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| R&D Trends and Special Analyses
Kei Koizumi, AAAS |
HIGHLIGHTS
AGENCY TRENDS FROM A FUNCTIONAL PERSPECTIVE The federal government divides the budget into 20 "functional" groupings to illustrate national priorities. (AAAS separates the general science, space, and technology function into its subfunctions of General Science and Space.) The congressional budget resolution divides the total budget "pie" into functional "slices," which serve as non-binding guides for appropriators in allocating funds to agencies and programs. Viewing the R&D budget by function sheds light on the funding priorities assigned to different areas over time. The following discussion presents federal R&D programs according to their functional category in the federal budget. Table I-4 shows R&D by function in the FY 2000 budget. (Chapter 1 discusses historical trends in the functional distribution of federal R&D.) An agency's programs are typically distributed across functions, and each function often includes programs from multiple agencies. No overlap occurs between functions; each R&D program is assigned to only one function, even though the R&D activity may address several functional concerns. For example, NASA's Earth Science program is classified under the Space function, even though its R&D is also closely related to Natural Resources and Environment, as well as General Science. Defense R&D (function 050), which includes R&D activities in the Department of Defense (DOD) and the defense-related atomic energy activities of the Department of Energy (DOE), has accounted for the majority of R&D for the past two decades. However, in the FY 2000 request, nondefense R&D would exceed defense R&D for the first time since the Carter Administration. Nondefense R&D would increase by 3.6 percent to $39.4 billion. Defense R&D, however, would fall $2.7 billion or 6.6 percent to $38.5 billion, 49.4 percent of total R&D. Defense R&D would fall mostly because of cuts in weapons development activities and because a one-time emergency appropriation of $1 billion in FY 1999 for the Ballistic Missile Defense Organization (BMDO) would not be renewed. Although there would be a large increase in the total FY 2000 DOD budget, the additional funds would mostly go toward military salaries and weapons procurement. Among the DOD R&D categories, only the "6.1" (basic research) category would receive an increase (to $1.1 billion, $6 million above FY 1999). Detailed information on DOD's support of R&D is in Chapter 7. Defense-related R&D at DOE would be the only area of defense R&D to increase, because of the Administration's continuing commitment to science as the best means of maintaining the safety and reliability of the nation's nuclear weapons under a Comprehensive Test Ban Treaty. DOE's defense R&D would increase by 5.7 percent to $3.4 billion in FY 2000, mostly because of the Stockpile Stewardship program, which aims to replace nuclear testing with computer-based modeling of nuclear explosions (see Chapter 10 for more information on DOE's R&D). In the nondefense mission areas, R&D in general science, energy, transportation, agriculture, and commerce are priorities in FY 2000. General science (function 251) R&D has two major components: the National Science Foundation (NSF) and the Science account in DOE. General science R&D would increase $303 million or 5.6 percent in FY 2000 to $5.7 billion because of large increases for selected programs in NSF and DOE, especially those involved in the Information Technology for the Twenty-First Century (IT2) initiative. (Please see Chapter 8 for information on NSF and Chapter 10 for information on DOE.) Energy (function 270) R&D includes DOE's research on energy supply, fossil energy, coal technology, and energy conservation. It also includes R&D funded by the Nuclear Regulatory Commission and the power programs of the Tennessee Valley Authority, a government-owned corporation. The $1.4 billion request for this function in FY 2000 would be 15.3 percent or $180 million more than FY 1999, mostly because of large increases for the Energy Conservation, Nuclear Energy, and Solar and Renewables programs. These increases are part of the Administration's effort to reduce U.S. greenhouse gas emissions to achieve compliance with the U.N. Kyoto protocol, and reflect the importance that technological solutions will have in this effort. Past proposed increases for energy R&D, however, have met with resistance in Congress. Agriculture R&D (function 350) includes all R&D at the U.S. Department of Agriculture (USDA) except the Forest Service. Agriculture R&D would increase $159 million to $1.6 billion, a gain of 10.9 percent. USDA would increase funds for competitively awarded research grants in the National Research Initiative ($200 million, up from $119 million in FY 1999) and would also provide $120 million in new money for competitively awarded research grants from the Initiative for Future Agriculture and Food Systems. The Initiative was created last year as a mandatory program, but FY 1999 funding was blocked by Congress. (For more information on USDA, see Chapter 12.) Transportation R&D (function 400) would increase to $1.9 billion, up 5.7 percent. This function includes NASA's aeronautics R&D as well as the