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Final Bush Budget Released: R&D Gets Boost; Economic Development Slashed

February 06, 2008

Analysts Say Request Going Nowhere
The last budget request of a lame duck administration rarely musters much attention from Congress as its focus is turned toward the next administration and, for entire the House of Representatives, its own re-election. Not one of the previous seven budgets of the Bush years has been passed on time, so no one in Washington expects this one to be the exception.
Nevertheless, the fiscal year 2009 request provides the Bush Administration one final opportunity to outline how it would like to see the federal government spend its money. As in every previous budget request from the Bush White House, that doesn’t include much for economic development programs. “Highlights” for economic development programs include:

  • Every economic development program in the Department of Agriculture is either slated for elimination or deep cuts.
  • The Manufacturing Extension Partnership (MEP) would receive only $4 million, down from $89.6 million in FY08.
  • Grants from the Economic Development Administration (EDA) would be slashed 60 percent, dropping from $250 million to $100 million.
  • SBA grant programs for entrepreneurial assistance efforts, such as the Small Business Development Centers, SCORE and Women’s Business Centers, would see a $10 million cut for a combined total in FY09 of $87 million.
  • The Minority Business Development Agency, while requesting a continuation level of $29 million, would be prohibited from spending $12 million in grant funding until the last day of the FY08 fiscal year – leaving the funding extremely vulnerable to rescissions during the year.
  • Community Development Block Grants would see at least a $660 million cut according to the Housing and Urban Development request.
  • The Community Development Financial Institutions (CDFI) Fund would be cut to $29 million, nearly 70 percent less than the $94 million appropriated in FY08.

Whether or not this tired assault on the federal government’s role in encouraging innovation and entrepreneurship gains much traction during Congress’s budget sessions this summer remains to be seen. To the Administration’s credit, it has managed to whittle down spending on economic development. For example, in FY 2001, MEP’s budget was $107 million. The EDA budget was a whopping $412 million.
By proposing cuts or elimination, the Administration forces constituents to argue for maintaining some level of funding, rather than sustaining or growing programs. Squeezing budgets year after year, as has been the approach, means programs do not keep pace with inflation or meet the growing needs for services as the country slips further into recession.
COMPETE Research Rising as Other Fields Slip
While the president vetoed FY07 budgets reflecting increases for the science agencies as recently as December, the Administration this month is proposing similar increases for those same agencies in FY09. The National Science Foundation (NSF) and the Office of Science with the Department of Energy (DOE) both stand to benefit. Unfortunately, both increases come at a cost to other programs and line items – cuts that are probably too unpalatable for even congressional Republicans to swallow in an election year (e.g., Medicare, student aid, etc). On the positive side:

  • DOE’s Office of Science would see an 18.8 percent increase to $4.72 billion. All research areas of the office would see increases ranging from a nominal 4.4 percent for critical biological and environmental research to 72 percent for fusion energy sciences. One STEM highlight of note, Workforce Development for Teachers and Scientists would receive $13.6 million, a $5.5 million or 68.9 percent increase.
  • The Administration’s FY09 NSF budget request of $6.85 billion represents an increase of $789 million, 13 percent higher than the FY08 budget estimate. Research and research-related expenses account for much of this new funding, with a $772.5 million increase. Of this total, the largest program increases effect research in mathematic and physical sciences, computer and information science and engineering, geosciences, and engineering.

All news on the research side of the federal budget request is not encouraging, however. The National Institutes of Health (NIH), on the other hand, would be level-funded, further exacerbating complaints within the life science community for the slowdown in medical advances resulting from lower-than-inflation increases for the National Institutes of Health.
While the overall defense budget would see a robust boost of 8.2 percent in the Administration request, basic research investment at the Department of Defense (6.1 funds) would decline 5 percent.
Space science and engineering at NASA would experience a staggering 21 percent reduction, dropping to $8.39 billion from the FY07 total of $10.57 billion.
Digest readers looking for more information regarding the Administration’s FY09 budget request are encouraged to peruse the following sources: