Federal Research and Development: Budgeting and Priority-Setting Issues, 109th Congress

Publication Date: October 2006

Publisher: Library of Congress. Congressional Research Service

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Research Area: Science and technology

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Abstract:

This report summarizes current research and development (R&D) prioritysetting issues -- in terms of expenditures; agency, topical, or field-specific priorities; and organizational arrangements to determine priorities. Federal R&D funding priorities reflect presidential policies and national needs. Defense R&D predominated in the 1980s, decreasing to about 50% of federal R&D in the 1990s. In non-defense R&D, space R&D was important in the 1960s as the nation sought to compete with the Soviet Union; energy R&D was a priority during the energy-short 1970s, and, since the 1980s, health R&D has predominated in non-defense science. This Administration's R&D priorities include weapons development, homeland security, space launch vehicles, and, beginning in 2006, more support for physical sciences and engineering. For FY2007, R&D is requested at almost $137 billion of budget authority, about 1.8% more than enacted in FY2006. The request would increase funding for physical sciences and engineering programs in the National Science Foundation, the Department of Energy's Office of Science, and National Institute of Standards and Technology laboratories as part of the President's American Competitiveness Initiative (ACI) to enhance innovation. Funding for the National Aeronautics and Space Administration's R&D would increase by about 8% largely to develop human space vehicles, but cuts would be made in aeronautics, life sciences, and other research activities. For FY2007, two appropriations bills have been signed; the rest of the government is operating on a continuing resolution. Budget action so far increases support for defense development and decreases homeland security R&D funding. Although other action is incomplete, it is likely that National Institutes of Health R&D funding would be flat and physical sciences funding could increase in the three agencies as requested. However, Congress could reduce funding levels when enacting final R&D appropriations.

The latest estimated expenditure for national (public and private) R&D is $312.1 billion for FY2004. Federal R&D expenditures, at $93.4 billion, have grown, but have declined to 30% of total national R&D spending. Some proposals to increase incentives for industrial R&D include H.R. 1454, H.R. 1736, S. 14, S. 627, S. 2199, and S. 2720, which would make permanent the R&D tax credit. H.R. 4297 would have extended the credit through the end of 2007, but conferees excluded language relating to this topic. In a Senate floor vote, a motion to permit voting on H.R. 5970, a tripartite tax bill which included the R&D tax credit, failed to pass. The FY2007 budget would fund three interagency R&D initiatives: networking and information technology; climate change science; and nanotechnology. Proposals to coordinate R&D include a continuing priority-setting mechanism; a cabinet-level S&T body; functional R&D budgeting; and reestablishment of a technology assessment function. The Administration opposes R&D earmarking, estimated at $2.4 billion in budget authority for FY2006. Although the Administration is using the Government Performance and Results Act and the Program Assessment Rating Tool for R&D budgeting, some critics say better data and concepts are needed before performance budgeting can be used to identify R&D priorities.

This report replaces CRS Issue Brief IB10088. It will be updated as needed.