U.S. Federal R&D Funds/Total Budget Ratio
NSF 95-304

U.S. Federal R&D Funds/Total Budget Ratio

One way to gauge the Government's priority for R&D is to compare Federal outlays for R&D with Federal outlays for all purposes. In 1994 total Federal outlays (for on budget programs only) are estimated at $1.22 trillion.[8] An estimated 5.7 percent ($68.1 billion) of total outlays is for R&D (chart 7).

Chart 7

From 1970 to 1983, R&D outlays as a percentage of total outlays declined steadily, dropping from 9.0 to 5.5 percent. The rate of decline was most rapid in the early seventies and slowed considerably from 1975 on. Throughout most of the 1970-83 period, the ratio of R&D to total outlays for the Department of Defense hovered between 10 and 11 percent. This ratio contrasts with the falling share of R&D in the non DOD part of the budget (even after excluding outlays for interest payments), from 10.7 percent in 1970 to 4.3 percent in 1983. This declining share was not confined to one or two agencies but was a result of both slow growth in most non DOD agencies' R&D outlays and a relatively rapid expansion in the non R&D component of the Federal budget for civilian agencies.

After 1983 the overall Federal R&D outlay ratio first moved up and then back down: The ratio peaked at 6.4 percent in each year of the 1987- 89 period before settling back to 5.7 percent in 1994. Most of the initial ratio increases were due to a large increase in the DOD R&D outlay ratio. This increase was not offset by the declining non DOD ratio as had been the case in the 1970s or by the growing share of the Federal budget for interest payments.[9] During the past couple of years, however, the declining R&D outlay ratio has stemmed largely from a decrease in the R&D share of the non DOD component of the budget.

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8. Almost all off budget receipts and disbursements are for social security programs (the Federal Old Age and Survivors Insurance and the Federal Disability Insurance trust funds) which are excluded from the budget totals by the Balanced Budget and Emergency Deficit Control Act of 1985. Off budget outlays for FY 1994, as provided in the President's 1995 budget proposal, are estimated at $281 billion. See Office of Management and Budget, The Budget of the United States Government, Fiscal Year 1995 (Washington, DC: GPO, 1994).

9. As a percentage of total Federal on budget outlays, interest payments on the national debt rose from 13.8 percent in 1983 to 19.4 percent in 1989. In 1994 the estimated share of on budget outlays for interest payments was 19.3 percent.

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