(This analysis is a progress report on FY 2000
appropriations as of the August congressional recess, and summarizes the
AAAS R&D Funding Updates released so far. The complete series of AAAS
R&D Funding Updates, including continually updated analyses of R&D
by agency in FY 2000 appropriations, is available on the AAAS R&D
Web Site (http://www.aaas.org/spp/R&D)
in the "FY 2000 R&D" or the "What's
New" sections.)
When Congress left Washington for a month-long August recess, it
left behind proposals for cuts to federal support of R&D programs,
especially nondefense R&D, and the threat of even more cuts in September.
Even in a time of expanding federal surpluses, $800 billion tax cut proposals,
increased defense spending, a shrinking national debt, and plans for new
Medicare benefits, Congress is contemplating cuts to R&D and other
discretionary programs. This fall, the FY 2000 appropriations process
is likely to grind to a halt because of severe restrictions on discretionary
spending and steep cuts to domestic programs, and the final funding levels
for many R&D programs are likely to be decided as minor items in high-level
closed-door negotiations between the President and Congress over the shape
of the federal budget for years to come. In such an environment, it is
difficult to predict how federal R&D will fare, but the proposed cuts
already on the table stand a fair chance of becoming reality.
FY 2000 R&D in House Appropriations
The House would make significant cuts to nondefense R&D programs
in the appropriations bills it has drafted so far. The House has drafted
12 out of the 13 appropriations bills, including the appropriations
for all the major R&D funding agencies except the National Institutes
of Health (NIH). (The totals and trends below exclude NIH and other
agencies funded in the remaining Labor-HHS bill.) Because of tight budget
caps within which defense spending would rise considerably, the House
would make cuts to key R&D programs and deny funds for several Clinton
Administration initiatives. The Senate, working under the same budget
caps, would provide increases for R&D because it has made R&D
a high priority and would give less money for defense than the House,
freeing up funds for domestic programs. (Note: All percentage changes
below refer to current dollars and do not take account of inflation,
projected at 2 percent for the coming year.)
- The House would cut funding for most nondefense R&D agencies. So far in
the process, the House would cut nondefense R&D 5.1 percent
or $1.1 billion from FY 1999 funding levels (see Table
1). Especially hard hit would be R&D in the National Aeronautics
and Space Administration (NASA; down 7.0 percent from FY 1999 to $9.0
billion); the Department of Commerce ($844 million, down 21.5 percent),
and the Department of Energy (DOE; $6.8 billion, down 2.9 percent).
Even the National Science Foundation (NSF), which received increases
in previous years, would see its R&D decline by 2.4 percent to
$2.6 billion. Among the large agencies, only the Department of Transportation
(DOT) among the large agencies would see an increase, to $656 million
(up 8.9 percent) because most of its funding is under separate budget
caps.
- In contrast to nondefense R&D, defense R&D
would receive favorable treatment in the House. The House's completed
appropriations for defense R&D in the Department of
Defense (DOD) and DOE would total $40.9 billion, a cut of $304
million or 0.7 percent below FY 1999, but this would be $2.4 billion
more than the Administration request. The Senate's appropriation
would be similar. The cuts would be concentrated in DOD's development
activities and would be partly offset by increases for basic and
applied research. The "Science and Technology" portion
of DOD's budget (encompassing basic and applied research plus
exploratory technology development) would increase by 5.6 percent
to $8.2 billion in the House plan, including $250 million for
congressionally designated medical research. The House would cut
DOE's defense R&D programs, while the Senate would provide
substantial increases.
- Basic research in agencies whose budgets the House has approved would
be up by 2.2 percent to $9.0 billion (see Table
2). There would be increases for basic research in DOD (up 3.1
percent), USDA (up 2.3 percent), and even NASA (up 7.1 percent because
of a planned shift toward basic research in key programs, despite
sharp cuts to applied research and development). But NSF, the second-largest
funding source for basic research and the leading source for most
non-life sciences disciplines, would see its basic research funding
decline by 0.3 percent to $2.3 billion. DOE basic research would stay
nearly level at $2.2 billion because of flat funding for basic research-oriented
programs such as High Energy Physics, Nuclear Physics, and Basic Energy
Sciences.
