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House, Senate Budgets Adopt Sequester Status Quo, For Now

Republicans in both chambers would trim nondefense spending in future years, but at the moment they're standing pat on sequestration this year.

This week the House and Senate budget committees released their draft budgets for the FY 2016 appropriations cycle. Taken at face value, both budgets shoot to end deficits and balance budgets in the long run: the House budget by FY 2024, the Senate budget by FY 2025 (though there are some real questions about the validity of certain underlying assumptions). Unsurprisingly, neither budget turns to tax revenues as a deficit solution. Instead, both budgets tackle deficits through spending cuts, with $5.5 trillion proposed cuts in the House and $5.1 trillion in the Senate. The bulk of these cuts are achieved via federal healthcare entitlements, which are otherwise expected to continue growing in the years ahead, though cuts in other areas are proposed as well. We'll not tackle the full range of proposals here; visit the House and Senate budget committees to see the plans, and the Committee for a Responsible Federal Budget also has broad recaps of both.

Of greatest importance to science and technology funding are the targets for discretionary spending. Just about all federal R&D is funded via the discretionary budget, and its share doesn't tend to change much in the long run. So, the size of the discretionary budget is not a bad predictor (though not perfect) of what will happen to R&D. See this budget process overview for more on how the budget resolutions fit into the overall process.



When Congress passed and the President signed the Budget Control Act into law in August 2011, it was supposed to cut the overall discretionary budget by roughly $813 billion below the pre-sequestration baseline through FY 2021 in nominal dollars, and by roughly $279 billion in just the first three years, according to early Congressional Budget Office estimates. But fortunately, this hasn't quite happened. In subsequent legislation, Congress has partially raised the discretionary spending caps every year they've been in effect, reducing the cuts by about one-third overall (see Figure 1). This extra fiscal room has definitely effected the budgets for science agencies and others.

But Congress hasn't yet modified the caps for FY 2016 and beyond, which means we remain at the sequester-level baseline. The President's budget does propose lifting the discretionary spending caps in a big way in FY 2016, by about 7.2 percent above FY 2015. Discretionary spending would remain elevated thereafter, as shown in Figure 1.



Figure 2 reproduces Figure 1, but with the House and Senate discretionary spending totals added in.

As one can see, Republicans in both committees would like to trim discretionary spending through FY 2021: the House by about $115 billion in nominal dollars relative to current law, the Senate by about $73 billion. But future years don't matter all that much: only the FY 2016 numbers are binding for appropriators now, and those simply maintain the current status quo across-the-board. The House Budget Committee attempted a similar tack in last year's budget, saving all cuts and adjustments for future years while maintaining the status quo in the current year. This lets the budget resolutions do their job as political documents, without requiring the difficult votes to actually enact them.

As expected, the resolutions diverge on defense and nondefense spending.



Figure three shows defense spending totals. The House budget keeps the status quo in the current year, while ratcheting it up in the out-years. However, the House budget also ratchets up war funding in the current year, to $96 billion, compared to the President's request of $58 billion (not shown in Figure 3). This effectively turns the war budget, which is exempt from the Budget Control Act caps, into a back-door funding stream. Note the combined base plus war funding proposal in the House budget is virtually the same as the President's combined proposal. Also note the war budget typically contains relatively little R&D spending.

But the House war funding proposal has also been met with immediate rejection from their Senate counterparts, who included in their own budget a provision to keep FY 2016 war funding no higher than the requested $58 billion level. The Senate budget also includes a provisional "reserve fund" in the hope that an increase in base defense spending (perhaps in conjunction with a nondefense spending increase) can be negotiated later this year. [3/20 update: during the Senate committee markup, an amendment was added that now brings war funding in the Senate resolution up to $96 billion.]



The House committee would slash nondefense discretionary spending by $344 billion below sequester levels through FY 2021, while the Senate committee would cut such spending by "only" $73 billion below sequester levels over that time. This is vastly different from the President's approach. If enacted, these reductions would undoubtedly have ripple effects on science agency budgets. But again, neither budget proposes these cuts in FY 2016, which means that unless something changes, appropriators will be operating under the sequestration-level spending caps in FY 2016.

To that end, however, the reserve fund included by the Senate in their resolution does cover both defense and nondefense discretionary spending. This keeps the door open for a cap-raising deal later, provided that deal is deficit-neutral. It might seem odd that a modest deal to raise discretionary spending may still be in the cards given the proposed cuts described above, but such is life in the realm of fiscal politics.

The odds of such a deal, however, and the ultimate congressional budget resolution this year (if any) depend on the outcome of the current internal GOP budget battle. Both budget resolutions are scheduled for markup in their respective committees this week and, pending successful committee votes, will be up for floor votes in the near future.