The President's FY2002 Budget for Research and Development

An Analysis by the Democratic Staff of the House Science Committee

I. INTRODUCTION

The Overall FY 2002 Budget

The President's overall budget submission calls for $1,961 billion in outlays and $2,192 billion in receipts for a projected FY2002 unified surplus of $231 billion. Of the $660.7 billion requested for discretionary budget authority, $95.253 billion is for research and development (R&D). The comparable outlay figures are $691.7 billion and $87.2 billion. Thus, R&D outlays as a percentage of discretionary outlays will be 12.6 percent, a figure that has remained relatively constant since the early 1970's. (See table at end of document for agency-by-agency breakdowns)

Four Major Themes in the FY 2002 R&D Budget

The budget proposes to invest $95.253 billion for R&D, including facilities, in FY2002, an increase of $5.2 billion or six percent above FY2001. Civilian R&D would increase by three percent, defense R&D by eight percent. The budget proposes a six percent increase in basic R&D and a four percent increase in civilian applied R&D.

Four themes are apparent from the R&D request.

First, the request reverses the trend toward parity between defense and non-defense R&D that was nearly achieved in FY 2001. In FY 1987 defense R&D was funded at nearly double the rate of civilian R&D. The end of the Cold War led to a steady narrowing of the gap every year from FY 1987 through FY 2001, when defense R&D ($45.6 billion) barely exceeded civilian R&D ($45.3 billion). It was in fact a policy goal of the Clinton White House to achieve, at a minimum, parity for civilian R&D funding. The FY 2002 budget submission is the first budget in 15 years to reverse the trend. Outlays for defense R&D are projected to be $42.0 billion while non-defense R&D is estimated at $36.3 billion. Only the large increase in the request for NIH keeps the budget request for defense R&D ($48.7 billion) and non-defense R&D ($46.5 billion) even roughly comparable. Given the non-threatening state of the former Soviet Union and the importance of civilian R&D to economic competitiveness, the tilt back toward the Cold War defense/non-defense R&D ratio seems misplaced. More than anything, it may be a reflection of the fact that the President has yet to fill the post of Presidential Science Advisor.

Second, the imbalance between biomedical R&D and R&D in the physical sciences is further exacerbated in the budget submission. If there has been a unifying message over the past three years from those concerned with federal R&D funding, it has been the warning that biomedical research itself will suffer if its funding level overwhelms the funding of the physical sciences. This message has been preached by university groups, industry organizations like the National Association of Manufacturers, Newt Gingrich, D. Allan Bromley (George Bush's science advisor from 1989-93), and even Harold Varmus, the former Director of NIH. But the message has gone unheeded in this White House. The President's FY 2002 budget provides a $2.751 billion increase for NIH. All other civilian R&D programs receive a $1.2 billion reduction. NIH would dole out 59 percent of all civilian funding for basic research in FY 2002, an increase of 4 percent in the last two years alone and an increase of over 20 percent in the last 20 years.

Last week, the Senate approved the amendment by Senator Christopher Bond (R-MO) to the FY 2002 Budget Resolution to increase FY 2002 funding for NSF, NASA and DOE by $1.44 billion. The Bond amendment is a serious signal that Congress intends to redress the growing imbalance in Federal R&D funding. Congressional action will be critical, since the Administration's cuts in non-biomedical R&D, in conjunction with its failure to appoint top civilian science officials throughout the government, suggests a lack of interest in funding the research necessary to drive future technological advances and ultimately our economy.

Third, the budget submission stops in its tracks a growing consensus that the NSF budget should grow at least at the same rate as the NIH budget. NSF was put on a five-year doubling path in the FY 2001 appropriations process, and a continued commitment to that doubling is embodied in the Bond amendment, policy statements by the Senate Appropriations Committee, and H.R. 1472, introduced in the House on April 4 by Rep. Eddie Bernice Johnson and 15 other Members of the House Science Committee. Despite this growing consensus, the budget proposes to cut NSF's R&D activities by $55 million in FY 2002, completely derailing the five-year doubling path that was started in FY 2001.

Fourth, cooperative Federal-industry R&D programs fare poorly in the budget submission. Two theories of R&D cooperation have competed in recent years. One theory, promoted by the Council on Competitiveness, the Progressive Policy Institute, and others, holds that one of the great and unique strengths of the U.S. economy is the ability of its academic, governmental, and industrial sectors to form collaborative partnerships in cutting-edge R&D. The other view propounded by the Cato Institute and the post-1994 Republican revolutionaries in the House of Representatives, holds that joint Federal-industry R&D efforts are wasteful examples of corporate welfare. This budget submission tilts strongly back toward the latter view. Several program cuts exemplify this new tilt, including suspension and probable termination of the Advanced Technology Program, slashing of cooperative energy efficiency programs at the Department of Energy, and targeting of the Partnership for a New Generation Vehicle program.

