Computing Research Policy Blog

IT Spending Does Not Equal IT R&D Funding


Computerworld has a story today that, I think, helps contribute to the common misunderstanding in some policy circles that “IT funding” is the same as “IT R&D funding.” The story combines budget news about the president’s proposed increases in federal IT funding — in this case, funding for IT procurement — with news about some aspects of the president’s science and technology budget. Here’s the first few paragraphs:

FEBRUARY 14, 2005 (COMPUTERWORLD) – President George Bush’s proposed budget for the federal government’s 2006 fiscal year, which starts Oct. 1, includes an increase in IT spending, despite significant cuts elsewhere.
The plan also asks Congress to permanently extend a research and development tax credit while terminating a program to develop high-risk, high-payoff technology.
The 2006 Bush budget cuts back or eliminates 150 government programs while calling for a 7% increase in government IT spending, to $65.1 billion. About 55% of IT-related funding would go to defense and domestic security programs. At the same time, the plan raises IT funding for the National Science Foundation by nearly 26%.
Separately, Bush’s science and technology budget would drop from an estimated $61.7 billion in fiscal 2005 to $60.8 billion in 2006. The science and technology budget includes programs such as space exploration, renewable energy and agricultural research, as well as technology-related research and development at the National Institute of Standards and Technology (NIST).

The Information Technology Association of America (ITAA), an industry trade group, praised the IT budget plan.
“America must pick up the pace in science, math and engineering,” ITAA President Harris Miller said in a statement. “Countries around the world have clearly signaled their intent to challenge U.S. leadership in technology. Our economic well-being depends on answering this challenge.”

The conflation in the article of IT procurement issues –buying IT for uses within the agency — with science and technology funding issues aimed at supporting researchers working on the next generations of technology might lead the reader to conclude that IT R&D funding did well under the budget request. Indeed, the line about the 26 percent increase in funding at NSF, as well as Harris Miller’s (ITAA) quote about the need for America to “pick up the pace in science, math and engineering,” and the bit about the extension of the research and development tax cut seem to reinforce that.
Of course, that’s not quite the case. IT R&D funding overall would decline 7 percent under the President’s plan. NSF funding for IT R&D would increase agency-wide, but only slightly — $8 million or 1 percent over FY 05.
The irony is that the very important message conveyed in Miller’s quote argues for much more robust IT R&D funding, which despite NSF’s increase in IT procurement, isn’t happening.

Business Week Makes the Economic Case for Federal R&D Spending


Michael Mandel notes in today’s BusinessWeek Online op-ed that President Bush’s proposed cuts to federal support of R&D in his FY 06 budget request are shortsighted because of the impact they’ll have on the U.S. economy. He focuses on multifactor productivity (MFP). a measure of productivity that, when it goes up, means “output per hour of the average worker goes up without any additional skills or a change in equipment.”
“An increase in MFP equals free money, extra production that you don’t have to pay for,” he writes.
The key, according to Mandel:

Multifactor productivity is borne of the essence of technological innovation — the creation of new products and new opportunities out of ideas and thin air. For example, the spread of the Internet has not only made doing business easier and cheaper but also allowed people to do things that weren’t even possible in the past. Think about Amazon, Google, and eBay. Wireless phones aren’t just a substitute for landlines; they enable people to organize their activities in very different ways.
The rate of multifactor productivity growth represents the single best indicator of the economy’s true strength. When MFP is increasing rapidly, the size of the economic pie expands, real wages rise, profits go up, and everyone feels good. When that figure stagnates, things are tough all around.
For example, multifactor productivity didn’t rise at all in 1973-83, a period that included the era of runaway inflation, President Jimmy Carter’s famous “malaise” speech, and the deepest recession since the Great Depression. During that stretch, the stock market, adjusted for inflation, fell by 34%, while real hourly wages for production and nonsupervisory workers descended by 11%.
By contrast, the birth of the New Economy can be clearly seen in the sharp acceleration of multifactor productivity growth starting in 1996. From that point to 2002 (the latest year for which figures are available), MFP gained a bit more than 1% a year. From 1995 to today, real wages have risen by 9%, while the inflation-adjusted stock market is up by 68%.
An economy with rapid multifactor productivity growth is potentially quite profitable for investors, which helps explain why the U.S. can attract so much foreign capital to fund its trade deficit. High MFP also generates lots of extra output, useful for paying for, say, military actions or better health-care benefits. It’s like having a cushion or a security blanket.