- As in FY 1999, the Clinton Administration presented a "21st
Century Research Fund" in the FY 2000 request to highlight
programs that it considers important to the nation's science and technology
enterprise. The Fund includes both R&D and non-R&D items while
excluding large parts of the nation's R&D portfolio (primarily
in development). Table 3 shows appropriations
for the Fund, which is intended to serve as one indicator of the health
of the federal research enterprise in the budget process. House appropriations
for the Fund are currently running 2.6 percent below FY 1999 and 6.1
percent or $1.3 billion below the Administration request. The House
would cut the Administration's request for almost every nondefense
R&D program. Only in DOD would the House exceed the Administration's
request, with significant increases for DOD basic and applied research.
- The Senate would be far more generous to R&D programs
than the House, but the Senate has not yet drafted the more difficult
appropriations for key R&D agencies such as NASA, NSF, and EPA.
The Senate was ahead of the House in completing its appropriations
as of the July 4 recess, but since then has drafted no new bills and
approved only one. Table 4 shows the
status of Senate appropriations for R&D so far. The Senate would
provide increases to nearly all nondefense R&D programs, and increases
for DOD's science and technology programs and DOE's defense R&D.
The Senate spending bills would place a higher priority on R&D
than the House. These totals have changed only slightly in the past
month (for details of Senate appropriations of R&D, please see
the July 6 R&D Funding Update).
House R&D Appropriations for Key Agencies
(Full information on House and Senate appropriations
for individual agencies can be found in the AAAS R&D Funding Updates
on the AAAS R&D Web site. The Web versions
of this document contain links from each agency listing to its R&D
Funding Update).
- The National Aeronautics and Space Administration
(NASA) budget would decline steeply in the House plan, from
$13.7 billion in FY 1999 to a proposed $12.7 billion, a cut of $1
billion or 7.4 percent. NASA's Science, Aeronautics and Technology
(SAT) account, which funds most of NASA's R&D, would decline 12.0
percent to $5.0 billion because of deep cuts to the Earth Science
and Space Science programs. The House would cancel several missions,
and dramatically reduce planning and development funds for future
missions in the Discovery and Explorer space science programs. The
House would also reduce supporting research and technology funds and
mission support funds, which could affect all NASA programs. The Senate
has not acted yet on the NASA budget.
- The House would cut the National Science Foundation
(NSF) budget by 1.7 percent to $3.6 billion. Most of the research
directorates would receive level funding; NSF had requested increases
between 2 to 5 percent. Cuts in facilities funding would result in
a 2.4 percent decline in total NSF R&D. The House would dramatically
scale back first-year funding for the Administration's proposed Information
Technology for the Twenty-First Century (IT2) initiative.
NSF requested $146 million for its role in IT2, but the
House would provide only $35 million. The new Biocomplexity initiative
would receive $35 million, less than the $50 million request. The
Senate has not acted yet on the NSF budget.
- The House would slash R&D in the Department
of Commerce by nearly one fourth. The House would provide
only $844 million for Commerce R&D, a reduction of $231 million
or 21.5 percent from FY 1999 funding levels. The House would eliminate
the Advanced Technology Program (ATP) and make cuts to most R&D
programs in the National Oceanic and Atmospheric Administration (NOAA).
Intramural research in the National Institute of Standards and Technology
(NIST) would remain at the FY 1999 level. The House would provide
sufficient funds for a two-track 2000 census, one with and one without
statistical sampling. The Senate, in sharp
contrast to the House, would provide generous increases to most Commerce
R&D programs, including ATP, for a 15.8 percent increase in total
Commerce R&D ($1.2 billion).
- In the wake of growing congressional anger over security breaches
and allegations of mismanagement at Department
of Energy (DOE) weapons labs, the
House would impose numerous restrictions on DOE activities, would
withhold $1 billion until DOE is restructured, and would also cut
funding for R&D programs. DOE's R&D would total $6.8 billion,
2.9 percent less than FY 1999. The Stockpile Stewardship program,
which funds most of the R&D performed at the weapons labs, would
receive $2.0 billion, a reduction of 6.0 percent after several years
of large increases. The House would withhold a quarter of these funds
until June 30 and would release them only if DOE creates an independent
or semi-independent agency for its nuclear weapons programs. When
Congress returns from its recess, it is likely to give final approval
to a defense authorization bill which would create a new semi-autonomous
National Nuclear Security Administration within DOE to manage the
nuclear programs. Although DOE Secretary Bill Richardson has recommended
a veto, the President may sign it into law. The DOE Science account,
which funds research on physics, fusion, and energy sciences, would
receive $2.6 billion, a cut of 2.8 percent. The House would deny the
requested $70 million for DOE's contribution to the IT2
initiative, and would also trim the request for the Spallation Neutron
Source from $214 million down to only $68 million. R&D on solar
and renewable energy technologies would fall 7.7 percent. The Senate
would provide increases for most DOE programs, without restrictions,
for a total R&D appropriation of $7.3 billion, an increase of
4.9 percent.
- The House would boost Department of Defense
(DOD) funding of basic and applied research above both the
President's request and the FY 1999 funding level. DOD's basic research
("6.1") would total $1.1 billion, 3.1 percent above FY 1999,
while applied research ("6.2") would total $3.4 billion,
more than 7 percent above the current year funding level. The House
would provide $60 million for DOD's role in the IT2 initiative,
down from the request of $100 million. The House would also create
a separate $250 million appropriation for medical R&D, including
$175 million for breast cancer research and $75 million for prostate
cancer research. The Senate would provide
similar increases for DOD "6.1", "6.2", and medical
research accounts.
- The U.S. Department of Agriculture (USDA)
would receive $1.6 billion for its R&D, a cut of 2.1 percent.
This would be far below the request of $1.85 billion because the House
would block a new, non-appropriated competitive research grants program
from spending a planned $120 million in FY 2000. (The Senate would
allow the release of $50 million.) An existing competitive grants
program, the National Research Initiative, would be cut 11.6 percent
from the FY 1999 level to $105 million, little more than half the
request. Congressionally designated Special Research Grants, however,
would receive $63 million, $8 million more than this year and $58
million more than USDA had requested. The Senate
would be more generous with an appropriation of $1.7 billion for total
USDA R&D (up 3.8 percent).
- The Environmental Protection Agency (EPA)
would receive $643 million for its R&D from the House, a decline
of 3.5 percent, but this would be the same amount as the agency request.
Most research programs would be funded at FY 1999 levels. The Senate
has not acted yet on the EPA budget.
- Although Congress faces the politically unpleasant task of making
deep cuts to total discretionary spending in order to stay under budget
caps, much of the Department of Transportation
(DOT) budget is exempt from the caps because of two new categories
of spending created last year for transportation programs. Spending
on these categories automatically increases with increased gas tax
revenues. As a result, the House would allow DOT's R&D to increase
8.9 percent to $656 million in FY 2000, with substantial increases
for highway, aviation, and transit R&D. The Senate
would provide similar amounts.
Breaking the Caps: The Budget Process So Far
When Congress returns in September from its recess,
it will struggle to draft the remaining appropriations bills,
but no one expects all of them to be signed into law by the October
1 start of FY 2000. Instead, the House and the Senate may run
into insurmountable problems in merely drafting the last bill,
the Labor-HHS bill, because its spending allocation has been repeatedly
raided to make the other bills easier to pass. The next-to-last
bill, the VA-HUD bill, may be impossible to pass in the House
because of its cuts to NSF and NASA and other programs, and the
Senate may delay drafting similar cuts in its version for as long
as possible. Of the other bills, it is likely that the President
will veto some of them and others will contain funding cuts so
severe that they will cause delays in House-Senate conferences.
Any appropriations bills not signed into law by October, which
could be a majority of them, will likely be bundled eventually
into an omnibus appropriations bill, and funding levels will be
hammered out in high-level negotiations between the Republican
leadership and Administration officials behind closed doors. Agencies
funded by the unfinished appropriations will receive temporary
funding (most likely at FY 1999 levels) through continuing resolutions
(temporary appropriations) until final appropriations levels are
decided.
The appropriations process has turned into a painful,
protracted budget-cutting struggle even in a time of budget surpluses
because steep cuts to discretionary programs are required to meet
the budget totals established in Congress' FY 2000 budget resolution,
which in turn were based on discretionary spending caps
enacted in 1997. Under the caps, total FY 2000 discretionary spending
must be cut more than $30 billion below the amount appropriated
for FY 1999.
In July, Congressional Republicans retreated from
their pledge to keep discretionary spending within the capped
limit of $538 billion, down from nearly $570 billion (including
spending designated as emergency, which is exempt from the caps)
in FY 1999 (see Figure 1), when it became clear that it would
be impossible to draft appropriations bills within that total.
Because of a bipartisan push to increase defense spending (which
accounts for half of all discretionary spending), complying with
the caps would have required unprecedented cuts in domestic programs.
Although the federal government recorded a unified budget surplus
($70 billion) for the first time in thirty years in FY 1998, an achievement
celebrated by both the President and Congress, this year both sides
have moved the goalposts toward achieving an on-budget surplus,
one that excludes Social Security (which is classified as off-budget).
