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President's Budget Request for Federal R&D Contains Cuts and Increases in FY 2004 President Bush proposed a record level of federal funding for R&D in his FY 2004 budget request, which was released on February 3, 2003.  Under the President's proposal, total federal funding for R&D in FY 2004 would rise to $122.5 billion, an increase of $5.2 billion or 4.4 percent relative to the FY 2003 enacted appropriations bills1 (Table 2).  However, federal funding for R&D excluding defense ($62.8 billion) and the National Institutes of Health ($26.9 billion) would decline by $42 million or 0.1 percent (Table 2), with some agencies receiving increases and other agencies receiving offsetting decreases.   Federal agencies that would receive increases in R&D funding in FY 2004 include the Department of Homeland Security (49.6 percent), Department of Defense (7.1 percent), Department of Energy (4.0 percent), National Science Foundation (2.8 percent), Department of the Interior (1.0 percent), and NASA (0.2 percent).  Agencies that would receive decreases in R&D funding include NOAA (-1.4 percent), Department of Agriculture (-10.3 percent), and EPA (-5.7 percent).  All changes are expressed relative to the FY 2003 enacted appropriations bills.   Proposed changes in R&D funding for FY 2004 are distributed highly unevenly across the categories of research, development, and facilities and equipment: Research.  Federal funding for research (basic and applied) would increase by $805 million or 1.5 percent to $53.7 billion in FY 2004.  However, federal funding for research would decline in constant dollars because the nominal increase in funding (1.5 percent) is less than the expected rate of inflation (1.9 percent).                   Development.  Federal funding for development would increase by $5.7 billion or 9.7 percent to $64.3 billion in FY 2004.  The $5.7 billion increase in development would account for more than 100 percent of the net increase in total federal R&D.  Increases in development would be offset by decreases in applied research and facilities and equipment.                     Facilities and Equipment.  Federal funding for R&D facilities and equipment would decline by 22.5 percent or $1.3 billion to $4.5 billion in FY 2004.   Highlights of R&D funding at several key federal agencies are provided below: Department of Homeland Security (DHS). The DHS, which began full operations in March 2003, is becoming a major source of R&D funding with a budget request of $1.0 billion in FY 2004.  The R&D portfolio of the DHS would increase by 49.6 percent relative to FY 2003 and would nearly quadruple relative to comparable programs in FY 2002.                     Department of Defense (DOD).  DOD would receive the vast majority of the increase in federal funding for R&D in FY 2004.  Its R&D budget would increase by $4.2 billion or 7.1 percent to $62.8 billion.  Development sponsored by the Department of Defense (DOD) would rise by $5.3 billion or 10.0 percent to $57.6 billion.  The proposed increase in DOD development ($5.3 billion) is greater than the proposed increase in total federal funding for R&D ($5.2 billion) in the FY 2004 budget request.  The increase in DOD development would be partially offset by a $1.1 billion decrease in DOD research.  In FY 2004, DOD's share of total federal R&D would rise to 51 percent, greater than the combined total of all other federal agencies.  DOD's share of total federal development would rise to 90 percent.                   National Science Foundation (NSF).  The FY 2004 budget request would increase funding for NSF by 3.2 percent to $5.5 billion.  The FY 2004 budget request falls far short of the $6.4 billion budget and 15 percent increase authorized in the NSF doubling act, which passed Congress and signed by President Bush in December 2002 (for more information about the NSF doubling act, see the December 2002 issue of the Science, Environment and Policy Report).                   National Institutes of Health (NIH).  In FY 2003, NIH completed a campaign to double the agency's budget in five years by increasing its budget 15 percent per year.  In FY 2004, the NIH budget would increase by 2.7 percent or $700 million to $26.9 billion.  In FY 2004, NIH's share of total federal research (basic and applied) would increase to 53 percent, greater than the combined total of all other federal agencies. Multi-agency R&D priorities in the President's FY 2004 budget request include climate change R&D, education  R&D, networking and information technology R&D, nanotechnology R&D, and combating terrorism R&D.  The budget documents continue to emphasize R&D performance criteria and opposition to R&D earmarks. Articles about the FY 2004 budget request for key environmental R&D agencies will be featured in future issues of the Science, Environment and Policy Report. Table 2. R&D in the FY 2004 Budget by Agency         (budget authority in millions of dollars)                           Total R&D ($ Millions)   Percent Change Agency FY 2002 Actual FY 20031 Enacted FY 2004 Request   FY02 Actual to FY03 Enacted FY03 Enacted to FY04 Request               Total R&D (Conduct and Facilities)           Defense (military)  49,877 58,646 62,821   17.6% 7.1% Health and Human Services  24,016 27,550 28,203   14.7% 2.4%     National Institutes of Health  22,714 26,245 26,946   15.5% 2.7% NASA  10,224 10,999 11,025   7.6% 0.2% Energy  8,078 8,205 8,535   1.6% 4.0%     NNSA and other defense 3,761 3,849 4,180   2.3% 8.6%     Office of Science 3,074 3,075 3,066   0.0% -0.3%     Energy programs  1,244 1,281 1,289   3.0% 0.6% National Science Foundation  3,525 3,927 4,035   11.4% 2.8% Agriculture 2,112 2,166 1,943   2.6% -10.3% Commerce  1,227 1,248 1,100   1.7% -11.9%     NOAA  677 684 675   1.0% -1.4%     NIST  503 527 410   4.8% -22.1% Interior  623 627 633   0.6% 1.0% Transportation 778 702 693   -9.8% -1.2% Environmental Protection Agency 592 643 607   8.6% -5.7% Veterans Affairs  756 800 822   5.8% 2.8% Education  265 315 275   18.9% -12.8% Homeland Security 2  266 669 1,001   151.5% 49.6% All Other   760 798 792   5.0% -0.7%               Total R&D  103,100 117,297 122,485   13.8% 4.4%               Defense R&D  53,731 62,986 67,515   17.2% 7.2% Nondefense R&D  49,368 54,311 54,970   10.0% 1.2%     Nondefense R&D excluding NIH 26,654 28,066 28,024   5.3% -0.1%               Basic Research 23,848 26,048 26,861   9.2% 3.1% Applied Research  24,407 26,878 26,870   10.1% 0.0% Development  49,412 58,599 64,284   18.6% 9.7% R&D Facilities and Equipment  5,432 5,772 4,471   6.3% -22.5%               Source: AAAS, based on OMB data for R&D for FY 2004, agency budget justifications, and information from agency budget offices.  Revised March 10, 2003. 1 FY 2003 figures revised to reflect AAAS estimates of final FY 2003 appropriations.   2 DHS figures for all years adjusted to include programs to be transferred to DHS from other agencies. 1In this article, changes between the FY 2004 budget request and FY 2003 are expressed relative to the enacted FY 2003 appropriations bills.  An omnibus appropriations bill containing 11 of the 13 original FY 2003 appropriations bills was passed by Congress on February 13 and signed by President Bush on February 20, 2003, nearly five months after the start of the FY 2003.  Changes between FY 2004 and FY 2003 reported in this article may differ widely from those reported in the President's FY 2004 budget request, which are expressed relative to the President's FY 2003 budget request because the FY 2003 enacted levels were not available at the time the President submitted his FY 2004 budget request.

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