The Changing Composition of the Federal Research and Development Portfolio

CRS Report for Congress
The Changing Composition of the Federal
Research and Development Portfolio
June 27, 2001
Michael E. Davey
Specialist in Science and Technology
Resources, Science, and Industry Division
Richard E. Rowberg
Senior Specialist in Science and Technology
Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

The Changing Composition of the Federal
Research and Development Portfolio
Each year since FY1997, Congress has appropriated more funds for research and
development (R&D) than requested by the Administration. For FY2001,Congress
appropriated $90.0 billion for R&D, 9.2% above the FY2000 level. In addition,th
legislation passed the Senate in the 106 Congress calling for doubling of federal
funding for nondefense R&D over the next 11 years. Despite this seemingly favorable
climate for federal R&D funding, however, concerns have been raised about the
composition of the federal R&D portfolio. In particular there are questions about
whether the funding growth is distributed most effectively among the various fields
of science and engineering.
Most of the recent growth in federal nondefense R&D funding has been in the
life sciences. From FY1995 to FY2001, constant dollar funding for health-related
R&D increased by 62% while that for the remaining nondefense R&D agencies
increased by 9.5%. Health-related R&D now constitutes 45% of all nondefense R&D
funding up from 35% in FY1990 and 25% in FY1980. For basic and applied research
alone, the share allocated to the National Institutes of Health (NIH) — which
supports nearly all of the federally-funded health science research — rose from 18%
in FY1971 to 48% in FY2001. This situation, however, is not unique. During the
1960s, funding for space R&D absorbed 63% of the growth in federal nondefense
R&D funding from FY1962 to FY 1968. During the 1970s, funding for energy R&D
accounted for 45% of the growth in federal nondefense R&D funding from FY1973
to FY1979. The ratio of the growth of NIH funding to that of the rest of the
nondefense R&D for the FY1995 to FY2002 period, however, is unprecedented.
In recent months, many observers, including supporters of increased funding for
health care R&D, have expressed concern about the fact that the growth in federal
funding for physical science and engineering research, critical to the nation’s
economic future, has not kept pace with that for the life sciences. They point out that
many important advances in health care and health science in recent years — such as
magnetic resonance imaging — have depended on research findings from the physical
sciences and engineering. Also, some observers note that this difference in R&D
funding growth rates may be contributing to a decline in graduate school enrollment
in the physical sciences and engineering, which could intensify possible shortfalls in
the number of engineers and scientists needed by the nation.
These concerns are likely to appear in at least three formats this Congress. First,
legislation to double federal nondefense R&D funding over the next 10 to 11 years,
a version of which passed the Senate in the last Congress, is likely to be reintroduced.
Second, the Administration’s FY2002 budget request includes a 13.5% increase for
NIH while reducing the remaining nondefense R&D funding by 3%. Many in
Congress have already expressed concern about the latter, and attempts may be made
to increase funding for several of those other agencies. Third, debate over the
allocation of federal R&D funding among the various agencies may rekindle efforts
to develop a more comprehensive means of setting federal R&D funding priorities.

Background ................................................ 1
The Changing Federal R&D Portfolio............................2
Federal Research Funding ....................................6
Congressional Issues........................................10
Proposals to Double Federal R&D Funding...................10
FY2002 R&D Budget Request.............................12
Establishing Federal Research and Development Priorities........13
Conclusion ................................................ 15
List of Figures
Figure 1. Federal Nondefense R&D Funding by Budget Function...........3
Figure 2. Nondefense and Defense R&D Funding.......................5
Figure 3. Changes in Federal R&D Priorities...........................6
Figure 4. Change in Agency Share of Total Federal Research Funding – FY1971 and
FY2001 ................................................... 7
Figure 5. Percentage Change in Research Funding – Constant Dollars........8

The Changing Composition of the Federal
Research and Development Portfolio
Over the past several years, congressional support for federal funding of research
and development has grown substantially. For each year from FY1997 through
FY2001, Congress has increased federal research and development (R&D) funding
above the Administration request. Over that period, federal funding for R&D grew
by nearly 22%. In the last session of the 106th Congress the Senate passed legislation
(S. 296) calling for a doubling of federal funding for nondefense R&D for 16 agencies
over the next 11 years. Similar legislation was considered in the House. Because a
significant proportion of the growth in R&D funding over the last five years has been
in the health sciences, however, questions have arisen about whether the federal R&D
funding is allocated most effectively among all fields of science. The questions do not
so much focus on whether health R&D is getting too much funding, but whether the
non-health fields are getting adequate support. This report addresses that allocation
A recent report from the National Science Foundation (NSF) noted that while
“research and development expenditures have never exceeded 3% of the United
States’ economy, R&D has been widely recognized as a key ingredients for economic

