FY 2006 R&D by Function

-Chart. Trends in DOE Office of Science, 1987-2006 -( Data Table )

- Chart. NIH Budget by Institute, 1996-2006 - ( Data Table )

This report is a summary of AAAS estimates and analyses of appropriations in final FY 2006 appropriations bills for federal R&D. This report is a preview of the publication Congressional Action on Research and Development in the FY 2006 Budget (see the last page).

On December 30, nearly three months into the fiscal year, President Bush signed the last two FY 2006 appropriations bills into law, bringing the FY 2006 appropriations process to a close. AAAS estimates that the federal R&D portfolio totals $134.8 billion in 2006, a $2.2 billion or 1.7 percent increase. But 97 percent of the increase goes to just two areas: defense weapons development and human space exploration technologies. Funding for all other federal R&D programs collectively will barely increase, and will fall nearly 2 percent after adjusting for inflation. Leaving out large federal investments in development, congressional appropriations for basic and applied research total $57.0 billion, an increase of $1.0 billion or 1.8 percent over 2005. But NASA applied research on human space flight technologies accounts for a majority of the increase, leaving most agency research portfolios with modest increases falling short of inflation, or cuts. Many flagship federal science agencies have disappointing budgets in 2006: the National Institutes of Health (NIH) budget falls for the first time in 36 years; the National Science Foundation (NSF) wins a small increase but has less in real terms for its research portfolio than in any of the last three years; the Department of Energy (DOE) Office of Science budget declines, and despite big increases in development funding the Department of Defense (DOD)’s basic research funding declines.

In the customary year-end crush of legislation, Congress cleared the final Defense appropriations bill on December 22. In addition to regular funding for DOD, the Defense bill contained emergency supplemental appropriations for Gulf Coast reconstruction, avian flu preparedness, and Iraq and Afghanistan military operations, but to pay for some of these emergencies the bill also contained a 1 percent across-the-board cut for all discretionary programs, even those whose budgets had already been signed into law earlier. Even before the across-the-board cut appeared, the President and Congress had agreed to cut overall domestic discretionary spending by nearly 1 percent, but now it appears that domestic spending will fall almost 2 percent in 2006. In FY 2006, funding for domestic programs continues on a downward curve after several years of generous annual increases earlier in the decade, and the federal R&D investment lands on the same downward side of the slope in 2006.

Highlights of Federal R&D in FY 2006

- The federal investment in research and development (R&D) hits another record of $134.8 billion in FY 2006, a $2.2 billion or 1.7 percent increase over 2005 (see Table 1 and Figure 1). But 97 percent of the increase goes just to the two areas of DOD weapons development and NASA next-generation space exploration vehicles. Funding for all other R&D programs collectively barely increases, and will fall nearly 2 percent after adjusting for inflation. Congress provided $2.5 billion more than the Administration request, primarily for defense, to improve on an even gloomier 2006 proposal (see Figure 2). After 9 years in a row of increases, federal R&D dips slightly in real (inflation-adjusted) dollars (see Figure 1).

 Figure 1. (click on the image for PDF)

 - The nondefense R&D investment rises by $808 million or 1.4 percent to $57.3 billion, better than the steep cut overall for domestic programs, but nearly the entire increase goes to NASA’s ambitious efforts to develop new space exploration vehicles (see Table 1). Excluding NASA, nondefense R&D increases only 0.3 percent, far short of expected inflation. Although many nondefense R&D programs win increases, two flagship civilian science agencies face outright cuts: the NIH budget falls for the first time since 1970, leading to budget cuts at all but two institutes; and the DOE Office of Science R&D portfolio falls 0.4 percent in 2006.

 - Defense-related R&D in DOD, the Department of Homeland Security (DHS), and DOE wins a 1.8 percent or $1.4 billion increase to $77.4 billion, a slight cut from last year’s record total in inflation-adjusted dollars (see Table 1). Weapons development in DOD once again accounts for nearly all of the increase (up $1.3 billion to $59.2 billion), but Congress also rewarded DOD’s “S&T” activities in research and early technology development with a 1.2 percent increase to $13.8 billion, in sharp contrast to a requested cut of 22 percent. But the rapid defense build-up of recent years appears to be cresting: for the first time in a decade, the defense R&D portfolio fails to keep pace with inflation, and DOE’s defense R&D actually falls 2.4 percent to $4.0 billion.  

