In his State of the Union Address last January, President George W. Bush announced an American Competitiveness Initiative, which included substantial increases in funding for the physical sciences as a means of securing US industrial competitiveness in the long term. This laudable initiative set out to increase expenditure on research in physics, engineering and other disciplines at the National Science Foundation, the Department of Energy and the National Institute of Standards and Technology.

Leading Republicans and Democrats have expressed strong support for such a step, and as the president's proposal moved through the congressional budget process last year, all three agencies were looking forward to significant growth during 2007.

But despite the goodwill, an unusual turn in the budget saga has caused the gains to vanish overnight. The outgoing Republican Congress never finished the 2007 budget, as it should have done by 1 October 2006. That left the incoming, Democrat-controlled one to decide what to do with the unfinished appropriations bills. But the Democrats want to focus on the issues that they think got them elected, such as lobbying reform and the war in Iraq. Instead of completing last year's spending bills, the Democrat chairs of the appropriations committees have said they plan to stick with 2006 funding levels through the whole of the 2007 fiscal year (see page 130).

The sudden retraction of the funding increases is more damaging than if they had never been mooted in the first place.

The announcements left lab directors and agency administrators who stood to benefit from the competitiveness initiative protesting about sharp cutbacks in extramural grants and sidelined intramural facilities. Some of this is exaggerated, but there is no denying that the physical sciences will suffer as a result of this turn of events. Because the House and Senate had already approved the increases, agencies were incorporating them into budget planning. Tough choices must now be made at the last minute to ensure that the agencies can operate until 30 September, when the fiscal year ends. In other words, the sudden retraction of the increases is more damaging than if they had never been mooted in the first place.

The bill to keep spending at 2006 levels will probably be finalized and passed in the next few weeks, and science lobbyists in Washington are scrambling to have an exception made for the competitiveness initiative. They have a strong case, and given the bipartisan support for the initiative's main elements, they deserve to succeed. Unfortunately, it is more likely that appropriators will make exceptions only for a few politically sensitive agencies, such as the Department of Veterans' Affairs.

All eyes will then turn to the president's budget proposal for 2008, to be released on 5 February. Despite the president's well-known political difficulties, his proposal will set the tone for the subsequent budget process. Science advocates have been pressing hard to ensure that Bush's proposal makes up for this year's shortfalls. And scientists should urge their own congressional representatives to ensure that the 2008 budget reflects both the withdrawn increase for 2007 and that originally envisaged for 2008. With the right support, it may still be possible to get the American Competitiveness Initiative back on track.