growth...”1 Neal Lane, former director of the Office of Science and Technology
Policy, under the Clinton Administration, noted that both public and private
investments in R&D have generated new knowledge and new industries, created new
jobs, reduced pollution, improved medical treatment, helped to educate future
scientist and engineers, and increased living standards for all Americans. A number
of economists, including those in the current Administration, attribute much of the
nation’s prosperity in the 1990s to increased productivity stemming, in large part,2
from technological development arising from scientific research.
Support for R&D in the United States from both public and private sector
sources is estimated to have reached a record $264.2 billion in 2000, according to the
NSF. Of that total, NSF estimated that private industry contributed 68% of all
funding, with the federal government contributing 27%, and universities and non-
profits the remaining 5%.
The end of the Cold War, growing budget surpluses, and the dramatic surge in
private sector support for R&D have raised questions about the appropriate role the
federal government should play in the nation’s R&D enterprise. Given the private
sector’s recognition of the important role R&D plays in helping to fuel the new high
tech economy, it is unlikely that the federal government will ever again be the
predominant supporter of R&D funding as it was in the past. Nevertheless, in a
recent New York Times article, Allan Bromley, Science Advisor, to former President
George H. W. Bush wrote that,
“Technological innovation depends upon the steady flow of discoveries and
trained workers generated by federal science investments in universities and
national laboratories. These discoveries feed directly into industries that drive the
economy. It’s a straightforward relationship, industry is attentive to immediate
market pressures, and the federal government makes the investments that
ensures long term competitiveness.”3
Of the three components of R&D4 — basic research, applied research, and
development — the federal government supports 60% of the nation’s basic research

1National Science Foundation, Division of Science Resources Studies, Sixth Year of
Unprecedented R&D Growth Expected in 2000, NSF 01-310, November 29, 2000. NSF also
noted that other factors such as education, training, production engineering, design, and
quality control also contributed to economic growth.
2Budget of the United States Government, Office of Management and Budget, Budget: Fiscal
Year 2002, Washington, DC, 2001, 29.
3Science and the Surplus, D Allan Bromley. New York Times, Section A, Page 19. March

9, 2001.

4According to NSF the object of agency sponsored basic research is to gain more complete
knowledge or understanding of the fundamental aspects of phenomena and of observable facts
without specific applications toward processes or products in mind. The object of applied
research is to gain knowledge or understanding necessary for determining the means by which
a recognized need may be met. Development, the remaining 53% of federal R&D, is the
systematic use of the knowledge or understanding gained from research, directed towards the
production of useful materials, devices, systems or methods.

and about the same percentage of all R&D performed at the nations’ universities and
colleges. Over the past fifty years, basic research has contributed to an array of
impressive scientific breakthroughs in such diverse areas as computers, information
technology, genetic engineering, lasers, environmental sciences, agricultures, and the
development of new drugs. Besides supporting high-risk long-term basic research,
the federal government also plays a pivotal role in educating future scientists and
engineers. Further, many analysts assert that federally-funded applied research and
development related to the missions of the funding agencies has contributed to
advancements in medicine and health care, superior defense technology, energy
efficient technologies, and cleaner air and water.
The Changing Federal R&D Portfolio
While it is very likely that the federal government will continue to play a crucial
role in supporting the Nation’s R&D enterprise, a number of critics in the scientific
community as well as some Members of Congress have raised concerns about the
current trends in the federal R&D budget portfolio. Specifically their concerns center
around the relative rate of the growth of government research support for the life
sciences, through the National Institutes of Health (NIH), as compared to other fields
of research, primarily in the physical sciences and engineering. These critics argue
that because the latter have not kept pace with the former, the nation runs the risk of
a having inadequate scientific and technical resources in the physical sciences and
engineering. While Congress appears to be in the process of doubling the funding for
NIH between FY1998 and FY2003, those agencies that primarily support other fields
of science, such as the physical sciences, engineering, and mathematics, have seen
their funding remain flat or increase less than 5%, in constant dollars, between
FY1998 and FY2001. According to most recent data from the Office of Management
and Budget (OMB), NIH accounts for 45% of all federal nondefense R&D funding
in FY2001, up from 35% in 1990.5
Charles Wessner, a member of the National Research Council’s Board on
Science Technology and Economic Policy noted, that a number of prominent
scientists and engineers, including Harold Varmus (former NIH Director), have
argued for more federal research funding for other scientific disciplines to more
closely match the gains in federal health-related R&D funding. Dr. Wessner stated
that “scientific progress, and importantly commercial development, often require
investments in physics and chemistry and new materials. Past progress on magnetic
resonance imaging diagnostics involved many disciplines and technologies.”6 Others
have noted that scientific discoveries in other fields of science, such as physical
sciences and math, have led to important advances in the life sciences.

5It should be noted that NIH also funds research in fields classified as physical science and
mathematics, although nearly all of its funding supports research in the life sciences.
6ATP, NSF Among the Losers in Bush’s First Budget Plan, Scott Nance, New Technology
Week, March 5, 2001. P. 10.

While health-related R&D has enjoyed strong Presidential and congressional
support over the last few years, the data displayed in Figure 1 indicate that
emphasizing one R&D area is not a unique situation. The chart highlights changing
Presidential and congressional priorities for federal nondefense R&D funding by
budget function since 1962. M.R.C. Greenwood, a former member of the National
Science Board, also noted that a historical review of federal R&D spending reveals
that setting the Nation’s R&D priorities was often “crisis” driven.7
Despite the establishment of the National Science Foundation in 1950 and calls
for greater federal support for non-defense R&D, it was not until the launch of
Sputnik in 1957 and the creation of the National Aeronautics and Space
Administration (NASA) in 1958 that funding for federal nondefense R&D begin to
expand rapidly. In 1955, total federal nondefense R&D was $2 billion, in FY1996
Figure 1. Federal Nondefense R&D Funding by Budget Function
Billions 1996$
0 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998
Health Space Energy
General ScienceNatural ResourcesOther
dollars. By 1962, however, total federal nondefense R&D spending was $13 billion
and reached $31.5 billion by 1966, all in constant FY1996 dollars.8 As indicated in
Figure 1, space science and technology dominated federal nondefense R&D funding
through the 1960s, absorbing 66% of all federal nondefense R&D dollars in 1966.
After 1970, funding for space R&D, in constant dollars, continued to decline until the
Challenger accident in 1986.
As funding for space R&D declined in the 1970s, the oil embargo of 1973 -1974
led to calls by the Congress and Administration for more energy-related R&D