Mandel notes that the President’s cut to nondefense R&D spending “can only hurt the nation’s ability to maintain a rapid pace of multifactor productivity growth.”

Putting more resources into technology and education is the best way to ensure that the bounty of higher MFP continues in the future.

Read the whole piece.
Thanks to Anthony Pitagno of ACS for the tip.

Real ID Act Passes House


USACM’s David Padgham has a good post on House Judiciary Committee Chairman James Sensenbrenner’s “Real ID Act,” a bill inteded to disrupt terrorist travel and bolster U.S. border security.

Among privacy and civil liberties advocates, the bill has renewed worries about the development of a national identification system. Indeed, critics of the bill assert that implementing the standards and information sharing compacts would amount to a “de facto national ID card.” Supporters of the bill contend that the bill is needed to address a number of vulnerabilities in border and homeland security efforts.

ACM has more info on national ID’s here.
Read the whole post.

DeLay Gets His Appropriations Reorganization — Much of it, anyway


Proving once again that House Majority Leader Tom DeLay (R-TX) is the most powerful man in Congress, Appropriations Committee Chairman Jerry Lewis (R-CA) announced yesterday a “bold reorganization” (to quote his press release) of his panel, a plan that mirrors much of a proposal DeLay originally proposed late last year. The reorganization will dissolve three appropriations subcommittees, including VA-HUD-Independent Agencies subcommittee — home to NASA and NSF — and is designed to “streamline and expedite” an appropriations process that has failed to finish up on time every year in recent memory.
Lewis plans to eliminate VA-HUD and spread its jurisdiction across several committees. Maybe most importantly to computing researchers, the reorganization would result in NASA and NSF moving to what was the Commerce, State, Justice subcommittee, but will now be called the Science, State, Justice and Commerce subcommittee.
While this isn’t quite as far-ranging as the DeLay proposal originally floated in December (which we analyzed a bit here), it still accomplishes one of DeLay’s primary goals: namely, to get NASA out from under the shadow of the Veterans’ Administration and Housing and Urban Development. And in that sense, I think it’s a net positive for NSF and NASA. They get moved to a subcommittee in which they’ll enjoy a bit more prominence, and no longer have to compete with two relative behemoths (VA and HUD) for funding.
This is also a gain, I think, over the original Lewis proposal, which we told you about a few weeks ago. That plan would’ve seen NSF and NASA join DOE Science in the Energy and Water subcommittee, which raised concerns about the effect of NSF sharing a subcommittee likely to be staffed by members of Congress with DOE Labs in their districts. Would NSF, which has not been terribly affected by earmarks historically, then be in direct competition for funding with DOE in a subcommittee amenable to earmarking projects at DOE labs?
In any case, it looks as if the new organization plan avoids that potential pitfall by separating NSF and DOE. Of course, NSF will still have to contend with NASA — focus of much special attention by the House Majority Leader — and now adds NOAA, home to quite a few earmarks of its own. But, well, no plan is perfect….
The Senate appears to be close to adopting the House plan, according to Congressional Quarterly (sub. req’d). Failing to do so would mean absolute chaos come appropriations time — as opposed to the moderate chaos already experienced during conference season. Adopting the change in the Senate would mean that long-time NSF champion Sen. Kit Bond (R-MO) would lose his VA-HUD chairmanship and instead likely take over the new Transportation, Treasury, Judiciary and Housing subcommittee. That move would bump Sen. Richard Shelby (R-AL) to the Science, State, Justice and Commerce subcommittee.
On the House side, the new Science, State, Justice, and Commerce subcommittee will be chaired by Rep. Frank Wolf (R-VA). Former VA-HUD Chair Rep. James Walsh would take over the new Military Quality of Life and Veterans’ Affairs subcommittee.
For the full shakeout, see Lewis’ press release. We’ll continue to monitor the reorganization and post the details as we get them.
Update: Roll Call reports (sub. req’d) that the Senate Republicans have rejected adoption of the House plan and want Appropriations Chair Thad Cochran (R-MS) to “negotiate further changes with his House counterpart.”
Cochran said no decisions have been made, according to Roll Call.
I have learned not to bet against DeLay, however….