II. AGENCY BUDGETS UNDER SCIENCE COMMITTEE JURISDICTION

National Aeronautics and Space Administration

The NASA budget proposal, which would provide $14.512 billion in FY 2002, is status quo at best. This request represents a 1.8 percent increase over the FY 2001 appropriation of $14.254 billion. Funding for the out-years would grow at a modest rate, with funding for FY 2006 projected to be $16.073 billion (a total increase of about 10.8 percent over the five-year period). The multi-year NASA budget run-out would barely keep pace with inflation and in all likelihood would lose ground to the higher rate of inflation typically prevalent in the aerospace sector. Of the $14.512 billion, 50.3 percent would be allocated to Human Space Flight. The Administration's NASA budget request proposes no major new initiatives in FY 2002.

Overall, NASA would receive a percentage increase that is less than half the average increase proposed for the Federal government's discretionary accounts. The message for specific accounts is equally disappointing. For example, in order to fit within an arbitrary budget envelope, the International Space Station (ISS) program is being directed to delete or indefinitely defer the very content that is needed to make it a useful research facility; namely, the Crew Return Vehicle, the Habitation Module, and forty percent of the Station's research budget facility are slated to be curtailed or eliminated. In addition, a set of solar arrays and the life sciences centrifuge may be negatively impacted or eliminated.

The ISS would receive $2.087 billion in FY 2002, a decrease of $25.5 million, reflecting the near completion of the development program. Over the five-year period FY 2002-2006, the Administration would devote roughly the same amount of resources as was provided in the previous Administration's FY 2001 run-out budget. Funding for the Crew Return Vehicle would no longer be tabulated in the Aerospace Technology account but instead returned to the Human Space Flight account. The Space Shuttle program would receive a 5.3 percent increase in FY 2002, but then be cut by two percent in FY 2003.

The Space Science account would be increased by 6.2 percent. However, the Pluto-Kuiper Express and the Solar Probe missions would be cancelled. In the area of Biological and Physical Research, the budget would be cut by almost five percent relative to the FY 2001 level. The Earth Science program would be cut by almost 12 percent. Aerospace Technology (which includes the Space Launch Initiative) would be increased by 7.3 percent (about $161 million). Since the second generation Reusable Launch Vehicle (RLV) program will receive a $200 million increase in FY 2002, it is clear that some existing programs will be cut. Due to the merged nature of the Aerospace Technology accounts, it is difficult at this point to ascertain what level of resources will be allocated to aeronautics R&D, although the budget blueprint stated that some "lower priority" aeronautics programs would be eliminated.

National Science Foundation

The President's FY 2002 budget proposal for NSF is $4.472 billion, which is $56 million, or 1.3 percent, above the appropriations level (Current Plan) for FY 2001.

The FY 2002 funding level for Research and Related Activities (R&RA) is $3.327 billion, which is $16 million (- 0.5 percent) below the FY 2001 appropriations level. For the 30 disciplinary divisions within the six research directorates, 23 received cuts or zero growth, four received growth of less than two percent, and three received growth exceeding inflation: Mathematical Sciences (+$20 million or 16.5 percent), Electrical and Communications Systems (+$3 million or 5.8 percent), and Astronomical Sciences (+$7.6 million or 5.1 percent). Funding is proposed to start six to eight new Science and Technology Centers (+$27 million or 41 percent) and to maintain growth for the Nanotechnology Initiative (+$24 million or 16 percent) and the Bio-complexity Initiative (+$3.2 million or five percent). The Information Technology Initiative is held constant, and the Major Research Instrumentation program is cut (-$25 million or 33 percent).

The FY 2002 funding level for the base Education and Human Resources (EHR) programs is $872 million, which is $87 million (+11 percent) above the FY 2001 appropriations level. The H-1B program receipts for FY 2002 (designated for undergraduate scholarships, $86 million, and K-12 science education programs, $58 million) are expected to be $144 million, which is $23 million (+19 percent) above FY 2001. The total for EHR is then $1.016 billion (+12 percent). The main budget change is the allocation of $200 million to fund the President's Math and Science Partnerships between institutions of higher education and K-12 school systems. To accommodate this initiative requires reprogramming $113 million, mainly by reducing Education System Reform by $65 million (-59 percent) and Elementary, Secondary and Informal Education by $37 million (-18 percent). Graduate Education is increased by $8 million to accommodate increases in graduate student stipends. Programs targeted for underrepresented groups, education research, and education program evaluation receive slight cuts, and undergraduate education programs are reduced by $8 million (-6 percent).

