The Federal R&D Budget

1. The Federal R&D Budget Matt Hourihan September 6, 2016 For the AAAS S&T Policy Fellows AAAS R&D Budget and Policy Programhttp://www.aaas.org/program/rd-budget-and-policy-program

2. The Federal Budget is Kind Of a Big Deal • “Politics is who gets what, when, and how.” - Harold Lasswell • “Budgeting is about values, and it’s about choices.” – Rep. Rosa DeLauro • Every dollar in the budget has its claimants! • Negotiation between competing interests (and their proxies) in a decentralized system • Major impact for R&D and innovation: most basic research, and most university research, is federally funded

6. Two Spending Categories: Discretionary vs. Mandatory • Mandatory Spending (aka Direct Spending) • Mostly entitlements, mostly on “autopilot” • Potential for high political sensitivity = “third rail” • New spending requires new legislation from the authorizing committees • Discretionary Spending: • Adjusted annually through appropriations bills via the appropriations committees • Diffuse support = easy (nondefense) targets? • For example: Sequestration! • Vast majority of federal R&D is discretionary

9. Ongoing Politics: The “Pong” Model? Protect social spending! Reduce social spending! The science and innovation budget

10. Congress in the Federal Budget Cycle • Congress has the Power of the Purse • U.S. Constitution, Article I, Section 9: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

11. And many others… • Also revenue (tax) committees (House Ways and Means, Senate Finance)

12. Budget Committees

13. The Budget Resolution Established by 1974 Congressional Budget Act Overall framework Discretionary spending Also revenue, deficit, and total spending targets Can’t change law, but can set up reconciliation instructions The budget resolution is a politicaldocument (and therefore, often not passed!)

21. Appropriations Committees

22. From Budget to Appropriations Committees • Budget Resolution limits  Approps Committees  Subcommittees [302(b) allocations] • These caps remain in place all the way to floor, but can be revised as needed • Twelve Appropriations Subcommittees • Nine subcommittees responsible for at least $1 billion of R&D • Approps led by “Cardinals” • Committee Chairs: Rep. Hal Rogers (KY), Sen. Thad Cochran (MS) • Ranking Members: Rep. Nita Lowey (NY), Sen. Barbara Mikulski (MD) • Appropriators will often have their own priorities • “There are three parties: Democrats, Republicans, and appropriators” • “President proposes, Congress disposes” • Tendency towards incrementalism

23. Congressional Budget Decisions… • “All politics is local” • Broader issues • Competitiveness, health, energy independence, national security, deficits, climate change politics • Concerns over balance, duplication, role of government, fiscal context, waste • Always tradeoffs…and always a need to get the bill passed • No concerted assessment of full R&D portfolio • Somewhat reactive by definition, given agency budgets come first

24. Defense • Over $500 billion • Tradeoffs: balancing force modernization, readiness, personnel costs, RDT&E (and medical research) • Offset Strategy • War funding

25. Energy & Water • ~$40 billion • Tradeoffs: Balancing basic research and facilities, DOE technology portfolio, NNSA; also Army Corps, Bureau of Reclamation • Highly partisan debates over energy technologies (renewables vs. nuclear vs. fossil) • Have mostly embraced new research and innovation models at DOE

26. Labor, HHS, Education • >$150 billion • Deep divisions – especially Obamacare • Usually one of the hardest to pass, thus usually one of the last out of the gate • Everybody likes NIH lately • Especially Alzheimer’s research • Cancer moonshot? • Success rates?

27. Commerce, Justice, Science • ~$55 billion • Tradeoffs: Balancing Depts. of Justice and Commerce, NASA, NSF • NSF: social and geo science funding? Facilities? • NASA: planetary exploration, climate research, human spaceflight (and where do we fly to?) • Commerce: NOAA climate research and NIST industrial technology programs can be controversial

28. Agriculture • ~$20 billion • Funds most USDA (but not Forest Service); also FDA • Balancing between conservation, public assistance, food safety • Research activities often take secondary prominence • Fragmented? Formula funds or competitive grants? • Once a big source of pork via earmarks

29. Interior & Environment • ~$30 billion • Includes: Dept. of the Interior, EPA; also Forest Service; small bit goes to NIH • Another divisive bill: environmental protection, land use, emissions regulation, wildfire management and response • Again, science funding tends to take secondary prominence (U.S. Geological Survey, EPA S&T)

30. Appropriations Process • Budget Resolution Limits  Appropriations Committees  Subcommittees [302(b) allocations] • These caps are always in place throughout the process, but can be revised as needed • Information gathering: • Hearings with agency testimony • “Views and estimates” from other authorizing committees • Projections from CBO • Behind-the-scenes agency contact • Constituents, experts, lobbyists • Subcommittee  Committee  Floor • Can be amended throughout • Subject to 302(b) caps • Bills have to pass both chambers • Can be filibustered or vetoed • Differences are negotiated/resolved in conference committee

31. Other Legislative Appropriations Tools • Continuing Resolutions • …with depressing regularity • Uncertainty? New starts? • Omnibus • Or minibus, or megabus, or cromnibus, or… • Supplementals • i.e. Zika, Ebola, Hurricane Sandy • Also war funding • Not subject to spending caps

32. Authorizing Committees

33. Authorizations vs. Appropriations • Authorizations • Creates and modifies programs and policies • Sets funding ceilings • Can provide mandatory spending • Reconciliation bills • i.e. Bush-era tax cuts; certain fiscal elements of Obamacare • Appropriations • Provides funding to discretionary programs • Appropriating federal dollars is basically a two-step process • First authorization, then appropriation • However: unauthorized appropriations (and unfunded authorizations) are ever-present

34. Mandatory Spending: An Alternate Path for R&D? • Two current examples: • Diabetes Research (NIH) • Biomass R&D Program (USDA) • Proposals: • FY 2017 budget request • 21st Century Cures • Potential challenges: • Shifting power away from appropriators • Can make it harder for Congress to intervene • PAYGO rules • Potential advantages: • Stability?

37. The Federal Budget Cycle • Gov’t is usually working on 3 budgets at any given time

39. For more info… mhouriha@aaas.org 202-326-6607 http://www.aaas.org/program/rd-budget-and-policy-program