TOUGH TIMES FOR 2005 R&D BUDGET | February 16, 2004 Issue - Vol. 82 Issue 7 | Chemical & Engineering News
Volume 82 Issue 7 | pp. 45-54
Issue Date: February 16, 2004


Large deficit, defense spending work to keep R&D funding low for next year
Department: Government & Policy
View a table of Federal R&D funding from 2003 to 2005

Record federal budget deficits and a continued emphasis on spending for national defense and homeland security combine to keep funding increases for nondefense research and development spending essentially zero next year.

President George W. Bush's record $2.4 trillion federal budget for fiscal 2005 includes just $132 billion dedicated to R&D. Although this is a 5% increase from 2004, only about $60 billion of that is supporting traditional research programs. Much of the rest goes to development of large weapons systems by the Department of Defense. Even if large increases for R&D funding at the Department of Homeland Security (DHS) are taken into account, overall federal research support has fallen almost 1% from Bush's proposal a year ago (C&EN, Feb. 9, page 8).

The Administration tried to put a good face on the low numbers. John H. Marburger III, science adviser to the President and director of the Office of Science & Technology Policy, told a budget briefing that the R&D numbers are in line with historical trends--that is, about 10% of total discretionary spending. "This is an Administration that has been very favorable to R&D," Marburger said.

The Administration has designated several research topics as multiagency R&D priorities. The largest of these is for combating terrorism, including more than $1 billion from DHS and substantial amounts from at least six other departments and agencies. The second priority is networking and information technology R&D, which gets a combined $2 billion from a several agencies. Third is nanotechnology, slated for $886 million in 2005, a slight increase over this year. Another priority is global climate change, which will get $57 million as part of the Administration's strategic plan to address critical knowledge gaps in climate-change science. The final priority cited is hydrogen. Nine agencies will fund hydrogen-related research as part of the President's Hydrogen Fuel Initiative.

Congressional earmarks are also a problem for the Administration. Marburger said that about one of every 12 R&D dollars was earmarked in the 2004 budget, a number the Administration considers to be "in the danger zone." Many R&D earmarks were cut from the President's proposal, and that is one reason some agencies appear to have lower R&D budgets compared with 2004. Despite efforts to curtail this practice, Congress can be expected to put most earmarked projects back into the 2005 budget.

The following review of R&D agencies comes with some caveats. The numbers given are mostly budget obligations: the money that agencies can contract to spend during the fiscal year. This may be more or less than the agencies actually spend, or outlay, during the year. Also, the federal budget is a complicated document with various ways of adding up programs and getting totals. As a result, sometimes agency or department figures and totals from the White House Office of Management & Budget (OMB) are not the same, and they can be published in different places as different amounts. These variations are usually small and reflect alternative methods of dividing up funds.

The President's request for the National Science Foundation would raise the agency's budget by 3% to $5.7 billion in 2005. This is well below the level anticipated to keep NSF on track to double its budget over five years, ending in 2008, as authorized in the NSF Authorization Act, signed in late 2002.

"It would be disingenuous to say that this is all we hoped for," NSF Director Rita R. Colwell said at a budget briefing. In preparing the 2005 budget, "we have had to make informed choices in a sea of mixed opportunity and constraint," she said, adding that the budget targets three priorities: strengthen NSF management, improve productivity for researchers and expand opportunities for students, and enhance instruments and facilities.

NSF will continue to support research within four strategic areas: organizational excellence ($363 million), people ($1.1 billion), ideas ($2.8 billion), and tools ($1.5 billion). Within the area of organizational excellence--an effort to improve the agency's operations and management--NSF will invest an additional $76 million in 2005 "to ensure that we can continue to make productive investments wisely and efficiently, and perform even better in the future," Colwell said.

In the strategic area of people, the 2005 budget will allow the agency to increase the number of graduate education fellowships from 5,000 to 5,500. The stipend level of these awards will remain at $30,000 annually.

One big change within this strategic area is the phaseout of the Math & Science Partnership, which is slated to receive $80 million, down 43% from 2004. Control of the program will shift to the Department of Education under the Administration's 2005 budget. This change has already incensed some in Congress.

The movement of the Math & Science Partnership from NSF to Education is a "glaringly bad decision," said House Science Committee Chairman Sherwood L. Boehlert (R-N.Y.) in a statement. He also noted that the close-out money proposed for the partnership is moved to the research account of NSF, where it "artificially inflates what would otherwise be a mediocre rise in research spending," he said.