The FY 2002 funding level for Major Research Equipment (MRE) is $96.3 million, which is $25 million (-21 percent) below the FY 2001 appropriations level. Funding is provided neither to begin construction of the millimeter array nor for follow-on for the HIAPER. The third Terascale Computing Systems project ($55 million), the Large Hadron Collider ($16 million), and the Network for Earthquake Engineering Simulation ($28 million) are funded.

Department of Energy

Office of Science. The budget request includes $3.160 billion in FY 2002 for the Department of Energy's Office of Science, a decrease of $19 million from the FY 2001 appropriation. While most accounts show minor increases, two are cut. Biological and Environmental Research (BER) receives $443 million, a reduction of $50 million or 10 percent. The majority of this cut is the $45 million reduction to the Medical Applications and Measurement Science line. The Fusion Energy Sciences line is reduced to $238 million, which is $11 million or 4.4 percent below current levels. The Department plans to submit a budget amendment to increase the Fusion account by $10 million with offsets from High Energy Physics, Advanced Scientific Computing Research, and Program Direction.

The DOE High-Energy Physics program includes $54 million for the U.S. contribution to the Large Hadron Collider (LHC) and $11.4 million for the Neutrinos at the Main Injector (NuMI) project. In addition, the High-Energy Physics Facilities account is increased $20.0 million to $456.8 million. This increase is offset by a $20.9 million decrease to the Construction line due to the completion or near completion of three projects.

The request for Basic Energy Sciences includes $276.3 million for construction of the Spallation Neutron Source, compared to $258.9 million in FY 2001, and flat funding of $36.2 million for continued support of the national nanotechnology program.

Nuclear Energy. Nuclear Energy R&D has been reduced 9.3 percent from $246 million in FY 2001 to $223 million in FY 2002, including a 48 percent reduction in the Nuclear Energy Research Initiative to $18.1 million, a 40 percent reduction in the Nuclear Energy Technologies program to $4.5 million, and a 9.8 percent reduction in the cost-shared Nuclear Energy Plant Optimization program to $4.5 million.

Renewable Energy Resources. The FY 2002 budget request for renewable energy resources is $237.5 million, a 36.4 percent decrease from the FY 2001 appropriation of $373.2 million. Cuts of nearly 50 percent are proposed in geothermal technology development, hydrogen research (both reduced to $13.9 million in FY2002 from $26.9 million in FY2001), and hydropower programs (reduced from $5.0 million in FY 2001 to $2.5 million in FY2002). These cuts, if enacted, will put many of these programs in imminent peril by reducing them below sustainable levels. This is particularly distressing at a time when R&D work on renewable technologies needs to be supported more than ever to assist in any plan to overcome future energy shortfalls.

Solar energy is especially hit hard, funded at $42.9 million, a cut of $49.7 million or 54 percent. In particular, the concentrating solar power program is scheduled for a cut of nearly 86 percent from $13.7 million in FY2001 to $1.9 million in FY2002. Electric energy systems and storage programs are slated to be cut by one-third to a level of $33.9 million from $51.7 million in FY2001, while the Renewable Support and Implementation line is to be cut by over 75 percent from the current level of $21.5 million to the request of $5.1 million. As for the sole bright spot, the budget request for infrastructure upgrading at the National Renewable Energy Laboratory is up by 25 percent to $5 million.

The administration has indicated it intends to send to Congress an amendment that will add nearly $40 million to renewable energy programs. It is unclear how DOE would distribute these additional funds among the programs. Even with this add-back, these program budgets will still face a cut of more than 25 percent.

Conservation. The energy conservation R&D budget request for FY 2002 is $430.6 million, a 22.5 percent cut from the FY 2001 level of $555.9 million. R&D program requests in the building sector, the industry sector, and the transportation sector are cut by 46.3, 41.0, and 6.3 percent, respectively. Industry sector programs target the most energy-intensive industries where the potential for substantial reduction in energy consumption remains high.

The budget request for all energy conservation programs is $794.9 million, a decrease of 2.5 percent from the comparable 2001 appropriation. The budget reflects a 78.9 percent increase in weatherization grants for a FY 2002 request of $273.0 million.

