Created by on 08/19/2011

After an extended battle with Congress, in early August President Barack Obama signed comprehensive legislation to raise the federal debt ceiling and engage in a two-step process to address the country’s $14.3 trillion deficit. The Budget Control Act of 2011(BCA), Public Law 112-25, includes few details about how the mandated cuts in discretionary spending will be achieved, making it hard to immediately determine how funding for research and science agencies, including the National Institutes of Health (NIH) and the National Science Foundation, will be affected in fiscal year (FY) 2012 and beyond. However, it is clear that the bill aims to enforce a newfound measure of fiscal discipline regarding federal spending.

The BCA imposes immediate caps on security and non-security discretionary spending, accounting for nearly one trillion in savings over the next decade. For FY 2012 and 2013 there is a “firewall” that prohibits lawmakers from making further cuts in non-security spending (such as medical research) in order to increase funding for security programs. That firewall does not exist after FY 2013. In addition, both the House and Senate are required to vote on a balanced budget amendment to the U.S. Constitution sometime between October 1st and December 31st of this year. None of the spending cuts or other aspects of the agreement are contingent on the adoption of a balanced budget amendment.
Longer-term spending restraint will be determined by a new Joint Select Committee on Deficit Reduction (JCDR) that has been appointed to identify an additional $1.2 - $1.5 trillion in deficit reduction (on top of the spending caps) over the next ten years. These savings are to be achieved through future spending cuts, changes in entitlement programs, reforms of the tax code, or any combination of those things (see the “Inside the Beltway Scoop” article in this newsletter for more information about the committee). The JCDR must approve recommendations and write a bill by November 23, 2011 and submit the legislation to Congress, the President and Vice President. Once the JCDR bill comes to the House and Senate floor all lawmakers will have an opportunity to vote “yes” or “no” (and are not allowed to offer amendments) on the entire package of recommendations. This vote must take place by December 23, 2011.
If the JCDR fails to produce a bill to reduce the deficit by a minimum of $1.2 trillion or Congress fails to approve it, a budget process known as “sequestration” would be triggered to reduce the federal budget through across-the-board cuts split equally between defense and non-defense discretionary spending. Social Security, Medicaid, Veterans benefits and pensions, food stamps, unemployment insurance, and low-income support programs would be exempt from any across-the-board cuts. The across the board cuts would go into effect on January 1, 2013 and would be divided and spread evenly across nine years (FY’s 2013-2021).
Although research funding is not exempt from the spending cuts mandated in the BCA, some of the less-publicized details about the legislation may provide hope for the scientific community. For instance, the overall cap on discretionary spending for FY 2012 is actually $24 billion higher than the amount included in the 2012 “Budget Resolution” approved by the House earlier this spring. The House Appropriations Committee has already passed all of its appropriations bills with the exception of the Transportation bill and the Labor, Health and Human Services (LHHS) measure that funds NIH. Even though there is nothing in the BCA mandating the House to readjust the spending levels for appropriations bills that have already been finished, the $24 billion could be allocated exclusively to the unfinished bills (like LHHS). It is also possible that the funds could be distributed among all of the measures. We don’t know yet what the House appropriators are planning to do with the “extra” money.
The next few months will be exceptionally busy in Washington given the tight deadlines that must be met by the JCDR. We will need the involvement of the entire scientific community to ensure that all members of Congress, not just those on the deficit committee, are educated about the importance of maintaining federal funding for research and how doing so will benefit their constituents.