In the strategic area of ideas, which "build the intellectual capital that drives technology innovation and spurs economic growth," NSF will increase the average award size by $3,000 in 2005. This increase will bring the average annual award amount to $142,000.

NSF will continue to fund NSF's priority areas. The biggest increase will be in the area of nanoscale science and engineering, where the budget will grow by 20.3%, to $305 million. And $20 million will be used to support the new initiative, workforce for the 21st century, which is supposed to integrate NSF's educational investment at all levels and broaden participation in science and engineering. The other three areas--biocomplexity in the environment ($99.8 million), mathematical sciences ($89.1 million), and human and social dynamics ($23.3 million)--will remain at or near 2004 levels.

One program in the strategic area of tools that is slated for an increase is the major research equipment and facilities construction program. An investment of $213 million, a 38% rise, will support three new projects and continue funding for three ongoing ones.

HOMELAND SECURITY. With the formation of DHS in 2003, the federal government set about creating a coordinated multiagency R&D initiative to combat terrorism. Departments getting a bite of this large pie in fiscal 2005 include DHS, of course, but also the Departments of Commerce, Defense, Energy, Health & Human Services (HHS), and Justice.

The fiscal 2005 budget for the National Institutes of Health, part of HHS, includes $1.74 billion for biodefense research. A portion of this will fund research to develop new therapeutics and vaccine products and to set up regional centers of excellence in biodefense and emerging infectious diseases.

Another program to speed development and procurement of new medical countermeasures against existing and next-generation bioterrorism threats is President Bush's Bioshield project. The fiscal 2005 budget includes more than $2.5 billion over the next three years for this effort, which has been appropriated but not yet authorized by Congress. Most of this funding is for non-R&D activities, but it is intended to stimulate private-sector biodefense R&D.

DHS already has $885 million in its fiscal 2004 budget for Bioshield, but these funds also have not been authorized, which means the department can't legally spend the money. In his press briefing, DHS Secretary Tom Ridge touted this "186%" increase, and said, "I suspect that if we need to pull on that source of funds because of an emergency, no one in Congress would object."

DHS, one of the big 2005 R&D budget winners, will receive $1.2 billion, up $163 million or 15.5% from fiscal 2004. And this comes on top of a 50% increase in the department's R&D budget from fiscal 2003 to fiscal 2004. This proposed boost presages a shift in the department's focus from near-term technology development to more basic and applied research. Basic and applied research is about $431 million in fiscal 2005, up 152% from $171 million last year.

Most of DHS's R&D efforts are carried out by its Science & Technology Directorate, which includes the Office of R&D and the Homeland Security Advanced Research Projects Agency. The S&T Directorate's R&D budget is $987 million in fiscal 2005, up from $200 million in fiscal 2003, the last year for an actual budget number.

The S&T Directorate breaks down its activities by portfolio areas. Included in this classification is funding for R&D as well as funding for testing, systems development, and prototyping and commercialization.

Some high-priority portfolios and their funding for fiscal 2005 are biological countermeasures at $407 million, radiological/nuclear countermeasures at more than $129 million, chemical/high-explosives countermeasures at more than $62 million, and standards development for devices and equipment at more than $39 million.

Under the Administration's biosurveillance initiative, which will receive $274 million in fiscal 2005, DHS's S&T Directorate will get $31 million to develop better biosensors and new detection systems as well as improve the synthesis and analysis of incident data when assessing the extent of a biological attack.

DHS's total budget for fiscal 2005 is $40.2 billion, up nearly 10% from fiscal 2004.

For the second year in a row, NIH is slated to receive only a small increase in its overall budget. The agency, which completed a five-year doubling of its budget in 2003, will get $28.8 billion, a 2.6% increase over the 2004 enacted budget.

The 27 institutes and centers will see about a 3% increase across the board. Research areas targeted for increases include obesity, which will receive $22 million to expand trans-NIH programs, and AIDS, which will get an $80 million increase for research programs. As mentioned, biodefense initiatives will also remain a research focus at NIH.

In 2005, NIH will begin a research effort in the area of radiological and nuclear countermeasures. Although NIH would manage and oversee the program, the budget requests $47.4 million to be allocated to HHS's Public Health & Social Services Emergency Fund. The focus of NIH's work in this area will be on "the development of drugs that can be used to prevent injury from radiological exposure, improve methods of measuring radiological exposure and contamination, and the development of methods/drugs to restore injured tissues and eliminate radioactive materials from contaminated tissues."

