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21 RESEARCH AND DEVELOPMENT The American innovation ecosystem is the envy of the world Federal research and development R D strengthens the U S innovation base and contributes to job growth national security and continued prosperity While recognizing the continued importance of R D spending to support innovation fiscal prudence demands a more focused approach to the Federal R D budget in the context of America’s multi-sector R D enterprise This approach prioritizes maintaining peace through strength and ensures U S leadership in the Industries of the Future The President’s 2020 Budget provides $134 1 billion for Federal R D including the conduct of R D and investments in R D facilities and equipment It continues support of investments in basic research earlystage applied research and technology transfer efforts for Agencies to accomplish their missions and support the President’s priorities while reducing spending in lower priority areas Table 21-1 shows a breakout of FY 2020 R D funding by Agency Table 21–1 TOTAL FEDERAL R D FUNDING BY AGENCY AT THE BUREAU OR ACCOUNT LEVEL Mandatory and discretionary budget authority 1 2 dollar amounts in millions 2018 Actual Dollar Percent 2019 2020 Change 2019 Change 2019 3 Estimate Proposed to 2020 to 2020 By Agency Agriculture �� Agriculture Research Service �� Animal and Plant Health Inspection Service �� Economic Research Service �� Forest Service �� National Agricultural Statistics Service �� National Institute of Food and Agriculture �� 2 618 1 387 39 87 272 9 824 2 666 1 421 34 87 269 9 846 2 464 1 275 34 61 229 9 856 –202 –146 0 –26 –40 0 10 –8% –10% 0% –30% –15% 0% 1% Commerce �� Bureau of the Census �� National Institute of Standards and Technology �� National Oceanic and Atmospheric Administration �� National Telecommunications and Information Administration �� 2 029 122 975 923 9 2 194 165 973 1 048 8 1 694 138 898 650 8 –500 –27 –75 –398 0 –23% –16% –8% –38% 0% Defense 4 �� Military Construction �� Military Personnel �� Defense Health Program �� Research Development Test and Evaluation �� 52 386 38 467 1 616 50 265 55 832 22 416 1 774 53 620 59 463 0 435 376 58 652 3 631 –22 19 –1 398 5 032 7% –100% 5% –79% 9% Education �� Institute of Education Sciences �� Office of Innovation and Improvement �� Office of Postsecondary Education �� Office of Special Education and Rehabilitative Services �� Office of Career Technical and Adult Education �� 257 230 1 1 24 1 258 230 0 1 24 3 224 197 0 0 24 3 –34 –33 0 –1 0 0 –13% –14% n a 0% 0% 0% Energy �� Fossil Energy Research and Development �� Science �� Electricity Delivery �� Nuclear Energy �� Energy Efficiency and Renewable Energy �� Advanced Research Projects Agency--Energy 5 �� Cybersecurity Energy Security and Emergency Response �� Defense Environmental Cleanup �� National Nuclear Security Administration �� 17 482 683 6 200 172 1 172 1 757 354 0 38 7 093 17 793 682 6 517 136 1 293 1 842 366 49 28 6 873 14 718 551 5 475 163 742 322 –287 36 13 7 701 –3 075 –131 –1 042 27 –551 –1 520 –653 –13 –15 828 –17% –19% –16% 20% –43% –83% –178% n a –54% 12% 267 268 ANALYTICAL PERSPECTIVES Table 21–1 TOTAL FEDERAL R D FUNDING BY AGENCY AT THE BUREAU OR ACCOUNT LEVEL—Continued Mandatory and discretionary budget authority 1 2 dollar amounts in millions 2018 Actual Dollar Percent 2019 2020 Change 2019 Change 2019 3 Estimate Proposed to 2020 to 2020 Power Marketing Administration �� 13 7 2 –5 –71% Environmental Protection Agency �� Science and Technology �� Hazardous Substance Superfund �� Inland Oil Spill Programs �� 492 476 15 1 489 473 15 1 285 266 18 1 –204 –207 3 0 –42% –44% 20% 0% Health and Human Services �� Administration for Children and Families �� Centers for Disease Control and Prevention �� Centers for Medicare and Medicaid Services �� Departmental Management �� Food and Drug Administration �� Health Resources and Services Administration �� National Institutes of Health 6 �� 36 942 5 437 20 131 495 30 35 824 38 647 4 435 20 154 410 30 37 594 33 693 5 435 0 18 410 26 32 799 –4 954 1 0 –20 –136 0 –4 –4 795 –13% 25% 0% –100% –88% 0% –13% –13% Homeland Security �� Science and Technology �� Transportation Security Administration �� United States Coast Guard �� United States Secret Service �� Management Directorate �� Cybersecurity and Infrastructure Security Agency �� Countering Weapons of Mass Destruction Office �� 725 589 20 31 2 3 15 65 737 588 20 31 0 3 15 80 507 369 21 7 11 0 31 68 –230 –219 1 –24 11 –3 16 –12 –31% –37% 5% –77% n a –100% 107% –15% Interior �� Bureau of Land Management �� Bureau of Reclamation �� Bureau of Safety and Environmental Enforcement �� Department-Wide Programs �� National Park Service �� Office of Surface Mining Reclamation and Enforcement �� United States Fish and Wildlife Service �� United States Geological Survey �� Bureau of Ocean Energy Management �� Bureau of Indian Affairs �� 885 21 90 27 3 26 1 33 600 79 5 884 25 100 21 