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Tax Deal Leaves U.S. Science Agencies and Institutions in Funding Limbo

The U.S. scientific enterprise has been spared the devastating effects of an automatic budget sequestration—for now—thanks to policymakers’ last-minute passage of the American Taxpayer Relief Act of 2012.

But across-the-board budget cuts were only postponed until 1 March. Meanwhile, said Matt Hourihan, director of the AAAS R&D Budget and Policy Program, “the weight of uncertainty remains in place for science agencies and research institutions that rely on federal funding, especially given that full-year base appropriations for fiscal year 2013 remain to be determined by Congress.”

Such uncertainty could mean that science agencies must squeeze still-sizeable budget cuts into a shortened time period this summer, Hourihan added. The Office of Management and Budget (OMB) had previously issued guidance for agencies struggling to plan for sequestration. “That planning will now apparently continue beyond January,” Hourihan said of the 20 December OMB memorandum.

The American Taxpayer Relief Act of 2012, passed on New Year’s Day 2013 by an 89-8 vote in the Senate and a 257-167 vote in the House of Representatives, was intended to prevent the country from going over a fiscal cliff, potentially resulting in recession. The bill will save more than $100 billion in interest payments, according to the OMB, while raising about $620 billion in new revenues.

But the bill only delayed and did not directly address the question of automatic budget sequestration, Hourihan noted. The bill did trim by $24 billion the amount of money to be sequestered in FY 2013, reducing this year’s sequestration to $85 billion from the original $109 billion. Future cuts would remain at $109 billion per year thereafter.

Congress agreed, in exchange for this marginal reduction, to cut discretionary spending by $12 billion over the next two years. “These cuts are to be distributed evenly between defense and nondefense accounts, and would effectively keep base spending flat at 2012 levels, whereas the current Continuing Resolution had provided a minor increase,” Hourihan noted. “The advantage is that the [Obama] administration and Congress will have discretion in allocating this new round of cuts, rather than the across-the-board approach taken by the sequester, which leaves open the possibility that they may prioritize science and innovation funding.”

He pointed out, however, that the nation’s longer-term financial health will demand difficult choices about the debt ceiling and spending priorities. The FY 2014 budget proposal is due in about a month. “In the big picture, it remains to be seen where science funding fits in,” Hourihan said.

Experts at a 14 November briefing on Capitol Hill had warned that automatic, draconian budget cuts under sequestration could slash the U.S. R&D investment by 8.4%—some $58 billion—over five years, resulting in laboratory closures and layoffs, and jeopardizing critical areas of research.


View comments from researchers concerned about the impact of sequestration budget cuts on U.S. research.

View resources collected by the AAAS Office of Government Relations on the possible budget sequestration.

Read updated budget analyses at the AAAS R&D Budget and Policy Program page.