2. An OMB Perspective on Federal Funding of Research
Michael Holland
Program Examiner
Office of Management & Budget

3. Outline Who or What is OMB?
The Federal Budget and US R&D: the “Big Picture”
The Budget Process
Future Issues

4. “One of the interesting things about OMB is that it is unexplainable to everyone who lives outside of the Beltway and misunderstood by nearly everyone who lives inside the Beltway.”
Paul O'Neill,
Former Deputy Director, OMB
Current Secretary of Treasury

5. The Mission of OMB
OMB serves the Presidency as the primary agency for leading the coordination of policy development in the Executive Branch and for ensuring consistency, efficiency, and effectiveness in policy implementation.
OMB prepares the President’s Budget
OMB provides oversight of financial management, procurement, and information technology policies
OMB reviews and clears proposed legislation, regulations, and executive orders
OMB ensures continuity of these functions during the transition to new Presidential Administrations

6. Executive Office of the President (EXOP)
White House Office
Office of
Management & Budget
(OMB)
Office of the
Vice President
(OVP)
National Security Council (NSC)
President’s Foreign Intelligence Advisory Board (PFIAB)
Policy Development
(OPD)
Council of
Economic Advisors
(CEA)
Environmental Quality
(CEQ)
US Trade Representative
(USTR)
Administration
(OA)
Office of National Drug Control Policy (ONDCP)
Office of Science & Technology Policy (OSTP)
Mix of detailees, career, political
Political
Primarily career staff

7. Office of Management & Budget
General Counsel
Legislative Affairs
Communications
Administration
Economic Policy
Legislative Reference
Budget Review
SUPPORT OFFICES
Office of Federal Financial Management (OFFM)
Office of Federal Procurement Policy (OFPP)
Office of Information & Regulatory Affairs (OIRA)
STATUTORY OFFICES
DIRECTOR
Deputy Director
Deputy Director for Management
Executive Associate Director
Resource Management Offices (RMOs)
Natural Resource Programs
National Security Programs
Human Resource
Programs
General Government
Programs
ENERGY, SCIENCE & WATER
Energy
Science & Space
Water & Power
NATURAL RESOURCES
Agriculture
Environment
Interior
INT’L AFFAIRS
State/USAI
Economic Affairs
NATIONAL SECURITY
C4 Intelligence
Ops & Support
Force Structure & Investment VA
HEALTH
Health Financing
Public Health
HHS Branch
EDUCATION & HR
Education
Income Maintenance
Labor
Personnel Policy
TRANSPORTATION, COMMERCE, JUSTICE & SERVICES
Transportation
Commerce
Justice/GSA
HOUSING, TREASURY & FINANCE
Financial Institutions
Treasury
Housing

8. Office of Management & Budget
SUPPORT OFFICES
STATUTORY OFFICES
DIRECTOR
Resource Management Offices (RMOs)
Natural Resource Programs
National Security Programs
Human Resource
Programs
General Government
Programs
DOE, NSF
NASA, USDA
USGS, EPA
Smithsonian
DOD VA
NIH Ed
NIST
NOAA
DOT

9. Outline Who or What is OMB?
The Federal Budget and US R&D: the “Big Picture”
The Budget Process
Future Issues

10. Government Spending as a Share of GDP, 2000

11. Composition of Federal Revenues

12. FY 2002 Proposed Budget ($2.0 Trillion OL)
R&D = 14% of discretionary spending

13. U.S. R&D Spending Growth Is Due Mostly to Private Sector

14. Increased U.S. R&D Spending Is Due Mostly to Private Sector (Cumulative “New Money,” 1993-1999)
Source: National Science Foundation 20 40 60 80
All R&D
Basic Research
Applied Research
Billions of Nominal Dollars
Non-Federal
Federal
94%
89%
64%
11%
36%

15. Federal R&D in 2002

16. FY 2002 Proposed R&D Budget ($98 Billion BA*)
*Total includes additions resulting from Defense Budget Amendment

17. R&D Balance In Addition to Life Sciences, Some Other Disciplines Have Done Well75
100
125
150
175
1992
1993
1994
1995
1996
1997
1998
1999
Factors of Constant FY 1992 Dollars
Mathematics and
Computer Sciences
Life Sciences
Environmental
Sciences
Physical Sciences

18. Historical R&D Priorities (obligations, in 1996 constant dollars)
Source: National Science Foundation
-5% 0% 5%
10%
15%
20%
25%
30%
Average Annual Increases
Space
Energy
Health
Defense
All
Others

19. Earmarks to Universities & Colleges Increasing and Undermining Competitive, Merit-Based Efforts in Some Fields
Source: Chronicle of Higher Education
400
800
1,200
1996
1997
1998
1999
2000
Millions of Nominal Dollars

20. Federal Science & Technology (F S&T) Budget

21. Outline Who or What is OMB?
The Federal Budget and US R&D: the “Big Picture”
The Budget Process
Future Issues

22. The Budget Process Department of Energy White House Congress House
Science
Fossil
Energy
NNSA
White House
OMB
Congress
House
Senate
Approps

