House Budget Committee Chairman Paul Ryan’s (R-WI) fiscal year 2015 budget proposal recommends an unacceptable new normal in federal funding for research and development, or R&D. This stagnation is a drastic departure from the historic trend of steadily increasing federal R&D funding. The broad degree of bipartisan support for basic scientific research stems from its overwhelming economic returns. Since World War II, anywhere from one-third to one-half of U.S. economic growth can be attributed to technological innovation, much of which is the result of basic research. R&D is simply an engine that powers our economy.
The government’s role in this type of research is critical. Incentives for private firms are limited because the commercial benefits of basic research are not realized immediately, thus limiting short-term profits for these companies. Firms also can’t patent basic research, and therefore can’t keep it private, limiting its worth. In contrast to the private sector, the federal government’s investment decisions need not be driven by profit considerations, thereby freeing it to invest in promising basic research whose commercial benefits are not initially clear. With his latest proposal, however, Rep. Ryan effectively abandons our innovation future.
Rep. Ryan’s FY 2015 budget would cut funding for “general science, space, and technology” by $7 billion over five years, relative to President Barack Obama’s FY 2015 budget proposal. This cut is even worse than it sounds when put in context: President Obama’s FY 2015 budget already reflects enormous spending cuts and actually calls for lower general science, space, and technology funding than Ryan’s own budget did just a few years ago[ES1] .
The historic break in the federal government’s commitment to R&D investment began with the widely divergent budget proposals from President Obama and Rep. Ryan for FY 2010. These proposals had vastly different allocations for general science, space, and technology, which the Office of Management and Budget, or OMB, classifies as budget Function 250. In FY 2013, Function 250 accounted for roughly half of all federal spending for nondefense R&D. Rep. Ryan’s FY 2010 budget called for Function 250 funding levels that over the span of 10 years would have resulted in a total of $44.8 billion less funding in constant 2013 dollars than President Obama’s FY 2010 proposal.
Ultimately, the federal government spent $30.1 billion for Function 250 in FY 2010, significantly closer to Rep. Ryan’s proposal of $29.9 billion than President Obama’s proposal of $31.2 billion. Funding for Function 250 decreased by 7.1 percent from its FY 2010 level over subsequent years as budget cuts ensued, culminating in sequestration in FY 2013. When adjusted for inflation, this decrease was even more dramatic, at 11.7 percent.
Not content with these dramatic cuts, Rep. Ryan’s latest budget proposes even deeper reductions in general science, space, and technology. Cutting federal R&D investment is among the most counterproductive approaches to deficit reduction; the federal government’s investments in basic research are the engines that power innovation and future economic growth. As the president noted in his 2011 State of the Union address, “Cutting[AD2] the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine.”
To President Obama’s credit, his budget recognizes the inadequacy of our current levels of funding for Function 250, as well as other critical sectors. While adhering to the spending levels established by the Murray-Ryan agreement, the president’s budget rightly notes that these levels “are not sufficient to ensure that the Nation[AD3] is achieving its full potential in creating jobs, growing the economy, and promoting opportunity for all.”
The president’s proposal attempts to address this inadequacy through the establishment of the Opportunity, Growth, and Security Initiative, or OGSI, which seeks to spend an additional $56 billion on investments in a wide range of areas, including basic research. Among other investments, the OGSI would provide an additional $552 million for the National Science Foundation—an increase of 7.6 percent over the proposed FY 2015 funding figure.
This level of additional investment would go a long way toward putting the United States back on its long-term funding track for R&D. Rep. Ryan’s proposal, on the other hand, abandons our innovation leadership—and future.
Kwame Boadi is a Policy Analyst with the Economic Policy team at the Center for American Progress.