Appropriators have yet to announce plans for writing the massive Labor-HHS-Education spending bill, which is always among the last and most controversial funding measures to move.  The bill faces an additional challenge this year with the pending Supreme Court ruling on health care reform due in June.  House appropriators might wait until after the ruling to move the bill.  Meanwhile in the Senate expects the court will uphold the law and plans to write its spending bill assuming health reform will remain intact.

Tuesday

• The Senate Appropriations Committee will hold subcommittee markups of its Commerce, Justice, Science FY 2013 spending bill and its Transportation, Housing and Urban Development FY 2013 spending bill.
• The Senate Armed Services Committee will hold a subcommittee hearing on the health and status of the Department of Defense science and technology laboratories and enterprise.

Wednesday

• The House Appropriations Energy and Water Subcommittee will mark up its Energy and Water Development FY 2013 spending bill.
• The House Energy and Commerce Committee will hold subcommittee hearings on budget and spending concerns at the DOE and FDA User Fees 2012: How Innovation Helps Patients and Jobs.
• The House Science, Space, and Technology Committee will hold subcommittee hearings on NSF Major Multi-User Research Facilities Management and Growing the Wireless Economy through Innovation.

Thursday

• The House Homeland Security Committee will hold a subcommittee hearing on the Department of Homeland Security (DHS) and DOE National Labs: Finding Efficiencies and Optimizing Outputs in Homeland Security Research and Development.
• The House Science, Space, and Technology Committee will hold a subcommittee hearing on Impact of Tax Policies on the Commercial Application of Renewable Energy Technology.
• The American Chemical Society will hold a Capitol Hill briefing on Cybersecurity and Smart Infrastructure: Ensuring Resilience and Deterrence.

                          

Funding for the National Institutes of Health (NIH) would be essentially frozen at the FY12 level.  The science portfolio at NASA would be cut by more than three percent.  

For student aid, the Administration would fully fund the maximum Pell Grant level of $5,635 and extend the 3.4 percent interest rate on subsidized Stafford loans, which otherwise would rise to 6.8 percent on July 1, 2012.  Additionally, the Administration would shift campus-based aid programs, such as Perkins Loans, toward institutions that “keep their tuition and tuition increases low,” enroll relatively high numbers of Pell-eligible students, and provide “good value.”  No additional details are available on exactly how the Administration would implement this.

The FY13 budget also contains several tax proposals of interest to research universities.  These include making the American Opportunity Tax Credit permanent and limiting the value of certain tax expenditures, including the deduction for charitable contributions for individual taxpayers, to 28 percent.  The budget would also expand the Build America Bonds program by making the program permanent, expanding eligibility to both government entities and nonprofit institutions—including both public and private universities—and expanding the allowed uses of the bonds.

                          

One of the most sensitive issues in the final negotiations was the question of how much Medicare should compensate hospitals for the bad debt accumulated when patients don’t provide their required co-pays for care (uncompensated care). Medicare currently compensates hospitals for 70 percent of their loss and the House proposed to cut this to 55 percent — saving more than $10 billion over 10 years. But this puts a heavy burden on hospitals that provide a lot of uncompensated care – like Harborview.  The final compromise lowers the bad debt cut to about $7 billion, which is better than the original proposal from a couple of months ago but it will still be a blow to hospitals with low-income patients.

                          

The President will also request $4 trillion in deficit reduction over the next decade in his FY13 budget, but his proposal to pay for it with revenue increases and spending cuts — already rejected by the special deficit reduction panel last fall — will make it tough to sell to Congress. Half of the deficit reduction would come by increasing revenues, including raising $1 trillion over 10 years by increasing taxes on families earning more than $250,000. Obama’s proposal would cut the deficit to $901 billion by the end of FY13, or about 5.5 percent of the gross domestic product. All told, his proposal would reduce accumulated debt by $3 trillion in addition to the $1 trillion in savings over 10 years already put in place by the BCA. If approved, Obama’s plan would void the automatic across-the-board cuts— known as a sequester— due to kick in January 2013.

Once the budget request is delivered to the Hill, both the House and Senate canCures Acceleration Network begin the annual appropriations process. The usual first step in that process is for both chambers to approve a budget resolution, which gives appropriations committees their top-line numbers on how much to appropriate. This year, however, Senate Majority Leader Harry Reid (D-NV) has announced that he won’t move a budget resolution to the floor, even if the Senate Budget Committee approves one, since the Budget Control Act (BCA) approved last August already specified the top-line number for FY13. In the House, Budget Committee Chairman Paul Ryan (R-WI) will move a budget resolution through his committee, which will likely specify a top-line number even less than what was agreed to in the BCA.

                          

“We conclude the plaintiffs are unlikely to prevail because Dickey-Wicker is ambiguous and the NIH seems reasonably to have concluded that, although Dickey-Wicker bars funding for the destructive act of deriving an ESC [embryonic stem cell] from an embryo, it does not prohibit funding a research project in which an ESC will be used. We therefore vacate the preliminary injunction.”

As you might recall, last August, U.S. District Court Judge Royce Lamberth had ruled in favor of two scientist plaintiffs and issued a preliminary injunction that briefly blocked federally funded embryonic stem cell research on the grounds that NIH’s 2009 hESC guidelines violated Dickey-Wicker. Today’s decision vacating that injunction can be viewed here.   There is still the possibility of an appeal. 