Because the Social Security trust fund regularly runs a surplus of more
than $100 billion annually which it lends to the rest of the government,
the FY 1998 surplus was the result of a Social Security surplus masking
a deficit in the rest of the federal budget. But current projections
show that the FY 2000 unified surplus could be as high as $161 billion,
with a $14 billion on-budget surplus, allowing both the President and
the Congress to pledge to use Social Security surpluses exclusively
to pay down the national debt, thereby strengthening the government's
ability to pay future obligations.
Figure 1.
Republican leaders have now retreated from the cap by allowing billions
of dollars in emergency-designated spending above the caps, but only
up to the additional $14 billion of the projected on-budget surplus.
Any spending above $552 billion ($538 billion plus $14 billion) without
corresponding increases in revenues would cause the federal government
to dip into the Social Security surplus. Because even this additional
funding would leave domestic programs funded well below FY 1999 levels,
the Republican strategy is to wait for President Clinton to ask for
additional money out of the Social Security surplus to fund his domestic
priorities, and then criticize him for breaking his promise to "Save
Social Security First".
Current congressional plans, however, would already
exceed this new limit. Before the recess, the House voted for
$4.5 billion in emergency funds for the 2000 census, while the
Senate voted for $7.4 billion in emergency farm aid. Both appropriations
are likely to survive in conference. In addition, several appropriations
bills contain arcane budgetary maneuvers, which could result in
exceeding the cap by as much as $17 billion while technically
remaining within the limit, further draining the projected FY
2000 surplus. If Congress follows through on these plans in September,
Congress could end up spending as much as $30 billion above the
cap, and could tap the Social Security surplus even before the
President asks Congress to do so.
Already, then, Congress and the President are well
on its way to repeating the experience of last year. In the FY
1999 budget process, both sides went into budget negotiations
vowing to abide by the discretionary cap but ended up designating
$34 billion in spending as emergency to get around it, most of
it for spending that would usually be funded in regular appropriations.
The government is currently expected to record a $120 billion
unified surplus in FY 1999, made up of a $124 billion Social Security
surplus and a $4 billion on-budget deficit, meaning there would
have been an on-budget surplus this year if lawmakers had not
circumvented the caps.
It is looking increasingly likely that FY 2000 will
be a repeat of the same situation, with the federal government
spending the Social Security surplus as it has every year for
the past three decades, making a shambles of both the President's
and Republicans' plans to lock up Social Security surpluses. But
because the FY 2000 cap is so restrictive and proposed defense
increases are so large, even the many budgetary maneuvers have
not yielded enough money to keep domestic programs funded at the
current-year funding level. For the two largest domestic spending
bills, the VA-HUD and Labor-HHS bills, both the House and the
Senate are short nearly $20 billion of the amount needed just
to keep spending at the FY 1999 level. The President requested
increases for many of these programs, and Republicans would like
to give increases for several of them, including NIH. But faced
with this constraint, the House drafted a VA-HUD bill which had
to make the cuts to NSF, NASA, and EPA R&D programs outlined
in this report, and the House had to stop short of drafting a
Labor-HHS bill because it proved impossible to come up with even
minimally acceptable funding levels for its programs. Likewise,
the Senate has not drafted either of these bills, preferring to
wait in the hope that more funds may somehow be found by September
to ease the drastic cuts it would otherwise have to make.
President Clinton appears to have the upper hand
in the budget negotiations that are sure to be necessary when
the appropriations process finally implodes under the weight of
all the cuts. Not only can he veto appropriations bills that do
not provide what he regards as adequate levels of funding, but
he also claims the rhetorical high ground because he claims to
provide increases for defense spending and domestic programs in
FY 2000 while staying under the cap and protecting the Social
Security surplus. His February FY 2000 request exceeded the cap
by $18 billion (see Figure 1), but his budget plan offset these
increases through a number of tax increases and other financing
mechanisms. Although some of them have turned out to be political
dead-ends, such as a new tobacco tax and claiming portions of
states' tobacco settlements for the federal government, and the
Administration has made little effort to win approval for the
remainder (including a freeze in Medicare reimbursements), it
still claims that it is possible to increase domestic and defense
spending while living under the cap. The Administration has proposed
supplemental requests for the census and other programs since
February that have not been offset, but this has not yielded any
political dividends for Congress yet. Although Congressional leaders
hope to pressure the President to be the first to propose repealing
the discretionary caps and/or dipping into the proposed Social
Security surplus to fund his priority domestic programs, the President
seems determined to wait Congress out, which could cause the appropriations
process to drag on well into the fall.
