The Trump administration has set its sights on basic science. Last week, the National Science Foundation revealed plans to lay off between a quarter and half of its staff, and the National Institutes of Health announced that it would drastically reduce grants to university research programs. Meanwhile, Donald Trump has nominated the longtime NIH critic Robert F. Kennedy Jr. to run the Department of Health and Human Services, the agency that oversees NIH funding, and the president’s initial budget request will reportedly ask Congress to slash the NSF’s budget by as much as 66 percent.
The cuts are being justified in terms of efficiency. The change at NIH will cap payments for administrative support—known as indirect costs, or “overhead”—at 15 percent of direct funding. (Last night, a federal judge temporarily blocked the NIH policy from going into effect—but only in the 22 states that sued to stop it.) The administration claims that this will save the government more than $4 billion a year. Elon Musk, whose Department of Government Efficiency has been empowered by executive order to “maximize governmental efficiency and productivity,” has already taken a victory lap. “Can you believe that universities with tens of billions in endowments were siphoning off 60% of research award money for ‘overhead’?” he wrote on X. “What a ripoff!”
Let’s set aside the arguments about the constitutionality or wisdom of turning Musk loose on the federal bureaucracy. With its attack on research, DOGE is failing on its own terms. Cutting basic science funding violates its mandate to make government more efficient. If they survive legal challenges, the moves might save money in the short run, but in the years and decades to come, they will cost taxpayers dearly by slowing down innovation and making America’s future less prosperous.
Many breakthrough technologies began as highly speculative, taxpayer-funded projects with no immediate practical value. The first computers were connected in 1969 through ARPANET, a Department of Defense–funded communication network. ARPANET’s narrow purpose at the time was to facilitate the sharing of costly computing resources across project sites. In the 1980s, the NSF funded an expansion of the ARPANET concept to more than a dozen universities and, eventually, a nationwide network of supercomputing centers. This became the backbone of the modern internet when it was opened up to commercial activity in the 1990s.
The practical value of a connected computer network did not become apparent until decades after the early ideas were funded. If DOGE had been around in the 1980s, cuts in the name of “efficiency” might have prevented or greatly delayed the development of one of the most important technologies in human history. Similarly, an NSF-funded project on the chopping block today might be on track to unlock future breakthroughs in clean energy or artificial intelligence.
In medicine, too, government funding of abstract, seemingly useless research can lay the groundwork for transformative discoveries. To take just one recent example, the development of Ozempic and other GLP-1 weight-loss drugs originated in NIH-funded research into reptiles. In the early 1980s, Jean-Pierre Raufman, a scientist doing postdoctoral research at NIH, discovered that Gila-monster venom stimulated cell growth in the pancreas, the organ that synthesizes insulin. A few years later, Raufman and John Eng, an endocrinologist at a Veterans Affairs hospital, discovered that the venom contained a peptide that stimulates insulin production for much longer than the natural GLP-1 produced by the human body. Eng patented the peptide and licensed the patent to Amylin Pharmaceuticals, which developed it as a diabetes treatment with NIH support. Twenty years later, pharmaceutical companies realized the drug’s revolutionary potential for weight loss.
Scientific discovery is unpredictable and haphazard, with many surprises and dead ends. You can imagine a member of Congress in the 1980s denouncing the NIH’s wasteful spending on useless studies of Gila-monster venom. But Musk and his Silicon Valley allies should know better. Like scientific research, venture capital is built on funding lots of ideas that go nowhere. Most venture-capital investments fail, but the small number of wild successes makes the whole enterprise worthwhile. These successes are hard to predict because they can arise from seemingly outlandish new ideas, such as a virtual yearbook for college students.
The public has a right to demand that its tax dollars are spent wisely. One good measure of the efficiency of government spending is whether it beats the alternative: returning the money to citizens as a tax cut.
Funding for basic research is efficient by this very strict definition. Multiple studies have concluded that $1 spent on research typically returns several dollars of value to society through increases in private-sector innovation. Nearly one-third of NIH grants over a 27-year period led to the publication of research that was eventually cited in commercial patent applications, and one in 10 NIH grants was cited in a patent directly. One cleverly designed study estimated that an additional $10 million of NIH funding generates about $23 million in sales of newly patented drugs. And a working paper posted a few weeks ago found that major NSF investment in science and engineering infrastructure at non-elite research universities increased the annual patenting rate in the surrounding local economy by 18 to 32 percent. The overall picture is very consistent: Government funding of basic science research generates very large social returns, even when we can’t accurately predict the good ideas ahead of time.
This makes indiscriminate cuts harmful and inefficient. Consider the NIH’s proposal to limit university research funding. Government research grants provide funding for both direct costs—meaning personnel and material support, such as lab equipment, for specific projects—and indirect costs, which it calculates as a percentage of the direct costs. Indirect costs fund the infrastructure that makes projects possible, including lab facilities, heat and electricity, finance and administration, data privacy, and compliance with regulations. In announcing the new policy, the NIH said that the average indirect grant in recent years was about 27 to 28 percent of direct funding.
The Trump administration argues that a 15 percent cap on indirect costs is reasonable because that is the rate typically paid by private foundations. But private-foundation grants can be so low only because of the existence of larger government grants that support basic research infrastructure. Lowering the NIH rate to 15 percent will force universities to spend much more of their own money to support basic research. Even if rich private schools like Harvard, where I teach, can take the hit, most NIH funds go to cash-strapped public universities without big endowments. If government funding goes away, so will much of the research. The long-run cost will be staggering. We’ll have fewer medical breakthroughs, the progress of lifesaving medical treatments will stall, and America may fall behind in its efforts to train the next generation of great scientists and engineers.
There are many ways to make government funding of scientific research more efficient. The nonpartisan Institute for Progress commissioned a series of papers about how to improve NIH funding, including speeding up grant review, funding riskier but higher-upside research, and smoothing the path to commercialization. One could even lower NIH spending by creating categories of grants with different indirect rates that depend on the scale and scope of the project. Doctoral-training grants, for example, might not really justify high overhead costs. But the biggest, most ambitious projects require substantial investments of energy and space that a 15 percent rate will not begin to cover. DOGE should focus on these and other reforms, rather than confusing efficiency with ill-conceived budget cuts that will make us sicker, poorer, and less innovative in the years to come.
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