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For U.S. scientists studying human-embryo stem cells, it is the best of times and the worst of times.

More than four years after President Bush decided to strictly limit public funding for studies of embryonic stem cells, the federal government's spending on such research hit a high of more than $37 million last year, according to the National Institutes of Health.

The growth in NIH funding, up more than 60% from 2004, is one of several signs that despite the heated debate over the controversial cells, U.S. research in the area is gaining steam.

"There is a lot going on in the U.S. The official story [of stem-cell advocates] is how we are falling behind in tragedy and dismay. And I don't think that is the case," said Renee Reijo-Pera, co-director of the Human Embryonic Stem Cell Center at the University of California, San Francisco

That doesn't mean U.S. policy is popular with scientists or patients hoping for cures. In his 2001 decision, President Bush greenlighted public spending, but only for 60 supplies of stem cells the administration estimated had...