R&D programs of the Department of Transportation (DOT). DOT would use some of the extra revenues generated by last year's expansion of transportation funding in the Transportation Equity Act for the 21st Century (TEA-21) to provide increases for highway R&D. The Federal Highway Administration (FHWA) in DOT would allocate $459 million for R&D, $202 million more than FY 1999, of which $160 million would come from new revenues generated by TEA-21. Total DOT R&D would increase 38.7 percent to $836 million. NASA's Aero-Space Technology account, however, would fall 24.8 percent to $1.0 billion because of the elimination of several aeronautics research programs. Commerce R&D (function 370), consisting of the National Institute of Standards and Technology's (NIST) programs, would grow by 20.5 percent to $571 million. NIST would begin construction of the Advancement Measurement Laboratory (AML) and would expand its Advanced Technology Program of industrial R&D grants. Most other functional areas of R&D would receive modest increases. The only functional area to receive less in FY 2000 would be International R&D (function 150), down $48 million to $123 million. CHARACTER OF WORK FOR R&D Agencies develop their budgets in programmatic terms and then retrospectively estimate the amounts that would be spent on different types of R&D. Statistics on federally funded R&D generally make distinctions among basic research, applied research, development, and R&D facilities and capital equipment-terms that describe the "character of work" in R&D programs. (See Appendix 2 for definitions.) The figures shown inTables I-5, I-6, and II-1 represent agencies' classifications of basic and applied research, development, and R&D facilities within their R&D portfolios. The data reported here are imprecise and reflect the agencies' judgments as to how their R&D fits into the definitions for character of work. As shown in Table II-1, basic research would be a high priority in the FY 2000 budget, climbing $816 million or 4.7 percent to $18.1 billion. Basic research funding would increase significantly at NSF (up 7.8 percent), NASA (up 15.2 percent), and USDA (up 12.7 percent). Applied research would increase by 0.5 percent to $16.6 billion; development would fall by 5.3 percent because of cuts in DOD's development work, although it would still account for the majority of federal R&D at $40.7 billion. The character of work is quite different in defense and nondefense R&D, a point illustrated in Table I-6. Development would be by far the largest component of defense R&D, accounting for 83 percent of the FY 2000 total, while applied research would be 12 percent and basic research would be only 3 percent. In nondefense R&D, by contrast, basic research would be the largest category at 43 percent, with development at 22 percent and applied research at 31 percent. A major reason for the difference between the character of defense and nondefense R&D is that development in DOD includes testing and evaluation of weapons systems. These activities are expensive compared to other types of R&D.
 Figure 1. Because of the expensive development costs of DOD weapons systems, the federal R&D portfolio looks dramatically different if only basic and applied research are considered, and development and R&D facilities are excluded. Figure 1 and page 138 of Table II-1 show that when only research is considered, DOD is no longer the dominant federal agency supporter. Federal research support is more evenly spread among the agencies than total R&D, and NIH becomes the largest federal supporter, with $13.2 billion out of a $34.8 billion portfolio in FY 2000. R&D IN COLLEGES AND UNIVERSITIES Despite their comparatively small share of federal R&D funding, colleges and universities have long played a key role in the nation's R&D effort. Academia serves as a primary site for the performance of basic research and for the training of future scientists and engineers. As shown inTable I-8, 60 percent of the R&D performed by universities is funded by the federal government, with most of the rest coming from the institutions' own funds. Universities still receive relatively little support from industrial firms for R&D ($1.7 billion in FY 1997). Table I-7 shows agencies' estimates for their support of R&D in colleges and universities, most of which is for basic research. Total federal support of academic R&D is expected to increase 2.3 percent to $15.5 billion. NIH, which is responsible for nearly 60 percent of all federal support of academic R&D, would account for nearly all of the $9.6 billion total for the Department of Health and Human Services (HHS). NSF, the next largest federal sponsor with 15 percent of the federal total, would boost its support by 7.9 percent to $2.3 billion. USDA would increase its support for R&D at colleges and universities by $75 million or 17.9 percent to $493 million because of a planned expansion in competitively awarded research grants, most of which are expected to go to universities. The increases in competitive grants, however, would be partially offset by proposed cuts in formula research funds distributed to the nation's land-grant universities. OUTYEAR PROJECTIONS FOR FEDERAL R&D TO FY 2004 The FY 2000 budget also contains detailed projections for federal spending to FY 