7The future Role of the Federal Government, Science and Engineering and Education in the

21st Century, the National Science Board Policy Symposium, March 28-29, 1996 Arlington,

Virginia, p.23-30.
8Data from Federal R&D Funding by Budget Function, Fiscal Years 1999-2001, October
2000, p. 40-46. Data for FY2000 and FY2001 from OMB. Beginning in FY1998 DOE’s
basic research funding was transferred from Energy to General Science where NSF’s basic
research program and NASA’s space programs are included.

spending. The second oil price shock in the late 1970s led to the establishment of the
Department of Energy (DOE) and helped to further accelerate energy R&D spending.
Between FY1972 and FY1980, energy R&D increased 255% in constant dollars.
However, 1980 marked the highwater point for energy R&D as it reached 24% of
total nondefense R&D funding, the same percentage as health research that year.
The election of President Ronald Reagan in 1980 changed federal R&D funding
priorities again. The Reagan Administration did not support many of DOE’s
alternative energy R&D activities believing that such efforts should be funded
primarily by the private sector. Thus, as indicated in Figure 1, funding for energy
R&D declined to nearly 1974 levels, in constant dollars, by 1988. Concomitantly the
Reagan Administration’s creation of the Strategic Defense Initiative (SDI), along with
greater investments in a variety of defense-related technologies, led to a resurgence
of funding in DOD’s and DOE’s defense-related R&D programs.
Figure 2 (next page) compares federal nondefense and defense R&D spending
since the early 1960s in constant 1996 dollars. Prior to the 1960s, defense R&D9
dominated the federal R&D portfolio, and accounted for over 70% of all federal R&D
funding. However, as indicated in Figure 2, by FY1966 the disparity between defense
and nondefense R&D funding had closed significantly. Federal R&D funding remained
evenly divided between nondefense and defense activities through the 1960s and
most of the 1970s. By about 1986, however, defense related R&D amounted to 68%
of all federal R&D spending. Nondefense R&D funding (even though basic research
funding increased in constant dollars during the Reagan years) declined to pre-1964
levels, in constant 1996 dollars.
The end of the Cold War in 1991 and the election of President Clinton in 199210
marked the beginning of a different focus for federal R&D. The Clinton
Administration tied much of its R&D strategy to economic growth and technological
innovation. One of the objectives of the new Administration was to increase
nondefense R&D funding while concomitantly slowing the growth of defense-related
R&D. As indicated in Figure 2, parity between nondefense and defense R&D
spending was restored in the FY2001 budget.

9Defense R&D consists of DOD and DOE defense related R&D programs.
10For a detailed discussion of that period, see Congressional Research Service, Federal
Research and Development: Budgeting and Priority-Settion, 1993-2000, by Genevieve
Knezo, RL30905, March 14, 2001.

Most of the resurgence of nondefense R&D spending, however, occurred since
FY1996 during a period of growing budget surpluses. The major recipient of the
growth in nondefense R&D funding was the health sciences, primarily the National
Figure 2. Nondefense and Defense R&D Funding
30000Millions 1996$
10000 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001
Defense R&DNondefense R&D
Institutes of Health (NIH). Figure 1 (page 3) illustrates how health-related R&D has
come to dominate nondefense R&D funding. Since 1986, federal health R&D funding
has increased from 33% of total nondefense R&D to an estimated 45% in FY2001.
Figure 3 (next page) gives another perspective of theses changes in federal R&D
funding priorities using comparative federal R&D funding data over selected six-year
intervals. Of the total growth in federal nondefense R&D funding between FY1962
and FY1968, 63% went to space related R&D and 37% to all other nondefense R&D.
Of the total growth in federal nondefense R&D funding between FY1973 and
FY1979, 43% went to energy R&D, while 57% went to all other areas.
Figure 3 also illustrates the extent to which the growth in defense-related R&D
dominated total federal R&D spending during the early 1980s. Between FY1979 and
FY1985, defense R&D received 92% of the growth in all federal R&D funding that
took place over that period. Consequently, over those six years, in constant dollars
defense R&D funding increased 70% while nondefense R&D declined 22%.
During the most recent six-year interval, FY1995 to FY2001, health-related
R&D, in response to major advances in molecular biology and the growing health
concerns of an aging American population, received 75% of the total increase in
federal nondefense R&D funding. This is the largest such increase for any nondefense
R&D research area over a six year time frame since 1945.
It is instructive to compare the 1962-1968 period with the 1995-2001 period
from a different perspective than is presented in Figure 3. This is done by comparing
the actual constant dollar increases in the space (1962-1968) and health-related
(1995-2001) R&D to the actual constant dollar increases of all other nondefense
R&D fields during those two periods. During the 1962-1968 period, constant dollar
funding for space R&D increased 168% while for all other nondefense R&D it rose