 - The total federal research investment (basic and applied) totals $57.0 billion in 2006, an increase of $1.0 billion or 1.8 percent over 2005 (see Table 2 and Figure 1). But NASA applied research on new spacecraft to carry out future moon-and-Mars missions accounts for a majority of the increase, leaving most agency research portfolios with modest increases falling short of inflation, or cuts. Even at NASA, the increase for new vehicles squeezes out funding for other research areas such as space science, earth science, aeronautics, and biological research, leaving those areas with budget cuts.

 - Because of the emphasis on applied research in the NASA portfolio and tight budgets in other agencies, the federal investment in basic research falls 0.5 percent to $26.7 billion in 2006 (see Table 2). More than 90 percent of the federal basic research investment comes from just five pieces of the federal budget: NIH, DOD’s “6.1” programs, NSF’s Research and Related Activities, DOE’s Office of Science, and NASA’s Science programs. Basic research in 4 out of the 5 accounts falls in 2006, with only NSF managing a small increase. NASA’s support for basic research falls the most, by more than 8 percent to $2.2 billion, as the agency siphons off resources from basic research in space science, earth science, and biological and physical research in order to bulk up on spacecraft research. 

 Figure 2. (click on the image for PDF)

- The National Institutes of Health (NIH) budget falls in 2006 for the first time in 36 years because of a modest appropriation combined with the 1 percent across-the-board cut (see Table 1 and Figure 2). After adjusting for inflation, NIH has a smaller budget in 2006 than it did in 2003, erasing the small gains of the last two years. Other R&D funding agencies with falling budgets in 2006 include the U.S. Department of Agriculture (USDA), with a 0.4 percent cut to $2.4 billion; and Commerce’s National Institute of Standards and Technology (NIST) with a 5.0 percent cut to $438 million, due primarily to the Advanced Technology Program (ATP) budget falling to a little more than half the 2005 funding level.

 - The National Science Foundation (NSF) budget, after declining in 2005, rebounds to $5.6 billion in 2006, less than the request. But inflation, the across-the-board cut, and new non-R&D costs for polar icebreakers leave NSF with less R&D funding in real terms than in each of the last three years.

 - There are some winners in the nondefense R&D portfolio (see Figure 2). In addition to the large NASA increase, Department of Transportation (DOT) R&D gains substantially by 13 percent to $841 million because of additional money dedicated to R&D in the August 2005 highway authorization bill, bringing the DOT R&D portfolio to a record high in real terms. DHS continues to expand its R&D portfolio because of continuing concerns over the nation’s preparedness against a terrorist attack, although the 3.1 percent increase to $1.3 billion for 2006 is well off the double-digit percentage gains of previous years. The Department of Veterans Affairs (VA) is the only agency exempt from the across-the-board cut and emerges with a 2.7 percent increase in its R&D portfolio to $805 million. And Congress reverses a proposed cut for U.S. Geological Survey (USGS) R&D with a 2.1 percent increase to $553 million.

 - Despite tough times, R&D earmarks set a new record in 2006, climbing to $2.4 billion in 2006, up 13 percent from last year’s previous record, according to the AAAS analysis of congressionally designated, performer-specific R&D projects in FY 2006 appropriations. Although these projects amount to only 1.7 percent of total R&D, they remain concentrated in a few key agencies and programs. Five agencies (USDA, $331 million; NASA, $317 million; DOE, $524 million; the National Oceanic and Atmospheric Administration (NOAA) in Commerce, $184 million; and DOD, $852 million) receive 94 percent of the total R&D earmarks, while NIH, NSF, and DHS remain earmark-free. In some programs, R&D earmarks make up more than 20 percent of total program funds. (For full details see the AAAS R&D Funding Update on R&D Earmarks in the FY 2006 Budget, available on the AAAS R&D web site).