President’s Budget: NIST


Cameron Wilson, USACM’s new Director of Public Policy puts his experience as a former Hill staffer to good use in analyzing how the National Institute of Standards and Technology fares in the President’s FY 2006 Budget Request. Read his excellent post on USACM’s Technology Policy Weblog.
Short story: NIST IT R&D funding at NIST Labs did see a slight bump in the request, but the President’s elimination of NIST’s Advanced Technology Program and a 50 percent cut to the Manufacturing Extension Partnership — both programs with considerable support in Congress — once again puts funding at NIST Labs at risk in the appropriations process.

President’s Budget: National Science Foundation


The N.Y. Times was right…for FY 2006, the National Science Foundation is requesting a budget of $5.6 billion, an increase of 2.4 percent or $132 million over FY 2005. While an improvement over the 2 percent cut imposed in FY 05 by congressional appropriators, and certainly better than the rumored 5 percent cut initially approved by the White House for FY 06, the rate of growth proposed by the Administration would still fall below the rate of inflation.

Here’s the breakdown for the major NSF accounts:

NSF FY 2006 Budget by Account
(in millions)
Appropriations Account FY 2006 Request $ Change
FY 05 plan v. FY 06 request
% Change
FY 05 plan v. FY 06 request
Research and Related Activities $4,333 $113 2.7%
Education and Human Resources $737 -$104 -12.4%
Major Research Equipment and Facilities Construction $250 $76 43.9%
Salaries and Expenses $269 $46 20.5%
National Science Board $4 $0.03 0.8%
Inspector General $11.5 $1.5 14.7%
Total $5,605 $132 2.4%

Some details from Bement’s presentation today:

  • “The Education and Human Resources account decreases for a second year. In that area, we are leveraging our resources by focusing investments on successful programs and developing closer links with research programs. … Ideally, all of NSF’s budget areas would remain robust so that we can maximize the nation’s return on investment. In a difficult budget climate, however, we do our best to exercise fiscal responsibility by singling out priorities.”
  • Four priorities for NSF are: Strengthening core research, continuing to provide tools and infrastructure, broadening participation, and continuing to sharpen NSF’s management.
  • The “not-so-good” news: “The number of proposals received by NSF has been increasing every year. As a result, the proportion of proposals the agency is able to fund has dropped dramatically — from 30 percent in the late 1990s, to around 20 percent that we expect this year.” Goal is to maintain the recent gains made in increasing award size and duration, while halting the erosion in the funding rate.
  • Cyberinfrastructure investments across the foundation total $509 million (about $120 million in CISE).
  • No new starts in MREFC account. Increase in the account “covers our commitment to large ongoing projects.”

    Here are the directorate-by-directorate breakdowns. If you focus only on the final columns — $ Change and % Change over FY 05 — it might appear that CISE has been de-emphasized among the directorates. This would run counter to Bement’s stated goal of ramping up CISE funding quickly to provide some immediate relief to the proposal pressure the directorate currently faces — its 16% success rate is the lowest among the directorates in the Foundation.

    However, as CISE AD Peter Freeman pointed out after the briefing today, Bement was able to prioritize funding for CISE for FY 2005, [provided the appropriators approve of Bement’s FY 05 plan] even though the final FY 05 appropriations included a 2% cut overall for NSF. So, you’ll note that CISE does reasonably well, relatively speaking, when compared to the other directorates, lagging only Polar Programs (not included in the chart) — which was transferred 3 icebreakers and $45 million from the US Coast Guard — in total dollar increase since FY 2004.

    Nevertheless, even with the increases in FY 05 and in the President’s request for FY 06, CISE’s rate of growth, along with that of the rest of the Foundation, still lags inflation.