Figure 3. Changes in Federal R&D Priorities
100 Defense
80 Health
Percent of IncreaseOther
20 Other
0 1962-1968 1973-1979 1979-1985 1995-2001
by 77%. At its peak in 1966, space R&D accounted for 64% of all federal nondefense
R&D funding. By contrast, during the 1995-2001 period, constant dollar funding for
health R&D increased by 62% while for all other nondefense R&D it grew by 9.5%.
Health-related R&D is now estimated to constitute 45% of all federal nondefense
R&D. Therefore, while the health-related R&D increase has been substantial
compared to other nondefense R&D over the last six years, the former does not
dominate all R&D funding the way space R&D did during the 1960s. Nevertheless,
the ratio of the growth in health-related R&D funding during the last six years to all
other nondefense R&D funding is considerably greater than the comparable ratio
between space R&D funding and all other nondefense R&D funding during the 1960s.
It is this latter fact that appears to be of most concern to critics who argue that
funding for physical sciences and engineering R&D is being left behind by that for
health-related R&D. It is not that health-related R&D is faring too well that is the
crux of their argument, it is that the other fields do not appear to be faring well at all.
Federal Research Funding
This overview of changes in federal R&D priorities illustrates the extent and
diversity of those changes and how historical events along with congressional and
Presidential responses to those events have helped to shape federal R&D policy over
the last 40 years. Clearly other factors such as international competition,
environmental concerns, demographics, and changing political philosophies have also
influenced the direction of federal R&D programs. Given that federal R&D portfolio
has undergone many significant changes over the past 40 years, it is worth asking why
has so much attention been given to the recent growth of health-related research, in
particular NIH.

Figure 4. Change in Agency Share of Total Federal Research
Funding – FY1971 and FY2001

28NIH (from 18% to 46%)

3DOE (from 8% to 11%)

1NSF (from 6% to 7%)

-8NASA (from 18% to 10%)
-13DOD (from 25% to 12%)
-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30
Percentage point share change
The extent of the recent changes are shown most dramatically by concentrating
on the research (both basic and applied) portion of the R&D budget.11 Nearly all of
the funds going to life science R&D and NIH in particular are classified as research.
Figure 4 illustrates a the extent to which NIH’s funding increases have changed the
distribution of the research portion of all (both defense and nondefense) federal R&D
expenditures among five major federal research agencies.12 The chart, which is based
on NSF data, shows the change that occurred in each agency’s share of total federal
research funding comparing FY1971 to FY2001. Total federal expenditures for
research funding grew from $5.123 billion in FY1971, to an estimated $42.752 billion
in FY2001. The five agencies in Figure 4 account for 80% of all federal research
expenditures in FY2001, up from 75% in FY1971.
As indicated in Figure 4, NIH has enjoyed a substantially greater increase in its
share of federal research funding than any of the other agencies, some of whom have
seen their share drop. Looking at the absolute changes between 1971 and 2001 and
between 1985 and 2001 for these five agencies in Figure 5 (next page) shows that in
constant dollar terms, NIH has dominated over both intervals. Between FY1985 and
FY2001, research funding increased 196% for NIH, 51% for NSF, 60% for NASA,
43% for DOE, and just under 6% for DOD. President Bush’s proposed FY2002
federal R&D budget would continue these funding trends. Under the President’s
proposed budget, for FY2002, NIH research funding would increase 12.9%, while
research funding from all other federal agencies would decline 1.5%. Essentially, the
President’s proposal maintains congressional efforts to double NIH funding between
FY1998 and FY2003.

11See footnote 4 for definitions of research, applied research, and development.
12Further, over the past decade research funding has grown significantly as a percent of total
federal R&D, increasing from 34% of federal R&D spending in FY1990, to an estimated 47%
in FY2001.

Figure 5. Percentage Change in Research Funding – Constant
1971-2001 1985-2001
These two figures show clearly that the growth in research funding in NIH has
dramatically outpaced all other agencies and has been doing so since 1971. This
longer term trend has been masked to some extent by the fact that the year-to-year
growth rates for NIH were generally only a few percentage points higher than the
other agencies until the last few years. Those year-to-year growth rates for NIH,
however, did not vary a great deal over time while, as noted above, they flucuated
substantially for the other agencies, sometimes becoming negative. As a consequence,
the current allocation of total research funding by agency is heavily dominated by
As noted in this report, some Members of Congress and representatives of the
scientific community have voiced concerns about these changes. First, they argue that
the nation needs to accelerate and maintain the growth in federal funding for all fields
of science and engineering, not just health science. They note that federally funded
research has played crucial role in the generation of new knowledge, technological
innovation, and the education of scientists and engineers. They also point out that the
federal research budget consists of a broad array of generally long term, high risk
activities with potential payoffs that may not materialize for many years in the future.
Because the outcomes of such research are unpredictable and have extended time
frames, it is unlikely that the private sector will support such research on a consistent
long term basis. According to a number of reports, federal support of basic and
applied research has been crucial for numerous technological advancements that have
contributed to the nation’s overall economic growth and prosperity. For example,
federally funded basic research in optics, coupled with advancements in lasers, led to
the development of fiber optics, which helped to build the nation’s modern
telecommunications network.13