Fossil Energy Research and Development. The request for the Fossil Energy R&D program is $449.0 million, a decrease of 17.1 percent from the comparable FY 2001 appropriation of $541.5 million. However, the actual effect of the decrease is disguised by the addition of a major new program, the Clean Coal Power Initiative, for which $150.0 million has been requested. If the Coal Initiative is disregarded, the decreases to the other Fossil Energy R&D programs average nearly 45 percent. Fuels and power systems programs were reduced more than 50 percent to $159.8 million from the current level of $324.0 million. The budget, as proposed, raises major questions about the administration's commitment to bringing on new technologies to enable production of domestic oil and gas in complex horizons.

The distributed generation-fuel cell program is reduced nearly 15 percent to $45.1 million. The only increase in this program is for carbon sequestration, which is up 10 percent to $20.7 million. Gas and petroleum programs also took hits of more than 50 percent with requests of $21 million and $30.5 million respectively, while the cooperative R&D program was eliminated. Plant and capital equipment expenditures will be down nearly 50 percent to $2.0 million. Fossil energy environmental restoration is down nearly five percent at a level of $9.5 million.

The administration describes this budget as a "work-in-progress." It is hoped that Vice President Cheney's Energy Policy Task Force will recognize the gross deficiencies in this budget request, and that their findings will force the administration to generously supplement this budget bringing their budget priorities more in line with their commitment to increase energy supply.

Department of Commerce

NIST. The Technology Administration, which includes NIST, receives a substantial decrease due to the suspension of the Advanced Technology Program (ATP). The request includes flat funding of $8 million for the Office of the Under Secretary for Technology to fund continuing policy development, analyses and evaluation. FY 2002 funding for the ATP program is reduced from $191 million to $13 million. The President proposes suspending the granting of new awards in FY 2002 pending an evaluation of the program. Resources available in FY 2002 will be used to pay for prior year awards and administrative costs in the interim. The internal laboratory program at NIST receives an 11 percent increase. However, this was initially predicated upon the termination of the ATP program so this increase may be adjusted downward. Within this increase a number of new initiatives have been proposed, but are not detailed in the budget request. The request includes $106 million for the Manufacturing Extension Program. This is a $5 million decrease from FY2001, which will permit neither expansion of the current system nor any new initiatives. The request freezes funding for maintenance at the Boulder/Gaithersburg campuses, with no new funding for the dire renovation needs of the Boulder campus. Finally, the request provides no funding for the National Technical Information Service (NTIS). Congress has mandated that NTIS be self-sufficient, but it is becoming increasingly difficult for NTIS to operate without an appropriation. The Administration has included no plans on how to resolve this issue.

National Oceanic and Atmospheric Administration. The overall budget request for NOAA is $3.15 billion, an increase of $61 million or two percent. The Oceans and Atmospheric Research (OAR) budget of $340.8 million is a cut of $10.4 million from FY2001 levels. The bulk of this cut is the result of the elimination of STORM (Univ. of Iowa), a 33 percent decrease for marine environmental research, a 12 percent decrease in the National Undersea Research Program, and the completion of construction of both the Norman Consolidation Project and the University of New Hampshire facilities. Despite these cuts, total funding for the Climate and Air Quality Account is increased by 10 percent and Atmospheric Program funding is increased by 7.5 percent. The National Weather Service enjoys a five percent increase to a level of $727.6 million. The National Environmental Satellite, Data, and Information Service is increased by 15 percent from $640 million in FY2001 to $738 million in the request. Nonetheless, there are some significant cuts within the account. Funding for Environmental Data Management Systems is cut by 14 percent - including the elimination of the regional climate centers.

Environmental Protection Agency

The Administration request for EPA's Office of Research and Development (ORD) is $679 million or 7.2 percent below the current estimate for FY 2001 and $4 million below the FY2000 actual amount. In inflation adjusted dollars, this provides ORD with less funding than it received in FY1981, before the Reagan cuts of the early 1980's. It is important to note that the Administration is not calling for any significant additional funding for research at the same time that it is decrying the lack of credible science on which to base decisions on regulation of carbon dioxide or arsenic. Indeed, the request reduces the amount of funding for climate change research at a time when a bipartisan group of House Science Committee members agrees that more research is needed.

Department of Transportation

The President's FY 2002 budget request for the FAA RE&D activity is $188 million, which is $1 million (+0.5 percent) above the FY 2001 appropriations level. Funding for the subcategories within RE&D essentially track last year's levels, except for Environment and Energy (includes aircraft noise programs), which is doubled to $8 million.

Research and Technology is funded at $503.7 million (in accordance with TEA-21). This includes $253.2 million for Intelligent Transportation Systems, a 32% increase over FY2001, with $135 million to accelerate rural, regional, and commercial motor vehicle deployment and $118.2 million for ITS standards, research operational tests, and development. The Science Committee has been a strong proponent of standards development. In addition, $250.4 million, a 27 percent increase over FY2001, is provided for pavement research, congestion reduction, and bridge research.

