the federal r&d budget: process and perspectives matt hourihan april 11, 2013 for iaff 2190w,...

The Federal R&D Budget: Process and Perspectives

Matt HourihanApril 11, 2013for IAFF 2190W, Science, Technology, & PolicyGeorge Washington University

AAAS R&D Budget and Policy Programhttp://www.aaas.org/spp/rd

U.S. R&D INVESTMENT

Income Taxes$1,359

Corporate Taxes$348

Social Insurance and Retirement (Payroll

Taxes)$959

Other Taxes (excise, gas, estate, etc.)

$236

Borrowing$901

FY 2013 Budget by Source of FundsTotal Outlays = $3.8 trillion

Total Receipts (without borrowing) = $2.9 trillion

Source: Budget of the United States Government FY 2013.© 2012 AAAS

U.S. R&D INVESTMENT

-2000

-1800

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

200

40019

60

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

Federal Budget Deficit (or Surplus)in billions of constant FY 2012 dollars

Unified budget (including Social Security)

Source: Budget of the United States Government, FY 2013.FY 2012 data are estimates. FY 2013-2017 data are budget projections.© 2012 AAAS

U.S. R&D INVESTMENT

U.S. R&D INVESTMENT

Two Spending Categories: Discretionary vs. Mandatory

Mandatory Spending (aka Direct Spending) Mostly entitlements

Potential for high political sensitivity = “third rail”

Changed only by act of Congress: essentially “on autopilot”

Discretionary Spending: Adjusted annually

Easy targets?

i.e. Sequestration

Vast majority of federal R&D is discretionary

U.S. R&D INVESTMENT

The Federal R&D Budget: The Basics

About $130 billion in FY 2013 Down ~17% since 2010 About half = DOD Basic + applied research = nearly half

Fragmented More than two dozen departments and agencies But “top heavy” (DOD and NIH)

Funds ~60% of university R&D Declining share of economy Declining share of national R&D investment (vs. industry)

U.S. R&D INVESTMENT

Federal Industry Other$0

$50

$100

$150

$200

$250

$300

Character of R&D By Funder, 2009Expenditures in billions of dollars

Development

Applied Research

Basic Research

Source: NSF, National Patterns of R&D ResourcesFigures are preliminary.© 2012 AAAS

U.S. R&D INVESTMENT

Recent R&D Budget History Historically large cuts this year

Recent gains: Energy

General Science

Manufacturing

Recent stagnation / declines Health

Agriculture

Environment

Space

U.S. R&D INVESTMENT

Q: How Did We Get Here?A: A convoluted, complicated, old and evolving process…

FY 2013

FY 2014

Bud

get

Rel

ease

FY 2015

Bud

get

Rel

ease

Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Planning within Agency

----- Spend Fiscal Year Budget -----

Negotiate and finalize budget

proposal with OMB via passbacks

----- Spend Fiscal Year Budget -----

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Agencies submit budget

proposals

Agencies receive strategic guidance from OMB

Negotiate and finalize budget proposal with OMB via passbacks

U.S. R&D INVESTMENT

The Federal Budget Cycle

Internal agency discussions

Joint guidance memorandum from OMB / OSTP Defines focus areas, methods, strategy for boosts or cuts

Agencies deliver budget justifications to OMB

Budg

et

Rele

ase

Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Planning within Agency

Negotiate and finalize budget

proposal with OMB via passbacks

Agencies submit budget

proposals

Agencies receive strategic guidance from OMB

U.S. R&D INVESTMENT

What Drives Presidential R&D Budget Formulation? Incrementalism

Administration priorities

Program priorities & politics

Expert and community input

OMB oversight, OSTP input

Also big (fiscal) picture

U.S. R&D INVESTMENT

The Federal Budget Cycle

Agencies negotiate with OMB (“passbacks”)

