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FY 2013 U.S. Federal R&D Funding: Uncertain Future

Tue, 12/18/2012 - 8:01am
Martin Grueber, Research Leader, Battelle and Tim Studt, Editorial Director, Advantage Business Media

GFF GlobeWith significant fiscal debates ongoing, a detailed discussion of FY 2013 federal R&D funding would be of limited value at this time. Instead we highlight a few key issues and describe how the current budget will likely be developed. For an up-to-date analysis of federal R&D appropriations, we recommend the AAAS R&D Budget and Policy Program.

Continuing Resolutions
The federal government is currently operating in FY 2013 under a continuing resolution (CR) set to expire March 27, 2013. The CR sets the current fiscal year budget at the final enacted levels of the previous fiscal year's budget, with only slight modifications possible.

Unlike previous years, this year's CR was established under the fiscal controls mandated under the Budget Control Act of 2011 (BCA), including spending limits or caps on future budgets. The BCA was also responsible for the creation of the congressional Joint Select Committee (the "Super Committee"), which failed to reach a compromised budget agreement last year (2011). This failure automatically invoked a budget sequestration to begin January 2, 2013—one of the key components of the "fiscal cliff" currently under debate.

Similar to previous years, there is a strong likelihood that most, if not all, federal departmental budgets will be established through an Omnibus appropriations bill, making spending levels under the current CR the final full-year budget. In a somewhat ironic twist, if the current CR functions as the ultimate FY 2013 "budget", the slightly higher spending caps established under the BCA for FY 2013 will actually provide a slight (less than 1%) increase over FY 2012 levels.

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Declining Real Dollar Outlook
Based on this scenario, the current CR-based FY 2013 would indicate a federal R&D budget of $140.0 billion, up 0.8% from the final FY 2012 of $138.9 billion. This budget takes into account several small modifications beyond the slight increase allowed by the BCA, including mandatory increased spending for nuclear defense R&D within the Department of Energy. With a projected 2013 inflation rate of 1.9%, however, the estimated budget is still declining by more than 1% in real terms over FY 2012.

Potential Sequestration Effects
Though not considered in the U.S. R&D Forecast figures, this discussion of the FY 2013 budget would be incomplete without some mention of the potential effects of sequestration on federal R&D spending. In its most simple description, the sequestration is basically a "resetting" of the baseline federal budget for defense and nondefense discretionary spending, with formula-based spending caps limiting the potential for future-year budget growth.

If the budget sequestration takes effect in January 2013, the effect on federal FY 2013 R&D spending is estimated by AAAS to equal a reduction of $12.1 billion. Of this total, approximately $6.9 billion of these cuts will come from the Department of Defense and $2.4 billion will come from the National Institutes of Health. The column chart shows the FY 2009 to FY 2013 R&D funding of the five largest R&D performing federal departments and shows the effects of sequestration on the estimated CR-based FY 2013 budget. As the chart shows, the first year impact, though substantial, is a smaller one-year amount than the ARRA-based increases in R&D funding in FY 2009 for several agencies. However, the longer-term cumulative reduction in federal R&D investment and the lasting impact it would have on overall U.S. research competitiveness are the issues of greatest concern.

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