- R&D focused on several important national missions declines in 2006, and nearly all fail to keep pace with inflation (see Table 3). Defense R&D (including DOD, DOE’s defense activities, and a large part of the DHS R&D portfolio) posts the smallest increase in a decade of 1.8 percent to $77.4 billion, falling short of inflation but outpacing growth in nondefense R&D to bring the defense share of total R&D to 57.5 percent, the highest ratio since the end of the Cold War. But health-related R&D declines for the first time in more than three decades, by 0.1 percent to $29.8 billion, because of NIH budget cuts. Agricultural R&D, transportation R&D, and commerce R&D also fall.

The FY 2006 R&D Budget in Historical Context 


Figure 3.
(click on the image for PDF)


Figure 4.
(click on the image for PDF)

For several measures of the federal R&D investment, final FY 2006 appropriations represent another year on a downward slope from the highs of a few years ago. For trend after trend, big increases leading up to 2003 flattened out more recently, and now funding is headed down in real terms. As Figure 3 and Figure 4 show, both the defense and nondefense R&D investments decline in real terms from recent highs.

 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, took nearly 20 years to recover from post-Cold War cuts to narrowly reach an all-time high in FY 2005, but fall in real terms again in 2006. 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. Even the overall S&T trend masks a shift in DOD investments: most of the recent growth has been in “6.3” technology development programs; meanwhile, DOD “6.1” basic research programs have steadily declined to just 11 percent of the S&T portfolio and have declined steeply in dollar terms.

Nondefense R&D peaked in FY 2004 and is now headed down, but for most programs funding has been stagnant for nearly two decades. Nondefense R&D did very well between 1998 and 2003 because of the campaign to double the NIH budget, as shown in Figure 4. The creation of the DHS also helped to boost nondefense R&D investments by creating a new area for investment. But all the other nondefense R&D funding agencies collectively have seen their budgets remain flat for nearly two decades (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. 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.


Figure 5.
(click on the image for PDF)

 Not surprisingly, the federal research investment is now on the downward slope after hitting new highs from the NIH doubling campaign. Federal support of research (excluding development) peaked in 2004 (see Figure 5), driven primarily by big boosts to NIH research. But the research portfolio declines in 2005 and 2006, except for the narrowly focused area of research on new space exploration vehicles. For non-biomedical research, 2006 will be the third straight year of decline in real terms if one excludes the NASA space exploration increase. And even biomedical research falls in 2006 because of budget cuts at NIH.

Most R&D funding agencies now face budgets that are shrinking to levels of years past. While it has been 24 years since the NIH budget declined in inflation-adjusted terms, there is a clear division between the 15 percent annual increases from 1998 to 2003 and flat or declining budgets since then (see Figure 7). Other agencies are also adjusting to flat and declining budgets, such as NSF, or have lived with stagnant R&D funding for years, such as DOE’s Office of Science and NASA (see Figure 7). But the downward trend is clear from the 2006 budget results: NIH, NSF, DOE, USDA, and NASA (excluding human space exploration) all have less R&D funding in real terms in 2006 than they had in 2003.


Figure 6.
(click on the image for PDF)

Federal research investments are shrinking as a share of the U.S. economy, just as other nations are increasing their investments. As shown in Figure 6, the federal R&D investment has plateaued at about 1.1 percent of U.S. Gross Domestic Product (GDP) in recent years, buoyed by big increases in weapons development, but is projected to decline sharply in 2006. But the federal research/GDP ratio is already falling and falls further in 2006 down to the historical average of 0.4 percent after briefly increasing during the NIH doubling campaign. Despite an increasingly technology-based economy and a growing recognition among policymakers that federal research investments are the seed corn for future technology-based innovations, the U.S. government research investment has failed to match the new realities and has also failed to match the competition. While the European Union goal of boosting its government research investments by 2010 may not be met, Asian nations are dramatically increasing their government research investments: both China and South Korea, for example, are boosting government research by 10 percent or more annually.

R&D Appropriations for Key Agencies

Full information on final FY 2006 funding levels and program details for individual agencies is available in newly revised AAAS R&D Funding Updates on the AAAS R&D Web site. (The on-line version of this document features links to the updates; see also the agency chapters in Congressional Action on R&D in the FY 2006 Budget.)