13Besides the direct role of funding R&D, the federal government helps to foster commercial

The relationship between the results of physical science and engineering research
and advances in the health sciences raises a second concern. Some analysts argue that
a “funding imbalance” between life sciences and all other fields of science could
weaken this linkage to the detriment of continued advances in biomedicine. They note
that breakthroughs in health research are often dependent on advances, or a
combination of advances, in the fields of engineering, mathematics, and the physical
sciences, and that growing support for the latter are also needed if the promises of
health research are to be fulfilled. Magnetic Resonance Imaging is an example of how
physical and engineering sciences underpin advances in medical science.14
A third concern relates to the increasing interdisciplinary nature of modern
scientific research. In a recent Science magazine editorial, Donald Kennedy wrote
that an increased proportion of important science and technology challenges will
require an interdisciplinary approach.15 He noted that advancements in
nanotechnologies, neuroscience, information technology, climate change sciences, and
bioengineering are dependent on disciplines as diverse as chemistry, physics,
mathematics, and engineering. He argued that scientific gains derived from sequencing
the human genome will not only be dependent on molecular biologists, but on
specialists in bioinformatics trained in mathematics and computer sciences.
A fourth concern raised by the differential growth rates in federal research
funding between the life sciences and the physical sciences and engineering is related
to the important role played by such funding in educating future scientists and
engineers. Current NSF data on graduate enrollment by field of science suggest that
continued funding disparity between health and non-health related R&D may be
affecting graduate enrollment in other fields of science. According to NSF data,16 the
number of graduate students in engineering, mathematics, and the physical and earth
sciences grew from 1975 to 1993 and then declined by 14.4% from 1993 to 1999.
The number of graduate students in the biological sciences, on the other hand,
increased from 1975 to 1999, although there was essentially no change from 1993 to
1999. It is possible that the growing publicity in scientific circles given to the large
increases in the NIH budget relative to other agencies over the last few years may
have discouraged some students in the physical sciences and engineering from staying
in graduate school because they perceived relatively poor prospects for research
funding for those fields when they completed their studies. At the same time, those

13 (...continued)
technological innovation through a variety indirect mechanisms including patent protection,
and variety of tax incentives, promoting economic stability, and the promotion of international
14National Academy of Sciences, A Life Saving Window on the Mind and Body: The
Development of Magnetic Resonance Imaging (MRI), Beyond Discovery; The Path from
Research to Human Benefit, January 31, 2001,
15Donald Kennedy, A Budget Out of Balance, Science, Vol. 291 March 23, 2001, p. 2275.
16National Science Foundation, Division of Science Resources Studies, Graduate Students
and Postdoctorates in Science and Engineering; Fall 1999, NSF 01-315, Feb. 2001, 30.

large increases do not seem to have triggered a proportional increase in graduate
enrollment in the biological sciences.
While graduate student enrollment in engineering, mathematics, and the physical
and earth sciences increased in 1999 for the first time since 1993, the increase was
small and was entirely attributed to growth in non-U.S. citizen enrollments. Graduate
school enrollments of U.S. citizens in science and engineering has dropped 9%, since17
it peaked in 1993. Some have expressed concern about the U. S. ability to continue
to compete in the global market place if these science and engineering graduate
education trends, particularly in the physical sciences and engineering, are not
reversed soon.
Despite these arguments, it is not clear that these funding trends are causing
serious problems for the nation’s science and technology enterprise. While the
premises for each of the four concerns expressed above may be valid, there at present
does not appear to be any data supporting the notion that physical science and
engineering research is suffering because the growth in federal funding for those areas
is not keeping pace with that for life science research.18 New diagnostic technologies
are still entering the market — witness the advent of the full-body CT Scan — and
the issue at present appears to be more whether the nation can afford such
technologies. There has also been a fairly rapid expansion of funding for
interdisciplinary research in recent years, particularly in information technologies and
nanoscience and technology. In addition, it is important to note that declining
graduate enrollments may be due to other factors such as a strong economy that has
lured potential graduate students — particularly from the physical sciences and
engineering — into the workforce, growing numbers of minority high school students
who have traditionally been under represented in the science and engineering fields,
and a lack of student interest in pursuing fields of study that are considered too
academically challenging. Finally, with the pervasiveness and expansion of healthcare
concerns in the nation and world, a significantly more rapid growth rate for health
research than other fields over a given period of time may be justified.
Nevertheless, if this large growth rate differential were to continue for too long,
the problems outlined above could come to fruition. The resources available for
federal research funding are not unlimited and eventually these trends could result in
a damaging shift of such resources away from the physical sciences and engineering
research. At present, it appears that percentage funding increases for NIH will fall
back to below double digits after 2003 when the current doubling phase is complete.
It is possible, however, that even then, NIH funding growth, on average, may outpace
the other agencies as has been the case over the last three decades (see Figure 5).
Congressional Issues

17National Science Foundation, Data Brief, “Science and Engineering Enrollment in Science
and Engineering Increase for the First Time Since 1993", NSF 01-312, Jan. 11,2001, 2.
18It should be noted, however, that some observers have expressed the view that the growth
in NIH funding is excessive. They argue that the agency cannot effectively spend all of the
funding increases it is receiving and, in addition, may have great difficulty adjusting when the
double-digit growth rates cease.

