The Federal R&D Budget: Process and Perspectives Matt Hourihan March 16, 2015 For the Mirzayan S&T Policy Fellows AAAS R&D Budget and Policy Program

The Federal R&D Budget: Process and Perspectives

Matt HourihanMarch 16, 2015For the Mirzayan S&T Policy Fellows

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

Major impact for R&D and innovation: most basic research, and most university research, is federally funded

Broad Qualities of the System

Decentralization

“Embeddedness”

Incrementalism

Defense Discretionary

$528 [Defense R&D]$77

Nondefense Discretionary

$495

[Nondefense R&D]$69

Social Security$938

Medicare$583

Medicaid$351

Other Mandatory$670

Net Interest$283

Composition of the Proposed FY 2016 BudgetTotal Outlays = $4.0 trillion

outlays in billions of dollars

Source: Budget of the United States Government FY 2016. Projected deficit is $474 billion. © 2015 AAAS

Two Spending Categories: Discretionary vs. Mandatory

Mandatory Spending (aka Direct Spending) Mostly entitlements, mostly on “autopilot” Potential for high political sensitivity = “third rail”

Discretionary Spending: Adjusted annually Easy (nondefense) targets?

i.e. Sequestration Vast majority of federal R&D is discretionary

0%

10%

20%

30%

40%

50%

60%

70%

80%

Composition of the Federal BudgetOutlays as share of total budget, 1962 - 2016

Payments toIndividuals

All Other

Defense (non-R&D)

Investments(research, edu,infrastructure)

Source: Budget of the United States Government, FY 2016. "Investments" include outlays for R&D, education and training, direct nondefense infrastructure, and other grants, primarily for transportation. "Payments to Individuals" are primarily entitlement programs like Medicare, Medicaid, and Social Security, but also include many other public assistance programs. © 2015 AAAS

A Typical Federal Budget Process:Three Years, Four Phases

Phase 4: Execute the fiscal year’s budget (not shown)

Arranged by fiscal year (October to September)B

udge

t R

elea

se

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

Phase 1: Planning within Agency w/ OMB and OSTP oversight

Phase 2: OMB Review

Phase 3: Congressional budget and appropriations

Bud

get

Rel

ease



Phase 2: OMB Review


The Federal Budget Cycle

Phase 1: Internal agency discussions and planning Strategic plans, staff retreats, program assessments

OMB is present throughout Early spring: guidance memo Science & Tech: Joint guidance memo from OMB / OSTP (midsummer)

Agencies deliver budget justifications to OMB (early fall)

Agency Budgeting

One Agency’s R&D Budget

OMB fiscal directives

Agency heads and staff

Strategic Plans

Advisory Panels and Review Committees

Coordination (?) and Top-Down Guidance

Decentralized planning and scientific input

External Panels (i.e. NAS) and

broader science community

White House S&T priorities (OSTP,

NSTC)

Congressional Directives and Agreements

Last Year's Budget

One Example The Human Genome Project

Science community takes early interest in sequencing

Senior DOE Science personnel conceive plan, work their way up the hierarchy:Elicit support from DOE superiors, OMBEndorsements, guidance from advisory panels,

other outside expertsAppropriators and authorizers on board

Separately and slightly behind, NIH sets up its own program Interagency rivalry evolves to collaboration

Bud

get

Rel

ease



Phase 2: OMB Review



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

DOD, $71.9

HHS (NIH), $31.0

DOE, $12.5

NASA, $12.2

NSF, $6.3

USDA, $2.9

Commerce, $2.1All Other, $6.2

Total R&D by Agency, FY 2016budget authority in billions of dollars

Source: OMB R&D data, agency budget justifications, and other agency documents and data. R&D includes conduct of R&D and R&D facilities. © 2015 AAAS

Total R&D = $145.3 billion

Major Funding Priorities Advanced Manufacturing Low-carbon energy Climate research and earth observation Agricultural R&D Infrastructure R&D Antibiotic Resistance* Precision Medicine* Discovery Science:

Life sciences and neuroscience Advanced computing

COMPETES Agencies R&D: $12.1 billion, +6.6%

*New for FY16

Bud

get

Rel

ease



Phase 2: OMB Review



Phase 3: Congress gets involved Receives and reacts to President’s budget, holds hearings IN THEORY: Approves budget resolution (simple

majority) 302(b) allocations to the 12 appropriations subcommittees

The Budget Resolution

Overall spending framework

Discretionary spending figure is divvied up by appropriations committees

Budget resolution is a political document (which is why they can’t

seem to pass one?)

Reconciliation instructions?

