IP: Exploring Alternative Models of Federal Support for

[Dave Farber <farber () central cis upenn edu>]

[ Note I consider this to be a very important document. It was scanned in
and thus there are errors. Clark can send the charts if you need them via
fax or tiff files djf]


From: clark () rpcp mit edu (Clark E. Johnson, Jr.)


This is a frightening document for the science and engineering fraternity.
It was generated for a meeting at the Library of Congress tomorrow (Nov. 1)
to discuss funding options for research.


The principal objections include the following:


1)      The financial graphs and charts are in in dollars, uncorrected for
inflation and thus give a very misleading impression of R&D expenditures
over the years.  Those depicting R&D expenditures should more properly be
as a percentage of GNP.


2)      Starting on page 17 are four proposed scenarios.  These range from
government support of R&D strictly limited to only defense requirements, to
a 30-50% across-the-board reduction.  By listing only these four scenarios
the attendees, largely representing the republican majority in congress,
will be boxed in and are not likely to consider any other possibilities.


This document should be a call to arms for the technical community to rise
up and point out how unbalanced and unreasonable this report is.


You may use my name but I cannot reveal my source of this document.


-clark






Congressional Research Service * The Library of Congress * Washington, D.C.
20540-7490


Exploring Alternative Models of
Federal Support for Resear~h and
Development


Prepared for a CRS Workshop
November 1, 1995




Michael E. Davey
Genevieve J. Knezo
Richard E. Rowberg
Wendy H. Schacht
Science Policy Research Division




October 25, 1995
 TABLE OF CONTENTS




INTRODUCTION


A SHORT HISTORY oF FEDERAL RESEARCH
 AND DEVELOPMENT FUNDING .............................2
   Prior to World War II ............................................2
   Post-World War II ...............................................4


BASIC RESEARCH SINCE WORLD WAR II ................6


TRENDS IN INDUSTRIAL R&D ................................8


COMPOSITION OF INDUSTRIAL R&D .......................12


FEDERAL R&D--CURRENT STATUS .........................14


OUTLOOK ............................................................15


ALTERNATIVE MODELS OF FEDERAL
 SUPPORT FOR R&D ................................................16


 EXPLORING ALTERNATIVE MODELS OF
FEDERAL SUPPORT FOR RESEARCH AND DEVELOPMENT




INTRODUCTION*


This workshop briefing paper contains a brief history of Federal support for
research and development (R&D), a short historical review regarding the
emergence and growth of industrial R&D, and a range of alternative models of
Federal support for R&D that will form the basis of the workshop discussions.
The four models are offered as potential scenarios for Federal Government
support of R&D. They are not intended to be exhaustive (there could have
been others), but are offered as an illustrative vehicle for exploration and
to stimulate
discussion.


To the maximum extent possible, we would like each of you to identify both
the short and long term implications of each model focusing on the following
six points:


* The potential impact on the providers and performers of R&D;


* Advancement of knowledge in various fields of science;


* The education of future scientists and engineers;


* The United States international standing in science and technology;


* Meeting the specific R&D requirements of the public sector; and


* Responding to Social and Economic problems confronting the Nation


In order to facilitate workshop discussion and the exchange of ideas, it
will be important not to become preoccupied with the likelihood of
implementing each model. Also, while we believe it was important to provide
each of you with an historical context for our discussions, we do not want
to make that material an explicit subject of discussion. Rather, we would
like each of you to focus your
intellectual energy on assessing the implications of the four models
presented in the workshop paper. Finally, it is important to note that CRS
takes no




******************************************************************* *Support
for this program is being provided, in part, by grants from the Ford
Foundation and the Henry Luce Foundation.




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position, for or against, any of the models that will be discussed at the
workshop.