Proposals to Double Federal R&D Funding. In both the 105th and 106th
Congresses, legislation was introduced in both the House and Senate to double federal
nondefense R&D funding over a 10- or 11-year period. While the House did not act
on those bills, the Senate approved an R&D doubling bill in both sessions.19 The
Senate and House bills contained similar provisions. The bills call for the doubling of
“basic scientific, biomedical, and precompetitive engineering research,” for 16
nondefense agencies, including NIH (DOD research activities are not included in the
bills) over an 11-year period. Further, language in the bills pointed out the desire of
obtaining a balanced research portfolio because of the interdependence the various
science and engineering disciplines.
According to the legislation, a balanced research portfolio would be achieved by
allowing each agency’s R&D budget to grow 5.5% per year in order to reach the
overall doubling target. Under this provision if an agency receives an annual increase
of more than 8%, its total budget may not be counted against the total recommended
spending level of all 16 agencies for the following fiscal year. For example, because
NIH received a 15% increase in FY2001, under this provision, its total would not be
included as part of the recommended annual funding total for the remaining 15
agencies in FY2002. Thus, the remaining agencies could increase an average of 5.5%
without exceeding the recommended FY2002 funding level of $45.160 billion. If
NIH‘s FY2001 funding level was included, total spending could exceed the FY2002
target and potentially limit the growth of the other 14 agencies.
The Senate bill S. 2046, passed by the Senate last year, recognizes that “health
research has emerged as a national priority...and that the pattern of substantial
budgetary expansion begun in FY1999 should be maintained.” The bill supports the
position that rapid growth in NIH funding could be maintained while at the same time
increasing funding for the remaining 15 agencies contained in the legislation. The bill
also recommends that by 2011, nondefense R&D funding should be 10% of federal
discretionary spending up from 7% in FY2001.
The House did not pass this legislation in either the 105th or the 106th Congress.
Some Members expressed concern that the bills may circumvent the authorization
process. In a letter to Senator Bill Frist, (one of the primary sponsors of the Senate
R&D funding doubling bills and then Chairman of the Senate Subcommittee on
Science, Transportation and Space), Representative James Sensenbrenner, then
Chairman of the House Science Committee, wrote that he could not
“support a long-term authorization bill that includes a single annual blanket
authorization for all nondefense R&D agencies (contained in the legislation). In
my opinion, such an authorization would provide little support for scientific
research while undermining the Science Committee’s ability to operate as an
effective legislative entity.”20

19In the 105th Congress, the Senate passed S. 2217 and in the 106th S. 296, which was inserted
in S. 2046 , The Next Generation Internet 2000, passed by the Senate. The House bill for thethth

105 was H.R. 4514 and for the 106 H. R. 3161.

20Letter to the Honorable Bill Frist, Chairman of the Senate Subcommittee on Science,

Representative Sensenbrenner further wrote
“for example, voting for a cut to NASA in the next Veterans Administration,
Housing and Urban Development and Independent Agencies Appropriations bill
will not be inconsistent with the doubling bill since the bill contains no specific
numbers for the National Aeronautics and Space Administration,”
unlike the Committee’s FY 2000 authorization bill, H.R. 1654, that contains specific
funding numbers for NASA.
In response to the letter, Senator Frist wrote,
“Nothing in the Federal Research Investment Act detracts from your [House
Science] Committee’s ability and obligation to exercise full oversight over the
agencies and programs in your jurisdiction. Furthermore, the Federal Research
Investment Act is an authorization bill similar to the dozens of bills that the
House Science Committee has passed under your leadership.”21
In a speech before the Universities Research Association, the current Chairman
of the House Science Committee, Representative Sherwood Boehlert, indicated that
the Committee would take a serious look at the current balance of the federal research
portfolio.22 Chairman Boehlert noted that at first glance, it appears that funding for
biomedical research could be “a little out of whack” despite its dependence on a wide
range of research disciplines. He went on to state that if the Committee is to take
action “it would have to ask some tough questions, including... How would we know
if NIH was over-funded in either relative or absolute terms? Given the public concern
with health and the advances in biology, shouldn’t NIH get a larger share of the pie?”
Chairman Boehlert noted that in the past federal R&D funding priorities have been
driven by other national concerns such as the Cold War and the space race.
While he indicated he was “kindly disposed” toward a ‘doubling’ bill, it would
not preclude the committee asking pointed questions such as “Why Double? What are
we going to get for the money? How will we know if we are under or over spending
in any field?” The Chairman suggested that passage of such a bill would put Congress
on record that science spending is a priority. Finally, he did note that passing such a
bill should “not obscure the fact that doubling will never become a reality if we can’t
make a much more solid case to the appropriators.” At this point, no comparable
legislation has been introduced in the 107th Congress.

20 (...continued)
Transportation and Space, from Chairman of the House Science Committee, F. James
Sensenbrenner Jr., September 19, 2000.
21Letter to the Honorable F. James Sensenbrenner Jr., Chairman of the House Science
Committee, September 22, 2000.
22 Congressman Sherwood Boehlert, speech to the Universities Research Association,
January 31, 2001.

