With Elections Pending, Big Question on Science Budgets Remain

By Peter Harsha, CRA’s Director of Government Affairs

With both parties having wrapped up their presidential nominating conventions, Congress returns to Washington with much of the Federal budget process unfinished. The congressional leadership has already conceded that they will not finish FY 2013 appropriations before the end of this session, leaving the 12 unfinished annual appropriations bills for the next Congress to resolve. Congress also remains unresolved about what to do with pending across-the-board cuts to federal agencies and programs that are scheduled for January, 2, 2013. Those cuts, called for in the Budget Control Act of 2011 and triggered because Congress failed to agree on a plan to cut the Federal budget deficit, will happen unless Congress agrees to do something to stop them.

But Congress and the President have a more important deadline on their collective mind: Tuesday, November 6th, when they will face voters for reelection. As a result, nearly all progress has stopped on tough questions like appropriations and budget cuts as Members of Congress are not interested in making tough decisions before election day.

So Federal science agencies sit in a sort of limbo as they wait to find out what their FY 2013 budgets will look like. In early August, House and Senate leaders announced they had reached an agreement to push the deadline for completion of FY 2013 appropriations until March 2013, six months after the October 1, 2012, start to the fiscal year. Unwilling and unable to finish appropriations before the September 30th deadline, the question before the leadership was whether to pass a so-called “continuing resolution” (CR) — a bill that continues funding Federal agencies in the new fiscal year at the same level they received in the previous one — that lasts until the end of November, giving the lame duck Congress an opportunity to finish them, or to extend the continuing resolution through January, giving the newly-elected Congress an opportunity to put its stamp on appropriations. The Republican leadership, sensing that GOP chances to pick up seats in both the House and the Senate (and perhaps take the White House) were quite good, leaving them in a better position than they’d have in the lame duck, pressed for the longer-term CR. The Democrats, perhaps having the same sense, wanted a short-term CR instead and wanted spending levels in FY 2013 above what House Republicans were likely to agree to. In the end, the leaders compromised, agreeing to a CR that will last until March 2013, but contain slightly higher spending levels.

Still unaddressed and of more immediate interest to Federal science agencies is the looming threat of budget sequestration. Sequestration was the “stick” written into the Budget Control Act of 2011 to compel Congress to reach an agreement to cut $1.2 trillion from the Federal deficit over the next ten years — whether by reforming entitlement programs, cutting discretionary spending, raising taxes or some combination of the three. Failure to reach agreement would trigger the rather more sledgehammer-like approach of automatically cutting federal spending across the board by enough to reduce the deficit by $1.2 trillion over the next ten years. Because Congress failed to reach agreement, sequestration is now the law of the land and will occur on January 2, 2013, unless Congress acts to stop it. For Federal science agencies, sequestration could have a significant impact on FY 13 spending. Under the law, all non-defense discretionary spending accounts (which includes much of Federal science funding) would be cut by nearly 8 percent in FY 13. All defense-related accounts (which include the remainder of Federal science funding) would see cuts of nearly 10 percent. The law gives agencies very little discretion about how those cuts are made, and the White House Office of Management and Budget, which will have the ultimate authority to make the cuts, has indicated they intend to make the cuts as equitable as they can as they believe that is what the law proscribes.

No one in Congress, it is believed, really wants the cuts to happen. The across-the-board nature of the cuts means that lots of favored programs of Members will see what they believe are unmerited cuts. Others believe that the cuts represent an abrogation of their duty to set government spending levels. But it is unlikely that Congress will take the difficult step of acting before the election to defuse the trigger (for the same reason they don’t want to make difficult decisions about appropriations before the election). This leaves the lame duck session as the last chance for Congress to act. To complicate matters, the Bush-era tax cuts are also due for renewal by the end of 2012. Republicans see renewing these tax cuts as a priority, so the Democrats are using their potential expiration to push Republicans to compromise on both cuts to non-defense discretionary spending in the sequester and for support in increasing the tax burden on some of the richest taxpayers. Tying these issues together has created what some are calling a “fiscal cliff” that the federal government is rushing headlong toward, and will reach by January 2nd.

In the meantime, Federal science agencies will remain in their holding patterns -- finishing up spending out their FY 2012 budgets, then cautiously starting to spend FY 2013 funds after October 1st, being careful not to spend beyond those FY 12 levels, and in many cases being unable to start new programs or hire new staff.

After November 6th, the picture will become somewhat clearer, though likely still unsettled for months to come. For all the latest details on the state of the budget process, the appropriations levels, and the fate of the sequester, check the Computing Research Policy Blog.