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Observations on the President's
FY 2001 Federal Science and Technology Budget
Committee on Science, Engineering and Public Policy, NAS/NAE/IOM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Findings
o Since 1987, industry R&D has increased 196 percent, and the federal share of total R&D in the U.S. has dropped from 46 percent to 27 percent. FIGURE 1: FS&T Budget and Basic Research, FY 1994-FY
2001
The FY 2001 FS&T budget The FS&T budget encompasses the federal investment in the creation of new knowledge and technologies, as detailed in earlier reports from the National Academies. The Administration has moved toward this concept by identifying, in addition to the usual R&D budget, a budget known as the 21st Century Research Fund, similar in spirit to the FS&T concept but stressing as well its research priorities. We have compared the R&D, FS&T, and Fund budgets in Figure 2 and in Tables A-1, A-2, and A-3. As can be seen in Table A-1, FS&T differs from the Fund by about $11 billion, of which $3 billion is the "6.3" budget of DOD, $4 billion is Human Space Flight and Mission Support in the National Aeronautics and Space Administration (NASA), and $2.8 billion is Department of Energy (DOE) Defense Activities. Both the FS&T budget and the Fund provide visibility for the research budget and its change in the context of overall R&D. Table A-1. Alternative Perspectives on the President's FY 2001 Science and Technology Budget (millions of current dollars)
Source: OMB, Budget of the U.S. Government FY 2001 and AAAS, Tables II-1, II-2, II-7, II-8, II-11, and II-12. The FY 2001 budget proposes a small increase in FS&T-$674 million, an increase of 1.3 percent from FY 2000 in constant dollars, to a total of $52.6 billion (see Figure 1). Last year, the Administration requested an increase of only 0.4 percent in FS&T spending, but the Congress raised it 6.4 percent in appropriations (see Table A-3). Of particular note in FY 2001 are the proposed increases at NSF (17.5 percent), the Department of Health and Human Services (HHS; 3.9 percent), and certain programs in DOE (5.9 percent overall). NASA has a real increase (0.7 percent) for the first time in several years. DOD FS&T spending would be cut 13.9 percent. Aside from large proposed increases at the National Institutes of Health (NIH) and NSF, proposed FS&T spending in the rest of the federal government would be down 1.4 percent. FIGURE 2: FY 2001 R&D, FS&T, and 21st Century Research Fund (in billions)
Table A-2. Federal Science and Technology (FS&T) Budget, by Agency, FY 1999-FY 2001 (millions of constant FY 2000 dollars)
n.a. = not available
The Administration proposes to spend $42.9 billion on the 21st Century Research Fund, an increase of 5.0 percent in constant dollars over FY 2000. This is substantially higher than the 1.7 percent increase in constant dollars proposed by the administration for this fund in FY 2000, but smaller than the 6.5 percent growth actually appropriated by Congress last year. A set of inter-agency initiatives is highlighted this year, with focused efforts in nanotechnology ($485 million in constant FY 2000 dollars), information technology ($2.27 billion), clean energy ($283 million), climate change ($1.4 billion), and six others, as detailed in Table I-10 (p. 80). The emergence of the 21st Century Research Fund is a welcome program descriptive device for some areas of research that are ripe for making dramatic progress, and other areas of current importance to society. Table A-3. Trends in FS&T and R&D, FY 1994-FY 2001 (millions of constant FY 2000 dollars).
