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Research and Development in
the 1998 Budget: An Overview


Introduction up arrow

This report presents information on Federal proposed fiscal year (FY) 1998 budget authority for the research and development (R&D) components of agency programs. The data were submitted by Federal agencies to the Office of Management and Budget in early 1997. This report documents historical data not affected by current legislation and therefore can be used for tracking funding trends. The report also provides detailed data on Federal R&D authorizations that are not readily available from other sources.

Total R&D up arrow

In the first half of 1997, the administration proposed total budget authority of $72 billion for FY 1998 for all Federal R&D programs, an increase of 1 percent from the estimated 1997 R&D total of $71 billion (table 1). After adjusting for expected inflation, proposed R&D budget authority will decrease 2 percent. Budget authority for R&D grew 3 percent between 1996 and 1997 (an increase of 0.2 percent in constant dollars).

Among individual functions, the largest 1998 R&D decrease ($0.3 billion) is slated for defense (budget function code 050), which includes military programs of the Department of Defense and the atomic energy defense activities of the Department of Energy (DOE).

Proposed defense-related R&D funding is $38.7 billion in 1998, a 1-percent decrease from the preliminary 1997 level. This proposed decrease reverses the rise of 3 percent in budget authority for defense-related R&D between 1996 and 1997. However, R&D funding within the national defense function has continued to decrease in real terms since 1993 (with the exception of a 0.7-percent increase between FYs 1996-97). The proposed real decrease in defense-related R&D budget authority is offset by an increase in proposed funding of civilian R&D in 1998. Nondefense R&D funding is anticipated to grow by about 3 percent to $32.9 billion in 1998 (0.1 percent in constant dollars). Civilian-related activities represent 46 percent of Federal funding for the conduct of R&D. The proportion of R&D funds proposed for defense-related activities has declined from 55.0 percent in 1997 to 54.1 percent in 1998.

The five largest budget functions with respect to R&D expenditures-national defense, health, space research and technology, general science, and energy-together account for 91 percent of all proposed Federal R&D funding. Health, space, and general science functions are proposed to receive increased funding for R&D in 1998. Highlights of proposed R&D funding by function in the 1998 budget follow.

Distribution of Total R&D Budget Authority Among Functions up arrow

The five largest R&D functions in 1998-defense, health, space research, general science, and energy-account for 91 percent of all proposed Federal R&D budget authority. Transportation, natural resources and the environment, agriculture, and commerce and housing credit each account for between 1 and 3 percent of Federal funding of R&D. The remaining seven functions each account for less than 1 percent of the total 1998 proposed R&D budget authority (table 2).

During the early and mid-1980s, practically all growth in Federal R&D support was defense-related (chart 1). Since 1986, however, defense R&D has dropped significantly from its peak 69-percent share of the Federal total to the proposed 54-percent share for 1998 (table 3). Despite this decline, defense is proposed to receive more than three times the budget authority for R&D than the next largest function, health. Proportions of seven functions to the total R&D budget authority would be larger in 1998 than in 1997-health; space research; general science; transportation; natural resources and environment; commerce and housing credit; and education, training, employment, and social services.

chart1

Proportions for agriculture; international affairs; community and regional development; administration of justice; income security; and general government will stay the same as in 1997. Based on the administration's budget proposal, proportions of three functions would drop in FY 1998-defense, energy, and veterans benefits and services.

Basic Research up arrow

The administration proposes to increase budget authority for basic research by 3 percent in 1998 to $15 billion (table 4). When adjusted for expected inflation, this would be about a 0.2-percent increase from the estimated 1997 level. The total dollar amount for basic research, as well as the basic research share of total R&D budget authority, has slowly increased from 15 percent in 1986 to the proposed 21 percent in 1998 (chart 2).

chart2

The largest five R&D functions-defense, health, space research and technology, general science, and energy-are also the largest basic research functions; they account for 91 percent of the basic research total (chart 3). Health ($7 billion) accounts for the largest share (46 percent) of the requested 1998 basic research total, followed by general science ($3 billion) and space research and technology ($1.5 billion). Defense accounts for $1.2 billion-or nearly 8 percent-of the proposed basic research total, but only 3 percent of the defense R&D total is basic research. (The basic research portion of the defense R&D total has remained at about 3 percent for the last seven years.) Of the nondefense R&D total, 43 percent is basic research.

chart3

R&D's Share of Total Budget Authority up arrow

The proportion of R&D funding out of the total funding for functions in which R&D is conducted continues to remain at about 8 percent (table 5). Since FY 1990, the percent has fluctuated from a high of 8.2 percent in FY 1996 to a low of 7.6 percent in FY 1991. For functions that include R&D activities, only three (energy, general science, and space research) are expected to be more than 60 percent of each function's total budget authority. (Energy R&D is greater than total energy budget authority because gross budget authority has been reduced by offsetting receipts, for total net budget authority that is less than R&D budget authority.) The R&D shares in the other functions range from a high of 15 percent for national defense to less than 0.1 percent for income security and general government.

Only four functions (space research, general science, transportation, and commerce and housing credit) will show an increased share of their budget authority directed toward R&D in FY 1998. The R&D share of eight functions is expected to drop.


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