The Federal R&D Budget: Process and Perspectives Matt Hourihan October 30, 2017 For the American Institute for Medical and Biological Engineering 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 “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 Negotiation = tradeoffs Major impact for R&D and innovation: most basic research, and most university research, is federally funded

Phase 4: Execute the fiscal year’s budget (not shown) Budget Process in Regular Order (a.k.a. “how it’s supposed to work”): Three Years, Four Phases Phase 4: Execute the fiscal year’s budget (not shown) Arranged by fiscal year (October 1 to September 30)

The Federal Budget Cycle Phase 1: Internal agency discussions and planning Strategic plans, staff retreats, program assessments OMB is present throughout Agencies deliver budget justifications to OMB (early fall)

Plans, Goals, Evaluations, Constituents Agency Budgeting Coordination and Top-Down Guidance One Agency’s R&D Budget Plans, Goals, Evaluations, Constituents Decentralized planning and scientific input

The Federal Budget Cycle Phase 2: OMB performs multi-stage review, responds to agencies (“passbacks”) Agencies and agency heads can and do negotiate Budget proposals are finalized in January President presents the proposed budget to Congress early February

The Federal Budget Cycle Phase 3: Congress gets involved Receives and reacts to President’s budget, holds hearings Approves budget resolution (simple majority) Writes and passes appropriations

Natural Resources Cmte House Budget Cmte Natural Resources Cmte Approps Cmte Subc on Interior + Env Subc on Energy + Water Energy + Commerce Cmte Senate Energy and Nat Res Cmte Env and Pub Works Cmte And many others… Also revenue (tax) committees (House Ways and Means, Senate Finance)

Natural Resources Cmte House Budget Cmte Natural Resources Cmte Approps Cmte Subc on Interior + Env Subc on Energy + Water Energy + Commerce Cmte Senate Energy and Nat Res Cmte Env and Pub Works Cmte Budget Committees

The Budget Resolution Established by 1974 Congressional Budget Act Overall framework Discretionary spending Also revenue, deficit, and total spending targets Also non-binding recommendations from majority Isn’t law and can’t change law, but can set up reconciliation instructions The budget resolution is a political document (and therefore, often not passed!)

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 Easy (nondefense) targets? i.e. Sequestration Vast majority of federal R&D is discretionary

Natural Resources Cmte House Budget Cmte Natural Resources Cmte Approps Cmte Subc on Interior + Env Subc on Energy + Water Energy + Commerce Cmte Senate Energy and Nat Res Cmte Env and Pub Works Cmte Appropriations Committees

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 Eight responsible for >$1 billion of R&D 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 “President proposes, Congress disposes” Getting bills that can pass

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 funding

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

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 Federal Budget Cycle Approps committees write/approve 12 appropriations bills Bills have to pass both chambers Can be amended (always subject to caps) Funding changes or policy riders Differences are resolved in conference committee Can be filibustered

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

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

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?

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

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