[Analytical Perspectives]
[Special Analyses and Presentations]
[7. Research and Development Funding]
[From the U.S. Government Publishing Office, www.gpo.gov]
7. RESEARCH AND DEVELOPMENT FUNDING
Technological innovation and scientific discovery have generated much
of the Nation's productivity growth over the last 50 years, created
millions of high-skill, high-wage jobs, and improved the quality of life
in America. This innovation and discovery has been possible only through
the strong national investment in research and development (R&D), from
both the public and private sectors. Data from the National Science
Foundation indicate that the total national investment in R&D recently
surpassed 2.7 percent of the Gross Domestic Product.
Table 7-1 shows R&D highlights of the 2002 Budget.
Table 7-1. R&D HIGHLIGHTS IN 2002 SPENDING
(Budget authority, dollar amounts in millions)
----------------------------------------------------------------------------------------------------------------
Percent
Change:
By Agency 2000 2001 2002 2001 to
2002
----------------------------------------------------------------------------------------------------------------
National Institutes of Health
Biomedical research............................................... 17,827 20,361 23,112 14%
Defense
R&D initiative.................................................... ......... ......... 2,600 NA
NASA
Space Launch Initiative........................................... 30 290 475 64%
Mars Exploration Program.......................................... 249 426 431 1%
Astronomical Search for Origins................................... 118 123 194 57%
Earth Observing System Follow-on Program.......................... 15 55 130 136%
Energy
Basic Energy Sciences............................................. 772 994 1,005 1%
Fossil Energy..................................................... 404 445 544 22%
National Science Foundation
Math and Science Partnership Initiative........................... ......... ......... 200 NA
Mathematical Sciences............................................. 106 121 141 17%
Nanoscale Science, Engineering, and Technology.................... 97 150 174 16%
Agriculture
Biotechnology..................................................... 188 197 204 4%
Bioproducts and Bioenergy......................................... 81 240 249 4%
Commerce
Ocean Exploration................................................. ......... 4 14 250%
National Polar-orbiting Operational Environmental Satellite....... 60 73 157 115%
NIST internal research............................................ 282 313 347 11%
Transportation
Highway Surface Transportation.................................... 66 73 114 56%
Intelligent Transportation Systems Initiative..................... 40 41 62 51%
Veterans Affairs
Medical and Prosthetic Research................................... 321 350 360 3%
Education
National Institute on Disability and Rehabilitation Research...... 86 100 110 10%
Research and Dissemination........................................ 104 121 123 2%
----------------------------------------------------------------------------------------------------------------
Federal Research and Development Funding
R&D is the collection of efforts directed towards gaining greater
knowledge or understanding and applying knowledge toward the production
of useful materials, devices, and methods. Since 1949, the Budget has
collected and reported information on R&D. The budget is characterized
by the following categories: basic research, applied research,
development, R&D equipment, and R&D facilities.
Basic research is defined as systematic study directed toward greater
knowledge or understanding of the fundamental aspects of phenomena and
of observable facts without specific applications towards processes or
products in mind.
Applied research is systematic study to gain knowledge or
understanding necessary to determine the means by which a recognized and
specific need may be met.
[[Page 134]]
Development is systematic application of knowledge toward the
production of useful materials, devices, and systems or methods,
including design, development, and improvement of prototypes and new
processes to meet specific requirements.
Research and development equipment includes acquisition or design and
production of movable equipment, such as spectrometers, microscopes,
detectors, and other instruments.
Research and development facilities include the acquisition, design,
and construction of, or major repairs or alterations to, all physical
facilities for use in R&D activities. Facilities include land,
buildings, and fixed capital equipment, regardless of whether the
facilities are to be used by the Government or by a private
organization, and regardless of where title to the property may rest.
This category includes reactors, wind tunnels, and particle
accelerators, and the International Space Station.
Table 7-2 shows agency-by-agency spending on basic and applied
research, development, and R&D equipment and facilities.