Fire Administration

The President's FY 2002 budget request for the U.S. Fire Administration (USFA) is $50 million, which is $6 million (+13.6 percent) above the FY 2001 appropriations level. In addition, $100 million, the same as the FY 2001 appropriation, is proposed to fund a second set of awards under the Fire Grants Program, which is administered by USFA. The budget proposes $5 million for a new fire safety initiative to increase awareness of fire hazards by high-risk populations. The Salaries and Expenses account is increased by $1 million (11 percent), which will help offset a portion of the burden of administering the Fire Grants program. The USFA is housed in the Federal Emergency Management Agency.

III. AGENCY BUDGETS OUTSIDE THE SCIENCE COMMITTEE'S JURISDICTION

Department of Defense

While details of the Administration's request for Defense R&D are included in the budget, they are prefaced with a statement that the levels may change due to the ongoing top-down review. Clarification may not be available until late spring.

In aggregate terms, the Administration is requesting a total of $48.7 billion for defense-related R&D, $45.2 billion in the Department of Defense and approximately $3.5 billion to support the defense research activities within the Department of Energy. This total represents an eight percent increase over FY 2001. The bulk of the increase in defense R&D is for a new $2.6 billion R&D Initiative Transfer Account thought to be for the National Missile Defense (NMD) program. The remainder of defense R&D programs received an increase of $967 million or two percent.

Health and Human Services

The budget request for R&D at the Department of HHS is up $2.5 billion or 12 percent, to $23.3 billion. Of this, the increase for NIH is $2.75 billion, meaning the rest of HHS received a nominal cut of $243 million. Of special note is the $174 million cut to the Center for Disease Control (CDC) which lowers the request to $3.9 billion. The request assumes $175 million less spending on chronic disease prevention and health promotion.

Department of the Interior

Total budget authority requested for the Department of Interior, including trust funds, is $10 billion or three percent below current funding. A majority of the reduction is due to cancellation of one-time emergency expenditures, such as fire costs. However, the request includes $658.4 million for wildlife fire management, which the agency says is twice the historical level.

Funding for the U.S. Geological Survey is $813.4 million, a decrease of $69.4 million, or 7.9 percent. Two of the three major science lines in USGS are decreased. Biological research is cut $11.3 million, to $149.3 million, with most of the decrease from termination of the National Biological Information Infrastructure program and dropping maintenance for biological information web sites. The Geologic Hazards, Resources and Processes account is reduced by $14 million to $214 million, a 6.1 percent cut, including a $3.0 million cut to the Global Change program. Science Support would increase 9.5 percent from $74 million to $81 million.

Department of Agriculture

Due to the Administration's announced effort to end all Congressional earmarks, the USDA R&D budget request was cut by $158 million or 8.1 percent to $1.8 billion.

IV. INTER-AGENCY INITIATIVES

Global Change

The FY2002 research budget for the U.S. Global Change Research Program is $1.630 billion, a decrease of $75 million or four percent. This account includes climate R&D funding from nine Federal agencies. It is ironic that the Bush Administration is reversing the growth trend in this account at a time when the President has signaled his concern with the scientific basis for the theory of global warming.

Networking and Information Technology R&D

The Networking and Information technology R&D initiative of seven different agencies is funded at $1.969 billion, an increase of $26 million or one percent when offsetting collections by the Agency for Healthcare Research and Quality are taken into account.

The National Earthquake Hazards Reduction Program (NEHRP)

NEHRP is a multi-agency effort funded by USGS, NSF, NIST, and the Federal Emergency Management Agency (FEMA). The budget does not specifically address all of the activities funded within NEHRP, but the participating agencies have highlighted a few earthquake hazards reduction programs. FEMA is requesting $19 million for mitigation programs to eliminate or reduce the long-term risk to life and property from natural and technological hazards, such as earthquakes and hurricanes. This is 54 percent decrease from its current level of $46 million. Within USGS, the National Mapping Program is cut $6.7 million from $130.4 million to $123.7 million in FY2002 and Geologic Hazards, Resources, and Processes is cut $11.5 million from $225.3 million to $213.8 million in 2001. The George E. Brown, Jr. Network for Earthquake Engineering Simulation, sponsored by NSF, would receive $24.4 million in FY 2002, down from $28.1 million in FY 2001.

V. SUMMARY TABLE

The following table is a portion of Table 7-2 ("Federal Research and Development Spending") in the Analytical Perspectives volume of the President's budget submission. It compares Federal agency R&D funding in FY2001 and FY2002.