The House Budget Resolution and R&D Funding

Today, House Budget Committee Chair Paul Ryan (R-WI) unveiled the committee's proposed budget resolution for FY 2015 (see also coverage from USA Today). Typically, the budget resolution provides an overall spending framework for appropriations, in the form of a binding discretionary spending target for Congress. In this case, Congress has actually already agreed upon such a target for FY 2015 as part of the December budget deal, and the House resolution actually adheres to this target. Further, Senate Democrats have already said they don't intend to pass a budget resolution for their own chamber this year. This all means the House proposal wouldn't change much regarding FY 2015 appropriations — assuming it's approved by the full House, which isn't a done deal. It's thus widely seen more as a campaign document showcasing one policy vision for the country, with its focus on deficit reduction and cuts to mandatory spending (see this post from the Committee for a Responsible Federal Budget for a breakdown). It also seeks to cut deficits without raising tax revenue.

However, beginning in FY 2016, when spending is scheduled to return to sequestration levels, the House budget recommends some significant changes to the discretionary budget, which would in turn affect federal R&D support. Similar to prior years' House resolutions, the House budget would reduce discretionary spending by over $300 billion below the current sequestration baseline through 2024. Within that lower spending baseline, it would repeal the post-sequestration cuts scheduled for the Department of Defense and the National Nuclear Security Administration, thus leaving nondefense spending roughly $790 billion below the current baseline. This shift would likely mean acute funding cuts for many civilian science and engineering agencies, to rival the cuts under sequestration.

First, the basics (the numbers in the below section are in nominal dollars):

• As stated above, the budget resolution adopts the previously-agreed spending limits in FY 2015. The resolution also adopts the current overall spending limit for FY 2016, but would shift $43 billion from nondefense to defense, meaning an 8.6 percent cut in nondefense discretionary spending in FY 2016 before inflation. Beginning in FY 2017, the overall discretionary spending limit would begin declining, while the gap between defense and nondefense spending would continue to widen.
• By contrast, both the President's request and the current statutory baseline would keep defense and nondefense spending roughly in step, with the nondefense discretionary budget about six percent smaller than the defense budget each year. However, compared against the current baseline, the President proposes an increase in total discretionary spending over the next decade, with the largest increases coming in the next few years and smaller increases towards the end of the decade. This means similar shares of defense versus nondefense spending, but more of both in the President's request.
• Given these differences, discretionary spending in the House resolution would end up roughly $303 billion below the current baseline, and $679 billion below the President's request (depending on how one calculates the baseline in FY 2022 and beyond, when the spending caps under the Budget Control Act expire).
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  Because of the changes to the discretionary budget described above, the House budget would increase defense spending by about $486 billion above the current baseline and $274 billion above the request, cumulatively through 2024. It would leave cumulative nondefense spending about $790 billion below the current baseline and $954 billion below the President's request.

The resolution does not establish funding targets for individual R&D agencies, but since R&D doesn't tend to change much as a share of the discretionary budget, one can estimate what the above changes might mean for R&D. The below estimates assume R&D funding will maintain the share of discretionary spending as in FY 2014. The numbers in this section (and all graphs on this page) are in constant 2014 dollars.

• Total R&D under the House resolution might end up roughly $34 billion, or 2.5 percent, below the current baseline and $70 billion, or 5.1 percent, below the President's request through 2024 (top right chart).
• The divergence becomes more apparent when one separates defense and nondefense R&D. Under the House proposal, cumulative defense R&D might end up $59 billion, or 8.4 percent, above the current baseline and $42 billion, or 5.8 percent, above the President's request (middle right chart).
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  On the other side of the ledger, cumulative nondefense R&D under the House resolution might end up $92 billion, or 14.3 percent, below the current baseline and $112 billion, or 16.9 percent, below the President's request (bottom right).

The Committee's summary (PDF) also contains some agency recommendations for FY 2015 by budget function, so be sure to give those a look.

The caveat to keep in mind with the above is that, again, these projections assume R&D maintains its share of the overall discretionary budget. This actually is a fairly reasonable assumption, as the ratio of R&D to other discretionary spending has fluctuated only within a relatively small band for the past few decades. Still, it's possible R&D could get ahead of the overall discretionary curve, which is what happened to some extent in FY 2014. Of course, it's also possible R&D could slip below the curve, which would make these projections overly optimistic.

The upshot is that none of this should matter much for the time being, given the split control of Congress. It's also not clear how much support there really is for these kinds of changes to discretionary spending even within the House majority, as appropriators have had a hard enough time dealing with the current caps as they are. And after all, it was only a few months ago that Congress voted to increase the discretionary budget. Still, the vastly different approaches represented in these proposals are worth watching.