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Category: Budget

Additional Information About FY2020 Budget Proposal Available

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Additional details about the President’s FY2020 budget requests for various agencies are becoming available.  In the bigger picture, this additional level of information is not as detailed as what we expect to see later this spring.

For example, the top line USGS budget document shows that the Administration proposes to eliminate the Cooperative Research Unit program while seeking to move and reorganize the Climate Adaptation Science Centers.  It also calls for the Earthquake Early Warning system to be funded at $8.2 million.

The research budget proposal from the Pentagon, the “R-1,” seeks to reduce funding for DoD basic research by 11.4 percent and DoD science and technology by 11.9 percent compared to FY2019 levels.

NASA would see a cut of about $500 million below the enacted FY2019 level.  Within the larger NASA Administration proposal, Space Grant and WFIRST would both be eliminated.  See here, and here.  Space News also takes a look at the NASA budget request.

Office of Federal Relations will continue to provide additional details.

 

President’s FY2020 Budget

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Today, the Administration released its FY 2020 President’s budget request (PBR) to Congress. This budget is the first step in the annual Congressional appropriations cycle. The annual PBR is a political and policy document indicative of the goals of the  Administration for the coming year.

The $4.7 trillion FY 2020 budget released today would sharply reduce spending on safety-net programs, while effectively exempting the Pentagon from strict spending caps set to take effect in FY 2020.

The PBR assumes the scheduled FY 2020 and 2021 sequester cuts to domestic spending, which is effectively a 10 percent reduction to nondefense programs from current levels. The budget would reduce the overall level of nondefense spending by nearly $30 billion reduction and would increase military spending by 5 percent, to $750 billion from $716 billion received in FY 2019. It requests $8.6 billion for new barriers along the southern U.S. border, including $5 billion for the Department of Homeland Security and $3.6 billion for the Defense Department’s military-construction budget. The president’s blueprint would also provide additional funding to boost manpower at Immigration and Customs Enforcement and Customs and Border Protection, and it proposes policy changes to end so-called sanctuary cities.

The Administration’s budget proposed $2.7 trillion in spending cuts over the next decade of which $1.9 trillion is cuts to mandatory spending programs.  Specifically within those programs, the Administration proposes to cut $22 billion from safety-net programs next year—$327 billion over the next decade—and proposes new work requirements for recipients of food stamps, Medicaid, and federal housing programs.

Within the discretionary nondefense side of the ledger, cuts were proposed to:

  • $87.1 billion for HHS (a 12 percent cut)
  • $34.36 billion for NIH (a 12 percent or $4.9 billion cut)
  • $5.8 billion for HRSA (a $1 billion cut)
  • $5.27 billion for CDC (a $1.2 billion cut)
  • $31.7 billion for Energy, (an 11 percent cut) and requests $5.5 billion for Office of Science (a 9 percent decrease) while eliminating Advanced Research Projects Agency-Energy (ARPA-E)
  • $62.0 billion for ED (an $8.5 billion or 12 percent cut) and eliminating, Public Service Loan Forgiveness, Supporting Effective Instruction State Grants, 21st Century Community Learning Centers, and Federal Supplemental Educational Opportunity Grants
  • $12.2 billion for Commerce (a $1.0 billion or a 9.3-percent increase), but eliminations to the  Sea Grant, Coastal Zone Management Grants, and the Pacific Coastal Salmon Recovery Fund.
  • $12.5 billion for Interior (a 14 percent cut)
  • $7.1 billion for NSF (a 9 percent cut)
  • $21 billion for NASA (a 1.4 percent increase)

The budget specifics for HHS, ED, Energy, DOD, Interior, NOAA, and NASA should be forthcoming this week.

Other items included in the budget, the PBR proposes to streamline student loan repayment by consolidating multiple IDR plans into a single plan. The Single IDR plan would cap a borrower’s monthly payment at 12.5 percent of discretionary income. For undergraduate borrowers, any balance remaining after 180 months of repayment would be forgiven. For borrowers with any graduate debt, any balance remaining after 30 years of repayment would be forgiven.  It would expand Pell Grant eligibility to include high-quality short-term programs. The budget proposes to restructure and streamline the TRIO and GEAR UP programs by consolidating them into a $950 million State formula grant.

