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On Budget Day, A Snapshot of Current R&D Funding

Some big-picture context for the White House's 2020 science budget rollout.

As last week’s first look made clear, the Trump Administration’s science budget for FY 2020 continues to seek big cuts for most federal R&D funders. The next phase of the budget rollout is slated for today and promises much more detail from agencies this afternoon. While we wait, here’s a look at some U.S. R&D trends with graphs to help put the President’s budget in its proper context (see this report and these resources for more. Much of the below data comes from the National Center for Science and Engineering Statistics).


U.S. Industry is the Dominant Funder of R&D, and the Gap Continues to Grow. According to the most recent data, U.S. industry now accounts for 69.7 percent of national R&D expenditures, an all-time high, and up from 61 percent around the time of the Great Recession. Meanwhile, the federal share of R&D has dropped to 21.8 percent, and federal R&D as a share of U.S. GDP has also dropped to 0.61 percent. Both are post-Sputnik lows.


Federal Research Funding Has Been A Bit More Stable. While the relative decline in federal R&D is oft-noted, it’s not the full story. In reality, the biggest drops relative to GDP are on the “D” side. This is primarily for two reasons: space-related development declined after Apollo, while Department of Defense development has been losing its share of the federal budget over many years (see an interactive visualization). In inflation-adjusted dollars, federal development spending is about where it was 50 years ago.

On the other hand, federal research spending has been steadier. For instance, federal basic science dollars more than tripled between Apollo and the Great Recession, when spending cuts began (see visualization). This has allowed it to keep up with GDP growth.


Industrial Basic Research Funding Is Catching Up. For many years federal and industrial research have been roughly even as a share of U.S. GDP, with industry’s emphasis on applied research and government more focused on basic. But over the past decade-plus, the data show a steady increase in industrial funding of basic research as well.  This is something of a paradox, as studies have documented the evolving culture of corporate research labs away from high-risk fundamental science, as well as a preference for more applied extramural research. And the emphasis on the “D” in industrial R&D has crept upward since the 1960s, while the share of basic science has not.

What is happening is simply that all corporate R&D spending appears to be increasing: particularly development spending, but basic research as well. The apparent rise in industrial science certainly has implications for budget policy. In recent remarks to Science magazine, new OSTP Director Kelvin Droegemeier embraced the new smaller federal role in science and innovation.


After Bottoming Out, Agency Budgets are Again on the Rise. The years from 2010 to 2013 were tough ones for science and technology programs, as Congress was in a budget-cutting mood. But following the across-the-board spending cuts known as sequestration in FY 2013, Congress has been increasing discretionary spending and pumping research budgets back up in the process. That includes the Republican-controlled 115th Congress, which pushed aside Trump Administration attempts at cutbacks. As of the current fiscal year, energy science and technology programs are more than 10 percent above FY 2010 levels while NIH funding is not far behind (the NIH success rate for RPGs has also crept up, modestly). Most other major research funders are back to where they were when the original rounds of cuts began.


Life Science Remains Dominant in the Federal Research Portfolio. While it has declined some lately, life sciences research – primarily funded by NIH – still accounts for 48.2 percent of the federal portfolio, tallying up to $32.5 billion in inflation-adjusted dollars as of FY 2017. Efforts a decade ago to dramatically boost physical science and engineering research have, obviously, fallen quite short. Engineering and math and computer science have each seen their funding increase by at least 21 percent over that time, while physical science research – which includes physics, chemistry, and astronomy – has declined by 1.3 percent.


Federal Research Dollars Flow Increasingly to Universities. Universities have increased their share of federal research dollars from 25 percent in the mid-1960s to 44 percent and rising today, with total basic and applied research funding at $33.8 billion. Federal agencies remain by far the prime supporter of university research, but universities are also increasing their own share of internal research funding. Universities themselves sourced 25 percent of all research expenditures in FY 2017, double the share from the 1970s.




Matt Hourihan


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