RD SUPPORT SUSTAINED IN BUDGET FOCUSED ON DEFICIT REDUCTION

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President Clinton has requested record -high R&D funding of nearly $76billion in the FY '94 budget. In a budget focused on deficit reduction, theAdministration proposes a 3 percent increase for R&D. The budget reflectsa fundamental tenet of the Clinton Administration: Investment in science andtechnology is an investment in America's future.

The FY94 R&D budget proposal reflects the President's overallplan to move our country forward by focusing on the economy, investing in thefuture, an d reinventing government. Our goals are a growing economy with morehigh-skill, high-wage jobs for American workers; a cleaner environment where,for example, energy efficiency increases profits and reduces pollution; astronger, more competitive private sector able to maintain U.S. leadership incritical world markets, an educational system where every student is challengedto reach his or her full potential; and an inspired scientific andtechnological research community focused on ensuring not just ou r nationalsecurity, but our very quality of life.

There are two points I would like to point out: First, this is thefirst Administration to produce a line-by-line budget in such a short time inits first year -- a formidabl e task. It will take some additional time untilwe are able to provide all of the various cross-cuts and breakdowns that fillin the details of the budget. Second, reordering our federal R&Dprograms to reflect the end of the Cold War is a huge ef fort -- it won't happenovernight. Having said that, I believe that this budget represents a goodfirst step, particularly in the face of our current economic challenges.

The fact that overall R&D expenditures are as strong as t hey are inthis deficit-cutting budget is a key point. Within that budget, however, thereis also an important shift in where and how the funds are spent within thatbudget. This budget reflects the beginning of a shift in the balance ofcivilian versus defense R&D expenditures, with the intent of equalizingthese expenditures within the next few years. There is also an increasedemphasis on applied R&D, specifically applied R&D for civilian andcommercial technologies. There is a fundam ental shift towards both towardsdeveloping a much closer working partnership between the public and privatesectors, and towards the leveraging of government investments in cooperationwith private investments. All of this, again, takes place against t he backdropof the preservation of our basic R&D budget.

This budget reflects the changed priorities that come with the end of theCold War, as we focus less on military confrontation and more on economiccompetition. This FY94 budget proposal increases the focus on civilian andcommercial technologies, and strengthens the federal government's ability towork more effectively in partnership with American industry to improve ourecono my.

Commercially-relevant R&D is a mainstay of the FY94 request. TheAdministration is proposing $58 billion for applied research and developmentactivities. The biggest percent increase in this category will be for civilia napplied research and development activities, a $17 billion investment or sixpercent increase from 1993. Some highlights of the request include:

- A reorientation of the roles of our national laboratories andresearch agencies to work more closely with American industry. Funding hasbeen proposed for over 1,700 non-defense Cooperative Research and DevelopmentAgreements (CRADAs) throughout the national laboratory system, with public andprivate investments anticipated to exceed $3 billion. The ability of thefederal government to cooperate with American high technology industries todevelop crucial commercial technologies will be strengthened by a dramaticincrease -- almost 19 percent -- in funding for the National Institute fo rStandards and Technology (NIST).

- A substantial commitment to a 21st century information infrastructure.More and more businesses depend on access to information and high-speedcommunications links to acquire and retain a competitive edge . R&Dinvestments in a the supercomputer, networking, and telecommunicationstechnologies critical to a 21st century information infrastructure will also becrucial to improving education, health care, and the quality of life for allAmericans. The budget proposes over $1 billion for R&D in this area, a 26percent increase over the FY '93 level.

- Investment in improving our transportation infrastructure. While weare embarking on a new era of information technology, our econ omiccompetitiveness and quality of life depends as well upon improving our physicaltransportation infrastructure. Nearly $2 billion is proposed for R&D innew transportation technologies, a 29 percent increase over the 1993 level.

- Incr eased emphasis on Manufacturing Technology. Manufacturing R&Dwill be prioritized during the next several years, both through FCCSET andthrough additional initiatives designed to improve access to advancedmanufacturing technologies. This will i nclude a national network ofmanufacturing extension centers, with additional spending beyond what isreflected in this R&D budget. In FY94, nearly $1.5 billion is beingproposed in this area.

A COMMITMENT TO INVESTING IN THE FUTURE WITH BASIC RESEARCH Basicresearch is the seed bed for the technical advances that drive the economy. Inalmost every field, and U.S. researchers lead the world in scientificcitations, in Nobel Prizes, and in most other measures of scientificexcel lence. A healthy basic research budget is a fundamental necessity. Noneof the innovations in applied R&D proposed in this budget will be funded atthe expense of basic science. This budget proposes $14 billion for basicresearch, including:

-- $11 billion for university research from agencies including the NationalScience Foundation (NSF), the National Institutes of Health (NIH), theDepartment of Energy (DOE), the Department of Defense (DoD), and the NationalAeronautics and Space Administrat ion (NASA);

-- A 13 percent increase in funding ($1.5 billion) for the U.S. Global ChangeResearch Program, an interagency program operating under FCCSET;

-- An overall 3 percent increase in funding for NIH ($10.7 billion), with majorfundin g for breast cancer research and AIDS research; and

-- A 18 percent increase in funding for research and related activities at NSF($2.2 billion) over the FY93 appropriated level.

In this budget, h ow we spend money receives as much attention as howmuch we spend. Each department and agency will participate in this basicrestructuring of Federal R&D spending. Cabinet Secretaries and AgencyDirectors have, at the request of the Vice President, named Deputies orUndersecretaries in each agency to serve as points of coordination for scienceand technology policy.

These individuals will meet, under the chairmanship of the Office of Scienceand Technology Policy and the Nationa l Economic Council, to develop andcoordinate federal science and technology polices. They will focus on 3central goals:

We are also committed to working in cooperation with American industry and ourinternational partners to make the maximum use of every federal dollar. In atime of scarce resources, it is essential to merge public and private interestswherever possible. We expect big pay-offs for the Nation from leveragedFederal investments, i.e., partnerships with industry (e.g, consortia,cooperative R&D agreements, etc. ) that ensure that R&D funds aredirected toward national needs and that innovations that occur in thelaboratory move quickly into the marketplace.

This budget reflects both our challenges, and our goals. I believe it is anexcellent bluepr int for moving this country into the future.

In addition to the FY94 R&D budget, I would like reemphasize the criticalimportance of President Clinton's stimulus package to our R&D programs.

For example, the stimulus package inc ludes supplemental appropriations forsignificant investments in such vital programs as the National ScienceFoundation (NSF) and the National Institute of Science and Technology,including funds for both ATP and NIST's intramural programs.

The stimulus request includes more than $117 million for NIST and $207 millionfor NSF -- funds that can be spent immediately to buy equipment hireresearchers, and put our technical people to work now on research projects thathave already been approved and