Table 7-2. FEDERAL RESEARCH AND DEVELOPMENT SPENDING
(Budget authority, dollar amounts in millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollar Percent Dollar Percent
2000 2001 2002 Change: Change: Change: Change:
Actual Estimate Proposed 2000 to 2000 to 2001 to 2001 to
2002 2002 2002 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
By Agency
Defense*............................................................................. 39,664 41,571 45,159* 5,495* 14%* 3,588* 9%*
Health and Human Services............................................................ 18,051 20,805 23,313 5,262 29% 2,508 12%
National Aeronautics and Space Administration........................................ 9,242 9,632 9,311 69 1% -321 -3%
Energy............................................................................... 6,892 7,692 7,435 543 8% -257 -3%
National Science Foundation.......................................................... 2,947 3,297 3,242 295 10% -55 -2%
Agriculture.......................................................................... 1,773 1,961 1,803 30 2% -158 -8%
Commerce............................................................................. 1,110 1,096 1,029 -81 -7% -67 -6%
Interior............................................................................. 618 632 593 -25 -4% -39 -6%
Transportation....................................................................... 603 743 795 192 32% 52 7%
Veterans Affairs..................................................................... 645 703 721 76 12% 18 3%
Environmental Protection Agency...................................................... 559 610 575 16 3% -35 -6%
Education............................................................................ 238 265 259 21 9% -6 -2%
Other................................................................................ 796 1,007 1,022 226 28% 151% 1%
----------------------------------------------------------------
TOTAL.............................................................................. 83,138 90,010 95,253 12,115 15% 5,243 6%
Basic Research
Defense*............................................................................. 1,136 1,317 1,345* 209* 18%* 28* 2%*
Health and Human Services............................................................ 10,062 11,544 12,980 2,918 29% 1,436 12%
National Aeronautics and Space Administration........................................ 2,137 2,548 2,465 328 15% -83 -3%
Energy............................................................................... 2,262 2,378 2,344 82 4% -34 -1%
National Science Foundation.......................................................... 2,540 2,796 2,799 259 10% 3 0%
Agriculture.......................................................................... 684 742 717 33 5% -25 -3%
Commerce............................................................................. 42 40 46 4 10% 6 15%
Interior............................................................................. 52 57 54 2 4% -3 -5%
Transportation....................................................................... 10 17 21 11 110% 4 24%
Veterans Affairs..................................................................... 266 290 304 38 14% 14 5%
Environmental Protection Agency...................................................... 58 106 98 40 69% -8 -8%
Education............................................................................ 2 2 2 0 0% 0 0%
Other................................................................................ 170 181 177 7 4% -4 -2%
----------------------------------------------------------------
SUBTOTAL........................................................................... 19,421 22,018 23,352 3,931 20% 1,334 6%
Applied Research
Defense*............................................................................. 3,405 3,664 3,741* 336* 10%* 77* 2%*
Health and Human Services............................................................ 7,692 8,915 9,824 2,132 28% 909 10%
National Aeronautics and Space Administration........................................ 1,534 1,683 1,811 -277 -18% 128 8%
Energy............................................................................... 1,874 2,185 2,020 146 8% -165 -8%
National Science Foundation.......................................................... 184 220 218 34 18% -2 -1%
Agriculture.......................................................................... 831 922 829 -2 0% -93 -10%
Commerce............................................................................. 780 829 820 40 5% -9 -1%
Interior............................................................................. 520 537 503 -17 -3% -34 -6%
Transportation....................................................................... 396 456 507 111 28% 51 11%
Veterans Affairs..................................................................... 367 399 403 36 10% 4 1%
Environmental Protection Agency...................................................... 388 369 349 -39 -10% -20 -5%