NIH will continue to focus on transagency activities in 2005 as outlined in the NIH strategic road map. The agency has budgeted $237 million for the road map, which will be spread across three initiatives: $137 million for new pathways to discovery, $39 million for multidisciplinary research teams of the future, and $61 million for reengineering the clinical research enterprise.

The proposed budget will also allow for $14.9 billion to fund 37,744 research project grants--an increase of 515. The average grant amount will get an aggregate 1.3% increase.

Despite growth of more than 7% to $69 billion in total R&D testing and evaluation spending, the President's proposed budget for the Department of Defense actually cuts funding in the traditional research functions. The $4.4 billion increase all goes to support development of weapons systems, including the missile defense program, which is a Bush priority. That will get a 20% rise to $9.1 billion compared with 2004.

Other major development programs highlighted by DOD for next year include the Future Combat System, for a more efficient fighting force; continued work on the joint strike fighter, the multirole aircraft; and the next-generation ship for the Navy, the littoral combat ship designated the DD(X) destroyer.

The classic basic and applied research programs at DOD all decline again. Basic research, which has really fallen out of favor in recent years, would drop about 5% to $1.3 billion.

Applied research budgets are also cut. This spending would fall 12% to $3.9 billion. The biggest cut goes to DOD's science and technology research category, which includes funding for medical research and technology development, among other programs. This category would be cut 16% to $10.6 billion.

Congress has not been generous with DOD research either. Since the department is the major funder of U.S. engineering research, cuts of this duration can be expected to have long-term consequences in areas such as technology productivity and human resources development.

"Excellent" was Raymond L. Orbach's term for the Department of Energy's Science Office 2005 budget request. However, Orbach, director of the Science Office, qualified his enthusiasm by adding that the budget is excellent in this era of fiscal constraints.

Overall, the Administration is seeking a 1.2% increase to $24.3 billion for all of DOE in 2005. Of this, $7.2 billion is for R&D.

Orbach's Science Office is proposed to receive $3.4 billion, actually a 2% decline from the 2004 appropriation. But Orbach doesn't see it that way. He explained that the 2005 proposal eliminates about $40 million in congressional earmarks that Congress added to the 2004 budget. They are mostly in the biological and environmental area, and without them as part of the 2004 appropriation, Orbach said, the Science Office 2005 budget would really be a 2% increase.

Either way, Orbach stressed, the budget takes the first steps to make real the 20-year lab facilities improvement plan released last year (C&EN, Dec. 8, 2003, page 28).

The largest increase would go to Basic Energy Sciences (BES), he noted, and Orbach singled out two new programs. Some $29 million is directed to BES for its share of the department's hydrogen initiative, which is sprinkled throughout the DOE budget request. With its share, Orbach said, BES will conduct research on hydrogen production, storage, and fuel cells.

The other proposal would provide $30 million for long-lead procurement for the Linac Coherent Light Source, a free-electron laser located at the Stanford Linear Accelerator Center. The funds advance a research and construction project to get the facility operating by 2008.

The only clear reduction, according to Orbach, is a $25 million cut to science laboratory user infrastructure--mostly at Brookhaven and Lawrence Berkeley National Laboratories.

Among other areas discussed by the director are $38 million allocated to support fusion research, $38 million for the next-generation computer project, $211 million for nanoscale science, $80 million for development of a protein production and tagging facility, which is in planning, and $134 million for climate-change R&D.

Looking at other DOE research, renewable energy--solar, wind, and biomass--and energy efficiency are mostly either flat or cut as compared with last year's levels. Hydrogen-related R&D was the one exception, with fuel-cell research receiving a 19% boost to $77.5 million and hydrogen technology R&D getting a 16% increase to $95.3 million.

An R&D area intended to reduce energy consumption for industrial sectors--the Industries of the Future program--is being phased out with a proposed cut of 35% in 2005 to $58 million. The program has been important to the chemical industry, which like other sectors matches government money to develop energy-efficiency demonstration projects.

The chemical industry would receive the largest budget contribution, $7 million, for 2005 through the Industries of the Future program. Chemical R&D areas for next year include separations, reactions, enzymatic processes, and distillation technologies, DOE says.

Looking at other energy R&D, all fossil-fuel research programs are reduced by one-third or more, with the exception of coal. Coal R&D would receive $447 million in federal aid next year to continue the Clean Coal Power Initiative. The project's goal is to develop a coal-fired power plant with zero emissions and 60% efficiency within the next 30 to 50 years.