A SHORT HISTORY OF FEDERAL RESEARCH
AND DEVELOPMENT FUNDING


Prior to World War II


The Federal Government has sponsored research and development almost from
its beginning.(l) Prior to World War II, however, that effort was generally
quite small and usually confined to Federal facilities. Perhaps the most
famous R&D project of the early years of the country was the Lewis and Clark
expedition which explored the new territories added to the country through
the Louisiana Purchase.(2) As other lands were acquired by the United
States, additional surveys were funded by the Federal Government. During the
years following the Civil War, the role of scientific research expanded as
the Government took on new responsibilities. Among these were agricultural
research with the formation of the Department of Agriculture, a continuation
of land survey through the establishment of the Geological Survey, and
attempts to set up a weather bureau to pursue the science of meteorology.
One notable example of how Federal policy interacted with R&D was the
passage of the Pure Food and Drug Act in 1906 which stimulated research into
food safety and preservation at the Department of Agriculture. This
represented an early example of the linkage between public health and
research policy. The Public Health Service, established in 1901, included
among its responsibilities the Hygienic Laboratory which later became the
National Institutes of Health (NIH).


At the beginning of the 20th Century, other R&D activities were started to
address specific national needs through technical solutions. The National
Bureau of Standards (NBS, now the National Institute of Standards and
Technology) was established in 1901 to provide the Government with the
expertise it needed to maintain standards of weights and measures in the
face of rapid technological expansion. The invention of the airplane and its
potential
importance stimulated the Congress to establish the National Advisory
Committee on Aeronautics (NACA) in 1915. The role of NACA was to direct the
Federal aeronautics research effort. NACA did so for the next 43 years
contributing several significant advances to the early development of




**************************************************************** 1 This
discussion of the history of Federal R&D up to World War II is based on
material in Science in the Federal Government; A History of Policies and
Activities to 1940. Dupree, A. Hunter, Harvard University Press, 1957.


2 The Lewis and Clark expedition is considered research since one of its
primary mission was to gather and record data on the natural history,
geography, and inhabitants of the region, and to report back to the
President and the Congress. Dupree, op. cit., p. 27.




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aeronautics. (In 1958, NACA was absorbed by the National Aeronautics and
Space Administration.) Both the NBS and NACA, as well as the Bureau of
Mines, were a result of the Government's desire to help U.S. industry. As
such, they were the first attempts of Federal R&D policy to assist economic
development by performing research on technical problems which the affected
industries either were unable or unwilling to do.


During the pre-World War I period, U.S. business executives became
"sensitive to competitive challenges . . . in . . . fields such as
electricsl light and
power, communications systems, and chemical products." They established
industrial research laboratories in basic physics and chemistry, which
subsequently induced more State and Federal Government research support.(3)
The W~1VI mobilization of science demonstrated its practical value, and
during the 1920s, the proven utility of scientific research to industry
generated increased support for academic research. "Herbert Hoover mounted a
sustained effort to create a government agency that would be charged with
the health of basic science," in order to bolster applied research. However,
attempts at creating Federal basic research support programs failed becsuse
of the Depression.(4) The National Academy of Sciences was unable to
engender sufficient corporate support for a general fund to support
university research because "when produced in a university laboratory, the
results of an investment in pure science were usually published widely;
corporations that contributed to the Fund would in effect be helping to
supply new knowledge to competitive firms that did not."(5) Corporate
funding for academic science was re~lected in fellowships and small amounts
of support for technical research via trade associations.(6)


The advent of World War I spawned new research efforts although no new major
Federal R&D establishments. Much of the research done in support of the war
effort was coordinated by the National Research Council (NRC) which was
established by the National Academy of Sciences as its research operating
arm.7 The NRC is not a Government agency, but it was given wide latitude in
advising and coordinating Federal research efforts. This arrangement stayed
in place during the 1920s, as Federal research continued to support
industrial development, agriculture development, resource conservation and
public health.


**************************************************************** 3 Kevles,
Daniel J. Foundations, Universities, and Trends in Support for the Physical
and Biological Sciences, 1900-1992. Daedalus, v.121, Fall 1992. p. 198.


4 Griffiths, Phillip A. Science and The Public Interest. Reprinted on the
Internet from SIAM NEWS, Volume 27-1, Jan. 1994 and Volume 27-2, Feb.
1994.