FY2002 R&D Budget Request. The Administration has requested $95.2
billion for federal R&D spending in FY2002, a 5.8% increase over FY2001. Included
is a requested 8.8% increase for DOD’s RDT&E budget that would be the first
installment of the Administration’s goal of increasing DOD’s annual R&D funding by
$20 billion over the next five years. The Administration also proposed a 13.6%
increase in NIH’s budget, maintaining efforts to double the NIH budget by FY2003.
These two agencies account for the total proposed increase in federal R&D spending
for FY2002. Absent NIH, funding for all other nondefense R&D programs would
decline by about 6% in constant dollars. The enacted tax cut and the Administration’s
desire to limit the growth of discretionary spending to 4% overall appear to have
confined efforts to increase nondefense federal R&D funding to keeping the NIH
budget on a pace to double by FY2003.
Several Members of Congress have raised concerns about the proposed FY2002
R&D budget request. At a Senate Budget Committee hearing on NIH, Senator
Domenici, then Chairman of the Committee, told Health and Human Services
Secretary, Tommy Thompson, that
“to increase NIH 20 percent and not to increase NSF $100 million...those are
not going to mesh. In about five years, you’re going to have the medical
scientists clamoring for where are the physical scientists, where are the people
that work on the newest physics of machinery, and engineers and nano-
engineers... .”23
Other Members expressed concerns that the proposed budget would end parity
between defense and non-defense R&D and would further exacerbate the growing
imbalance between biomedical R&D and the physical sciences. Some Members noted
that the budget request could stop congressional efforts, that began in FY 2001, to
double NSF’s budget in five years. The budget request also maintains the Deparment
of Energy’s (DOE) science programs, which received a 15% increase in FY2001, at
that year’s level. A “Dear Colleague” letter is circulating in the House that urges an
increase in funding for DOE’s science programs.
In response to these concerns, the Senate adopted an amendment to the FY2002
Budget Resolution (S. Con. Res 20) that would provide an additional $674 million for
NSF (continuing efforts to double NSF’s budget), $469 million for DOE science, and
$518 million for NASA.24 The House-passed budget resolution mirrored the
Administration’s proposed FY2002 budget, maintaining a 4% increase for
discretionary spending, while the Senate approved an 8% increase. The House and
Senate conference report (H. Con. Res. 83, H. Rpt. 107-55) provides a 5% increase
in discretionary spending overall and reduced funding for function 250 (General
Science containing NSF, DOE science programs, and NASA) below the
Administration’s request. In another action, Representative Eddie Bernice Johnson

23Senate Budget Committee Hearing on the Proposed FY2002 Budget. March 6, 2001.
24Two other R&D amendments were approved by the Senate. The first proposed by Senator
Santorum, provides an additional $353 million for DOD research. The second amendment,
sponsored by Senators Spector and Harkin, provides an additional $600 million for NIH to
ensure the dollar value of its budget will double by FY2003.

introduced H.R. 1472, which proposes an annual 15% increase in the NSF budget
from FY2002 to FY2005. Together with 13% increase NSF received in FY2001, this
legislation would double the agency’s budget by FY2005.
At a Senate OMB confirmation hearing, Senator Lieberman asked OMB Deputy
Director Sean O’Keefe about the growing disparity in research funding between the
life and physical sciences, while arguing that the two fields are mutually dependent.
Deputy Director O’Keefe responded by noting that,
“ the President’s budget continues to invest in research, both at NIH and at other
agencies...The Nation needs a balanced portfolio of research, funded by the
Federal government and the private sector, in both defense and nondefense
areas, and across fields of science. For example, a balanced portfolio of research
looked very different during the Cold War, than it does now... . We believe that
the current portfolio is balanced, but we expect to further refine this balance as25
we assess new and ongoing research opportunities in future budgets.”
While the Administration’s proposed budget projects a $15 billion increase for
all nondefense discretionary spending in FY2003 over its FY2002 request, between
FY2004 and FY2006 it projects an average annual increase for all nondefense
discretionary spending of $8 billion. Over the past four years nondefense R&D
funding has averaged about 14% of all nondefense discretionary spending. If this
percentage were to be maintained and if the Administration’s out-year spending
projections were to be enacted, funding for nondefense R&D would likely increase
around $2 billion in FY2003, and then drop to slightly more than half that amount
over the next three years. From FY1998 to FY2001, the average annual increase for
nondefense R&D was $3 billion.
In a speech to the AAAS, Chairman Boehlert discussed the challenges of the
Administration’s proposed out-year spending levels.26 He argued that growth in
“discretionary spending for 2003 and beyond is only enough to cover inflation.” While
acknowledging the actual numbers will be higher, he stated that “competition for
federal dollars will be fierce.” The House Science Committee Chairman told the
AAAS audience that supporters of science need to be reinforcing their arguments for
science investments. He then further defined “reinforcing” as “providing good, solid
arguments for special levels of spending, not just throwing the word ‘doubling’
around as if it cast a magic spell. And it means providing good solid thinking about
what it may mean to have a balanced federal research portfolio.”
Establishing Federal Research and Development Priorities. Critics
have argued that despite calls from Members of Congress, the White House, and the
scientific community, a coherent system for establishing R&D spending and
programmatic priorities across the federal government does not exist. They state that
the current approach for allocating funds for federal research is an incremental process

25Sean O’Keefe, Testimony before the Senate Government Affairs Committee, February 27,