For nuclear power, the Administration proposes ending several R&D programs and focusing nearly all its resources on development of its "Generation IV" advanced nuclear power reactor program. Nuclear R&D funding would be reduced by 26% to $96 million in fiscal 2005.

Also, the Office of Nuclear Energy proposes spending some $100 million to restructure the Idaho National Environmental & Engineering Laboratory to become its primary R&D facility for commercial nuclear reactor development.

As in previous years, the largest single DOE allocation is the $9 billion proposed for the National Nuclear Security Administration (NNSA), a semiautonomous part of the department that includes a half-dozen DOE labs.

The R&D portion includes a mix of work to support research to maintain and design more effective nuclear weapons. Funds proposed for next year were divided among different nuclear warheads, making an exact R&D allocation difficult to determine. Consequently, the science numbers are higher than the $1.97 billion indicated in the department's budget.

Among areas NNSA identifies and highlights are $9 million in R&D to develop new nuclear weapons systems and $27.6 million to design a new "earth penetrator" nuclear weapon. This "bunker buster" R&D will grow to $145 million by 2007, NNSA says.

The President's 2005 budget requests for the Commerce Department's two primary scientific agencies--the National Institute of Standards & Technology (NIST) and the National Oceanic & Atmospheric Administration (NOAA)--provide increases for R&D.

Although funding for NIST is down nearly 15% to $521 million, the Administration's budget provides a 26% increase in funding for NIST laboratories. The increase will help fund new initiatives, such as $18.6 million for public safety and security, $16.2 million for advanced measurement capabilities to meet the needs of 21st-century science and industry, $15.6 million to support advanced manufacturing, and $8.3 million for improvements to the NIST Center for Neutron Research.

The budget also calls for a 1.2% increase in funding for the Manufacturing Extension Partnership, a program to help small manufacturers incorporate new technologies. And for the second year in a row, the President's budget terminates the Advanced Technology Program, which provides cost-sharing awards to industry for high-risk research. The attempt last year failed when Congress included ATP funding in the omnibus budget bill.

The budget request for NOAA stands at $3.4 billion for fiscal 2005, up $147 million over 2004. The budget contains $6.6 million to start a five-year study of aerosols in the atmosphere and an increase of $10.7 million for sustained ocean observation systems, which will accelerate the deployment of moored and free-drifting climate data buoys. NOAA will also spend $19 million to expand observing capabilities in support of the interagency Climate Change Science Program.

President Bush is proposing a 2005 R&D budget of $689 million for the Environmental Protection Agency. This is 12% below the $782 million Congress provided for the agency's R&D work for 2004 and 6% less than Bush asked for that year.

Most of these proposed reductions come from EPA's extramural grant project. For the past several years, the agency has requested about $100 million for its Science To Achieve Results (STAR) grants, says J. Paul Gilman, the agency's assistant administrator for R&D and science adviser to Administrator Michael O. Leavitt. STAR grants are the agency's competitive, extramural research funding program.

The 2005 budget request would slash $35 million out of the STAR program. According to John C. Puzak, acting director of EPA's National Center for Environmental Research, the President's proposal would cut $22 million from ecosystems research, $5 million from inquiry into chemicals suspected of disrupting the endocrine system, $3 million from pollution prevention work, $2.2 million from hazardous substances research centers, and $2 million from the study of mercury pollution.

EPA officials, as they have since the Clinton Administration, say their budget cuts for 2005 look particularly large because of the large number of congressional earmarks added to the 2004 budget. For example, STAR grant program funding generally gets reduced by as much as 10% to cover earmarks, Gilman says. Congress added about $52 million to the agency's R&D budget in 2004 for pet projects.

In contrast to competitive research proposals, EPA cannot reject earmarked projects, regardless of their quality or relevance to the agency. However, the agency subjects earmarked research to rigorous review before it begins, Gilman says. The agency may ask the earmark recipients to alter their research plans somewhat in light of the review, he says.

The proposed budget for R&D at EPA reflects some changes in policy priorities. EPA plans to spend $2 million in 2005 to help its 10 regional offices--which are scattered across the U.S.--implement peer review of their scientific analyses, Gilman says. These documents may describe characteristics of a particular Superfund site or local air pollution. This effort would reflect an expansion of EPA's already extensive peer review program.

The President's budget request for 2005 would also shift $143,600 from EPA's clean chemistry and engineering research efforts into computational toxicology research. Gilman has championed EPA's development of expertise in computational toxicology, which blends mathematical or computer models with data from molecular biology studies about the effects of chemical exposure (C&EN, Oct. 13, 2003, page 50). His goal is for EPA regulatory programs for chemicals to use these techniques.

