The Burden of Stimulus Money

There’s the familiar story of the guy of modest means who wins a lottery jackpot — and goes downhill from there. The same could be happening to the National Institutes of Health, and not for the first time. NIH had been suffering flat budgets for six straight years when Congress suddenly and unexpectedly dealt it a wad of stimulus money in February — $10.4 billion to be spent over two years, atop its current annual budget of approximately $30 billion.

The health research community is understandably ecstatic. Since the stimulus ground rules call for fast spending, much of the NIH bonanza is going to projects that were previously approved but unfunded for lack of money. But there’s a vast demand out there for funding even more projects. NIH’s stimulus plans include a new program of two-year “jump start” awards, called “Challenge Grants in Health and Scientific Research,” aimed at rapid progress in topics ranging from “Behavior, Behavioral Change, and Prevention” to “Stem Cells” and “Translational Science.” NIH plans to spend a total of at least $200 million on 200 or more of these grants. So far, it has received over 20,000 proposals!

In the workings of NIH, it’s well-established that a surge in appropriations brings a surge in proposals, followed by lower funding rates, and, perversely, doubt on Capitol Hill and in the White House that NIH needs more money. That sequence played out after Congress, in one of its periodic bouts of grandstanding affection for biomedical research, doubled the NIH budget between 1998 and 2003, from $14.5 billion to $29 billion.

In 2006, NIH Director Elias Zerhouni lamented in Science that “Many scientists are dismayed that it is more difficult to get funded today than it was before the NIH budget doubled.” The explanation, he said, is that the doubling of money had produced a near-doubling of grant applications, from 24,151 in 1998 to 46,000 in 2006. In expectation of continuing budget growth for NIH, academe went on a lab building spree, with construction spending rising from $3.2 billion between 1990 and 1997 to $15 billion between 1998 and 2007.

The workers for whom those labs were built needed grants, but Congress unfortunately felt that it had done well by NIH with the 1998-2003 budget doubling, which provided NIH with over half of all federal spending for non-defense research. Looking on enviously, the physical sciences complained of neglect, rousing political sympathy with claims that they were crucial for the nation’s industrial competitiveness. The Bush White House, which had unenthusiastically inherited the Congressional doubling plan from a similarly unenthusiastic Clinton White House, concluded biomedical research had enough for the present. “The python needs time to digest the pig,” Bush’s science adviser explained to me. Last year, with the annual budget still stuck around $30 billion, NIH estimated that its purchasing power had dropped by around 12 percent since 2003. Pre-stimulus package, NIH projected that the success rate for new grant applications would drop from 32 percent in 2001 to 18 percent this year.

Although NIH is working overtime to award its stimulus billions, the extra money is having a dampening effect on the regular appropriations process, which exists in parallel to the emergency spending efforts. For the coming fiscal year, the White House requested, relatively speaking, only a minuscule budget increase for NIH — $442 million, which would bring the total to $30.8 billion, essentially another standstill budget. The House Appropriations Committee doubled the increase, but its counterpart Senate committee accepted the White House figure after noting that NIH had received a hefty amount of stimulus money.

The outcome will be determined in conference and on the floor of each chamber of Congress this month. But as the economy shows some signs of recovery, and opinion surveys register public uneasiness about massive government spending, deficit fears are catching up with recession fears. Even as it belts out stimulus money, the Obama White House increasingly talks about the importance of deficit reduction.

Former Republican Senator Arlen Specter magically engineered the NIH stimulus appropriation as part of a complex party switch that brought the Democrats close to a filibuster-proof majority. Specter, an NIH enthusiast from way back, hopefully contends the budget base for NIH is $40 billion that from now on, and that respectable annual increases should be calculated from that level. The stimulus, he insisted, should not be regarded as a substitute for regular funding.

If Congress accepts that concept, NIH will enter a new period of great prosperity. If not, it will again follow in the footsteps of the poor guy whose big troubles began after he won the lottery.