Biden Budget Undervalues U.S. Technology Competitiveness

President Biden once quoted his father saying, “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.” Wise words, and if Joe Biden Sr. was right, then the White House’s FY2022 discretionary budget request shows the new administration places the greatest value on equity, social spending, health, and environment. It places much less value on national security and economic competitiveness.

Before discussing the numbers, a quick caveat. This discretionary request is a so-called “skinny budget” with relatively few details and limited baseline numbers to accurately identify all budget changes. Nonetheless, there is still a fair amount of useful detail. In reviewing the proposal, ITIF has assessed only proposed spending increases, not cuts (as the details of those are not released). We have classified each programmatic spending increase into one of five categories.

1. Equity and social spending. This area includes spending that is focused principally on addressing historical inequalities (such as affordable housing for tribal communities) or social spending in general (such as the Child Care and Development Block Grant). To be sure, some of these programs have broader economic benefits over and above addressing equity or social concerns, but for the purpose of this analysis we classify them as equity and social spending.
2. Health. This includes programs to boost health research (such as those at the National Institutes of Health and the proposed Health Advanced Research Projects Agency), plus spending for health treatment (such as for ending the opioid epidemic and support for Veterans Administration health).
3. Energy and environment. This includes programs to monitor and study climate change, programs to reduce fossil fuel energy use, programs to support clean energy research and development (R&D), and programs to reduce pollution or other environmental harms.
4. Security. This includes the non-R&D component of the Defense budget, as well as Justice Department programs like community policing and funding for domestic terrorism.
5. Technology and competitiveness. This is a broad category in which we have tried to include the kinds of investments the federal government for the expressed purpose of helping organizations boost productivity, international competitiveness, or commercial innovation. ITIF has included non-energy and non-health R&D increases, including a proposed $1.2 billion increase for the National Science Foundation (leaving out climate science research), our estimation of the share of the proposed Defense Department increase going to R&D ($970 million), U.S. Department of Agriculture research to help farmers ($647 million), and the non-climate increases going to NASA. We have included increases in funding for the Commerce Department related to economic development, manufacturing, and technology (NIST, $355 million); the Economic Development Administration ($300 million); and National Telecommunications and Information Administration funding for communications ($39 million). We have also included rural broadband of $65 million and workforce training of $303 million. Finally, we have included general support for modernizing federal IT systems ($1.25 billion).

What Does the Administration Appear to Value?

By the numbers, the administration appears to value equity and broad social spending most, as it accounts for approximately 46 percent of the discretionary budget increase. Health accounts for about one-quarter of the increase (26 percent), while climate change and environment account for 16 percent. Security, including non-R&D spending increases at DOD and DHS, accounts for 8 percent.

Unfortunately, given the severe challenges to U.S. competitiveness and the long-term slowdown in productivity and wage growth, just 3.9 percent is dedicated to spending on technology and competitiveness. That’s $5.06 billion out of the approximately $130 billion increase that we were able to categorize (97 percent of the total increase).

To put that in perspective, non-health R&D expenditures alone accounted for around 7 percent of discretionary outlays in FY2020; economic development and worker training programs accounted for about 1 percent; and IT expenditures accounted for around 6 percent. And these do include other programs, such as the manufacturing programs operated by NIST. In other words, while investments in technology and competitiveness currently account for at least 14 percent of the federal discretionary budget, the White House is proposing to devote less than 4 percent of its proposed spending increase to these areas.

Values matter. The key question for Congress this year is how much it values the things that technology and competitiveness produce, such as the security that depends on winning the technology competition with China, the opportunity and vitality that comes from boosting productivity and wages, and the broader societal progress that comes from spurring scientific and technological advances. If Joe Biden Sr. was right, the final federal budget will tell us the answer.