Education............................................................................ 151 165 167 16 11% 2 1%
Other................................................................................ 344 390 361 17 5% -29 -7%
----------------------------------------------------------------
SUBTOTAL........................................................................... 18,466 20,734 21,553 3,057 17% 819 4%
[[Page 135]]
Development
Defense*............................................................................. 35,026 36,410 39,889* 4,863* 14%* 3,479* 10%*
Health and Human Services............................................................ 44 101 87 43 98% -14 -14%
National Aeronautics and Space Administration........................................ 2,702 2,687 2,754 52 2% 67 2%
Energy............................................................................... 1,855 2,253 2,174 319 17% -79 -4%
National Science Foundation.......................................................... 0 0 0 0 NA 0 NA
Agriculture.......................................................................... 111 120 124 13 12% 4 3%
Commerce............................................................................. 130 138 83 -47 -36% -55 -40%
Interior............................................................................. 29 32 30 1 3% -2 -6%
Transportation....................................................................... 185 254 250 65 35% -4 -2%
Veterans Affairs..................................................................... 12 14 15 3 25% 1 7%
Environmental Protection Agency...................................................... 92 101 94 2 2% -7 -7%
Education............................................................................ 85 98 90 5 6% -8 -8%
Other................................................................................ 253 386 364 111 44% -22 -6%
----------------------------------------------------------------
SUBTOTAL........................................................................... 40,524 42,594 45,954 5,430 13% 3,360 8%
Facilities and Equipment
Defense.............................................................................. 97 180 184* 87* 90%* 4* 2%*
Health and Human Services............................................................ 253 245 422 169 67% 177 72%
National Aeronautics and Space Administration........................................ 2,869 2,714 2,281 -588 -20% -433 -16%
Energy............................................................................... 901 876 897 -4 0% 21 2%
National Science Foundation.......................................................... 223 281 225 2 1% -56 -20%
Agriculture.......................................................................... 147 177 133 -14 -10% -44 -25%
Commerce............................................................................. 158 89 80 -78 -49% -9 -10%
Interior............................................................................. 17 6 6 -11 -65% 0 0%
Transportation....................................................................... 12 16 17 5 42% 1 6%
Veterans Affairs..................................................................... 0 0 -1 -1 NA -1 NA
Environmental Protection Agency...................................................... 21 34 34 13 62% 0 0%
Education............................................................................ 0 0 0 0 NA 0 NA
Other................................................................................ 29 46 116 87 300% 70 152%
----------------------------------------------------------------
SUBTOTAL........................................................................... 4,727 4,664 4,394 -333 -7% -270 -6%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table does not include net mandatory funding for USDA research grant programs, as follows: $140 million in FY 2000, $130 million in FY 2001, and $135
million in FY 2002.
* FY 2002 entries for DOD research and facilities represent a projection from the enacted FY 2001 levels plus inflation. The entry for development
includes $2.6 billion for the R&D initiative. FY 2002 levels are subject to change as a result of the Defense Strategy Review now underway.
The Federal Science and Technology Budget
In a 1995 report from the National Academy of Sciences, the scientific
community proposed a ``Federal Science and Technology'' budget. Such a
compilation would highlight more consistently and accurately activities
central to the creation of new knowledge and technologies, compared with
the traditional R&D data collection reported in Table 7-2. Because the
Federal Science and Technology (FS&T) budget emphasizes research,
funding for defense development, testing, and evaluation is not
included. The resulting FS&T budget is about half of the total Federal
spending on R&D.
Table 7-3 contains an approximation of the FS&T budget, which accounts
for nearly all of Federal basic research, over 80 percent of Federal
applied research, and about half of Federal non-defense development.
