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Recent Gains in Federal R&D Funding May Be Difficult to Match for 2017, AAAS Analysis Finds

Major science agencies have been recovering from the automatic budget cuts known as “sequestration” first imposed in the 2013 fiscal year, but their recent gains may be difficult to match for the upcoming fiscal year, according to a new analysis from the AAAS R&D Budget and Policy Program.

Last year’s bipartisan budget deal put the brakes on discretionary spending for the 2017 fiscal year. The Obama administration has proposed an unusual end run around the limits, with a mix of traditional discretionary outlays for R&D coupled with new “mandatory spending” requests that would require separate legislative approval. The administration’s approach, which includes a variety of cuts and increases in the agencies’ base budgets, faces an uncertain prospect in the Republican-controlled Congress, however.

The budget request follows relatively positive outcomes for two out of the past three catch-all omnibus spending bills. Those left most major research and development agencies at or near their pre-sequestration spending levels, even after adjusting for inflation, according to the AAAS analysis by Hourihan and David Parkes.

The AAAS analysis is the first section of a longer report to be posted online later this month and discussed at the 2016 AAAS Forum on Science & Technology Policy (14-15 April) in Washington, D.C. Hourihan also will discuss the analysis in public luncheon briefings on House and Senate sides of the Capitol on March 23.

The Obama administration’s science budget request for FY 2017 looks very different depending on whether the new mandatory proposals are included or excluded, Hourihan and Parkes find. The base budget – including only discretionary spending and previously-approved mandatory spending – would increase overall R&D to $148.8 billion, an increase of 1.4 percent above FY 2016 levels. That is less than the rate of inflation. But with the additional R&D requested through mandatory spending, the total would reach $152.9 billion, a 4.2 percent increase. 

Appropriators are wary of mandatory spending, however, because it takes the power to allocate federal dollars out of their hands. In addition, any new mandatory spending must be deficit-neutral and offset by revenue increases or spending cuts elsewhere.

If the president’s proposed budget is considered without the mandatory spending requests, Hourihan and Parkes write, fiscal gains since 2013 would be partially rolled back for agencies such as NASA, the National Institutes of Health (NIH) and the U.S. Department of Agriculture (USDA). The base budget also would drop total federal R&D to 0.75 percent of the gross domestic product (GDP), the lowest point since the era of the Space Race, they say.

The full AAAS analysis, due later this month, will look in detail at the president’s budget request, which sets the stage for the annual budget debate on Capitol Hill.

While House Speaker Paul Ryan (R-Wis.) has said he would like to see all appropriations passed through the House by July, he and his colleagues have yet to come to a consensus on a budget resolution and Republicans on the Senate Budget Committee have said they will delay consideration of a budget resolution this month. Hourihan and Parkes question whether Congress will be able to get back to a productive timetable for budget matters.

“With continued conflict among the Congressional majority, the threat of ‘poison pill’ policy riders, and the looming election,” they write, “it’s not clear this Congress will have any more luck than prior Congresses in returning to regular order – that magical place in which budget resolutions and appropriations bills are drafted and approved on time, before the end of the fiscal year, and with minimal fuss.”

Since Congress passed legislation last year to establish overall spending levels for FY 2017, the appropriations committees can move forward even if a full congressional budget resolution is not achieved. Appropriators have boosted funding for favored science agencies such as NIH in the past, but they are faced with the funding constraints laid out in last year’s agreement.

According to Hourihan and Parkes, the Obama budget does abide by the agreed-upon discretionary cap of $1.07 trillion in FY 2017 as required by the 2015 budget agreement, but adds on top of that base budget the unusual package of proposals to be financed through new mandatory spending, which would not be subject to the caps on discretionary spending.

“Mandatory spending – also known as direct spending – refers to any spending written into, and required by, laws other than appropriations bills,” the AAAS analysis explains. “Getting a mandatory funding stream established requires new legislation, and that legislation would have to come from the authorizing committees rather than the appropriations committees.”

As an example, the president’s FY 2017 proposal for an increase in competitive agricultural research would be achieved partly through the regular Department of Agriculture appropriations bill and partly through hypothetical new legislation to establish the mandatory component, they write.

In addition to raising hackles among appropriators, such mandatory spending proposals also are subject to PAYGO rules requiring any new spending to be offset by revenue increases or spending cuts elsewhere in the budget. The administration has identified one new revenue stream that would levy a fee on oil companies to pay for infrastructure investments. Part of this plan would include R&D funding for the Departments of Transportation and Energy, and for NASA, accounting for only $800 million of the $4.2 billion in proposed mandatory R&D spending.

Depending on how the budget request’s numbers are parsed, the outcomes can be quite different by agency and funding character. Looking only at the base budget (which excludes any mandatory spending proposals), basic research would decline by 2.3 percent while applied research would rise by 2.8 percent, the AAAS analysis finds. Applied energy research, in particular, would be a clear winner.

If the mandatory spending proposals are included, the winners include cancer research, grants for competitive agricultural research, and National Science Foundation research. But if the president’s request is considered without the new mandatory spending, science and technology budgets for NIH, NASA, USDA, and the Department of Defense “would all drop markedly,” Hourihan and Parkes conclude, “erasing many of the gains since FY 2013.”


Earl Lane