Trends in Federal Support
NSF 95-304

Trends in Federal Support

As a share of the national R&D total, Federal Government support has continued to slip in recent years. Long the dominant provider of the Nation's R&D funds, the Federal share first fell below 50 percent in 1978; between 1980 and 1990, the Federal Government consistently provided 47 to 44 percent of all funds spent on R&D in the United States. Its share has further dropped to an estimated 36 percent in 1994.[4] Even with its declining share of the national total, Federal R&D support grew from $29 billion in 1980 to an estimated $62 billion in 1994, or by about 20 percent after adjusting for inflation. The real rate of increase was particularly strong in the early eighties and accounted for most of the gain for the entire decade. From 1980 to 1985, Federal R&D support grew on average by 6 percent annually. Support then slowed considerably in 1986 reflecting the budgetary constraints imposed on all Government programs, including those mandated by the Balanced Budget and Emergency Deficit Control Act of 1985 (also known as the Gramm Rudman Hollings Act) and subsequent legislation (notably the Budget Enforcement Act of 1990, which legislated that new spending increases be offset with specific spending cuts). As a consequence, real Federal R&D support is estimated to have declined on average by 1 percent per year over 1985-94.

Practically all the gain in Federal R&D support during the early eighties was due to large increases in defense spending. This statement is borne out by data on U.S. budget authority (chart 3). For example, defense activities of the Department of Defense (DOD) and the Department of Energy (DOE) accounted for one half of total Federal R&D budget authorizations in 1980.[5] By 1986, such defense related spending peaked at 69 percent of the Federal R&D budget authority.

Chart 3

Since then, Federal R&D spending priorities have shifted as a result of increasing budgetary pressures and altered U.S. security concerns in the evolving international environment. The defense buildup in the early and mid 1980s gave way to a period of moderate cuts in the late 1980s, a leveling in the early 1990s, and a return to planned moderate cuts in the mid 1990s. Annual R&D funding data reflect these Federal policy changes. Since 1986, the growth rate in Federal authority for civilian related R&D has been higher than for defense related R&D. Increases for health and space related R&D are particularly strong, whereas estimated R&D expenditures for defense programs declined by 23 percent-in real terms-during 1987-94. As a result, defense related R&D accounts for an estimated 56 percent of the 1994 total Federal R&D budget authority.

R&D is estimated to account for 15 percent of the 1994 defense related budget authority and 3 percent of all Federal nondefense funds (table 1).[6] In nondefense areas R&D accounted for 60 percent of energy funds; 59 percent of general science funds, 94 percent of which is devoted to the conduct of basic research; 56 percent of space funds, with about 27 percent of the R&D funding total slated for continued development of the planned manned Space Station Freedom; and 9 percent of health funds, of which 94 percent is directed toward the research programs of the National Institutes of Health.

For the Nation as a whole, defense R&D climbed from 24 percent of the total R&D effort in 1980 to 31 percent in 1987. In 1994 defense R&D is estimated to have dropped to a 20 percent share of total (chart 4). These shares by national objective represent a distribution of performer reported R&D data. They are distinct from the budget authority shares, reported above, that are based on the various functional categories that comprise the Federal budget. (See appendix A). Between 1980 and 1994 space related R&D support has annually accounted for 3 to 5 percent of the national R&D total. In spite of the recent expansion in Federal R&D support for nondefense nonspace programs, such support accounted for just 11 percent of the estimated U.S. 1994 R&D total, compared with its 18 percent share in 1980 and its 12 percent share in 1986.

Chart 4

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4. The sample design for estimating industry R&D expenditures was revised for 1991 and later years. The effect of the change in industry's sample design was to reduce the Federal share of the national R&D total to 38 percent in 1991, down from the 41 percent share previously published for 1991. See appendix A(and table A-2) for more information on these survey changes and their impact on the R&D estimates.

5. These percentage share estimates of defense related R&D expenditures are based on Federal budget authorization totals, not on data reported by the performers doing the R&D.

6. NSF, Federal R&D Funding by Budget Function: Fiscal Years 1993-95, NSF 94-19, (Arlington, VA, 1994). These data reflect estimates contained in the administration's 1995 Federal budget proposal.


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