[[Page 136]]
Table 7-3. FEDERAL SCIENCE AND TECHNOLOGY BUDGET
(Budget authority, dollar amounts in millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollar Percent Dollar Percent
2000 2001 2002 Change: Change: Change: Change:
Actual Estimate Proposed 2000 to 2000 to 2001 to 2001 to
2002 2002 2002 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
By Agency
National Institutes of Health........................................................ 17,827 20,361 23,112 5,285 30% 2,751 14%
NASA \1\............................................................................. 6,389 6,957 7,038 649 10% 81 1%
Space Science...................................................................... 2,524 2,658 2,786 262 10% 129 5%
Earth Science...................................................................... 1,675 1,702 1,496 -179 -11% -206 -12%
Biological and Physical Research................................................... 356 393 380 24 7% -13 -3%
Aero-space Technology.............................................................. 1,834 2,205 2,376 541 30% 171 8%
Defense \2\.......................................................................... 4,541 4,981 5,086 \2 545 \2\ 12% \2\ 105 \2\ 2% \2\
\
Basic Research \2\................................................................. 1,136 1,317 1,345 \2 209 \2\ 18% \2\ 28 \2\ 2% \2\
\
Applied Research \2\............................................................... 3,405 3,664 3,741 \2 336 \2\ 10% \2\ 77 \2\ 2% \2\
\
Energy............................................................................... 4,353 4,910 4,682 329 8% -228 -5%
Science Programs \3\............................................................... 2,788 3,179 3,160 372 13% -19 -1%
Energy Supply...................................................................... 584 661 494 -90 -15% -167 -25%
Energy Conservation \4\............................................................ 577 625 484 -93 -16% -141 -23%
Fossil Energy \5\.................................................................. 404 445 544 140 35% 99 22%
National Science Foundation.......................................................... 3,897 4,416 4,472 575 15% 56 1%
Agriculture.......................................................................... 1,739 1,831 1,759 20 1% -72 -4%
CSREES Research and Education...................................................... 487 513 416 -71 -15% -97 -19%
Mandatory research grants (net total).............................................. 140 130 135 -5 -4% 5 4%
Economic Research Service.......................................................... 64 66 67 3 5% 1 2%
Agricultural Research Service \6\.................................................. 830 897 916 86 10% 19 2%
Forest Service \7\................................................................. 218 225 225 7 3% 0 0%
Interior (USGS)...................................................................... 813 883 813 0 0% -70 -8%
Commerce............................................................................. 819 809 711 -108 -13% -98 -12%
NOAA (Oceanic and Atmospheric Research)............................................ 285 315 330 45 16% 15 5%
NIST \8\........................................................................... 534 494 381 -153 -29% -113 -23%
Environmental Protection Agency \9\.................................................. 683 732 679 -4 -1% -53 -7%
Transportation....................................................................... 646 621 631 -94 -15% 12 2%
Highway research \10\.............................................................. 490 437 443 -47 -10% 6 1%
Aviation research \11\............................................................. 156 184 188 32 21% 4 2%
Education............................................................................ 317 363 368 51 16% 5 1%
Special Education Research and Innovation.......................................... 64 77 70 6 9% -7 -9%
NIDRR \12\......................................................................... 86 100 110 24 28% 10 10%
Research, Development, and Dissemination........................................... 167 186 188 21 13% 2 1%
Veterans Affairs \13\................................................................ 321 350 360 39 12% 10 3%
----------------------------------------------------------------
TOTAL........................................................................... 42,345 47,214 49,711 7,366 17% 2,497 5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ Includes mission support.
\2\ FY 2002 entries for DOD research represent a projection from the enacted FY 2001 levels plus inflation. FY 2002 levels are subject to change as a
result of the Defense Strategy Review now underway.
\3\ Part of change in 2002 due to transfer from science programs.
\4\ Excludes state grant programs.
\5\ 2002 level includes $95 million unavailable until the last day of FY 2001.
\6\ Excludes buildings and facilities.
\7\ Forest and Rangeland Research.
\8\ Excludes Manufacturing Extension Program.
\9\ Science and Technology account, including transfer from Superfund.
\10\ Includes research and development funding for the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National
Highway Traffic Safety Administration.
\11\ Federal Aviation Administration Research, Engineering, and Development.
\12\ National Institute on Disability and Rehabilitation Research.
\13\ Medical and Prosthetic Research.
Allocation of Federal Funding for Research
Federal funds appropriated to Executive Branch agencies may be used in
different ways, ranging from grants awarded to university researchers to
supporting research at Federal laboratories. In order to better
understand and characterize the methods agencies use to allocate their
research funding, agencies reported how research funds are allocated in
2001 by the following five categories:
Research performed at congressional direction consists of
intramural and extramural research where funded activities are
awarded to a single performer or collection of performers.
