US Federal R&D Investment in FY 2011 and Outlook for FY 2012

bridges vol. 29, April 2011 / OpEds & Commentaries

By Patrick J. Clemins

{enclose Vol.29_Clemins.mp3}

Patrick J. Clemins

The last year of the US appropriations process has been particularly eventful, to say the least. It’s been marked by seven continuing resolutions (CR) which together cut more than $10 billion in spending, an omnibus appropriations bill that had its support wither in the final hours of consideration in the Senate, an election that gave the Republicans the majority in the House of Representatives, resulting in a split 112th Congress, a ban on Congressional earmarks, and preparation for a government shutdown that was ultimately avoided by a last-minute compromise. Who said the budget wasn’t exciting?

The Fiscal Year (FY) 2011 full-year continuing resolution, which includes full appropriations for the Department of Defense, was signed by President Obama on Friday, April 15, and includes unprecedented discretionary spending cuts. The US R&D investment is almost completely contained in the discretionary budget, and R&D-intensive agencies were not immune to the cuts. Generally, however, R&D was spared from the worst of the spending cuts. Basic research programs fared the best, while applied research programs, especially at the Department of Energy, received larger budget cuts, accurately reflecting the current policy debates taking place. Basic research generally has broad, bipartisan support, but discussion is taking place as to how much the federal government should invest in applied research and the role of industry in funding the applied research stage of the innovation pipeline.

{access view=guest}Access to the full article is free, but requires you to register. Registration is simple and quick – all we need is your name and a valid e-mail address. We appreciate your interest in bridges.{/access} {access view=!guest} The National Institutes of Health (NIH) are funded at $30.7 billion in the continuing resolution, a 0.8 percent ($260 million) cut from FY 2010 spending levels. The National Science Foundation (NSF) is funded at $6.8 billion, a 1.0 percent ($67 million) cut. The Department of Energy's (DOE) Office of Science will receive $4.9 billion, a 0.4 percent ($20 million) cut, while the applied research-oriented Energy Efficiency and Renewable Energy (EERE) program would receive $1.8 billion, an 18.4 percent ($408 billion) cut from FY 2010. By comparison, the EERE program had been slated for a budget of $1.5 billion in the original H.R. 1, a 35.0 percent ($775 million) cut. Although the Advanced Research Projects Agency-Energy (ARPA-E) is largely an applied research program with some development spending, it received $180 million in the year-long funding bill, less than the $300 million requested by the President in FY 2011, but its first significant funding outside of the Recovery Act. These funding levels do not include the 0.2 percent across-the-board cut for non-defense agencies.

The full-year continuing resolution does contain some policy directives. One of these, Section 1340, forbids the National Aeronautics and Space Administration (NASA) and the Office of Science and Technology Policy (OSTP) to use federal funds to “develop, design, plan, promulgate, implement, or execute a bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned company.” It also forbids the use of federal funds to “effectuate the hosting of official Chinese visitors at facilities belonging to or utilized by the National Aeronautics and Space Administration.” Interestingly, this directive only applies to NASA and OSTP, not other agencies, and only affects collaboration with China.

Looking forward to FY 2012, the President released his budget request on Valentine’s Day, February 14, 2011. The $3.7 trillion FY 2012 budget request projects a $1.1 trillion deficit next year, down from a $1.3 trillion deficit in FY 2010 and $1.6 trillion in FY 2011. The discretionary portion of the budget is $1.116 trillion, essentially unchanged from last year’s request of $1.115 trillion, but a 6.4 percent increase over the recently passed $1.049 trillion full-year continuing resolution discussed above. Science agencies fare well in the budget request, due to the administration’s priority on investing in American innovation and research and development.

The House of Representatives passed their FY 2012 budget resolution on April 15, 2011. It contains a discretionary budget of $1.019 trillion, almost a full $100 billion less than President Obama’s request. So another round of contentious appropriations debate appears to be shaping up for FY 2012. In a speech on April 13, 2011, the President discussed details of his long-term budget vision. In that speech, he showed signs of flexibility through his desire to “keep annual domestic spending low by building on the savings that both parties agreed to last week.” He did remain firm, however, in his commitment to “not sacrifice the core investments that we need to grow and create jobs,” and reaffirmed his State of the Union Address pledge to invest in medical research, clean energy technology, new roads and airports, and broadband access, education, and job training to “do what we need to do to compete” and “win the future.”

A third vision deserving mention for the federal budget for FY 2012 and beyond is the proposal being worked on by the Senate “Gang of Six.” This bipartisan group of senators is developing a long-term deficit-reduction plan based largely on recommendations provided last year by the President’s National Commission on Fiscal Responsibility and Reform. This proposal is likely to fall somewhere between the House’s and the President’s plan in philosophy, but will probably have more in common with the President’s plan, in that it will balance spending controls with increased revenues.

The FY 2012 budget request contains an investment in R&D that would remain essentially flat from FY 2010 to FY 2012, with a small $401 million (0.3 percent) decrease to $148.9 billion. The request offsets increased investments in a number of priority areas with cuts in defense R&D. R&D priorities in the FY 2012 budget request focus on innovation, education, and infrastructure. In addition to large increases for basic (11.1 percent increase from FY 2010 to $32.6 billion) and applied research (8.9 percent increase to $34.4 billion), the budget request contains a large funding increase for clean energy research (43.7 percent, $1.5 billion increase for DOE energy programs to $3.5 billion). The three agencies included in the President’s Plan for Science and InnovationNSF (12.1 percent increase to $7.8 billion), the National Institute for Standards and Technology (NIST) laboratories (31.8 percent increase to $679 million), and DOE's Office of Science (9.1 percent increase to $5.4 billion) – all received budget increases to keep them on their multi-year doubling path. NIH would receive a 3.4 percent budget increase to $32.0 billion. The budget request also proposes to increase the Research and Experimentation tax credit for business and make it permanent. For education, the President has proposed a program to train 100,000 new K-12 STEM educators over the next 10 years. And in terms of innovation, a new $3 billion Wireless Innovation Fund would be established to invest in cybersecurity research and technology to deliver high-speed wireless broadband to 98 percent of Americans.

Given the divided Congress, the President’s priorities are not likely to survive the appropriations process unscathed. But if the FY 2011 appropriations compromise is any indication, basic research will continue to have relatively good support compared with other components of the federal budget, and applied research programs will have a harder time surviving the negotiation process. Hold on to your hats – it promises to be another eventful year for the federal budget.


About the author: Pat Clemins is the director of the R&D Budget and Policy Program at the American Association for the Advancement of Science (AAAS). {/access}