- The final National Institutes of Health (NIH) appropriation for 2006 sticks closely to the request, but an across-the-board cut contained in another spending bill leaves NIH with a budget of $28.6 billion, down 0.1 percent for the first NIH budget cut since 1970. After adjusting for inflation, NIH has a smaller budget in 2006 than it did in 2003, erasing the small gains of the last two years. All but two institutes suffer budget cuts in 2006, with most institute budgets falling between 0.4 and 0.7 percent. NIH R&D, which makes up 97 percent of the budget, totals $27.7 billion, also down 0.1 percent (see Table 1). After five years of big increases to 2003 during the NIH doubling campaign, NIH now faces a third year of flat or declining funding in real terms (see Figure 7). NIH had already projected a decline in the number of Research Project Grants (RPGs) for the second year in a row in 2006, no inflation adjustment for most new or continuing grants, and a decline in the RPG success rate for the fifth year in a row down to 21 percent, but the across-the-board cut will make these funding trends even worse. R&D in the other Department of Health and Human Services (HHS) agencies combined falls $25 million or 2.0 percent to $1.3 billion. The cut, however, is due to the transfer of biodefense R&D from the Office of the Secretary to NIH; other HHS R&D actually increases in 2006 because of emergency appropriations for R&D to combat a potential avian flu pandemic.


Figure 7.
(click on the image for PDF)

- The National Science Foundation (NSF) budget, after declining in 2005, rebounds to $5.6 billion in 2006, a 2.0 percent increase after a similarly-sized cut last year. In the final budget modified by an across-the-board cut of 1 percent, NSF R&D funding ends up back at the 2004 funding level with $4.1 billion in 2006, a 1.6 percent increase after an equally sized cut last year (see Table 1).  In real terms, the NSF R&D portfolio in 2006 is smaller than in each of the last three years. Most NSF research directorates receive increases between 1 and 3 percent in 2006, but in real terms most directorates’ budgets remain below or just even with 2003 and 2004 funding levels. Most of NSF’s education and training programs suffer steep cuts for the second year in a row. The modest increases for the research directorates after a cut last year continue to squeeze NSF funding of competitively awarded research grants: NSF expects to make awards to just 1 in 5 applications in 2006.

- The Department of Defense (DOD) has $73.0 billion for its R&D activities in FY 2006, $1.5 billion more than last year for a 2.1 percent increase in contrast to a requested cut (see Table 1). Weapons development programs dominate both the total and the increase. Congress adds $3.1 billion to the request for DOD “Science and Technology” (S&T) programs for $13.8 billion, up 1.2 percent from last year’s record total. S&T, which includes research, medical research, and technology development, would have declined 22 percent in the Pentagon request, but Congress allocates a slight increase to bring funding to 3.3 percent of the total DOD budget. Most DOD services and agencies gain in FY 2006: the Defense Advanced Research Projects Agency (DARPA) budget remains flat at $3.0 billion, while the Chemical and Biological Defense Program (CBDP) sees its budget surge 47 percent to $1.0 billion. The Missile Defense Agency, however, loses $1.2 billion in funding down to $7.7 billion. Congress adds millions of dollars for DOD support of basic and applied research, much of it in the form of earmarks. Basic research (“6.1”) falls 2.9 percent to $1.5 billion, but this is an improvement over a 13 percent proposed cut (see Table 2). Applied research (“6.2”) gains 6.5 percent to $5.2 billion, again despite steep cuts in the Pentagon request.

 - The National Aeronautics and Space Administration (NASA) has a budget of $16.6 billion in 2006, $2.5 percent or $400 million more than last year, but $350 million of the increase is emergency funding to repair facilities damaged by Hurricane Katrina. But there are big changes within the essentially flat budget:  NASA’s R&D funding climbs 6.2 percent or $661 million to $11.4 billion as an expected decline in non-R&D Space Shuttle costs frees up money for NASA R&D programs (see Table 1 and Figure 2). The entire increase and more goes to Constellation Systems (up $712 million, nearly tripling to $1.1 billion) for applied research on the next generation of human space vehicles, leaving funding for all other NASA R&D programs down. There are steep cuts in aeronautics research (down 3.4 percent to $930 million), the earth sciences portfolio (down 8.3 percent to $2.1 billion), and especially biological and physical sciences research (down 14.4 percent to $791 million). The large R&D increase comes after a similarly sized cut in 2005, and leaves NASA R&D funding flat in real terms for the last decade (see Figure 7).