There is limited or no competitive selection, or there is
competitive selection but the research is outside of the agen
[[Page 137]]
cy's primary mission, and undertaking the research is based on
direction from the Congress in law, in report language, or by
other direction.
Inherently unique research is intramural and extramural
research where funded activities are awarded to a single
performer or team of performers without competitive selection.
The award may be based on the provision of unique
capabilities, concern for timeliness, or prior record of
performance (e.g., facility operations support for a unique
facility, such as an electron-positron linear collider;
research grants for rapid response studies such as Pfisteria,
an environmental hazard that arose suddenly; or the National
Science Foundation's merit-based renewals).
Merit-reviewed research with limited competitive selection
is intramural and extramural research where funded activities
are competitively awarded from a pool of qualified applicants
that are limited to organizations that were created to largely
serve Federal missions and continue to receive most of their
annual research revenue from Federal sources. The limited
competition may be for reasons of stewardship, agency mission
constraints, or retention of unique technical capabilities
(e.g., funding set aside for researchers at laboratories or
centers of the Department of Defense, the National Aeronautics
and Space Administration, the Environmental Protection Agency,
the National Oceanic and Atmospheric Administration, and the
National Institutes of Health; Federally-Funded Research and
Development Centers; formula funds from the U.S. Department of
Agriculture).
Merit-reviewed research with competitive selection and
internal (program) evaluation is intramural and extramural
research where funded activities are competitively awarded
following review for scientific or technical merit. The review
is conducted by the program manager or other qualified
individuals from within the agency program, without additional
independent evaluation (e.g., merit-reviewed research at the
Department of Defense).
Merit-reviewed research with competitive selection and
external (peer) evaluation is intramural and extramural
research where funded activities are competitively awarded
following review by a set of external scientific or technical
reviewers (often called peers) for merit. The review is
conducted by appropriately qualified scientists, engineers, or
other technically-qualified individuals who are apart from the
people or groups making the award decisions, and serves to
inform the program manager or other qualified individual who
makes the award (e.g., NSF's single-investigator research;
NASA's research and analysis funds).
Table 7-4 lists how Federal R&D agencies report their allocation of
research funding among these categories.
Table 7-4. ALLOCATION OF FEDERAL RESEARCH FUNDING, FY 2001
(Budget authority, dollar amounts in millions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Merit-Reviewed Merit-Reviewed
Research Merit-Reviewed Research Research
Performed at Inherently Research with with
Unique with Limited Competitive Competitive Total
Congressional Research Competitive Selection and Selection and
Direction Selection Internal External
Evaluation Evaluation
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By Agency
Health and Human Services................................................................................. 159 107 2,819 19 17,355 20,459
Defense................................................................................................... 614 200 1,131 2,901 135 4,981
Energy.................................................................................................... 139 1,016 2,338 321 749 4,563
National Aeronautics and Space Administration............................................................. 219 171 636 1,411 1,794 4,231
National Science Foundation............................................................................... ............. .......... 168 234 2,655 3,057
Agriculture*.............................................................................................. 458 768 359 .............. 79 1,664
Commerce.................................................................................................. 97 325 54 188 205 869
Veterans Affairs.......................................................................................... 1 .......... 3 .............. 685 689
Interior.................................................................................................. 51 138 375 26 4 594
Environmental Protection Agency........................................................................... 38 39 195 69 134 475
Transportation............................................................................................ 31 98 .............. 344 .............. 473
Education................................................................................................. 4 .......... 163 .............. .............. 167
Other..................................................................................................... 359 111 5 85 11 571
-----------------------------------------------------------------------------------
TOTAL................................................................................................... 2,170 2,973 8,246 5,598 23,806 43,793
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Does not include net mandatory funding for USDA research grant programs of $130 million in FY 2001.
[[Page 138]]
Networking and Information Technology and Global Change Research and
Development
Table 7-5 shows agency-by-agency spending for Networking and
Information Technology R&D and the U.S. Global Change Research program,
as required by statute.