The $1 Trillion Problem: Outlook for the Fall
The simple and most obvious solution to the appropriations
quandary would be to raise the FY 2000 and subsequent years' discretionary
caps to reflect the reality that discretionary spending cannot
be cut to the levels required by them. Both the President and
Congress, however, will resist this step for as long as possible,
not only because explicitly repealing the cap could be politically
disastrous but also because both sides are counting on the caps
restraining discretionary spending so that projected surpluses
can be used for other purposes.
The magic number in this fall's debates may turn out to be $996 billion, the
sum of on-budget surpluses between FY 2000 and FY 2009 projected by
the Congressional Budget Office last month if their forecast
of future economic conditions prevail, if no changes in tax laws
or entitlement programs are enacted, and most importantly if discretionary
spending is cut to capped levels from FY 2000 to 2002 and increases
only at the rate of inflation thereafter. These projected surpluses
are in addition to the nearly $2 trillion in Social Security surpluses
projected during this period, again if all the above conditions hold
true, which both Congress and the President would use exclusively to
pay down the national debt.
Figure 2.
As Figure 2 shows, both the President and Congress
have plans for the non-Social Security surpluses over the next
ten years that depend on restraining discretionary spending through
the caps. The Republican Party would use most of the $1 trillion
total surpluses for tax cuts, and plans to reduce discretionary
spending below even the capped levels in order to make room for
them. The President would add a prescription drug benefit to Medicare,
and would also provide tax cuts (though smaller ones than Congress).
The President would also add funds for discretionary spending
above the caps, but far less than the amounts required to keep
domestic spending even with inflation after providing the Administration's
planned increases for defense.
Figure 2 also shows why both sides are reluctant
to lift the caps. The "discretionary scenario" shows
that just keeping non-emergency discretionary spending at the
FY 1999 level after inflation, and allowing for $9 billion a year
in emergency spending (the average over the past decade except
during wartime) for unforeseen natural disasters and the like
would eat up nearly all of the projected on-budget surpluses.
Increasing defense spending, as both the President and Congress
have pledged to do, or allowing for emergency spending anywhere
near the $34 billion FY 1999 level would consume all of the projected
surpluses and then some, leaving no surplus funds for tax cuts,
Medicare, or even modest increases in domestic spending.
Although many in Washington had assumed that Congress and the President,
when faced with program cuts like the ones described in this report,
would work together in the fall to raise the caps and provide additional
funds for R&D and other programs, that outcome is no longer certain.
With minds already turning to the 2000 elections, both Congress and
the President are focused on big-picture items such as tax cuts, Medicare,
Social Security, and national defense, and additional domestic discretionary
spending could jeopardize their promises in these areas.
Because of how discretionary spending will affect projected surpluses,
the expected final appropriations negotiations are likely to be only
part of overall budget negotiations on tax cuts, Medicare, and Social
Security. The danger is that in the final budget negotiations, both
sides will push the current tactics to their limits, but they could
still fall short of the amounts necessary to provide increased or even
level funding for R&D and other domestic programs.
In such an environment, it is possible that only the most prominent
programs will receive high-level attention and funding increases, and
it will be easy for federal R&D to get lost in the shuffle unless
the science and engineering community makes its voices heard loudly
about the importance of federal support for R&D. With the temptation
for Congress and the President to provide only what is minimally necessary
to avoid political trouble over discretionary funding levels in order
to save money for their high priorities, the House-proposed cuts for
R&D could be close to the final funding levels unless significant
political pressure is brought to bear on Congress and the President.
R&D advocates cannot count on the Senate-proposed increases to prevail,
unless there is sufficient political pressure on Congress and the President
to agree on the more favorable Senate funding levels, or at least on
a compromise closer to the Senate levels than the House ones.
The only favorable news is that because of the torturous
negotiations that lie ahead, the proposed cuts to R&D programs
will not become law any time soon and are only a starting point.
With budget debates likely to drag on well past the October 1
start of FY 2000, there is still time for the science and engineering
community to influence the final outcome.
(Further AAAS R&D Funding Updates on the AAAS
R&D Web site will provide up-to-date information on R&D
in FY 2000 appropriations.)
Go to Tables
- August 17, 1999
AAAS R&D Budget and Policy Program
American Association for the Advancement of Science
1200 New York Ave, NW
Washington, DC 20005
(202) 326-6607
science_policy@aaas.org
http://www.aaas.org/spp/R&D