NIH would continue to address the opioid epidemic, make progress on developing a universal flu vaccine, and support the next generation of researchers. The PBR includes a new, dedicated effort to support research and develop new treatments for childhood cancer. Cancer is the leading cause of death from disease among children and adolescents in the United States. The basic biology of childhood cancers is not fully understood and differs from that of adult cancers. The Budget includes increased funding and an innovative initiative to enable the Nation’s best researchers and doctors to learn from every child with cancer, providing the opportunity to comprehend finally the unique causes and the best cures for childhood cancer.

 

 

And here comes the NEXT Spending Battle

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Although the FY2019 spending situation has finally been resolved, another potentially protracted spending fight is already underway.  Without an agreement to lift the statutory limits on how much the government can spend during FY2020, the federal government is looking at a very steep fiscal cliff and significant automatic cuts.

In 2011, House and Senate negotiators came up with, and the Obama Administration agreed to, a plan that was considered so potentially draconian that no one thought that parts of the plan would ever be allowed to come to fruition.  The overarching goal of the plan was to cut mandatory spending.  The intent was to force cuts in mandatory spending by imposing automatic cuts (or popularly called “sequesters”) to the discretionary part of the budget– both defense and non-defense– with statutory cuts placed on each part of the discretionary budget for 10 years.

The mandatory savings never materialized, and over the last eight years, sequesters have been avoided only as a result of two-year deals that raised the spending limits imposed on both defense and non-defense discretionary (“NDD”) programs.  The last deal that lifted the cap applied to FY2018 and FY2019.

All of this means that, for FY2020, without an agreement that lifts the statutory limit on discretionary programs, we are facing a mandatory cut of $126 billion below FY2019 levels.  As a result of the 2011 agreement, discretionary defense programs would be subject to a cut of $71 billion while the domestic agencies and programs funded through discretionary funds– such as NIH and NSF– would be forced to deal with a cut of $55 billion in FY2020.  An agreement must also be reached for FY2021 in order to prevent similar automatic cuts.

Advocacy groups have mobilized to draw Congressional attention to the serious problems surrounding maintaining current spending caps.  Congressional discussions have begun and the situation will take months to resolve.

 

CBO: Shutdown Cost $11B

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The nonpartisan Congressional Budget Office released a report today that the recent 35 day, 5 week government shutdown cost the U.S. economy $11 billion. Other take aways:

  • It permanently lost $3 billion in economic activity for the 4th quarter.
  • The shutdown delayed approximately $18 billion in federal discretionary spending for compensation and purchases of goods and services and suspended some federal services.
  • The level of real GDP in the first quarter of 2019 is expected to be reduced by 0.2 percent, or $8 billion less than it would have been if the government had been open.

Read the report here. 

Three Week Deal…Some Ancillary Fixes

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As part of the three week deal signed into law on Saturday, the measure (H.J.Res. 28) would reopen the nine Cabinet departments and several independent agencies closed during the shutdown through February 15. Beyond funding these agencies, there were other significant items included in this agreement.

Back Pay

Federal employees will receive back pay as part of the agreement. Most employees should be expect to receive their two missed paychecks by the end of the week. Government contractors may or may not receive missed pay depending on the nature of their contract. States or grantees that helped fill the gap during the shutdown can expect to be reimbursed.

Conference Committee

As part of the agreement, the House and Senate will convene a conference committee to work out a deal on FY 2019 Homeland Security spending, including the fate of the Administration’s demand for $5.7 billion for border wall construction, which is spending Congressional Democrats have long opposed.

Pay-Go

Under the Pay-As-You-Go Act of 2010 (PL 111-139), the White House Office of Management and Budget (OMB)  is supposed to issue a report within 14 days after the end of a Congressional session outlining whether enacted laws added to the deficit over five or 10 years. If so, then the OMB has to implement across-the-board cuts to any programs not exempt from the statute, to eliminate the excess.

Routinely, since the 2010 law was enacted, Congress has simply decreed that certain pricey provisions will not be added. For example, Congress removed the impact of the $1.5 trillion, 10-year tax cuts from the OMB’s calculations as part the 2017 stopgap appropriations bill both were signed into law the same day.

The stopgap spending bill includes provisions delaying roughly $800 million in spending cuts, mainly (about 90 percent) impacting Medicare. Because Congress did not act in time, the OMB should have had to implement the cuts, but the shutdown delayed implementation.

That Pay-Go “debit” will pop up again next year unless Congress eliminates it once again on any FY 2019 final package. A House-passed, $271.8 billion package (HR 648) of six appropriations measures would have wipe out the scorecard’s existing debit, so only future legislation increasing deficits would count for the OMB’s calculations.