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Federal R&D Spending Faces Budget Cuts in 2011 and Beyond

After a tense week in which a government shutdown was averted, the White House and congressional leaders agreed on a 2011 budget that spared research and development from the worst of the cuts, according to Patrick Clemins, director of the AAAS R&D Budget and Policy Program.

But the outlook for the 2012 budget remains uncertain, he said, as the political parties gear up for a major battle over federal deficits and long-term spending priorities. Basic research, which tends to have broad bipartisan support, fared well under the 8 April compromise on the 2011 budget, Clemins reported.

“While much of the scientific community can breathe a sigh of relief that the cuts were not as bad as those proposed” in a House Republican budget plan, Clemins said, “many R&D initiatives, including the president’s ‘Plan for Science and Innovation,’ are under-funded in the FY 2011 compromise, limiting those programs’ ability to contribute to stable economic growth.”

The compromise 2011 budget, in details released 12 April, appropriates $30.7 billion for the National Institutes of Health (NIH), a cut of 0.8%, or $260 million from current FY 2010 spending levels. The National Science Foundation (NSF) will see a cut of about 1% to $6.8 billion. The Department of Energy’s Office of Science was cut by $35 million, about 0.7%, to $4.9 billion and the Advanced Research Projects Agency-Energy (ARPA-E) will receive $180 million.

Patrick Clemins

However, Clemins said, those numbers do not include an additional 0.2% across-the-board cut for all non-defense agencies and programs.

At a 7 April congressional luncheon briefing, Clemins spoke about the importance of federal research and development funding for the future of innovation and economic growth. Reflecting the atmosphere on Capitol Hill, uncertainty dominated the discussion.

“I think it’s anybody’s guess right now,” Clemins said about what the 2012 budget will include. “We’re going to wait and see how 2011 goes and it’ll give us some insight into how this Congress works in terms of negotiating,” he said.

U.S. Representative Rush Holt

U.S. Representative Rush Holt (D-New Jersey) warned at the briefing that cuts to R&D could have profound consequences for future U.S. budget health. “This deficit attention disorder under which we’re operating here has erased the word ‘investment’ from our vocabulary,” he said. “I thought we were making real progress over the last few years in an understanding of the economic as well as cultural advantages of investment in research, that we really were making progress with the very idea of investment.”

U.S. Representative Judy Biggert

The briefing was held in conjunction with the House Research and Development Caucus which is co-chaired by Holt and U.S. Representative Judy Biggert (R-Illinois). Her district includes Argonne National Laboratory and Fermilab, and she agreed with Holt’s assessment. “If we don’t have this [R&D investment], we are never going to get the economic growth that we need and be able to create new jobs, put people back to work,” she said.

Alan I. Leshner

“Over 50% of U.S. economic growth since World War II has come from science and technology,” said Alan I. Leshner, the chief executive officer of AAAS and executive publisher of the journal Science. “The return on investment for academic scientific research is best estimated at around 28%, which isn’t bad. I wouldn’t mind it if my own investments could come close to it.”

“Total discretionary spending tracks very closely to R&D spending over the course of time,” usually making up about 12% of discretionary spending, Clemins said. President Barack Obama committed to freezing discretionary spending for the next five years so R&D spending is likely to stay flat over that time frame, he said.

“Despite that decrease in discretionary spending, the overall budget continues to increase” because of Medicare, Medicaid and interest on debt, Clemins said. “Reducing the deficit by just focusing on one piece of this pie is not going to get the job done.”

Federal R&D dollars are spread across two dozen departments and agencies, though two departments manage the bulk of federal R&D spending. The Defense Department manages nearly 52% of the R&D budget while the Department of Health and Human Services manages about 22%. R&D makes up a part of 11 of the 12 annual appropriations bills.

“Most people think of the role of R&D as to support federal missions,” Clemins said, “and so the Defense Department engages in R&D to create new weapons systems and new satellite platforms. Agriculture invests in R&D to create new seed crops and new irrigation techniques.”

But federal R&D spending also really drives US innovation, he explained. “All those basic research ideas that accumulate over time can filter through that pipeline and create jobs and businesses and new products as well,” Clemins said. NSF and NIH are the two primary drivers of such innovation, Clemins added.

“NIH gave out about $8.2 billion in grants during the last two years, mostly in two-year grants to help stimulate the economy as part of the Recovery Act,” Clemins said, but the institutes now have what Clemins called “a stimulus cliff problem.” “A lot of those grants are running out and there’s $8.2 billion worth of researchers coming back to NIH with a flat budget looking for renewals and for more grant money so it’s going to make the process much more competitive,” he said. “We should expect to see the award rate drop quite significantly as researchers come back for their next grant.”

Obama’s 2012 budget request included about $148 billion for R&D with spending on research expected to increase about 12% while development spending is expected to decline about 5%. “The administration really sees investment in R&D as a way to grow out of this recession,” Clemins said. “Within that budget, we see a big push to increase research funding.”

Clean energy and climate research are expected to benefit from Obama’s R&D budget request. Clemins also noted that the administration would like to expand, simplify, and make permanent the research and experimentation tax credit. The administration also plans to spend $100 million over the next 10 years to train 100,000 K-12 teachers in science, technology, engineering, and mathematics.

The budget request also appropriates $3 billion for the wireless innovation fund. “This money will come from sales of the old analog TV spectrum that we no longer need and this fund will go towards cyber security and also help to advance the penetration of broadband into rural areas,” Clemins said.

The political and philosophical differences between the Republican-controlled House and Democratic Senate become evident when comparing priorities within the proposals prior to the agreement on a 2011 budget compromise, Clemins said. While the Senate proposed $143.4 billion for R&D for FY 2011, the House proposed $140.7 billion.

“The real difference here is where those cuts are coming from in terms of the budget. You look at non-defense R&D, the House has a significant cut from current spending of about $3 billion and a huge gap from what the president wants next year,” Clemins said. “Up on the Senate side, non-defense R&D would actually see an increase in their amendment. So most of the Senate cuts in R&D tend to come on the defense side. So that’s a significant difference in philosophy in where these cuts are coming from.” This could be an indication of where debates over FY 2012 spending levels will fall as Congress continues to deliberate over the federal budget.

A key question, he said, is whether “we going to invest in non-defense and keep that flat, or are we going to end up with significant cuts in non-defense R&D? And the likely answer is probably somewhere in the middle.”

Going forward, Congress has to come up with a budget for fiscal year 2012, though that’s not the only challenge they’ll face.

“After we get done with fiscal year ’11, we have the debt ceiling increase to discuss and so attached to that will likely be more budget cuts,” Clemins said. “As we saw, the R&D budget is neatly tied to total discretionary spending, so we’ll probably see some R&D cuts embedded in that as well, although some discussions on the Hill are now talking about attaching more entitlements and mandatory spending cuts to the debt increase.”


See the latest analysis from Patrick Clemins, director of the AAAS R&D Budget and Policy Program.

View the presentation slides for Patrick Clemins’ 7 April R&D briefing on Capitol Hill.