Bud

get

Rel

ease



Phase 2: OMB Review



Approps committees write/approve 12 appropriations bills Bills have to pass both chambers Differences are resolved in conference committee Can be filibustered

“President proposes, Congress disposes”

Congressional Budget Decisions “All politics is local” Distributed responsibility:

Nine subcommittees responsible for at least $1 billion of R&D

No concerted assessment of full R&D portfolio

Limited avenues for formal S&T advice

Concerns over balance, duplication, competitiveness, role of government, broader fiscal context

Reactive; incrementalism? The “Annual Miracle”

More examples… Dept of Agriculture research grants

USDA research regular source for earmarks Outside calls for increased competitive grants

(versus formula funds) over 30+ years Competitive programs phased in slowly

Health Research and Congress DOD health program: breast cancer advocacy NIH doubling was a Congress-led initiative

Authorizations vs. Appropriations Authorization

Creates and modifies programs Sets funding ceilings Under the jurisdiction of the topical legislative committees

Appropriations Permits funding (power to incur obligations) Under jurisdiction of Approps Committees Can be multiyear or advance appropriations (i.e.

Veterans) >$250 million in unauthorized appropriations in 2012 (per

CBO)

House

BudgetCmte

Natural Resources

Cmte

Approps Cmte

Subc on Interior +

Env

Subc on Energy +

Water

Energy + Commerce

Cmte

Senate

BudgetCmte

Energy and Nat

Res Cmte

Env and Pub Works

Cmte

Approps Cmte

Subc on Energy +

Water

Subc on Interior +

Env


Gov’t is working on 3 budgets at any given time. Right now: FY15 in progress FY16: Heading for budget resolutions, approps to follow FY17: Agencies probably ramping up

FY 2015

FY 2016

Bud

get

Rel

ease

FY 2017

Bud

get

Rel

ease


Phase 4: Spend the Fiscal Year Budget

Phase 2: OMB Review



Phase 4: Spend the Fiscal Year Budget

Phase 2: OMB Review


Looking ahead…

Budget resolutions coming soon

Size and composition of the discretionary budget? Can R&D stay ahead of the curve?

Deficits have fallen, but big-picture fiscal challenges remain largely unchanged Debt limit, entitlement growth Reconciliation strategy?

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

Limits on Discretionary Spending Since FY 2010billions of constant 2015 dollars

Actual Base Budget Authority

Based on past budget resolutions, the Budget Control Act, and subsequent legislation. Adjusted for inflation using deflators from the FY16 budget request. © AAAS 2015

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200


Actual Base Budget Authority BCA: Original Baseline

BCA: Sequester Baseline


$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200



BCA: Sequester Baseline Current Law


$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200



BCA: Sequester Baseline Current Law

President's FY 2016 Budget


6.4%

-35.5%0.9%

2.2%

5.0%

8.1%

12.6%

17.8%

20.5%

23.3%

44.8%

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

TOTAL

Justice (DHS)

Space

Health (includes NIH)

General Science (NSF, DOE SC)

Defense Activities

Environment Agencies

Transportation

Agriculture

Applied Energy Programs

Commerce (includes NIST)

FY16 R&D in the Base Budget by Functionpercent change from FY 2015, nominal dollars

Source: OMB R&D data, agency budget justifications, and agency budget documents. © 2015 AAAS

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Total R&D

Defense

Nondefense

ARRA Total

ARRA Defense

ARRA Nondefense

Trends in Federal R&D, FY 1977-2016in billions of constant FY 2015 dollars

Source: AAAS analyses of historical budget and appropriations data. Pre-1994 figures are NSF obligations data from the Federal Funds survey. FY 2016 is the President's request. R&D includes conduct and facilities. © 2015 AAAS

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Federal R&D in the Budget and the EconomyOutlays as share of total, 1962 - 2016

R&D as a Share of the Federal Budget (Left Scale) R&D as a Share of GDP (Right Scale)

Source: Budget of the United States Government, FY 2016. FY 2016 is the President's request. © 2015 AAAS

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

R&D as a Share of GDP by Funder

Total Federal Industry Other

Source: National Science Foundation, National Patterns of R&D Resources series. © 2015 AAAS

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

Research as a Share of GDP by Funder

Total Research Federal Research Industry Research Other

Source: National Science Foundation, National Patterns of R&D Resources series. © 2015 AAAS

3. agency notes R&D STEM

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Documents

The Federal R&D Budget: Process and Perspectives Matt Hourihan March 16, 2015 For the Mirzayan S&T Policy Fellows AAAS R&D Budget and Policy Program