Congressional Budget Deal Would Raise Spending Caps

If lawmakers rally votes to avoid government shutdown, deal ends sequestration for two years, opens the door for science and technology investment

With the fiscal year more than a third finished, Congress may have finally reached a deal to raise the spending caps for two years — and it's a big raise indeed. Under the terms of the Bipartisan Budget Act of 2018, which was unveiled late Wednesday in the Senate, the discretionary caps are to be ratcheted up by $143 billion in FY 2018, good for a 12.9 percent increase above last year. The caps would also be raised by $153 billion in FY 2019. These increases are far larger than those secured in the last budget deal two years ago.

The only hurdle, of course, is to actually pass it into law, preferably by the end of the day to avoid a shutdown. [February 9 Update: Congress didn't make it before midnight, but the deal ultimately did pass early this morning. Congress now has until March 23 to craft a final set of appropriations for science agencies and others. The deal also raises a question about the relevance of the FY 2019 budget request from the White House, due out on Monday, and which may not account for anything like the cap deal just reached. - MH]

If Congress makes this deal work, the practical effect will be a large spending increase in FY 2018, coupled with a more modest year-over-year increase in 2019 (see table below). This will likely translate into major increases for at least some science and technology programs this year, followed by more modest changes next year.

The deal was ultimately necessary to avoid a small but unpopular spending cut for both defense and nondefense programs in FY 2018, as had been required by law.

Democrats had for months insisted on equal increases for defense and nondefense spending, but in the end did not secure such parity. Instead, as can be seen in the above table, defense spending will increase by about $34 billion more over the two years covered by the deal.

Even so, the increase for nondefense discretionary spending — a category that covers just about every research agency including NIH, NASA, and the National Science Foundation — is the largest since the original caps were first put in place in 2011 through the Budget Control Act. In fact, both defense and nondefense spending will now be lifted far above what the Budget Control Act ever allowed even before sequestration kicked in, underscoring the return of Congressional preferences for spending over fiscal discipline (see graph showing nondefense spending below, and click here to see defense spending).

While the deal only covers the next two years, by law the caps remain in place for two more years after that, until 2021. While this could set federal agencies up for a sharp spending drop in FY 2020, when the new deal would expire, a more likely scenario is Congress will come to the rescue once again, as they have to varying degrees every year since the caps were first put in place.

What Does It Mean For Science and Technology?

Raising the spending caps does not automatically mean science agencies will now get a spending increase: Congress still needs to agree on a catch-all omnibus appropriations bill that reflects this new higher spending level, and lays out funding for individual agencies and programs. But there are reasons to be optimistic.

As explained elsewhere, the size of the discretionary budget is a big determinant of the science budget, because it determines how much Congress is able to divvy up among various agencies and priorities each year. Movements in science agency budgets tend to reflect what's happening with the overall discretionary budget. In fact, since discretionary spending began declining in 2011, many of the biggest research agencies have fared somewhat ahead of the overall spending curve.

The last time Congress substantially raised the caps was in 2015, for the 2016 fiscal year, when they agreed to a 5 percent increase, and then achieved an omnibus that added some funding to nearly every agency's budget (see graph below). This new deal, of course, is a much larger cap increase.

The numbers this year have been very mixed so far for science programs, but that was with appropriators working with very limited spending caps. If Congress goes with the new deal, it gives them much more room spending-wise, and a healthy portion of that will likely be directed to science and technology simply based on past practice and expectations, especially for some more popular agencies like NIH or NASA.

Issues to Resolve

The cap deal would still leave some big questions for the chambers to resolve during negotiations over final spending appropriations, beyond simply "how much do we give." These include:

  • Survival of ARPA-E. The White House has proposed eliminating ARPA-E, a relatively young, relatively small innovation agency in the Department of Energy. While the Senate includes some of the biggest supporters of ARPA-E in Congress, the House has recommended going along with the Administration. Extra cap room could be enough to ensure ARPA-E's survival.
  • National Science Foundation disciplines. Once again, there's the question of how to allocate funding among NSF disciplines. During floor proceedings, Rep. Lamar Smith (R-TX) offered a successful amendment to boost physical and biological sciences at the expense of other NSF research. The Senate may or may not go be willing to go along with this. Appropriators also differed over funding for new NSF research vessels: the Senate proposed building three, while the House recommended none.
  • The perennial debate between NASA earth science and planetary science funding levels will have to be resolved once again. As in past years, the House targeted NASA’s Earth Science program for a large 11.3 percent cut that would offset a proposed boost for Planetary Science, while Senate appropriators took the opposite approach. The cap deal might mean everybody gets to win a little. Elsewhere at NASA, the Senate flat-funded the agency’s RESTORE-L satellite servicing mission, while the House cut its budget by over half, and the Administration sought its outright elimination.
  • NOAA climate research was targeted for a large 19 percent cut by the House and Administration, versus flat funding recommended by Senate appropriators. NOAA’s Polar Follow On (PFO) mission was also subject to deep cuts by the House and Administration, while the Senate instead recommended a boost for PFO. Funding for new NOAA research vessels was also denied by the House, whereas the Senate bill adopts the Administration’s recommended $75 million for construction of a second vessel Class A.
  • U.S. Geological Survey climate R&D funding was slated for elimination by the House and Administration, but preserved in the Senate’s Interior bill. Senate appropriators also rejected the House and Administration’s request to halve the number of Interior’s Climate Science Centers.
  • Lastly, there is major divergence between the chambers on Fusion Energy Science within the Department of Energy. House appropriators would give both domestic fusion research and the international ITER fusion project a modest boost, while Senate appropriators would zero out funding for ITER and cut domestic fusion research by 30 percent.

Hurricane Relief for Science Agencies Included

While most funding decisions would be left to make, the cap deal does provide some actual funding in the form of hurricane recovery dollars, which aren't subject to the caps. Specifically:

  • NOAA would receive a total of $120.9 million for hurricane research efforts including mapping and charting, and hurricane intensity and flood forecasting. NOAA would receive an additional $50 million for research weather supercomputing infrastructure and for improvement of satellite ground services used in hurricane intensity and track prediction.
  • NASA would see a total $81.3 million for repairs at facilities damaged by hurricanes in 2017.
  • For the U.S. Geological Survey, the legislation provides $42.2 million to fund response efforts to recent wildfires.
  • The Department of Agriculture would receive $22 million for its Agricultural Research Service facilities affected by the hurricanes.
  • NSF would receive $16.3 million to repair its radio observatory facilities.
  • DOE would receive $13 million for grid-related assistance.