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Budget Deal Means Research Programs Likely to Dodge Cuts, See Boosts – And Then…?

The two-year deal sets up science agencies for moderate funding increases in FY 2020, followed by a tougher year in FY 2021, after which the spending caps expire.

Congressional negotiators and the White House have at last crafted a budget and debt ceiling deal that, if adopted, will let science agencies avoid the sharp funding cuts threatened by declining budget caps, which were once embraced by the White House in its now-discarded spring budget.

Instead, research programs should be set up for moderate funding increases in the 2020 fiscal year – though things will be more constrained the following year. [Update: the deal was adopted by the Senate August 1 after House passage the week prior, and the President signed it into law August 2]

As seen in the table below, current law had required about a $125 billion or 10 percent drop in the discretionary budget, across defense and nondefense programs. This matters because just about all R&D spending is contained in the discretionary budget, and tends to follow its ups and downs.

 

To save research, military, and many other programs from these cuts, the budget deal raises the caps by about $172 billion combined in FY 2020 and another $152 billion in FY 2021. The oft-adjusted spending caps, which were enacted into law nearly eight years ago, are set to expire after FY 2021.

For nondefense spending – which includes NIH, NASA, the National Science Foundation, and most other research programs – these cap changes amount to a 4.5 percent overall increase in FY 2020, including an extra $2.5 billion bump for Census funding. FY 2021 spending would be nearly flat, with just a 0.4 percent increase from the new FY 2020 level, though far above the White House’s original budget (see below). The general picture is similar for defense spending, which includes the Defense Department research enterprise and the National Nuclear Security Administration.

 

In its broad strokes, the deal is somewhat similar to the two-year 2015 cap deal, which also provided a more generous cap increase in its first year while holding spending roughly flat in its second.

On the other hand, most of the current deal is not paid for, meaning it is largely deficit spending. The Congressional Budget Office has pointed out that interest payments on the debt will likely exceed the size of the entire nondefense discretionary budget in the next decade, and increasing debt costs may make it harder for Congress to invest in other priorities in the long run.

Legislators will vote on the deal over the next week amid a big push for support.

Appropriations Inbound?

Even if the deal becomes law – and all parties appear to be supportive – that doesn’t quite close the book on FY 2020 funding. The next step is to pass actual appropriations to avoid a shutdown, in the form of twelve individual spending bills. But legislators have limited time to do it, with the House breaking for August recess at the end of this week, and the Senate breaking after next week. The new fiscal year starts October 1.

The House has already adopted ten of its twelve bills, with the Legislative Branch and Homeland Security bills still outstanding. As previously reported, House legislators have been supportive of research program funding this year with most large agencies receiving increases of at least 4-5 percent, and with noteworthy jumps for energy and agricultural R&D, among many other areas. See the FY 2020 AAAS appropriations dashboard for more detail.

But the agreed-upon nondefense numbers are somewhat less than the House had sought, as seen in the graph above, which means at least some agencies will have to come down.

Of course, the Senate gets a say as well. Senate appropriators have not yet begun marking up their own FY 2020 legislation, which probably will happen in September. This timetable means Congress may have to adopt a continuing resolution to serve as a stopgap and avoid a shutdown, giving time to the House and Senate to negotiate final appropriations. Appropriators in both chambers have lately shared priorities on health research, energy R&D, and other areas.

Beyond This Fall

Even if appropriators can secure moderate increases for science agencies this year, next year’s funding debate will likely be tougher. Factoring in this year’s one-time Census funding, appropriators will only have an additional $5 billion to divvy up among nondefense programs and another $5 billion for defense, amounting to a less than one percent increase for each. With such tight funding flexibility, there may be an uphill battle to convince appropriators to keep research budgets in pace with inflation and avoid an erosion in purchasing power for some research programs. The fact that next year is an election year may also intensify the competition.

But there may also be some reason for optimism. The last time Congress was in this position was during FY 2017 appropriations. In spite of the tight situation, Congress still managed to adopt targeted increases above inflation for some research programs, including those funded by the Pentagon, NIH, NOAA, the U.S. Geological Survey, and others – just weeks after President Trump issued his first historically tough science budget. But increases weren't universal. Select agency budgets are displayed in the graph below.

 

After next year, the spending caps finally expire, after many years and much gnashing of teeth. That means in 2021 we may see a return to practical prominence of the annual budget resolution, which is intended to provide Congress with a negotiated budget framework, but which has largely taken a backseat as one of its major functions – to establish discretionary spending levels – has been effectively fulfilled by the spending caps.

2021 will also see the return of the debt ceiling, which is now suspended until that July under the deal. The debt ceiling, which limits the amount of borrowing the U.S. government can pursue, has been used in recent years as a political tool to force budget showdowns, though cooler heads have lately seemed to prevail.