26Congressman Sherwood Boehlert (R-NY) Speech to AAAS Colloquium, May 3, 2001. P


that may not be a model for rational decision making, and that there appears to be
little coordination within the executive and legislative branches of government in
reviewing and establishing federal R&D budgets. According to a study by the
National Science Board, the federal R&D “portfolio for research is treated as an
accounting device that aggregates the research portfolios of the individual
departments and agencies funding S&T.”27
Many policymakers in both the executive and legislative branch generally agree
that the federal R&D budget is not treated, or managed, as a single broad based
portfolio of science and technology investments aimed at meeting broad based federal
responsibilities. Past Administrations have used the Federal Coordinating Council for
Science, Engineering, and Technology (FCCSET) to help establish and coordinate
multi-agency R&D initiatives as well as to help develop policies for effective planning
and administration of science, technology and engineering across the federal
government. In 1993, President Clinton established the National Science and
Technology Council (NSTC) as a successor to FCCSET. Among its various
responsibilities the Council assisted in developing recommendations for federal agency
R&D budgets aimed at accomplishing important national objectives, and advising
OMB about individual agencies’ R&D budget priorities. The NSTC was responsible
for coordinating multi-agency research initiatives such as for information technologies
and nanotechnologies. The Council played a key role in the establishment of the “21st
Century Research Fund,” a multi-agency research initiative including DOD, that the
Clinton Administration hoped would help it promote a more balanced research
A number of reports have suggested that the current congressional process for
establishing R&D priorities is disjointed and lacks mechanisms for systematically
reviewing and establishing R&D priorities across the federal government. A 1998
House Science Committee report, Unlocking Our Future: Toward a New National
Science Policy,28 noted that decisions about science policy and agencies’ research
priorities are, “made in a large number of Congressional committees and
subcommittees which can impede the progress and coordination of important
projects.” Commonly referred to as the Ehlers’ report, it suggested that
“at a minimum Congress and the Executive Branch should improve their internal
coordination process to more effectively manage, execute, and integrate
oversight over these kinds of programs. While the Office of Management and
Budget can fill this role in the executive Branch, no such mechanism exits in
In a 1995 report, the National Academy of Sciences recommended that

27The Scientific Allocation of Scientific Resources, Discussion Draft ,National Science Board
NBB-39, March 29, 2001, []
28Unlocking Our Future: Toward a New National Science Policy, Committee on
Science, U.S. House of Representatives, 105th Congress, September 1998, Committee
Print 105-B p. 56.

“Congress should create a process that examines the entire FS&T [federal
science and technology] budget before the total budget is disaggregated into
allocations to appropriations committees and subcommittees.”29
In apparent recognition of these concerns, S. 2046, The Federal Research
Investment Act, contains a provision that would require the Office of Science and
Technology Policy to produce an annual report that verifies that the President’s
budget for nondefense R&D contains “a focused strategy that is consistent with the
funding projections of this title [Title I] for each future fiscal year until 2011,
including specific targets for each agency that funds nondefense research
development; ... .” Further, the legislation directs that the report should examine how
any differences in agencies recommended funding levels “will affect...the ability of the
agencies covered by this Act to perform their missions... .”
While a number of proposals (including establishing a Department of Science and30
Technology) and some attempts have been made, over the last several decades, to
strengthen OMB’s and OSTP’s role in R&D priority setting, the success of such
efforts has always depended on the extent to which the President believes they are
needed or warranted. There has been and continues to be support to keep the process
decentralized in order to ensure R&D priorities for a given agency best match that
agency’s mission, and to encourage the diversity inherent in the existing system.
Furthermore, while many Members of Congress recognize that the current legislative
process for identifying R&D spending priorities is cumbersome and disjointed, they
argue that such a process reflects a general belief that power within Congress should
be decentralized and not placed in the hands of a limited number of Members. Such
an approach, they argue, helps to serve the diversity of constituents that Members of
Congress represent and is the best way to ensure that R&D funding best serves the
broader missions of the agencies.
The difference between the rate at which R&D funding for NIH is growing
compared to the rest of federally-funded nondefense R&D is substantial. While the
existence of such a difference between one research field and the others is not unique
in the history of federal R&D funding since World War II, in some ways the current
gap is unprecedented. Some critics have argued that if this growth rate gap does not
shrink by enhancing funding growth rates for physical science and engineering
research, there could be negative consequences for the nation’s long-term economic
well-being and even for continued advances in health care. They assert that
continuation of the gap, as suggested by the FY2002 R&D budget request, could
result in an excessive shift of resources away from physical science and engineering
research towards the health sciences. Such a shift, however, is by no means assured

29Allocating Federal Funds for Science and Technology, National Academy of Sciences,
Committee on Criteria for Federal Support of Research and Development. National Academy
Press, Washington D.C. 1995. P. 12.
30For additional discussion on this issue see, Congressional Research Service, A Department
of Science and Technology: A Recurring Theme, by William C. Boesman, CRS Report, 95-

235 SPR, February 3, 1995. 6p.

and it may be too soon to tell whether this growth rate gap is creating any problems
for the nation. Furthermore, there appears to be substantial support for maintaining
a high level of funding for health research in order to attack major health problems
that are afflicting a growing number of people as the nation’s population ages. In any
event, Congress will have a chance to address the issue when it considers the FY2002
budget request and, possibly, legislation to double nondefense R&D funding for most
agencies. Early indications in Congress suggest that some Members already consider
the gap a potential problem that can be best addressed by increasing R&D funding for
other nondefense agencies.