3 27 1 33 592 77 5 753 19 84 21 0 26 1 15 482 100 5 –131 –6 –16 0 –3 –1 0 –18 –110 23 0 –15% –24% –16% 0% –100% –4% 0% –55% –19% 30% 0% National Aeronautics and Space Administration �� Science �� Aeronautics �� Low Earth Orbit and Spaceflight Operations �� Safety Security and Mission Services �� Deep Space Exploration Systems �� Construction and Environmental Compliance and Restoration �� Exploration Technology �� 11 755 5 983 560 2 227 272 1 864 135 714 10 698 6 154 565 1 586 272 1 288 117 716 11 280 5 974 575 1 611 242 1 883 87 908 582 –180 10 25 –30 595 –30 192 5% –3% 2% 2% –11% 46% –26% 27% National Science Foundation �� Research and Related Activities �� Education and Human Resources �� Major Research Equipment and Facilities Construction �� 6 327 5 687 457 183 6 315 5 684 448 183 5 760 5 079 458 223 –555 –605 10 40 –9% –11% 2% 22% Transportation �� Federal Aviation Administration �� Federal Highway Administration �� Federal Motor Carrier Safety Administration �� Federal Railroad Administration �� Federal Transit Administration �� Maritime Administration �� National Highway Traffic Safety Administration �� Office of the Secretary �� Pipeline and Hazardous Materials Safety Administration �� 1 043 471 376 9 43 28 0 76 19 21 1 146 571 376 9 45 28 0 76 19 22 1 076 510 404 9 23 28 3 65 13 21 –70 –61 28 0 –22 0 3 –11 –6 –1 –6% –11% 7% 0% –49% 0% n a –14% –32% –5% 269 21 Research and Development Table 21–1 TOTAL FEDERAL R D FUNDING BY AGENCY AT THE BUREAU OR ACCOUNT LEVEL—Continued Mandatory and discretionary budget authority 1 2 dollar amounts in millions 2018 Actual Smithsonian Institution �� 357 Dollar Percent 2019 2020 Change 2019 Change 2019 Estimate 3 Proposed to 2020 to 2020 336 315 –21 –6% Veterans Affairs �� 1 286 1 342 1 325 –17 –1% Medical Care Support �� 563 563 563 0 0% Medical and Prosthetic Research �� 723 779 762 –17 –2% 1 This table shows funding levels for Departments or Independent Agencies with more than $200 million in R D activities in 2020 2 The Experimental Development definition is used in this table across all three fiscal years 3 The FY 2019 Estimate column applies the main FY 2020 President’s Budget volume approach of estimating the FY 2019 level using FY 2019 enacted appropriations where available and annualized Continuing Resolution for agencies without enacted appropriations prior to Feb 15 2019 4 Totals for Experimental Development spending in FY 2018–2020 do not include DOD Budget Activity 07 Operational System Development due to a change in the definition of development first implemented in the FY 2018 Budget These DOD Budget Activity 07 funds support development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year 5 The -$287 million in FY 2020 for ARPA-E is the result of a one-time cancellation of unobligated balances 6 NIH includes Agency for Healthcare Research and Quality AHRQ funding as the FY 2020 Budget proposes that AHRQ be consolidated within NIH as a new institute I PRIORITIES FOR FEDERAL RESEARCH AND DEVELOPMENT The President’s Budget provides support for Federal R D to keep America strong safe and prosperous This section highlights key areas of R D funding in the 2020 Budget Security of the American People As adversaries leverage American R D outcomes and emerging technologies to threaten the Nation it is imperative that we invest in R D to strengthen our security The National Security Strategy as well as the 2018 National Defense Strategy prioritize investments in technologies that ensure we will be able to keep the American people safe The President’s 2020 Budget continues to encourage programs with dual-use potential to be leveraged for Federal nonmilitary advancements The Department of Defense DoD will invest more than $59 billion in research engineering and prototyping activities in 2020 to maintain technical superiority and promote U S national security innovation including in priority areas of trusted and assured microelectronics hypersonics research for non-nuclear weapons kinetic and non-kinetic technologies able to disrupt and defeat missiles prior to launch missile detection defeat and defense capabilities and R D to advance the Industries of the Future The 2020 Budget also supports critical investments to protect the Nation at the Department of Homeland Security DHS and the Department of Health and Human Services HHS At DHS the President’s Budget requests $120 million in R D funding to further detect and defend against radiological nuclear chemical and biological threats $57 million in R D to improve border surveillance and law enforcement capabilities to detect and interdict illegal activity and $37 million for cybersecurity R D To bolster transportation security the 2020 Budget will invest $82 million in R D to counter emerging threats to our aviation surface and intermodal transportation systems At HHS the Budget provides over $1 billion to develop enhanced medical countermeasures to respond to public health emergencies American