    Anyway, here’s the table:

    National Science Foundation
    FY 2006 Congressional Request
    (in millions)
    NSF Account FY 2004 Actual FY 2005 Current Plan FY 2006 Request $ Change
    FY 04 Actual v. FY 06 Request
    % Change
    FY 04 Actual v. FY 06 Request
    $ Change
    FY 05 Plan v. FY 06
    % Change
    FY 05 Plan v. FY 06
    BIO $587 $577 $582 -$5.26 -0.9% $5.18 0.9%
    CISE $605 $614 $621 $15 2.5% $6.84 1.1%
    ENG* $566 $562 $580 $14 2.5% $18 3.2%
    GEO $713 $694 $709 -$4.31 -0.9% $15 2.2%
    MPS $1,092 $1,069 $1,086 -$5.36 -0.5% $16 1.5%
    SBE $184 $197 $199 $14.5 7.9% $1.9 1.0%

    The full set of NSF budget charts are on the web.

  • President’s Budget is Out: Here are the First Numbers


    The budget is out and the numbers, as promised, don’t look very good. Here’s the breakdown for the Networking and Information Technology R&D program — the federal budget crosscut for all agencies involved in funding IT R&D:

    Networking and Information Technology R&D
    (budget authority in millions)
    Agency 2004
    Actual
    2005
    Estimate
    2006
    Proposed
    $ Change
    FY05 v FY06
    % Change
    FY05 v FY06
    Defense $241 $277 $299 $21 7.6%
    National Science Foundation $773 $795 $803 $8 1%
    HHS (primarily NIH) $542 $573 $569 -$20 -3.4%
    Energy $343 $383 $341 -$29 -7.8%
    Commerce $47 $58 $62 $4 6.9%
    NASA $258 $192 $74 -$89 -54.6%
    EPA $2 $4 $6 $2 50%
    Total $2,206 $2,282 $2,155 -$101 -4.5%

    There are some caveats to this table. The first is that the President’s budget submission indicates that DOD will “reassess which of its IT R&D programs are appropriate to count as part of the NITRD program, and any changes will be reported in subsequent NITRD publications.”
    The second is that the baseline budgets (FY 2004 actual and FY 05 estimated) of just about every agency have increased significantly since last year’s budget submission. You can see that by comparing this year’s “Trends in IT R&D” chart with last year’s chart. The change in baseline makes it a little trickier to put the cuts in context. It also makes NIH look like a much more significant supporter of IT R&D than previously reported…
    I’ll have much more parsing of the numbers a little later today. For now, I’m off to NSF for their budget briefing. I’m not terribly optimistic.
    Update: (3/28/05) — Table now reflects the latest revised numbers (pdf) from the NITRD National Coordinating Office. The NITRD cut is now “only” 4.5 versus FY 2005.

    President to Request Slight Increase for NSF, says NY Times


    The New York Times reports today that the President will include a request for a slight increase to the National Science Foundation when he delivers his budget plan to Congress on Monday. The Times, which had reported that NSF’s budget would be flat — an improvement over an initial OMB passback that called for a 5 percent cut for the agency — reports that the President will request $5.6 billion for NSF in FY 06, an increase of 2.4 percent over FY 05.
    The increase, though small, would appear to make up the ground lost by the agency after Congress elected to cut funding by 2 percent in FY 05. However, coupled with the rate of inflation, the small increase is actually closer to flat-funding the agency, or even a slight real-dollar decrease.
    Still, any increase in a budget which is otherwise rumored to be quite austere is symbolic, indicating areas where the Administration places priority. The Times also reports that the National Institutes of Health, which saw its budget double over the last six years, will receive only a 0.7 percent increase in the President’s request.
    The President’s budget is only the first step in the annual budget cycle. Once the President reveals his plan on Monday, the ball shifts to Congress’ court. Congressional and Presidential priorities don’t always line up — as NSF experienced last year. The President requested a 3 percent increase for the agency in his FY 05 request, only to see Congress instead cut the agency by 2 percent in the final omnibus appropriation.
    No details yet on directorate by directorate numbers, but we’ll only have to wait until Monday afternoon. Keep it here for all the details as they emerge.

