It is hard for us to fully comprehend how much our world changed on September 11. The challenges that we now face may not be that different from the challenges we faced a year ago, but our awareness of these challenges has changed dramatically. As a result everything we deal with is different. This chapter discusses the new pressures on the federal budget, especially for science, and the challenges presented by the changing demographics. I also discuss how efforts to advance science must change and specifically how strategies to increase the resources available for scientific inquiry must change if we are to maintain momentum.
New Pressures on the Federal Budget since September 11
The federal government today faces a decline in resources at the exact moment that it also faces a dramatic increase in the demands for those re- sources. That puts us all in a difficult position.
The U.S. economy slowed last year, reducing receipts to the federal treasury. Recovery is tepid and long-term. This situation will affect revenues not only in FY 2001 and FY 2002 but probably in FY 2003 as well. Growth from a lower base produces less revenue.
The impact that the economy has had on revenues was seriously compounded by changes in the federal tax law that were adopted last summer. The new tax law does not by itself explain the dramatic reversal from fiscal surplus to triple-digit deficits in one year, but it was a major contributor and SCOTT LILLY
it will erode the federal tax base by larger and larger amounts over the next 10 years. This tax bill will cost the government nearly $100 billion in the coming fiscal year. Revenues lost to that bill will exceed a quarter of a trillion dollars a year by the end of the decade. But the decline in available revenues is no more dramatic than the increased and urgent demands for government action brought about by the attacks of September 11. At the very time our capacity to finance existing government responsibilities was being eroded, a number of new and very expensive challenges were thrust upon us.
We have had significant increases in defence spending. We are now considering the third supplemental budget for defence in less than nine months. What is not well known is that the Administration has not told us the full costs of September 11 with respect to spending on defence, home- land security, and foreign assistance.
The $14 billion that the President recently requested for the Department of Defence (DOD) will not cover operations through the remainder of this fiscal year. Payments for National Guard and Reserve call-ups that have already taken place are understated by nearly $2 billion. When the seem- ingly enormous increase of $45 billion (13 percent) in Pentagon spending that the President has requested for next year is compared to what we will really spend in the current year the actual increase is much smaller. In addition, because hard decisions to phase out lower priority or unneeded weapon systems have been delayed, it is quite likely that the Pentagon will need another increase before the end of FY 2003. And this assumes nothing with respect to action against Iraq or other potential conflicts that the White House is now considering.
But the increase in defence spending is only one budgetary impact of September 11. It is probably easier to produce a list of government responsibilities that were not affected by September 11 than those that were. And these responsibilities must be met with increased cost. For example, we have ordered huge changes to protect airlines from terrorist attacks. But most of the bills for those changes have not been paid. We have hired more customs inspectors and more Federal Bureau of Investigation special agents. We have also begun hardening federal buildings against...