5 Kevles, p. 200.


6 Ibid., p. 201.


7 The National Academy of Sciences was chartered by Congress in 1863 to
advise the Congress and the Administration on Scientific matters.








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The rapid growth of industrial R&D during this decade created new
opportunities for cooperation between the government and private industry,
much of which was centered in the Department of Commerce.


The next major stimuli to Federal R&D were the programs of the second New
Deal beginning in 1935. Attempts to solve major social and economic problems
of the period created many new research opportunities and sources of
support. In particular, research in health expanded as Federal funding to
the Public Health Service increased as part of the Social Security Act. One
result was the growth of the National Institutes of Health (NIH) established
in 1931.
In 1937, the Congress authorized the National Cancer Institute which
stimulated expansion of the NIH.


Post-World War II


The history of Federal R&D policy prior to World War II showed a growing
belief that R&D could be an important element of public policy to improve
the Nation's standard of living and promote national security. The war
itself, however, greatly enhanced this belief. During the early years of the
war, just prior to the entrance of the United States, President Roosevelt
set up a research
establishment, the Office of Scientific Research and Development, to
coordinate R&D efforts in support of the war. The culmination of this
activity was the Manhattan District which developed the first nuclear weapons.




Yet, even before the successful development of the atomic bomb, the Nation
set itself on a path to develop an expanded R&D structure after the war.
This policy was based on the desire to maintain national security, to use
the fruits of war-related R&D to promote the general public welfare, to
foster research




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against disease and to develop scientific talent.(8) The final result was
tne establishment of the National Science Foundation in 19~0 and a greatly
expanded research effort in other Federal agencies. In the early 1950s, the
largest of these were the Department of Defense, created in 1949, and the
Atomic Energy Commission which was assigned all work on nuclear weapons.


Since 1950, Federal R&D has grown substantially driven by a number of
national policy goals. Figures 1 and 2 show the history of Federal R&D
funding since 1950. The first figure shows the breakdown by defense R&D and
total civilian R&D while the second figure shows the distribution of
civilian R&D by major function. Tables giving funding data are in the appendix.


Both the Department of Defense and the AEC saw substantial budget growth
during the late 1950s in response to the Cold War. Health research also grew
as the Nation became committed to a strong research component to support
both public and private health care goals. In the 1960s, research priorities
shifted somewhat with the start of the space program driven largely in
response to the launch of Sputnik in 1957. By the end of the decade, the
National Aeronautical and Space Administration (NASA) had become the second
largest R&D funding agency after DOD. Total R&D funding flattened after
1964. In part this slowing was a result of budget pressures created by
spending for the buildup of the war in Vietnam and the beginning of several
large entitlement programs, particularly Medicare.


****************************************************************** 8 Bush,
Vannevar. Science: The Endless Frontier; A Report to the President on a
Program for Postwar Scientific Research. Reprinted July 1960, National
Science Foundation. Washin~ton, p. 3. Originally published Nov. 1944.


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In the mid to late 1970s, however, R&D funding once again started growing as
a result of Federal policy actions in three areas. First, the oil embargoes of
1973 and 1979 stimulated a large increase in energy R&D. Second, the
launching of the war on cancer in 1971 resulted in a major buildup on R&D at
the NIH for the first half of the decade. Third, DOD R&D spending began
growing again toward the end of the decade as part of a buildup in the
Nation's defense capabilities because of increased concerns about the Soviet
Union.


The 1980s saw another shift in R&D policy, again reflecting changes in
broader policy objectives. The military buildup continued with an even
greater emphasis on technological superiority. This resulted in a very rapid
increase of DOD R&D which, by 1988, constituted 61 percent of all Federal
R&D, compared to 45 percent in 1980. Another objective was the Reagan
Administration's desire to reduce Federal involvemert in the Nation's
economy. A consequence of this was a significant reduction in R&D that
appeared to be aimed at developing products or processes which were deemed
to be better addressed by the private sector. The principal effect of these
actions was a substantial reduction in energy related research at the
Department of Energy (DOE). At the same time, the Reagan Administration
believed that the Federal Government was responsible for maintaining a
strong basic research R&D structure to support other policy areas. As a
result, basic research funding grew substantially in the NSF, DOE, and NIH.
The appearance of AIDS also resulted in a rapid increase in R&D at NIH as
Federal public health policy assigned a major role to research in response
to the disease.