2004. The AAAS analysis of these outyear projections reveals that, despite the expectation of growing surpluses, the Clinton Administration is anticipating declines in both defense and nondefense R&D after FY 2000. Most of the projected future surpluses would be dedicated to Medicare and Social Security, with relatively little left over for discretionary programs. In addition, even among discretionary programs, R&D has been accorded lower priority this year relative to other areas. This is in contrast to last year's (FY 1999) budget which projected increases for nondefense R&D in future years. Federal support for R&D is projected to fall from $79.3 billion in FY 1999 to $78.5 billion in FY 2004, a decline of 10.7 percent after adjusting for expected inflation (see Table I-15). Most of the decline is due to a sharp cut in defense R&D in FY 2000. By FY 2004, defense R&D would fall 14.3 percent in inflation-adjusted terms even as total defense spending would rise. Nondefense R&D would increase under the President's proposals from $38.1 billion in FY 1999 to $39.4 billion in FY 2004, but this gain becomes a 6.7 percent decline after adjusting for inflation. Total nondefense discretionary spending is projected to face similar declines. Total nondefense R&D would increase in FY 2000 but would remain level thereafter because any planned increases for nondefense discretionary would go to non-R&D programs. In contrast to last year, when many nondefense R&D agencies were projected to receive outyear increases, only a few programs are projected to stay ahead of expected inflation in this year's budget. NASA's non-aeronautics research, DOE's fossil energy and energy conservation programs, the Department of Commerce's Advanced Technology Program (ATP), and DOT's highway and aviation R&D programs would receive real increases; nearly all other R&D programs would see their budgets lose ground to inflation over the next several years. 1 On an agency level, only DOT (up 34.9 percent after inflation), the Department of Education (up 11.2 percent), and the Department of the Interior (up 6.7 percent) would see their R&D increase to FY 2004. Other agencies would see cuts, including NSF (down 3.4 percent after inflation), NIH (down 7.9 percent), DOE (down 3.5 percent), NASA (down 8.7 percent), and USDA (down 5.0 percent). (See Figure 2.)
 Figure 2. For defense R&D, the long post-Cold War slide in R&D funding would continue. DOD's priorities for the next few years include military personnel pay, operational readiness, and procurement of new weapons systems. While DOD's basic research (down 3.5 percent) and applied research (down 7.4 percent) programs would fare better than development, its total R&D would fall 15.1 percent after inflation to $35.7 billion. To understand these projections, one must view them in the context of the entire federal budget.2 Nearly all federal R&D is funded through the discretionary one-third of the budget subject to annual appropriations. The FY 2000 budget proposes to increase total discretionary spending over the next five years at a rate just enough to keep pace with expected inflation. Most of these increases would go to DOD, resulting in inflation-adjusted cuts for nondefense discretionary programs. The Administration's proposals are constrained by discretionary spending caps enacted in 1997. In order to fit discretionary spending under the FY 2000 and future caps, the outyear projections assume as much as $63 billion a year in new revenue streams that are currently not available because of tight statutory caps on discretionary spending. The budget proposes several offsets to additional discretionary spending, including as much as $11 billion a year from tobacco-related sources. The budget also assumes that a Social Security reform package will be enacted that will enable up to $51 billion a year in projected future budget surpluses to be used for discretionary spending. The availability of these revenue streams is already assumed in the outyear spending projections, but even these additional sources are insufficient to provide inflation-adjusted increases for most nondefense programs.
Projections, of course, are always wrong. They are not predictions. The FY 2000 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. The FY 2000 budget shows that the importance the Administration assigns to defense spending and Social Security is higher than in past years. As a result, federal R&D investments receive a lower priority than last year. However, as the budget is considered on Capitol Hill, congressional priorities and public voices, including the voices of the science and engineering communities, will be heard. In the end, the FY 2000 budget and future ones will end up far different from the projections.
1 For a program-by-program look at the outyear projections, please see the detailed analyses of projected defense R&D and nondefense R&D, available on the AAAS Web site at http://www.aaas.org/spp/R&D in the "Guide to R&D Funding Data" section.
2 For a more detailed discussion of the outyear projections for R&D in the context of the larger federal budget, please see the "AAAS Analysis of Outyear Projections for Federal R&D in the FY 2000 Budget," available on the AAAS Web site at http://www.aaas.org/spp/R&D in the "FY 2000 R&D" section. | |
