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President Releases FY 2017 Budget (Including Federal R&D Budget)

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Greetings from D.C.  The President unveiled his FY 2017 federal budget on February 9.  Included in the approximately $4 trillion budget is $152 billion for federal R&D overall, including a $6 billion, or 4 percent, increase from 2016 enacted levels.  Within the total R&D funding proposal is $73 billion for basic and applied research (a $4 billion or 6 percent increase).  Four billion of the total is also considered “new mandatory funding” (more on this later).

These and other details of the R&D budget can be found on the Office of Science and Technology Policy (OSTP) website, which notes that this budget will “ensure that we make adequate R&D investments to create jobs and grow the economy, even as the Budget adheres to the discretionary spending levels set by the Bipartisan Budget Act.”

Among the R&D funding priorities highlighted by OSTP are:

Continuing the commitment to world-class science and researchby increasing total funding for the National Science Foundation (NSF), DOE Office of Science, and NIST (three key basic research agencies) by more than $900 million.

Investing in innovation – by proposing $12.5 billion for the DOD S&T program, $3.0 billion for DARPA, and $318 million for cybersecurity R&D at civilian agencies. The budget also provides $19 billion for NASA to support innovation and scientific discovery on Earth and beyond, as well as investments within DOE ($285 million) and NSF ($33 million) to support the National Strategic Computing Initiative.

Improving Americans’ health – by providing $33.1 billion to support biomedical research at NIH (an increase of $1 billion); including $755 million to continue the recently launched National Cancer “Moonshot,” $195 million for NIH's contribution to the multi-agency BRAIN Initiative, and $309 million for the Precision Medicine Initiative.

Accelerating the pace of innovation in manufacturing – with $2 billion for federal R&D supporting the National Strategic Plan for Advanced Manufacturing.

Moving toward cleaner energy – with $7.7 billion in clean energy R&D.

Taking action on climate change – by providing $2.8 billion for the 13-agency U.S. Global Change Research Program (USGCRP).

Growing agriculture research for future generations – by funding competitive research grants through USDA’s Agriculture and Food Research Initiative at $700 million.

Preparing students with STEM skills – by investing $3.0 billion in STEM education programs.

Supporting private-sector R&D – with a simplified and expanded research and experimentation (R&E) tax credit.

As noted above, the Administration has adopted a new, and yet unproven, approach to many of the R&D budget proposals—the idea of making a significant portion of that component of the budget “mandatory funding.”  As explained by American Association for the Advancement of Science (AAAS), “while most R&D is typically housed in the discretionary budget – the portion of the budget that Congress allocates every year through the appropriations process – this year the Administration has turned to new mandatory spending to fund many of their proposals. Mandatory spending is not subject to the budget caps adopted last fall, which only allow essentially flat funding in FY 2017, with a cap of $1.07 trillion.”

But, and here’s where it gets tricky, “mandatory spending also requires new legislation to implement, and it must be deficit-neutral under so-called PAYGO rules, which means it must be paid for somehow through either revenue increases or spending cuts” and it can also be multi-year, all of which makes it very different from the normal appropriations process.

AAAS also points out that new mandatory spending actually accounts for most of the spending increase in the FY 2017 R&D budget, accounting for $4 billion of the $6 billion proposed increase.  Removing the mandatory component (in the event Congress doesn’t approve it), the budget really only provides about $2.2 billion, with the result that each agency’s R&D funding could ultimately look quite different than originally proposed.

While the new budget highlights funding specific to tech commercialization (through the lab-to-market effort), some of that funding also falls under the new mandatory funding approach.  Again from OSTP, “[T]he Budget reflects the Administration’s commitment to accelerating the transfer of the results of Federally funded research to the commercial marketplace by prioritizing funding for Lab-to-Market programs at [NIST] ($8 million) and for the [NSF] Innovation Corps (I-Corps) program ($30 million).  Both of these efforts are developing tools and best practices to commercialize the results of Federally-funded R&D. … The Budget also provides $50 million in mandatory funding for a new competitive grant program, building on the success of prior Economic Development Administration led activities, to incentivize partnerships between Federal Labs, academia and regional economic development organizations enabling the transfer of knowledge and technologies from Labs to private industry for commercialization. …” 

It’s always a challenge to predict what the final budget numbers will look like after going through the congressional appropriations process.  But the combination of a contentious election year and the new approach (mandatory budgeting for some R&D activities) makes this year even more of a guessing game.  Time will tell.

You can find all of the related OSTP R&D budget documents here, and preliminary summaries and agency-level analyses of the R&D budget by AAAS here and AIP here.

Gary can be reached at gkjones.ctr@federallabs.org.

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