    Venture Capitalists Worried About Federal Neglect of Basic Research


    Just a quick note on an otherwise busy Friday to point to a piece from the editors of MIT’s Technology Review about concerns in the high-tech VC community about the federal government’s commitment to funding fundamental research. Here’s the opening:

    The appetite of venture capitalists for investing in new technologies is rebounding: in 2004, venture capital financing in the United States was up 8 percent from the year before, following three years of decline. With the success of Google’s initial public offering (IPO) in August 2004, technology again excited the public imagination. Indeed, the window on IPOs opened wide in 2004, with 233 companies going public on U.S. stock exchanges and raising $43 billion, up from 79 companies and $16 billion in 2003. Biotechnology IPOs were particularly successful, raising $2.5 billion, the most since the $8.7 billion raised in 2000. So why are many of those involved in the funding of emerging technologies so worried?
    According to some experts, the kind of basic research necessary to create tomorrow’s technologies is under siege—or at the very least, suffering from neglect. Venture capitalists never entirely stopped investing in companies with technologies just emerging from the lab. But after several years in which high-risk investments were unpopular, many startups developing innovative technologies (especially in such areas as nanotechnology and new genomic approaches to medicine) are starving for capital. Even more worrisome, the federal government’s preoccupation with funding homeland security and national defense, and its resulting cutbacks in support for basic research in other areas, has left many wondering where the funding for research on new core technologies will come from.

    And a little more from later in the piece:

    “Defense and homeland security are very important. I can’t criticize funding increases per se in those areas,” says Shirley Ann Jackson, president of Rensselaer Polytechnic Institute in New York and the 2004 AAAS president. “But the bigger issue is sustaining focus and support for funding of basic research across broad fronts. We have to have a robust base of basic research. We’re talking about potentially eroding that base.” Jackson adds, “Other places will innovate. The question is, are we going to be a leader? If we don’t pay attention to the warning signs, 15, 20 years from now, we could find ourselves in a relatively disadvantageous position in terms of global leadership.”
    Experts also worry that the federal R&D budget has become too skewed toward relatively mature technologies. “A lot of the federal funding has gotten a little more conservative and risk averse. The government needs to put a bigger percentage in radical innovation and more-exploratory research—technology that’s going to be transformational,” says Deborah Wince-Smith, president of the Council on Competitiveness, a group of industry, university, and labor leaders based in Washington, DC. Amar Bose, professor emeritus at MIT and founder of the Bose audio company in Framingham, MA, puts it more bluntly: “Research funding is going downhill, and I don’t see it turning around. We’re going to have trouble.”

    Something to keep in mind as we brace for the release Monday of the President’s Budget Request for FY 06.
    Read the whole article here.
    Thanks to fellow CRA’er Jay Vegso for the tip!

    Research Under Fire


    The Berkeleyan, a publication of UC Berkeley, has a great, in-depth piece on a trend we’ve noted and complained about in this space quite often: the increasing use of restrictions on federally supported fundamental research and its impact on university-based research. I’ll just cite a little bit, but I urge you to read the article.

    DARPA, explains Lee’s colleague David Culler, “is a very strange place these days.” Just months after Lee’s brush with export controls, Culler, also an EECS professor, had a similar experience. In 2000 he was awarded an agency contract to develop hardware and software for miniaturized wireless computer networks, utilizing open-source software that would be shared with the wider research community. “This whole notion of openness was fundamental,” Culler says. “That’s what we wanted to do.”
    In February 2004, however, DARPA’s program manager sent an e-mail to Culler and more than a dozen other researchers working on various aspects of the program, asking that source codes and possibly other material — the message, says Culler, was “ambiguous” — be removed from websites. Unsure of what to do, Culler consulted with Freedman’s office, which advised him to take no such action.
    DARPA, meanwhile, pondered its next steps, eventually opting to split the program into two major segments, with basic research remaining at universities and classified work going to military contractors like Northrup Grumman. The decision, Culler says, wound up costing Berkeley “very little,” though other universities lost “quite a lot.”
    “The money basically moved from the universities to the military contractors,” he says. “It’s a tremendous shift in where the resources have gone.”
    More is at stake than just money, however. Ironically, DARPA’s efforts to “short-circuit” the research process — to short-shrift basic research in favor of specific military applications — could have the effect of hampering, not improving, America’s security.
    “If you’re not able to keep the basic-research engine alive,” Culler explains, the result is likely to be less innovation and competitiveness, as other countries pick up the slack. “There is absolutely a need for basic research,” he insists. “Ultimately, in the long term, that contributes to an advantage in national security.”

    Thanks to Spaf for the tip.

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