Leadership in the Industries of the Future The unique science and technology enterprise of the United States has positioned the Nation to pursue realize and dominate in emerging technologies The private sector responds to new opportunities and markets bringing forward ideas products and services that outperform existing technologies or in some cases create new industries Federal contributions in early-stage R D can help lay the technical and scientific foundation for truly revolutionary new technologies particularly those that require sustained support before becoming attractive for private sector investment The President’s 2020 Budget prioritizes investments for four key Industries of the Future artificial intelligence quantum information sciences advanced communication networks including fifth generation networks and beyond and advanced manufacturing Artificial intelligence AI is transforming every segment of American life with applications ranging from medical diagnostics and precision agriculture to autonomous transportation and national defense The Administration has taken a forward-looking approach to fortify American leadership in AI including considerations about its effective and ethical use It formed the National Science and Technology Council’s Select Committee on AI to coordinate the wide range of Federal R D efforts and Federal agencies continue to advance the development and use of AI across multiple domains The President recently signed an Executive Order EO launching the American AI Initiative which will take a multipronged approach to accelerating our national leadership in AI The FY 2020 Budget funding for this Initiative includes approximately $850 million at the Department of Energy DOE National Institutes of Health NIH National Institute of Standards and Technology NIST and National Science Foundation NSF Quantum information science QIS has the potential to revolutionize our scientific knowledge improve our 270 ANALYTICAL PERSPECTIVES industrial base and provide substantial economic and national security benefits QIS applications are expected to affect many areas of technology within the next two decades Recognizing the potential of QIS the President recently signed into law the National Quantum Initiative Act and will establish a 10-year plan to accelerate the development of QIS and technology applications The FY 2020 Budget funding for this Initiative includes approximately $430 million at the DoD DOE NIST and NSF American leadership in emerging wireless networks is a critical global advantage both for the economy and national security U S leadership in fourth generation 4G networks has led to significant GDP growth and job creation Deploying fifth generation 5G wireless connectivity is even more imperative because it will enable a wide range of transformational technologies from smart cities to the Internet of Things The 2020 Budget supports R D to manage spectrum secure networks and increase access to high-speed internet Advanced manufacturing—which includes both new manufacturing methods and the production of new products enabled by cutting-edge technologies—is an engine of America’s economic power and a pillar of its national security The 2020 Budget prioritizes R D aimed at advances in manufacturing and the integration of those advances into the domestic supply chain to reduce U S reliance on foreign sources of critical products Budget priorities include intelligent manufacturing systems materials and processing technologies advances in semiconductor design and fabrication and innovations in food and agricultural manufacturing II FEDERAL R D DATA R D is the collection of efforts directed toward gaining greater knowledge or understanding and applying knowledge toward the production of useful materials devices and methods R D investments can be characterized as basic research applied research development R D equipment or R D facilities The Office of Management and Budget OMB has used those or similar categories in its collection of R D data since 1949 Starting with the FY 2018 Budget OMB implemented a refinement to the categories by more narrowly defining “development” as “experimental development” to better align with the data collected by the National Science Foundation on its multiple R D surveys and to be consistent with international standards An explanation of this change is included below Please note that R D cross-cuts in specific topical areas as mandated by law will be reported separately in forthcoming Supplements to the President’s 2020 Budget Background on Federal R D Funding More than 20 Federal agencies fund R D in the United States The character of the R D that these agencies fund depends on the mission of each agency and on the role of R D in accomplishing it Table 20-2 shows agencyby-agency spending on basic research applied research experimental development and R D equipment and facilities Basic research is systematic study directed toward a fuller knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind Basic research however may include activities with broad applications in mind Applied research is systematic study to gain knowledge or understanding necessary to determine the means by which a recognized and specific need may be met Experimental development is creative and systematic work drawing on knowledge gained from research and practical experience which is directed at producing new products or processes or improving existing products or processes Like research experimental development will result in gaining additional knowledge Research and development equipment includes acquisition or design and production of movable equipment such as spectrometers research satellites detectors and other instruments At a minimum this category includes programs devoted to the purchase or construction of R D equipment Research and development facilities include the acquisition design and construction of or major repairs or alterations to all physical facilities for use in R D activities Facilities include land buildings and fixed capital equipment regardless of whether the facilities are to be used by the Government or by a private organization and regardless of where title to the property may rest This category includes such fixed facilities as reactors wind tunnels and particle accelerators Comprehensive government-wide efforts are currently underway to increase the accuracy and consistency of the R D budget via a collaborative community of practice of Federal agencies which have been working to identify best practices and standards for the most accurate classification and reporting of R D activities For example to better align with National Science Foundation R D surveys and international standards starting with the FY 2018 Budget OMB narrowed the definition of development to “experimental development ” This definition unlike the previous definition of development excludes user demonstrations of a system for a specific use case and pre-production development i e non-experimental work on a product or system before it goes into full production Because of this earlier change the experimental development amounts reported are significantly lower than the development amounts shown in past Budgets 1 1 The change in definition of experimental development reduces R D spending compared to what it would have been under the previous definition by approximately $40 6 billion in the FY 2020 Budget 271 21 Research and Development Table 21–2 FEDERAL RESEARCH AND DEVELOPMENT SPENDING Mandatory and discretionary budget authority 1 dollar amounts in millions 2018 Actual Dollar Percent 2019 2020 Change 2019 Change 2019 2 Estimate Proposed to 2020 to 2020 By Agency Defense 3 �� Health and Human Services �� Energy �� NASA �� National Science Foundation �� Agriculture �� Commerce �� Veterans Affairs �� Transportation �� Interior �� Homeland Security �� Smithsonian Institution �� Environmental Protection Agency �� Education �� Other �� TOTAL �� 52 386 36 942 17 482 11 755 6 327 2 618 2 029 1 286 1 043 885 725 357 492 257 1 181 135 765 55 832 38 647 17 793 10 698 6 315 2 666 2 194 1 342 1 146 884 737 336 489 258 1 258 140 595 59 463 33 693 14 718 11 280 5 760 2 464 1 694 1 325 1 076 753 507 315 285 224 540 134 097 3 631 –4 954 –3 075 582 –555 –202 –500 –17 –70 –131 –230 –21 –204 –34 –718 –6 498 7% –13% –17% 5% –9% –8% –23% –1% –6% –15% –31% –6% –42% –13% –57% –5% Basic Research Defense �� Health and Human Services �� Energy �� NASA �� National Science Foundation �� Agriculture �� Commerce �� Veterans Affairs �� Transportation �� Interior �� Homeland Security �� Smithsonian Institution �� Environmental Protection Agency �� Education �� Other �� SUBTOTAL �� 2 282 18 278 5 005 3 636 5 066 1 085 222 530 77 47 277 58 53 36 616 2 545 19 172 5 155 4 948 5 060 1 116 222 553 77 42 267 67 54 39 278 2 337 16 785 4 647 4 538 4 568 1 073 192 546 68 23 269 66 52 35 164 –208 –2 387 –508 –410 –492 –43 –30 –7 –9 –19 2 –1 –2 –4 114 –8% –12% –10% –8% –10% –4% –14% –1% –12% –45% 1% –1% –4% –10% Applied Research Defense �� Health and Human Services �� Energy �� NASA �� National Science Foundation �� Agriculture �� Commerce �� Veterans Affairs �� Transportation �� Interior �� Homeland Security �� Smithsonian Institution �� Environmental Protection Agency �� Education �� Other �� SUBTOTAL �� 5 690 18 414 7 998 2 112 758 1 072 963 727 697 669 188 415 124 880 40 707 6 190 19 187 7 813 2 743 752 1 099 996 758 703 664 189 415 119 942 42 570 5 440 16 624 6 410 2 864 687 1 037 757 749 634 548 98 220 107 268 36 443 –750 –2 563 –1 403 121 –65 –62 –239 –9 –69 –116 –91 –195 –12 –674 –6 127 –12% –13% –18% 4% –9% –6% –24% –1% –10% –17% –48% –47% –10% –72% –14% 272 ANALYTICAL PERSPECTIVES Table 21–2 FEDERAL RESEARCH AND DEVELOPMENT SPENDING—Continued Mandatory and discretionary budget authority 1 dollar amounts in millions 2018 Actual Experimental Development Defense 3 �� Health and Human Services �� Energy �� NASA �� National Science Foundation �� Agriculture �� Commerce �� Veterans Affairs �� Transportation �� Interior �� Homeland Security �� Smithsonian Institution �� Environmental Protection Agency �� Education �� Other �� SUBTOTAL �� 44 363 35 2 549 5 872 180 211 29 302 137 490 74 75 248 54 565 Dollar Percent 2019 2020 Change 2019 Change 2019 2 Estimate Proposed to 2020 to 2020 47 075 35 2 598 2 890 180 278 31 403 137 506 74 72 262 54 541 51 686 35 1 952 3 791 174 179 30 404 135 386 65 51 220 59 108 4 611 0 –646 901 –6 –99 –1 1 –2 –120 –9 –21 –42 4 567 10% 0% –25% 31% –3% –36% –3% 0% –1% –24% –12% –29% –16% 8% Facilities and Equipment Defense �� 51 22 0 –22 –100% Health and Human Services �� 215 253 249 –4 –2% Energy �� 1 930 2 227 1 709 –518 –23% NASA �� 135 117 87 –30 –26% National Science Foundation �� 503 503 505 2 0% Agriculture �� 281 271 180 –91 –34% Commerce �� 633 698 566 –132 –19% Veterans Affairs �� Transportation �� 44 40 38 –2 –5% Interior �� 2 6 2 –4 –67% Homeland Security �� Smithsonian Institution �� 80 69 46 –23 –33% Environmental Protection Agency �� 3 0 0 0 n a Education �� Other �� SUBTOTAL �� 3 877 4 206 3 382 –824 –20% 1 This table shows funding levels for Departments or Independent Agencies with more than $200 million in R D activities in 2020 2 The FY 2019 Estimate column applies the main FY 2020 President’s Budget volume approach of estimating the FY 2019 level using FY 2019 enacted appropriations where available and annualized Continuing Resolution for agencies without enacted appropriations prior to Feb 15 2019 3 Totals for Experimental Development spending in FY 2018–2020 do not include DOD Budget Activity 07 Operational System Development due to a change in the definition of development first implemented in the FY 2018 Budget These DOD Budget Activity 07 funds support development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year 273 21 Research and Development III OTHER SOURCES OF FEDERAL SUPPORT FOR R D The President’s 2020 Budget seeks to build on strong private sector R D investment by prioritizing Federal resources on areas that industry is not likely to support over later-stage applied research and development that the private sector is better equipped to pursue A key means of stimulating private sector investment and bridging Federal government research with industry development is through the transfer of technology Federal technology transfer seeks to help domestic companies develop and commercialize products derived from government-funded R D which can lead to greater productivity from U S R D investments and ultimately promote the Nation’s economic growth Recognizing the benefits of this mechanism the 2020 Budget sustains funding for technology transfer efforts where appropriate In addition the Administration launched a new initiative to enable and enhance the Federal government’s transition of discoveries from laboratory to market as a Cross-Agency Priority Goal under the President’s Management Agenda PMA Because much of the Federally funded R D is conducted outside of the government the Administration seeks to reduce the associated burdens to funding recipients and partners in order to promote greater effectiveness and efficiency in our Federal spending A significant effort to reduce the administrative and regulatory burdens associated with Federal R D funding is currently underway through an interagency working group on research regulation as required by the Research and Development Efficiency Act which is examining ways to reduce the administrative burden on those performing Federally funded research More broadly beyond just R D the Administration launched a Cross-Agency Priority Goal under the PMA aimed at reducing administrative burdens for all Federal grant recipients and promoting results-oriented accountability The Federal Government also stimulates private investment in R D through tax preferences Historically dating back to the 1950s the private sector has performed the majority of U S R D As of 2017 it is estimated that businesses performed 73% of total U S R D 2 The research and experimentation R E tax credit which was made permanent through the Protecting Americans from Tax Hikes Act of 2015 P L 114-113 and modified in the Tax Cut and Jobs Act of 2017 P L 115-97 essentially provides a credit to qualified research expenses R E tax credit claims have at least doubled over the past two decades growing from an estimated $4 4 billion in 1997 to $11 3 billion in 2013 3 The manufacturing and the professional scientific and technical services sectors account for about 70% of total claims in 2013 2 NSF National Center for Science and Engineering Statistics Feb 2019 National Patterns of R D Resources 2016-2017 Data Update NSF-19-309 3 IRS Statistics of Income Division Sept 2016 1990-2013 Corporate Returns Data

OCR of the Document

The White House, FY 2020 President’s Budget, “21. Research and Development,” February 2019. Unclassified.