23. The Budget Process Department of Energy White House OMB Guidance
Science
Fossil
Energy
NNSA
White House
OMB
Guidance

24. The Budget Process
Department of Energy
Science
Fossil
Energy
NNSA

25. The Budget Process Department of Energy White House OMB Budget Request
Science
Fossil
Energy
NNSA
White House
OMB
Budget Request

26. The Budget Process Department of Energy White House OMB Passback
Science
Fossil
Energy
NNSA
White House
OMB
Passback
Budget Request

27. The Budget Process Department of Energy White House OMB Appeal
Science
Fossil
Energy
NNSA
White House
OMB
Appeal
Passback
Budget Request

28. The Budget Process Department of Energy White House Congress House
Science
Fossil
Energy
NNSA
White House
OMB
Congress
House
Senate
Approps
President’s
Budget Request

29. The Budget Process Department of Energy White House Congress House
Science
Fossil
Energy
NNSA
White House
OMB
Congress
House
Senate
Approps
Budget Resolution
302(b) Allocation
Subcommittee Markup
Committee Markup
Floor Vote
Conference

30. The Budget Process Department of Energy White House Congress House
Science
Fossil
Energy
NNSA
White House
OMB
SAPs
Congress
House
Senate
Approps
Hearings
Budget Resolution
302(b) Allocation
Subcommittee Markup
Committee Markup
Floor Vote
Conference

31. The Budget Process Department of Energy White House Congress House
Science
Fossil
Energy
NNSA
White House
OMB
Bills
Congress
House
Senate
Approps

32. The Budget Process $ Department of Energy White House Congress House
Science
Fossil
Energy
NNSA
White House
OMB
Apportionment $
Congress
House
Senate
Approps

33. The DOE/SC Budget Cycle
FY 1999
FY 2000
FY 2001

34. R&D as a Percentage of OMB PAD $0%
20%
40%
60%
80%
100%
NRP
HRP
GGP
NSP
% BA, FY 2001
F S&T
Other R&D
Non R&D
$111.8B
$90.5B
$340.6B
$80.7B
FY 2001 est. BA
per PAD
Note: F S&T + Other R&D = Total R&D

35. R&D as % of Approp. Comm. $

36. Executive Office of the President (EXOP)
White House Office
Office of
Management & Budget
(OMB)
Office of the
Vice President
(OVP)
President’s Foreign Intelligence Advisory Board (PFIAB)
US Trade Representative
(USTR)
Office of
Policy Development
(OPD)
National Security Council (NSC)
Office of
Administration
(OA)
Council of
Economic Advisors
(CEA)
Office of National Drug Control Policy (ONDCP)
Primarily career staff
Council of
Environmental Quality
(CEQ)
Office of Science & Technology Policy (OSTP)
Political
Mix of detailees, career, political

37. Outline Who or What is OMB?
The Federal Budget and US R&D: the “Big Picture”
The Budget Process
Future Issues

38. R&D Policy Issues for FY 2003 and Beyond
The President’s Management Agenda includes government-wide and agency-specific management and performance initiatives.
The R&D initiative stems from our concern that current methods used to set Federal R&D spending are inconsistent or otherwise insufficient.
Without agreed-upon investment criteria, research funding decisions are often set based upon anecdotes and last year’s funding level.
Can we make more informed decisions about research investments? Can we devise a set of rules for applied (and later basic) research programs?

39. Draft Criteria for Applied R&D at DOE
Projects support work where the private sector cannot capture the benefits of developing the technology due to market failure, and in which there is a clear public interest
Projects present the best means to support the Federal policy goals, compared to other policies
Projects are subject to a competitive merit-based process, with external review when practical
Project proposals are comprehensive, complete and include performance indicators and “off ramps,” and a clear termination point

40. Further Information OMB website www.whitehouse.gov/omb
President’s budget
w3.access.gpo.gov/usbudget
AAAS Science & Policy Programs
DOE’s Office of Science
NSF Science Resources Studies
Shelley Lyne Tomkin, Inside OMB, ME Sharpe (1998).

42. Federal Budget Deficit/Surplus, FY 1960-2011 in billions of dollars
Budget Issues
Federal Budget Deficit/Surplus, FY in billions of dollars

43. 2002 Discretionary Spending ($ in billions)
Additions
Campaign initiatives
Pay & programmatic
National Emergency Reserve
Technical adjustments
Offsets
Non-repetition earmarked funding
Non-repetition one-time funding
Program decreases
Net Increase (4.0% increase)
(further details in A Blueprint for New Beginnings)

44. FY 2002 R&D Budget Summary Spurs Private R&D investments
-- R&E Tax Credit
($1.7 billion FY 2002; $9.9 billion FY )
Sets Federal R&D as Priority
-- 6% growth (vs. 4% discretionary growth)
Establishes commitment to health research
-- Doubles NIH by FY 2003
Addresses Math/Science Education Needs
-- at least $1 Billion over five years