Table 7-5. AGENCY DETAIL OF SELECTED INTERAGENCY R&D EFFORTS
(Budget authority, dollar amounts in millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollar Percent Dollar Percent
2000 2001 2002 Change: Change: Change: Change:
Actual Estimate Proposed 2000 to 2000 to 2001 to 2001 to
2002 2002 2002 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Networking and Information Technology R&D
National Science Foundation.......................................................... 496 641 643 147 +30% 2 +0%
Energy............................................................................... 331 475 480 149 45% 5 +1%
Defense*............................................................................. 285 349 356* 71* 25%* 7* 2%*
Health and Human Services**.......................................................... 214 244 266** 46 21% 22 9%
National Aeronautics and Space Administration........................................ 129 177 181 52 40% 4 2%
Commerce............................................................................. 36 39 41 5 +14% 2 +5%
Environmental Protection Agency...................................................... 4 4 2 -2 -50% -2 -50%
----------------------------------------------------------------
TOTAL.............................................................................. 1,501 1,929 1,969 468 31% 40 2%
U.S. Global Change Research Program
National Aeronautics and Space Administration........................................ 1,161 1,162 1,072 -89 -8% -90 -8%
National Science Foundation.......................................................... 187 179 178 -9 -5% -1 -1%
Energy............................................................................... 113 119 121 8 +7% 2 +2%
Commerce............................................................................. 67 80 93 26 +39% 13 +16%
National Institutes of Health........................................................ 48 52 57 9 +19% 5 +10%
Agriculture.......................................................................... 56 56 55 -1 -2% -1 -2%
Interior............................................................................. 27 27 25 -2 -7% -2 -7%
Environmental Protection Agency...................................................... 21 23 22 1 +5% -1 -4%
Smithsonian.......................................................................... 7 7 7 0 +0% 0 +0%
----------------------------------------------------------------
TOTAL.............................................................................. 1,687 1,705 1,630 -57 -3% -75 -4%
================================================================
TOTAL WITHOUT NASA DEVELOPMENT..................................................... 758 797 811 53 7% 14 2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
* FY 2002 entry for DOD R&D represents a projection from enacted FY 2001 levels plus inflation. FY 2002 levels are subject to change as a result of the
Defense Strategy Review now underway.
** Includes $14 million in offsetting collection in FY 2002 for the Agency for Healthcare Research and Quality. These activities were funded at $11
million in FY 2000 and $14 million in FY 2001.
Tax Incentives
Along with direct spending on R&D, the Federal Government has
stimulated private investment in these activities with tax preferences.
Current law provides a 20-percent tax credit for private research and
experimentation expenditures above a certain base amount. The credit,
which expired in 1999, was retroactively reinstated for five years, to
2004, in the Tax Relief Extension Act of 1999. The Budget proposes to
make the Research and Experimentation (R&E) tax credit permanent. The
proposed extension will cost an additional $49.6 billion over the period
from 2002 to 2011.
A permanent tax provision also lets companies deduct, up front, the
costs of certain kinds of research and experimentation, rather than
capitalize these costs. This tax expenditure will cost $1.9 billion in
2001. Finally, equipment used for research benefits from relatively
rapid cost recovery. The cost of this tax preference is calculated in
the tax expenditure estimate for accelerated depreciation of machinery
and equipment.
Table 7-6 shows a forecast of the costs of the research and
experimentation tax credit.
Table 7-6. PERMANENT EXTENSION OF THE RESEARCH AND EXPERIMENTATION TAX CREDIT
(Budget authority, dollar amounts in millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2002 to
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current Policy....................................... 6,760 5,390 4,710 2,720 1,160 ....... ....... ....... ....... ....... 20,740
Proposed Extension................................... ....... ....... 1,055 3,431 5,415 6,542 7,388 8,020 8,567 9,158 49,576
--------------------------------------------------------------------------------------------------
Total................................................ 6,760 5,390 5,765 6,151 6,575 6,542 7,388 8,020 8,567 9,158 70,316
--------------------------------------------------------------------------------------------------------------------------------------------------------