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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