Beginning in the early 1980s, and continuing through the start of the
Clinton Administration, the Federal Government shifted its policy to funding
R&D which directly supported development of new or improved technologies and
processes. A significant expansion of funding in joint Government-private
sector projects, such as the Advanced Technology Program in the National
Institute of Standards and Technology (NIST), took place. The principal
agencies involved in these efforts were NIST, the Department of Energy, and
the Department of Defense. Within DOE, programs in applied energy technology
development began to receive more money, and greater emphasis was placed on
technology transfer activities, particularly at the National laboratories.




BASIC RESEARCH SINCE WORLD WAR II


Support for basic research was one of the principal objectives of the
expanded Federal support of R&D that began at the end of World War II.
Indeed, that the Federal Government should be a principal supporter of basic
research has been one of the few constants in Federal R&D policy over the
last 50 years. Besides advancing the Nation's fundamental scientific
knowledge base, many, inside and outside of Government, believed that the
private sector would not make adequate investments in such a long-term,
high-risk venture.
Consequently, Federal research policy, established at the end of the War,
emphasized the centrality of increased Government funding for basic
research, and that this support should be aimed primarily at the Nation's
research


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universities. The National Science Foundation, which emerged from this
policy decision directed its funding primarily at these universities.


Prior to the establishment of NSF, Federal funding of basic research was
concentrated in the Department of Defense, the Atomic Energy Commission, and
the Public Health Service (through the National Institutes of Health). These
agencies, which funded basic research in support of their missions, remained
the principal Federal supporters through much of the 1950s. The NSF did not
become an important player until about 1957. As the decade ended, the
creation of NASA brought an additional source of funds as it began to fund
space science research. Prior to the formation of NASA, its predecessor,
NACA, had funded small amounts of basic research.


While DOD and AEC basic research was carried out primarily at agency- funded
laboratories, the majority cf that supported by NIH and NSF was performed by
the Nation's research universities. By the end of the 1950s, universities
had become the largest single performer of federally funded basic research.


These five agencies--DOD, AEC (now in DOE), NSF, NASA and NIH--have remained
the major supporters of basic research. Research funding from the AEC was
taken over by the Energy Research and Development Administration and finally
by the Department of Energy (DOE) during the 1970s. Figure 3 shows the
funding history of these agencies over the period 1952 to 1994. The two
agencies with the highest growth rate over this period, NIH and NSF, now
rank first and second in Federal support of basic research. Actual funding
data appears in the appendix.






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The dominance of the Nation's universities among all performers of basic
research also has grown since the end of the 1950s, primarily due to the
high percentage of support flowing to universities from NIH and NSF. Since
much of the basic research funded by DOE and NASA went to their respective
laboratory system, Federal laboratories--both those directly administered by
the agency and those classified as Federally Funded Research and Development
Centers--also captured a growing fraction of the Nation's basic research
enterprise.


The trends in basic research support since the early 1950s reflect both the
original policy statements set forth after World War II, and the recognition
of the importance of basic research to the missions of science and
technology agencies. Onlv NSF and DOE have supported a broad range of basic
research, and oniy NSF has funded basic research primarily for the sake of
general advancement of knowledge, and for training scientists and engineers.
The science funded by the other agencies has been directed at increasing
knowledge about specific areas vital to the mission of the agency. In some
cases, expansion
of scientific knowledge has been sought as part of the process leading to
attainment of the agencies' goals. For example, in NIH, research in
biological science is carried on in order to help develop treatments for and
prevention of various diseases. In other cases, the output of the basic
research is an end itself.
At NASA, space science research is carried out to enhance our understanding
of the regions beyond the earth's atmosphere, and not necessarily to support
space exploration or development. In the case of DOE, the function of basic
research has been a combination of the two.