The Federal R&D Budget Process 101 Matt Hourihan November 7, 2017 For the UNC-Chapel Hill Science Policy Advocacy Group AAAS R&D Budget and Policy Program http://www.aaas.org/program/rd-budget-and-policy-program

The Federal Budget is Kind Of a Big Deal Major impact for R&D and innovation: most basic research, and most university research, is federally funded “Politics is who gets what, when, and how.” - Harold Lasswell Public dollars are scarce resources The budget process is ultimately a negotiation between competing interests (and their proxies) in a decentralized system Budget choices are influenced by many things at every step: values; politics and political constituencies; power and control; tradeoffs; incrementalism; rules and institutions; and even merit!

The Budget Process at a Glance Executive Branch Legislative Branch White House Budget Committees Budget Resolution OMB Agencies OSTP February Budget Request Appropriations Committees & Subcommittees SPENDING BILLS (x12) Timeline is 18 months or more from the start of agency planning to completion of appropriations and start of the fiscal year on October 1, however… Congress hasn’t gotten appropriations finished on time since 1996

Formulation of the President’s Budget Executive Branch White House POTUS first required to submit annual budget in 1921 Agencies work for the President, and thus the White House has final approval on what makes it into the budget request to Congress Both top-down and bottom-up OMB Agencies OSTP

Agencies in the Budget Process Executive Branch Agency process kicks off 18+ months in advance. Generally: Developing strategic priorities, objectives (winter/early spring) Then developing and iterating concrete, detailed program proposals and scenarios (spring/summer) Often bottom-up: small units  larger units  agency leadership/CFO Ingredients include: Agency head and staff judgment External input from advisory or review committees, workshops or meetings, NAS surveys, Congress, etc. Incrementalism: last year’s budget influences next year’s Performance metrics White House OMB Agencies OSTP

The White House in the Budget Process Executive Branch OMB = Office of Management and Budget Spring: Guidance memo to agencies Fall: Thorough, detailed review of agency budget submissions, followed by “passbacks” and appeals OMB’s job is to constrain spending OSTP = Office of Science and Technology Policy Summer: joint memo with OMB outlining broad S&T priority areas for investment Advice (with PCAST) and coordination to President, agencies, OMB, NSTC on science investments and strategies High-level political, spending, or legislative priorities Negotiation with agencies Things must wrap in January This is all truncated in transition years White House OMB Agencies OSTP

The Budget Process at a Glance Executive Branch Legislative Branch White House Budget Committees Budget Resolution OMB Agencies OSTP February Budget Request Appropriations Committees & Subcommittees SPENDING BILLS (x12) Congress has the Power of the Purse Does the President’s Budget even matter? Only as much as Congress lets it

Appropriations Committees & Subcommittees The Budget Resolution Legislative Branch Established by 1974 CBA Intended to reassert legislative control Overall framework: Revenue, deficit, and total spending targets Non-binding recommendations Key for science: discretionary spending limit to govern appropriations Isn’t law and can’t change law, but can set up reconciliation instructions (i.e. tax reform this year) Best seen as a political document as much as a governing document Partly because it isn’t always adopted… Budget Committees Budget Resolution Appropriations Committees & Subcommittees SPENDING BILLS (x12)

Enter the Appropriators Executive Branch Legislative Branch White House Budget Committees Budget Resolution OMB Agencies OSTP February Budget Request Appropriations Committees & Subcommittees SPENDING BILLS (x12) Budget resolution discretionary target  spending caps for each appropriations bill Twelve appropriations subcommittees = twelve spending bills

From Budget to Appropriations Budget Resolution limits  Approps Committees  Subcommittees These caps remain in place all the way through floor consideration Led by “Cardinals” Committee Chairs: Rep. Rodney Frelinghuysen (NJ), Sen. Thad Cochran (MS) Ranking Members: Rep. Nita Lowey (NY), Sen. Patrick Leahy (VT) Appropriators will often have their own priorities “All politics is local” Merit, ideology, constituent needs, balance and tradeoffs, waste and good government “President proposes, Congress disposes” Key: Getting bills that can pass

Energy & Water Subcommittee House Senate Chair Mike Simpson (ID) Lamar Alexander (TN) Ranking Member Marcy Kaptur (OH) Dianne Feinstein (CA) Tradeoffs: Balancing basic research and facilities, labs, tech portfolio, NNSA; also Army Corps, Bureau of Reclamation NNSA prioritized Office of Science: flat in House, +3% in Senate ASCR boosted in both (exascale, facilities) BES: facilities prioritized over research Variation on Fusion Science Applied tech: Mixed reductions ARPA-E zeroed in House Very mixed for EERE, Fossil, Nuclear, grid Hubs, manufacturing institutes, other research centers mostly preserved

Labor, HHS, Education Subcommittee House Senate Chair Tom Cole (OK) Roy Blunt (MO) Ranking Member Rosa DeLauro (CT) Patty Murray (WA) Deep divisions over public health programs, education, DOL Everybody likes NIH lately House: +3.2% (+$1.1 billion) Senate: +5.6% (+$2.0 billion) Especially Alzheimer’s research F&A changes prohibited Fogarty protected Includes 21st Century Cures funding Others: BioShield and BARDA flat IES flat or trimmed CDC cut Opioids

Commerce, Justice, Science Subcommittee House Senate Chair John Culberson (TX) Richard Shelby (AL) Ranking Member Jose Serrano (NY) Jeanne Shaheen (NH) Tradeoffs: Balancing Justice, Commerce, NASA, NSF; smaller bills this year NSF: Cut by ~2% in both House: no funding for vessels; physical and biological disciplines targeted on floor Senate: research, EHR trimmed NASA: recent priority, but modest this year Variation in Science Directorate funding; Exploration favored; Education protected NOAA: Sea Grant, most research protected Climate research cut by 19% in House Major differences re: Polar Follow-On NIST: Senate more generous; labs fare better than industrial innovation programs Census: boosted by 4%, but is it enough?

The Budget Process at a Glance Executive Branch Legislative Branch White House Budget Committees Budget Resolution OMB Agencies OSTP February Budget Request Appropriations Committees & Subcommittees SPENDING BILLS (x12)

The Budget Process at a Glance Executive Branch Legislative Branch White House Budget Committees Budget Resolution OMB Agencies OSTP February Budget Request Appropriations Committees & Subcommittees SPENDING BILLS (x12) “Please don’t veto us!”

Other Legislative Tools for Spending 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

The Federal Budget Cycle Gov’t is usually working on 3 budgets at a time (However, presidential transitions complicate things)

Progress to Date On R&D-Relevant Spending Bills House Floor Senate Committee Agriculture X Defense Commerce, Justice, Science Energy & Water Homeland Security Interior & Environment Labor, HHS, Education Milcon, Veterans State Transportation, HUD

Looking Ahead FY18 spending caps: Where do we end up? House and Senate have budget resolutions, but… Will need to work with Senate Democrats on any deal to change the caps FY18 appropriations: CR in place until December House finished, Senate close Will the White House ultimately go along with any of this? Signaled willingness to sign House omnibus Implications of other policy issues: tax reform, border wall, healthcare, etc?

mhouriha@aaas.org 202-326-6607 http://www.aaas.org/rd For more info… mhouriha@aaas.org 202-326-6607 http://www.aaas.org/rd