In keeping with the President's space vision unveiled on Jan. 14, NASA's fiscal 2005 budget focuses on space exploration. The requested $16.2 billion for the agency--a 5.6% increase from the 2004 budget--will be used to return the space shuttle to flight, support the International Space Station (ISS), and begin work for solar exploration beyond lower Earth orbit.

"Although the budget increases are modest, NASA will be able to carry out a robust exploration program," NASA Administrator Sean O'Keefe said at a budget briefing. "During the next decade, retiring the space shuttle will free over $4 billion annually, enabling full-scale development and operation of robotic and human moon missions."

As NASA looks to the future, it faces some difficult decisions with regard to realigning programs to meet the challenges of the President's plan. For example, the Office of Biological & Physical Research reports that it has not cut any programs. However, that may change once a thorough review of all research activities is completed later this year. Currently, the office plans to increase spending for biological research by 38% in 2005, with $343 million allocated for bioastronautics research and $149 million for fundamental space research.

Space science is a key area in the agency's new goals. In 2005, NASA will spend $1.2 billion on robotic missions to Saturn, Mercury, and Pluto, as well as to comets and asteroids. Funding to support space observatories--such as the Hubble, Spitzer, and Webb telescopes--will see a 19% increase over 2004 levels, to $1.1 billion. The budget also contains $691 million and $70 million for Mars and lunar explorations, respectively.

Overall, the space flight program--including the shuttle and ISS programs--will get $6.7 billion, a 13.9% increase from 2004. The shuttle program will see a 10% increase in funding in 2005 to help get it back up and servicing ISS. To help keep ISS on track to be completed by the end of the decade, the budget will commit $1.9 billion, or 25% over 2004 levels for the space station.

Aside from addressing the President's challenge, NASA will also continue to fund research to improve life on Earth. The agency will become the largest contributor to the interagency Climate Change Science Program in 2005, spending $54 million on its Climate Change Research Initiative.

USDA. The Department of Agriculture's research budget would fall 3% from an estimated $2.57 billion in 2004 to $2.50 billion proposed for 2005.

The budget for the Cooperative State Research, Education & Extension Service falls from $1.13 billion estimated for 2004 to $1.03 billion proposed for 2005. CSREES partners with colleges and universities in carrying out extramural research and higher education and extension activities. Its budget declines primarily because grants totaling $166 million earmarked by Congress in the 2004 appropriation bill have been eliminated. However, CSREES's National Research Initiative would receive $180 million, an increase of $16 million above the 2004 estimate. This is a competitive, peer-reviewed program for fundamental and applied sciences in agriculture.

In contrast, funding for forest and rangeland research conducted by USDA's Forest Service rises from an estimated $266 million in 2004 to $281 million in 2005--a 6% increase. Some of the increase is focused on developing rapid management responses to invasive species that threaten forest and rangeland health.

And the budget for the Agricultural Research Service would rise $21 million, or 2%, from an estimated $1.17 billion in 2004 to a proposed $1.19 billion in 2005. ARS is USDA's principal in-house research agency in natural and biological sciences.

The ARS budget eliminates $169 million in 2004 funding for all projects earmarked by Congress in the past four years. However, it greatly increases funding for buildings and facilities from an estimated $63 million in 2004 to $178 million in 2005. All of this will be used to continue modernizing the National Centers for Animal Health in Ames, Iowa. The center conducts most of the research on mad cow disease funded by ARS.

Several of ARS's high-priority research areas are the development of enzymatic processes to increase the yield of coproducts from bioethanol production; animal genomics and the preservation of animal germplasm; crop genomics and preservation of crop genetic resources; climate-change research; and development of diagnostic methods that rapidly detect the most economically important pathogenic bacteria, viruses, and chemicals of food safety concern. ARS would receive $5 million to do advanced research on tests for mad cow disease.

THE BUDGET PROCESS. The President's budget for fiscal 2005 now goes to the House and Senate Appropriations Committees, where it is divided into 13 appropriations bills. Hearings will be held on each bill by various committees, and legislation will emerge that sets the levels of spending for all federal departments and agencies. The numbers approved by Congress may be very different from those originally proposed by the Administration, but historically, R&D has not been radically changed. The whole process is supposed to be completed and the bills signed by the President by Sept. 30, the last day of fiscal 2004.

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