Also in the news today, Dr. Roger Beachy, the current Director of the National Institute of Food and Agriculture (NIFA) at USDA, will resign as Director effective May 20, 2011 to spend more time with his family. In the interim, Dr. Chavonda Jacobs-Young will be named as Acting Director of NIFA.

                          

National Institutes of Health- $31.8 billion, an increase of 3.3% over the FY10 level of $30.8 billion

White House/Office of Management and Budget HHS FY12 Budget Summary

National Science Foundation- $7.77 billion, an increase of 13% over the FY10 level of $6.87 billion –keeping the agency on track for a 10-year (FY08-FY17) doubling that is authorized in last year’s America COMPETES Act

NSF FY12 Budget Materials

Department of Energy, Office of Science- $5.4 billion, an increase of 10.2% over the FY10 level of $4.9 billion –keeping the agency on track for a 10-year (FY08-FY17) doubling that is authorized in last year’s America COMPETES Act. $550 million is also included for the Advanced Research Projects Agency-Energy (ARPA-E) to continue support for the promising early-stage research projects that could deliver game-changing clean energy technologies.

DoE FY12 Budget Materials

Department of Defense, Science and Technology- $12.2 billion for science and technology programs, which includes a 2% real growth in basic research

National Oceanic and Atmospheric Agency- $5.5 billion, an increase of 14.3% over the FY10 level of $4.85 billion

White House/Office of Management and Budget Department of Commerce FY12 Budget Summary

Department of Education-

• Continues support for a $5,550 maximum Pell Grant award, $819 above the level in 2008, largely paid for by eliminating the year-round Pell Grant and the in-school interest subsidy for graduate and professional student loans
• Invests $26.8 billion, an increase of 6.9 percent, in a reformed Elementary and Secondary Education Act (ESEA) focused on raising standards, encouraging innovation, and rewarding success, while allowing States and districts more flexibility to invest resources where they will have the greatest impact. The new ESEA directs funds to reform-oriented competitive initiatives, consolidates dozens of programs, and cuts programs that do not demand results.
• Provides $1.4 billion for new competitions, modeled on the Race to the Top initiative, to strengthen and reform early childhood education, improve district performance in elementary and secondary education, and improve outcomes in higher education

Department of Education FY12 Budget Materials

National Endowment for the Humanities- $146 million, a decrease of 13% from the FY10 level of $168 million

NEH FY12 Budget Summary

Additional information on President Obama’s FY12 budget request will be posted as it becomes available. The release of the President’s Budget Request (PBR) is the first step in appropriations process for the coming year. After Congress and the President settle on a path forward for FY11 — which began on October 1, 2010 — the FY12 process will begin to move forward.

                          

 “We need to out-innovate, out-educate, and out-build the rest of the world,” he said. “We have to make America the best place on Earth to do business. We need to take responsibility for our deficit, and reform our government. That’s how our people will prosper. That’s how we’ll win the future.”

The promise of technology heavily underpinned the President’s address, as he emphasized the importance of clean tech, broadband, and science education in achieving his goal. He made the case for continued investment in research funding, and a renewed commitment to immigration reform that’s designed to keep talented foreign workers in the country.

While this all sounds encouraging for the research and higher education communities, the President proposes to pay for those investments by cutting other domestic programs.  He is proposing a five-year freeze on non-security discretionary spending, which he said would save more than $400 billion over 10 years and bring discretionary spending to the lowest level as a share of the economy since the Eisenhower administration. It remains to be seen whether the President can actually motivate Congress into acting on his proposals, some of which appeared in Obama’s prior State of the Union addresses. It was in 2010 that the president sounded similar notes on innovation, taxes and trade, but those reforms often lagged in a Congress more focused on other big-ticket items like healthcare.

One surprise in the President’s address was his threat to veto any legislation that includes earmarks, essentially closing the door on any earmarks for FY12. Democrats in the Senate denounced the President’s call as a power grab that will have little-to-no impact on the federal budget deficit.

But the reality is that Democrats face a political climate that makes it virtually impossible to get any earmarks through this Congress if Obama and Republicans in congress maintain their opposition. Speaker John Boehner (R-OH) has already said that no appropriations bills with earmarks will pass the House, and Senate Republicans have also embraced a moratorium on the pet projects. That means House Republicans, Senate Republicans, and the President would have to cave in if any earmarks are to become law this year.

In other budget news, the House Republicans on Tuesday moved forward in their push to sharply reduce spending and draw contrasts with President Obama’s budget priorities. They adopted a resolution calling for non-security discretionary spending to be cut to FY08 levels or less for the last seven months of FY11. House Republican leaders also announced that they are planning to bring a government funding measure to the floor the same week the president is expected to release his budget (week of February 14^th). During that same week, the House will also consider another stopgap spending measure to fund the government for the remainder of FY11. The current stopgap funding expires March 4th.

The Office of Federal Relations is closely monitoring all of these events and will provide additional information on this site as it becomes available. In the meantime, we are anticipating major programmatic cuts in the President’s FY12 Budget and are currently developing materials to defend those federal programs that the UW works with the most.