- After a year-end across-the-board cut, the Department of Energy (DOE) has $8.6 billion in its final 2006 budget for R&D activities, a slight cut of 0.1 percent (see Table 1). Although DOE’s Office of Science (OS) originally received a modest increase in its R&D portfolio, an across-the-board cut in December leaves the Science portfolio down 0.4 percent to $3.3 billion. DOE requested an even steeper cut, but Congress added $130 million in congressional earmarks and a boost in computing research. The final budget will lead to dramatic cuts in DOE support of operating times at scientific user facilities. Energy-related R&D appears to gain 9.6 percent to $1.3 billion because of a rescission in 2005, but actual funding declines slightly. Congress supports Administration priorities in coal and nuclear energy R&D, but there are cuts in other energy areas including the Administration priorities of hydrogen and fuel cells, and earmarks dominate most energy portfolios. Congress terminates the controversial Robust Nuclear Earth Penetrator program in 2006. DOE’s defense R&D declines 2.4 percent to $4.0 billion, including a steep cut to defense computing research

- The final Department of Homeland Security (DHS) budget for FY 2006 provides $1.3 billion for R&D, a 3.1 percent increase that slows recent growth in the DHS R&D portfolio (see Table 1). R&D to develop countermeasures against weapons of mass destruction continue to dominate the DHS R&D portfolio, with $210 million for radiological and nuclear countermeasures R&D (nearly double 2005 funding), including a new Domestic Nuclear Detection Office (DNDO), and $376 million for biological countermeasures. There are large increases for R&D on more conventional threats, including $44 million for explosive countermeasures (more than double 2005 funding), $109 million for R&D to counter portable anti-aircraft missiles (up 79 percent), and $40 million for critical infrastructure protection R&D. To offset increases in priority areas, there are cuts in other areas of the DHS R&D portfolio, including threat and vulnerability assessments, standards development, rapid prototyping, cybersecurity, and aviation security.

- Congress agreed on a $2.4 billion R&D portfolio in FY 2006 for the U.S. Department of Agriculture (USDA), a slight cut of $10 million or 0.4 percent that stands in sharp contrast to a requested 15 percent cut because of hundreds of millions of dollars in earmarks (see Table 1). Congress rejects USDA’s proposals to slash formula funds in its extramural research portfolio, and instead preserves a balance between formula funds, competitive funds, and earmarks. Hatch Act formula funding for land-grant colleges remains at $177 million, in contrast to a USDA proposal to eliminate half of this funding and shift the funds to a new $75 million competitive grants program. The National Research Initiative (NRI) of competitively awarded research grants increases slightly to $181 million, well short of a $250 million request. Earmarked special research grants, however, grow significantly from $120 million to $127 million and earmarks also grow in other areas of the USDA budget. USDA intramural R&D falls to $1.3 billion, primarily because of a drop in R&D facilities construction funding.

- In a compromise between steep House-proposed cuts and equally large Senate-proposed increases, the final Department of Commerce R&D budget totals $1.1 billion, down 1.5 percent from 2005 after an across-the-board cut (see Table 1). The Advanced Technology Program (ATP) survives House and Administration proposals to eliminate it, though at a little more than half last year’s funding level with no money for new grants. R&D in the National Oceanic and Atmospheric Administration (NOAA) increases 1.7 percent to $661 million in contrast to House and Administration proposals for steep cuts, but the increase is due to a new earmarked Alaskan fisheries R&D program, leaving other NOAA R&D down.

 - In FY 2006, Interior R&D totals $629 million, a gain of 2.2 percent over 2005 (see Table 1). Congress reversed proposed cuts to R&D in the U.S. Geological Survey (USGS) and instead agreed on an increase of $11 million or 2.1 percent to $553 million. R&D funding for Interior remains on a downward trend for the sixth year in a row.

