The U.S. research and development enterprise faces falling funding and stiff competition in the days and years ahead. Extremely constrained federal budgets will pit science against a host of other interest groups, worthy and unworthy, in the contest for federal dollars. And rapidly emerging scientific powers such as China and India will test America's longstanding competitive advantages in research.

This generally pessimistic picture emerged at the 30th annual Forum on Science and Technology of the American Association for the Advancement of Science, held 21-22 April in Washington, D.C. But the experts examining budgetary, workforce, and globalization issues related to science also suggested some sources of hope. A new model of state funding pioneered by California, for example, could provide an alternative to dependence on Uncle Sam. And infrastructure deficiencies have the potential of limiting those Asian countries' ability to compete with U.S.-based scientists in certain fields.

The Struggle for Funding

John H. Marburger III, Director of the White House Office of Science and Technology, led off the meeting with an assurance of President Bush's "strong commitment to science and technology." The President's budget proposal, the "tightest in nearly two decades," nonetheless provides increased funding to research and development, he said, noting that 13.6% of federal discretionary spending goes to research and 5.6% to non-defense research.

Given inflation, however, the proposed funding levels actually represent "flat or declining investments in R&D for the next few years," reported Kei Koizumi, director of the AAAS's R&D Budget and Policy Program, who pointed out that the President's 2006 budget proposal calls for a drop in overall non-security discretionary spending. With 1 in 7 of those discretionary dollars going to R&D, space and security will see "modest increases" amid "declining funding for most R&D." But even in such "favored agencies" as NASA and the Department of Homeland Security (DHS), Koizumi continued, budgets will be "very tight." DHS's increase, for example, will be "less than in previous years." Some departments, including Interior, Commerce, Agriculture, and even Defense, will see significant declines, including "cuts to core" research agencies, Koizumi added.

Kei Koizumi, director of the AAAS's R&D Budget and Policy Program

As "pressures that . . . make it harder" to get federal dollars mount in the next few years, science will face "a very difficult situation," according to Scott Lilly, Senior Fellow at the Center for American Progress in Washington, D.C. The rise in science funding during the first Bush term "had a lot to do with" appropriations made before Bush came to office, Lilly said. And when inflation is taken into account, any "nominal freeze" will mask a "significant decline" in real dollars. Federal science funding will fall sharply as a percentage of GDP in the next few years, he predicted. Lilly's best-case funding estimate for the next 5 years, which assumes a swift American exit from Iraq, foresees a 25% decline. In the worst case, he sees a drop of twice that size.

In the intensifying struggle for ever-scarcer federal discretionary dollars, "more powerful actors are going to crowd out the less powerful," including science, Lilly continued. "A lot of people" -- including veterans, educators, food-safety inspectors, the public health surveillance system, and many non-defense agencies -- are in the same situation as science " and will be taking substantial cuts," he said.

Of course, the federal government does not provide the only support for American science. Private investment in research approximately equals the federal government's share, reported Peter Cannon, Managing Partner of VRE Company in Ventura, California. In order to continue, however, this investment must justify itself in successful new products brought to market, and in the current era of globalized competition, industry cannot afford to support basic research, said Norman Ornstein, Resident Scholar at Washington, D.C.'s American Enterprise Institute. "We're not going to see [another] Bell Labs" funded for company prestige.

Despite this extremely grim funding picture, "a lot of scientific endeavors have a lot of potential they don't realize," according to Robert Klein, chair of the board of the California Institute for Regenerative Medicine in Emeryville, the new state entity that California's voters established to fund stem cell research. Klein, the father of a Type-I diabetic, spearheaded the political movement to make the golden state a multi-billion-dollar supporter of stem-cell research, which under current regulations cannot be done with federal funds. Klein predicted that growing interest in backing such research among states such as Massachusetts and New Jersey indicates a promising new source of funding.

