President Barack Obama's FY12 budget request includes fewer ambitious proposals related to TBED than his previous budgets, but his new request offers increases for many R&D programs and several new efforts to promote high-tech development at the regional level. The proposed budget eschews most of the savings measures proposed by the National Commission on Fiscal Responsibility and Reform last November (see the November 17, 2010 issue of the SSTI Digest), which would have eliminated several agencies and reduced research funding. Instead, the Administration has proposed increases for research, particularly clean energy and renewable fuels research, and focused on reorganizing existing programs to achieve savings through efficiencies.
A Note on Comparisons
Since the federal government is currently operating under a continuing resolution and no budget has been enacted for FY11, this year's Federal Budget Special Issue will not compare funding levels to the previous year's enacted budget. Instead, FY10 actual funding will be used as the basis for these comparisons. Where FY10 actual levels are unavailable, we have used FY10 enacted levels. All comparisons should be assumed to be from FY10 actual funding, unless noted otherwise. While we are aware that this will likely lead to some confusion, our decision is based on the use of FY10 actual levels in the White House budget request, available at the Office of Management and Budget website.
Highlights
Among the items of interest to the TBED community:
- Federal science agencies, including the National Science Foundation (NSF), the Department of Energy (DOE) Office of Science, and the National Institute of Standards and Technology (NIST), stay on track to double their budgets.
- All of DOE's Office of Science programs would receive increases, with the exception of Fusion Energy Sciences. Funding for Basic Energy Science would grow by 22.1 percent over FY10 actual levels.
- The National Institutes of Health (NIH) would receive $32 billion, a 3.4 percent increase over FY10 actual levels.
- Funding for the Department of Health and Human Service's (HHS) Biomedical Advanced Research and Development Authority would nearly double over FY10 actual levels to $665 million. A $100 million public-private venture capital fund for companies developing medical countermeasures is also proposed.
- The Research and Experimentation (R&E) tax credit would be expanded by 20 percent and would be made permanent.
Manufacturing
Several federal manufacturing initiatives would receive increases or initial funding:
- Funding for the Hollings Manufacturing Extension Partnership (MEP) would grow 14.1 percent over FY10 actual levels to $142.6 million.
- NIST's new Advanced Manufacturing Technology Consortia program, a public-private partnership to coordinate and fund industrial research, would receive $12 million.
- A new Workforce Innovation Fund, a collaborative effort from the Departments of Labor (DOL) and Education (ED) would receive $380 million to award competitive grants for innovative workforce reform initiatives.
- A total of $190.4 million (156.6 percent increase over FY10 actual) would be provided for NSF's Advanced Manufacturing initiative, which supports a diverse research portfolio generating basic research discoveries that benefit advanced manufacturing.
Entrepreneurship, Clusters and Regional Innovation
Startup America, the national competivitiveness initiative announced in January, would receive support through new initiatives at the Small Business Administration (SBA), the Department of Commerce (DOC), DOE, and Treasury. Though the Administration has positioned the effort as a public-private partnership, drawing support from high-tech corporations, the FY12 budget includes funding for the effort's capital access, community innovation and mentoring initiatives. Programs associated with Startup America in the FY12 request include:
- SBA would provide $2 billion over five years through two new funds that would operate through the Small Business Investment Company (SBIC):
- The Innovation Fund would provide $200 million in guaranteed debentures in FY12 and annually for the next four years. The fund would offer matching funds to investors who work with companies trying to survive the gap between angel and later-stage financing.
- The SBIC Impact Fund, also proposed at $200 million for FY12 and each of the next four years, would support investors who invest in high-potential businesses in underserved markets.
- The budget would expand the Department of the Treasury's New Market Tax Credits (NMTC) program, which helps attract private sources of capital to underserved regions, from $3 billion to $5 billion.
- Smaller programs like the EDA's i6 Green and a mentoring pilot program from SBA, DOE and ARPE-E would receive support.
- The U.S. Patent and Trademark Office (USPTO) would introduce a three-tiered system of patent examinations that would permit applicants to receive an accelerated approval process for a fee.
Other notable investments in entrepreneurship and clusters include:
- $16.5 billion in 7(a) loan guarantees through SBA, including $14.5 billion in term loans and $2 billion in revolving lines of credit;
- $526 million for the International Trade Administration's National Export Initiative to help achieve the goal the President set in the State of the Union address of doubling exports by 2014;
- $40 million for EDA's new Regional Innovation Program to support cluster development and to promote innovation in distressed portions of the country;
- $12 million for SBA's Regional Innovation Clusters program and $3 million for the Emerging Leaders initiative; and,
- Funding for the Department of Agriculture's (USDA) Regional Innovation Initiative (RII), which would assist rural communities in designing regional economic strategies, through a surtax on other USDA programs.
Clean Energy
Several agencies and programs that focus on clean energy technologies receive increase funding in the President's budget. In the State of the Union address, President Obama set the goal of producing 80 percent of the country's electricity from clean energy sources by 2035. The FY12 budget would:
- Boost funding for DOE's Office of Energy Efficiency and Renewable Energy (EERE) to $3.2 billion, a 44.3 percent increase over FY10 actual levels;
- Within EERE, double funding for Vehicle Technology research over FY10 actual levels;
- Provide $550 million for Advanced Research Projects Agency-Energy (ARPA-E), which would focus on clean energy projects;
- Expand funding for the USDA Agriculture and Food Research Initiative, which funds research on biofuels and renewable energy, to $325 million;
- Increase funding for USDA's Bioenergy for Advanced Biofuels Program by 90.1 percent to $105 million;
- Double funding for DOL's Green Jobs Innovation Fund;
- Eliminate tax breaks for non-renewable energy companies, a move the Administration estimates would generate $46 billion over 10 years for renewable energy and fuels programs; and,
- Add three new DOE Energy Innovation Hubs, bringing the total to six.
STEM Education
Education receives a large boost in the proposed budget, mostly due to increased funding for the federal Pell Grant program, but also through several STEM-oriented initiatives. A new $206 million effective teaching and learning for K-12 STEM program would replace and expand the Mathematics and Science Partnerships Program at ED, along with $300 million for ED's Investing in Innovation (i3) program. The i3 program would be instructed to prioritize STEM projects. NSF would administer a $20 million science and technology workforce program that would be used to attract undergraduates from underrepresented groups to STEM fields. DOE's Workforce Development Program for Teachers and Scientists would receive $36.5 million (9 percent increase) to promote STEM and energy education.
Broadband and Wireless Infrastructure
As part of the Administration's focus on national infrastructure improvements, the budget proposes legislation to allow spectrum license auctions that could generate more than $28 billion over the next 10 years. These voluntary incentive auctions, proposed in the Federal Communications Commission's (FCC) National Broadband Plan, would help reallocate some of the licensed spectrum from the television broadcasting sector to the wireless data industry. FCC proceeds would contribute to the Wireless Innovation (WIN) Fund, a government-wide initiative that would receive $3 billion under the proposed budget. President Obama has set the goal of extending 4G wireless to 98 percent of Americans within five years. The WIN Fund would support basic research, experimentation and testbeds, and applied development in FY12 through programs at the NSF, ARPA-E, DARPA and several agencies within the Department of Commerce.
A detailed write-up in a special pdf report on the FY11 budget proposal can be downloaded here.