 - The Environmental Protection Agency’s (EPA) R&D budget barely increases by just 0.2 percent or $1 million to $573 million in FY 2006 (see Table 1). Because of a reduction in congressional earmarks, most EPA R&D programs are set to receive slight increases.

- Department of Transportation (DOT) R&D funding climbs dramatically in 2006 to an all-time high of $841 million, a 13.0 percent or $97 million increase (see Table 1), thanks to an August transportation reauthorization bill that guarantees large increases in highway funding as well as numerous congressional earmarks. R&D in the Federal Aviation Administration (FAA) increases 5.0 percent to $276 million in contrast to a requested cut.

- Department of Veterans Affairs (VA) federal R&D totals $805 million in FY 2006 (see Table 1), up 2.7 percent from last year and a similar boost over the request. VA is the only federal agency exempt from across-the-board cuts in 2006.

Budget Outlook: On the Downward Slope 

The federal fiscal outlook remains bleak, and the FY 2006 budget results are likely to be just a preview of what lies ahead. Although the U.S. Treasury reported that last year’s (FY 2005) federal budget deficit was $319 billion, down from a record $413 billion the year before, the good news is only a temporary reprieve from record-breaking levels of indebtedness. Much of the decline in the deficit was due to a one-time surge in tax receipts, while in FY 2006 a large chunk of the billions of dollars for Gulf Coast reconstruction and relief approved in September will be paid out. Combined with later emergency appropriations for avian flu, heating assistance, veterans medical care, and military operations, the FY 2006 deficit could easily approach $500 billion. Although political leaders have made a mantra of restraining the deficit, they have focused their energies solely on reducing the discretionary one-third of the spending side of the federal budget: in 2005, their only budget-cutting success was enacting a 1 percent across-the-board cut for all discretionary programs and a 1 percent cut for regular domestic discretionary. Meanwhile, billions of dollars in emergency spending were approved in 2005, and lawmakers could not agree on a relatively modest $40 billion (over 5 years) reduction in projected entitlements spending even as a new Medicare prescription drug benefit is poised to dramatically increase such spending in 2006. Lawmakers continue to refuse to look on the revenue side of the federal budget: indeed, early in 2006 they are poised to give final approval to $70-$100 billion (over 5 years) in tax cuts which would, of course, increase future deficits.

In this budget-cutting environment in which only domestic discretionary programs are cut, it is no surprise that federal R&D programs find themselves on the downward slope of funding trends. For trend after trend, whether it is federal R&D, nondefense R&D, research funding, or individual agency budgets, funding climbed between 1998 and 2003 in the years when the federal government ran budget surpluses and had the wherewithal to boost spending, crested in 2004 after deficits returned, and are now headed down in 2005 and 2006, mirroring trends in overall discretionary funding. R&D programs have done slightly better than overall domestic spending in recent years, but overall the R&D portfolio has moved in lockstep with larger budget trends.

There seems little hope of R&D funding breaking free, as long as the larger budget strategy prevails.  Although many lawmakers of both parties have called on the U.S. to dramatically boost its investments in basic research in order to ensure U.S. innovative capacity and therefore future economic competitiveness, these proposals have run into a brick wall of tight budgets. Looking back on 2005, there finally appeared to be bipartisan and widespread recognition that the U.S. leadership in science and technology, innovation, and technology-based competitiveness were under threat from emerging economic competitors, especially India and China, but instead of boosting R&D investments policymakers cut them to meet restrictive budget targets. And things could get worse before they get better: the Bush Administration’s FY 2007 budget proposal, due in February, is primed to continue the same combination of tax cuts, declining discretionary spending, and modest entitlements reforms that have characterized past budgets, resulting in what is likely to be another year on the downward slope for most parts of the federal R&D portfolio.

(The AAAS publication Congressional Action on Research and Development in the FY 2006 Budget is now available. The full report is available online. The full report offers 20 detailed funding tables, several charts, an analysis of funding trends, and analyses of the impacts of the FY 2006 budget on each of the major R&D funding agencies. Individual agency analyses, historical tables, agency funding tables, and charts of recent funding trends are also available on the AAAS R&D Web site in the “FY 2006 R&D” section.)

- January 4, 2006

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/rd

Go to Tables 1-3

 

 

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