Robert Klein, chair of the California Institute for Regenerative Medicine

Foreign Competition

Federal budget cuts are not the only threat to America's scientific future, according to forum speakers. Two of America's "time sensitive" assets, the flexibility of its economic and regulatory system and the sheer size of its economy and population, have traditionally underpinned the nation's historic scientific leadership, explained Anthony Carnevale, Senior Fellow at the National Center on Education and the Economy in Washington, D.C. But "competitive advantage is always temporary" and America's may be fading, he continued. "The rest of the world is learning flexibility," for example.

The second advantage -- a very large educated population -- has historically allowed America to lead world science despite human capital that is, on average, "not outstanding," he said. Numerous other countries have long produced students who are on average better prepared in science and math, but America has been so much larger than its competitors that its smaller percentage of high scorers still amounted to a very large number of able scientists and engineers. In addition, as a consequence of its preeminence, it has long been able to import additional talent from all over the world.

Now, however, that advantage is threatened. On the domestic front, visa restrictions are hampering the entry of foreign scientists, and the number of American citizens taking science degrees is falling. But even more significant is the fact that the U.S. now faces more scientific competition than in the past. The European Union just about matches the U.S. in size, and India and China both far surpass it, Carnevale noted. With rapidly expanding economies, the Asian giants now graduate hundreds of thousands of scientists and engineers. For generations, their inability to provide their graduates appropriate employment propelled able technical people into American laboratories and companies. Now, however, their growing labs and industries, plus modern telecommunications, allow them to offer real opportunity at home, noted Marco di Capua, Science Counselor for India at the U.S. Department of State. "Cheap data transfer" via computers and the Internet, plus low salaries for skilled labor and a liberalization of the economy, "helped India get into intellectual property fields" such as computer programming, he said.

The immense demand for computer patches for the Y2K emergency highlighted these advantages and jumpstarted India's information technology industry, di Capua continued. Major corporations such as General Electric and Cummings have established substantial computer-based research facilities in India, and GE has one in China as well. IBM, Oracle, and Microsoft are among the firms "following in their steps" to establish their own Asian research and engineering centers. India has also developed a pharmaceutical industry heavily focused on reverse-engineering generic drugs and based on a national patent law that excludes pharmaceutical and food products. "Intellectual wildfire could be spreading in Asia," he said.

The U.S still leads the world in scientific investment, supplying 38% of the total, according to Koizumi. But China, not even a player only a few years ago, now holds third place, with 9%. And, he added, because of lower labor costs, that investment goes much farther than a similar investment in the U.S.

Facing the Challenge

Just how great a threat does outsourcing to Asia pose to American scientists and science? Some American engineering deans have lately wondered aloud whether to close their schools rather than produce graduates unable to find jobs after all the work goes to Asia, reported Martin Neil Baily, Senior Fellow of the Institute for International Economics in Washington, D.C., and former chairman of the President's Council of Economic Advisors.

But outside of the software field, where "some displacement" of American jobs has already occurred, Baily sees little cause for panic. Instead, there's "more likely to be a shortage of engineers" as R&D boom in Asia, he predicted, noting that much of the work currently sent overseas involves adapting existing products to new markets. A great deal of innovation could come out of India and China, and American firms would be wise to pay attention. But, in his opinion, only a "relatively small fraction" of Chinese scientists and engineers are "suitable to the international economy" because of language difficulties and an educational system that emphasizes rote learning over the problem solving favored by American schools and companies.

Extending India's success beyond IT will also involve significant challenges, di Capua warned. The IT industry ships its work and products electronically, but to succeed in biomedicine, biotechnology, and other fields "India will need a world-class infrastructure" with everything from new patent laws and control over endemic corruption to a reliable water supply. The country may "become a global partner" with international pharmaceutical companies and a major player in clinical trials, but "large-scale diffusion of biotechnology and nanotechnology is not likely to happen as quickly . . . because of widespread problems with sanitation, di Capua continued.

With huge public and private investments in staff and infrastructure built up over decades and superb research institutions and universities that lead the world, the U.S. retains an enormous head start on its new competitors, even if its traditional advantages of size and economic flexibility no longer guarantee dominance. In the future, Carnevale said, America faces the challenge that its continued ability to compete "will come down to the quality of our assets": assets that are primarily human.

Beryl Lieff Benderly writes from Washington, D.C.