Budget proposals are finalized in January

President presents the proposed budget to Congress early February

Budg

et

Rele

ase

Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Planning within Agency

Negotiate and finalize budget

proposal with OMB via passbacks

Agencies submit budget

proposals

Agencies receive strategic guidance from OMB

U.S. R&D INVESTMENT

DOD, $72.6

HHS (NIH), $31.4

DOE, $11.9

NASA, $9.6

NSF, $5.9

USDA, $2.3

Commerce, $2.6All Other, $6.0

Total R&D by Agency, FY 2013budget authority in billions of dollars

Source: OMB R&D data, agency budget justifications, and other agency documents.R&D includes conduct of R&D and R&D facilities.© 2012 AAAS

Total R&D = $142.2 billion

U.S. R&D INVESTMENT

-2.7%

-22.2%

-8.0%

-4.3%

27.6%

-11.7%

56.3%

25.6%

-40% -20% 0% 20% 40% 60% 80%

Defense

Agriculture

Health

Space*

General Science

Environment

Energy

Commerce

FY 2013 R&D Budget Request by Functionpercent change from FY 2003, in constant FY 2012 dollars

Source: OMB R&D data, agency budget justifications, and agency budget documents. Environment includes natural resources R&D. *Space includes total discretionary budget, minus aeronautics, for comparability.© 2012 AAAS

U.S. R&D INVESTMENT

The Federal Budget Cycle

Congress holds budget hearings…

IN THEORY - Approves budget resolution (simple majority)

302(b) allocations to the 12 appropriations subcommittees

Budg

et

Rele

ase

Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Planning within Agency

Negotiate and finalize budget

proposal with OMB via passbacks

Agencies submit budget

proposals

Agencies receive strategic guidance from OMB

U.S. R&D INVESTMENT

U.S. R&D INVESTMENT

The Federal Budget Cycle

Approps committees write/approve 12 appropriations bills

Bills have to pass both chambers (can be filibustered); Differences are conferenced

Continuing resolutions? Omnibus? Reconciliation? Supplemental appropriations?

Budg

et

Rele

ase

Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Planning within Agency

Negotiate and finalize budget

proposal with OMB via passbacks

Agencies submit budget

proposals

Agencies receive strategic guidance from OMB

U.S. R&D INVESTMENT

U.S. R&D INVESTMENT

Authorizations vs. Appropriations Authorization

Creates and modifies programs.

Includes funding ceilings BUT NOT actual funding.

Under the jurisdiction of the topical legislative committees.

i.e. America COMPETES and ARPA-E

Appropriations Permits funding (specifically, incur obligations)

Under the jurisdiction of the Appropriations Committees (each with 12 subcommittees – one for each spending bill)

Defense, Energy + Water, Interior, Labor/HHS/Eduction, Agriculture, etc…

U.S. R&D INVESTMENT

What Drives Congressional Budget Decisions?

Incrementalism

Local politics

Effectiveness, balance, duplication

Role of government

Workforce

Topical vs. substantial

The Big Fiscal Context “Annual Miracle”

U.S. R&D INVESTMENT

The Federal Budget Cycle

Agencies are working on 3 budgets at any given time. Right now:

Spending FY 13 Congress dealing with FY14 Agencies starting to kick off planning for FY15

FY 2013

FY 2014

Bud

get

Rel

ease

FY 2015

Bud

get

Rel

ease

Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug Sep

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Planning within Agency

----- Spend Fiscal Year Budget -----

Negotiate and finalize budget

proposal with OMB via passbacks

----- Spend Fiscal Year Budget -----

• Budget Resolution

• 302(a) and (b)• Hearings

Write, pass, and conference twelve appropriation bills

Agencies submit budget

proposals

Agencies receive strategic guidance from OMB

Negotiate and finalize budget proposal with OMB via passbacks

U.S. R&D INVESTMENT

The Budget Control Act / Sequestration

1. Established Discretionary Spending Caps

2. Established automatic budget enforcement procedures (sequestration) $1.2 trillion cuts through

2021

~8% cuts to R&D over the next five years

U.S. R&D INVESTMENT

U.S. R&D INVESTMENT

Current State of Play President’s FY14 budget now out

The BIG issues remain: deficits, taxes v. spending, growth in entitlements, tax burden

Sequestration remains in place for now…. Research community reeling

…also debt ceiling

U.S. R&D INVESTMENT

For more info…

mhouriha@aaas.org

202-326-6607

www.aaas.org/spp/rd/