1. The Federal R&D Budget: Process and Perspectives Matt Hourihan June 18, 2013 For the Washington Internship for Students of Engineering (WISE) Program AAAS R&D Budget and Policy Program http://www.aaas.org/spp/rd

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5. 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

6. U.S. R&D INVESTMENT The Federal R&D Budget: The Basics About $144 billion in FY 2014 Down ~16% between 2010 and 2013 About half = DOD About half = Basic + applied research 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)

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8. Recent R&D Budget History Historically large cuts in FY 13 Recent gains: Energy General Science Manufacturing Recent stagnation / declines Health Agriculture Environment Space

9. U.S. R&D INVESTMENT Q: How Did We Get Here? A: A convoluted, complicated, old and evolving process…

10. 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

11. 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

12. 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

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15. The Federal Budget Cycle Congress holds budget hearings… IN THEORY - Approves budget resolution (simple majority) 302(b) allocations to the 12 appropriations subcommittees

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17. 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?

18. U.S. R&D INVESTMENT Congress House Budget Cmte Natural Resources Cmte Approps Cmte Subc on Interior + Env Subc on Energy + Water Energy + Commerce Cmte Senate Budget Cmte Energy and Nat Res Cmte Env and Pub Works Cmte Approps Cmte Subc on Energy + Water Subc on Interior + Env

19. 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…

20. U.S. R&D INVESTMENT What Drives Congressional Budget Decisions? Incrementalism Local politics Concerns over effectiveness, balance, duplication Role of government STEM workforce issues Topical vs. substantial The Big Fiscal Context Annual Miracle

21. 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 planning for FY15

22. 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

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24. Current State of Play Presidents FY14 budget now out How does one fit a $1057 billion budget into a $966 billion hole? The BIG issues remain: deficits, taxes v. spending, growth in entitlements, tax burden Support for science funding seems to continue, BUT… House remains committed to cutting nondefense discretionary Veto threat? Sequestration remains in place for now…. Research community reeling Sequester Part 2? …also debt ceiling

25. U.S. R&D INVESTMENT For more info… mhouriha@aaas.org 202-326-6607 www.aaas.org/spp/rd/