* Note: Changes in DOE accounting for Atomic Energy Defense Activities has resulted in a modification in the calculation of FS&T beginning with FY 1999. Source: AAAS Tables I-16 and II-1; FS&T figures for 1994-1998 carried forward from Observations on the President's FY 2000 Federal Science and Technology Budget. Concerns Overall U.S. Investment in Research and Development: The FS&T budget is one part of the broader measure of R&D in the federal government, as well as of the total public and private support of R&D. Total R&D spending has been rising as a share of gross domestic product (GDP) and is now nearing 3 percent-2.8 percent in 1999. While hard and precise targets for total R&D spending and for its composition are hard to establish, there is a wide consensus that U.S. economic growth and scientific preeminence depend on maintaining and possibly increasing the share of GDP devoted to R&D. The Administration has suggested a target goal of total R&D as 3.0 percent of the U.S. GDP. Movement in recent decades toward that goal has been achieved through growing private rather than public investment. As seen in figure 3, there has been a significant divergence of federal and non-federal investment patterns in R&D as shares of GDP since 1987. FIGURE 3. Federal, Non-Federal, and Total Support for R&D as a Percent of GDP, 1953-1999
Basic research receives its principal support from publicly supported R&D, whereas privately sponsored R&D emphasizes applied research and development. The continued effectiveness of industry expenditures on applied research and development depends on the continued flow of basic research findings and the associated training of scientists and engineers. Industry benefits from, and invests in the development of products based on, basic research conducted in prior decades. Thus, continued growth of basic research will help sustain continued high returns to private R&D outlays, and ensure a pipeline of new knowledge accessible to future generations. The growth of industry spending on R&D should, therefore, not lull observers into thinking that the federal research budget can consequently be reduced. This growth does not reduce the need for a strong federal research budget. Balancing the FS&T Portfolio: The differences in the growth rates of FS&T investments across fields are a concern. In essence, the life sciences budget has surged ahead while the FS&T budgets for other fields have increased only slightly or have decreased with the cuts in the DOD budget. FS&T at NIH provided an increase to life sciences research between FY 1998 and FY 2000 that is greater than all of FS&T proposed for NSF for FY 2001. Research in the life sciences is motivated by a need to improve health. Yet many of the improvements seen in the past decades are due to advancement of knowledge that comes from other fields. Examples would include magnetic resonance imaging, positron emission, and miniaturization in athroscopic surgery. As Harold Varmus, former Director of NIH, has often explained, discoveries in biology and medicine depend on progress in physics, chemistry, engineering and many allied fields. The FY 2001 budget recognizes the need for balanced expansion of research with substantial increases proposed for NSF in particular. While reallocation of funds within a limited budget is inescapable, abrupt decreases can raise difficult problems. Among major programs, for instance, a cut of 14 percent is proposed for DOD FS&T. DOD has been and remains a major sponsor of academic research in the physical sciences and engineering. Much greater attention needs to be given to the impact of such reductions on fields, as available retrospectively in NSF data, where multi-year trends may signal the erosion of U.S. capability. Analysis could assess whether those trends affect U.S. global leadership in science and engineering. Swings in FS&T levels pose difficulties for those planning careers in science and engineering. Federal research funding directly and indirectly supports the training of the next generation of scientists and engineers. Only rarely do budget decisions take into account those effects of the various agencies funding research. A recent National Research Council review of major fields with substantial declines in federal research support (chemical engineering, mechanical engineering, and electrical engineering) in the 1990s shows a strong correlation with reduced graduate enrollments in those fields. Mission agencies contribute substantially to fields not readily identifiable in the stated missions. The cuts in programs at NASA, DOE, and DOD are especially notable. These declines, accumulated over a period of years, can be damaging to a research infrastructure that takes years to build and to maintain at state-of-the-art condition. The adequacy of physical infrastructure also requires close attention. The rapid, recent increases in FS&T funding for the life sciences challenge the capacity of research institutions to respond to the demands for expanded programs. Construction lead time for buildings and laboratories can be long. Without such physical capital, ambitious research programs may be needlessly costly or simply unattainable. Recent FS&T proposals have inadequately reflected the long-term costs to research institutions of raising the funds and building the human and physical infrastructure to maintain an adequate research capacity. Rising levels of federal support for research programs increase tension between the government and universities over indirect cost recovery. Universities are presently contributing substantially toward making this investment effective with their own resources as a result of incomplete cost recovery and other forms of cost-sharing. Unless universities can find additional revenue, this cost burden will cause tradeoffs with other university functions. The successful completion of efforts to reform rules governing reimbursement for indirect costs deserves high priority. Conclusions The Administration has made progress in FY 2001 in the strategy and presentation of the federal science and technology budget. Some areas of FS&T have increased with generally positive impacts, and other programs have been cut. The strong increase proposed for NSF (17.5 percent) represents an important investment in basic research and a step toward better balance in federal support among the various research fields. Overall, the proposed increase in constant dollars is only 1.3 percent. The initiatives highlighted in the President's budget and the 21st Century Research Fund are useful, and may fuel the kind of research that fosters public support for research as well as improvements in the quality of life. The budget causes concerns about the effects of proposed cuts in Defense and other mission agencies. A continuing need exists to analyze possible imbalances among the fields of science and engineering at a time when many fields are increasingly interdependent for achieving optimal results in the productivity of the economy and the pursuit of knowledge.
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