FY13 Budget Supports Research, Student Aid

Posted on February 17, 2012October 17, 2012

The Obama Administration’s FY13 budget, released on February 13, reflects a continuing commitment to increased federal investments in research and education. The budget would increase funding for the National Science Foundation (NSF); the Department of Energy’s (DOE) Office of Science and ARPA-E; and the Agriculture and Food Research Initiative (AFRI) in the Department of Agriculture, which supports competitive research. It also would provide a modest funding increase for the National Endowment for the Humanities (NEH). Similarly, funding for basic research at the Department of Defense (DOD) is essentially level despite significant cuts elsewhere in the agency.

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.

FY13 President’s Budget Request

Posted on February 13, 2012October 17, 2012

The President is scheduled to deliver his FY13 budget request to Congress later this morning, kicking off the annual budget and appropriations season. While the details of the budget have remained under wraps until today, the Office of Management and Budget (OMB) released a 2013 “Fact Sheet” on Friday revealing that the budget will include strong support for research and development, including “$140.8 billion for R&D overall; increase the level of investment in non-defense R&D by 5 percent from the 2012 level, even as overall budgets decline; maintains the President’s commitment to double the budgets of three key basic research agencies (National Science Foundation, Department of Energy’s Office of Science, and National Institute of Standards and Technology Laboratories); expands and makes permanent the R&D tax credit. [Includes] Level funding for biomedical research at NIHNational Institutes of Health ($30.7 billion); and to get more out of the money, proposes new grant management policies to increase the number of new research grants by 7 percent.”

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.

Effort Begins to Repeal Sequester

Posted on February 2, 2012October 17, 2012

Senate Republicans are posed today to initiate an effort to block automatic budget cuts scheduled to take place next January. They will propose replacing the first year of the spending “sequester” with a plan to shrink federal employment and extend a pay freeze on government workers. The effort is an attempt to stave off what many view as potentially devastating cuts to the Pentagon.

Late last year, House Armed Services Chairman McKeon (R-CA) offered a similar proposal (HR 3662) that quickly received a veto threat from the White House. McKeon’s legislation would save more than $120 billion over a decade, effectively offsetting the first year of the statutory sequester of both defense and non-defense spending. That would push off until FY14 the spending cuts triggered the Budget Control Act (PL 112-25) that was approved by Congress last August.

The Senate’s proposed bill, the Down Payment to Protect National Security Act of 2012, will add credibility to the sequester repeal effort due to the high-profile sponsors of the bill, including Senators Jon Kyl (R-AZ), John McCain (R-AZ), John Cornyn (R-TX), Lindsey Graham (R-SC), and Kelly Ayotte (R-NH).

Like McKeon’s measure, the Senate legislation would replace $109 billion in estimated, across-the-board spending cuts that are set to kick in January 2, 2013 with savings from a reduction in the federal workforce over a decade. McKeon’s proposal would trim the workforce by 10 percent by replacing every three workers who leave an agency with just one new hire. The Senate bill would cut the workforce by 5 percent, replacing every three full-time workers who leave with two new hires. The Senate bill goes farther than the House measure by also finding savings by extending the current pay freeze for federal civilian workers until June 30, 2014. Contrast that will what is expected to be in the President’s FY13 budget request: a 0.5 percent pay bump for federal employees in his budget proposal due February 13^th, bringing an end to the two-year freeze.

Senator Murray (D-WA) has already expressed her opposition to the GOP plan via Twitter, where she posts “GOP to lay out plan to avoid def. cuts tmw. Who thinks it will also avoid having wealthy pay fair share? Ask only middle class sacrifice?”

Sequestration: What it means for Federal Research Funding

Posted on February 2, 2012November 1, 2012

Automatic spending cuts, or sequestration, was established through the Budget Control Act passed by Congress last August and is set to go into effect January 2013. The sequestration process has great implications for all federal discretionary programs, including most – if not all – of federally funded research programs. Below is a link to a detailed explanation of this process and the impacts to federal spending in both the short- and long-term.

Sequestration_Details

Budget Season Begins

Posted on January 31, 2012October 17, 2012

President Obama will delay the release of his FY13 budget request by a week, until February 13^th, but lawmakers will still get a start on budget season today when the Congressional Budget Office (CBO) releases its annual budget and economic outlook. This report will certainly re-energize the debate around the issue of the automatic spending cuts that are set to take effect next January as required in the Budget Control Act of 2011 (PL 112-25). Those cuts, officially referred to as a sequester, were required when the Joint Select Committee on Deficit Reduction failed to produce $1.2 trillion in savings over a decade. The cuts are expected to reduce appropriations for FY13 by roughly 9 percent across the board.

The CBO’s report, to be released momentarily, serves as the unofficial kickoff of budget season. Congressional budget committees in both chambers will hold hearings over the next few weeks on spending, taxes, and entitlements. The pace will pick up further when President Obama presents his FY13 budget request to Capitol Hill on February 13^th. Committee leaders say they plan to hold hearings on the request and want to write congressional budget resolutions this spring. Those resolutions will serve as non-binding blueprints for appropriators as they draft the annual spending bills.

The President is expected to include an alternative to the automatic cuts in his budget request, which will likely include a number of familiar policies that have been recommended previously but not enacted. House Republicans will present their recommendations in their FY13 budget resolution in a few months. The GOP budget is expected to limit the automatic cuts, especially for defense programs, by making further reductions in discretionary and maybe even mandatory programs.

However, none of this is likely to lead to any serious deficit reduction action. As you might recall, lawmakers debated and negotiated this issue for much of 2011 and still failed to come to any consensus on deficit reduction recommendations. This will probably end up in a chaotic post-election lame-duck session to deal with the sequester – and a whole lot of expiring tax cuts – which will kick in on January 2, 2013 unless Congress takes action.