Government R&D Funding Grows Strongly

Public spending on research and development got stronger support in 1997 and 1998 from both executive and legislative camps, as well as university and industry research advocates. This support is reflected in the increased funding that has been budgeted for research in fiscal 1999. Although federal

spending on defense R&D continues to account for more research expenditures than does non-defense R&D spending, its overall share continues to slide. In fiscal 1997, defense R&D accounted for 56.5% of total R&D expenditure, in comparison to non-defense R&D, which accounted for 43.5%. In figures projected for fiscal 1999, defense R&D is expected to account for only 53.5%, versus non-defense R&D spending that will account for 46.5%. The yearly average percentage change supports this trend. Where defense R&D spending will average 0.0% gain from 1995 through 1999, non-defense R&D spending will climb an average 5.7% per year. While defense R&D spending is expected to increase 1.0% in fiscal 1999, this comes after a 2.9% decline in the present fiscal year. Non-defense R&D, on the other hand, will improve 6.0% in fiscal 1999, and is up 4.7% in fiscal 1998. One agency that continues to receive strong R&D funding is the National Institute of Health. The agency is expected to receive 13.7% more in fiscal 1999, and increased spending by 14.8% in fiscal 1998. The National Science Foundation will get a nice boost in R&D funds in fiscal 1999, another 11.8%. This follows an increase of 4.8% in fiscal 1998. After having declined 9.0% in fiscal 1998, the Department of Transportation will have its R&D spending increased by a hefty 78.4%. In all, the federal R&D budget is expected to increase by 3.3%, a healthy improvement after the small 0.4% uptick in this year's budget. In President Clinton's budget requests for fiscal 1999, he created the Research Fund for America, which covers civilian science and technology, providing for an 8% increase in R&D next year and an increase to about $38 billion over the next five years. Under Clinton's plan, R&D gets a slice of the federal budget as a dedicated offset from the tobacco deal. According to the associate director of the office of management and budgets, T.J. Glauthier, $7 billion of the $9.5 billion surplus projected for fiscal 1999 is to come from funds secured from the tobacco companies in the suits against them by the states. Unfortunately, because certain elements of the settlement included FDA jurisdiction, the deal required Congressional approval. After the Senate raised the price, tobacco companies balked and the legislation was effectively killed, thereby threatening the structure of Clinton's R&D spending plan. A new bill emerged in the Senate recently that could surpass even Clinton's hopes for research spending. S. 2217, introduced by Senator Bill Frist and Senator John D. Rockefeller IV, like its predecessor S. 1305, plans to almost double research spending from the current $37.7 billion to just under $68 billion, only in twelve years time, not ten as with S. 1305. The key difference in the new bill that has drawn more supporters is its method of reaching the goal, by maintaining the level of R&D spending at or above 2.1% of the overall federal budget. Industry accounted for three-fourths of the R&D conducted in the US in 1997, and universities performed the second most R&D at 14% of overall R&D (see charts at the top of this page). While the federal government accounted for only 8% of R&D performed, it was responsible for almost a third of the funding. Both industry and universities fund at least 10% less R&D than they perform. While federally funded R&D often fuels commercial innovations, its less commercially driven aspect allows a greater range of experimentation than would be allowed in an industry laboratory. This freedom to explore non-commercial avenues of research is fundamental to advancing the realm of scientific knowledge in the long-term, and ultimately, brings immense commercial benefits.

Pie Chart: Source of US R&D Funds 1997

Industry              65%

Federal Government    30%

Universities           3%

Non-profit Org.        2%

Source: National Science Foundation

Pie Chart: US R&D Performers 1997

Industry             75%

Federal Government    8%

Universities         14%

Non-profit Org.       3%

Source: National Science Foundation

Table: US Federal R&D Budget

US Government R&D Budget ($m)                         % chg

Agency

1995       1996      1997      1998*    1999*   98/99    yrly avg

DOD

35,356    36,936    37,702    36,446    36,593    0.4%   -0.3%

Atomic energy defense

 2,343     2,492     2,475     2,578     2,824    9.5%    4.3%

Total Defense

37,699    39,428    40,177    39,024    39,417    1.0%    0.0%

NASA

 8,243     6,963     8,137     7,975     7,880   -1.2%    4.6%

NSF

 1,894     2,077     2,015     2,111     2,360   11.8%    4.5%

Atomic energy general science

   700       705       703     1,438     1,734   20.6%    41.6%

Energy

 3,152     2,938     2,641     1,527     1,573    3.0%   -16.4%

DOT

   604       534       545       496       885    78.4%   23.8%

NASA

   749     1,120     1,237     1,424     1,370    -3.8%    7.3%

Health: NIH

10,229     9,642    10,599    12,171    13,066     7.4%    10.7%

Health: Other

   961       856       859       898     1,021    13.7%    6.2%

Agriculture

 1,186     1,168     1,178     1,228     1,247     1.5%    2.2%

Natural resources & environment

 1,162     1,593     1,590     1,734     1,785     2.9%    3.9%

All other

 1,283     1,398     1,392     1,353     1,366     1.0%    -0.8%

Total Non-Defense

30,733    29,011    30,896    32,355    34,287     6.0%     5.7%

Total R&D

68,432    68,439    71,073    71,379    73,704     3.3%     2.5%

R&D Grants

   348       303       290       301       426     1.5%    13.7%

Source:  Budget of the United States Government

  *Estimated