Transcript 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 http://www.aaas.org/program/rd-budget-and-policy-program.

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
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
Composition of the Proposed FY 2016 Budget
Total Outlays = $4.0 trillion
outlays in billions of dollars
Net Interest
$283
Defense
Discretionary
$528
[Defense R&D]
$77
Other Mandatory
$670
Nondefense
Discretionary
$495
Medicaid
$351
[Nondefense R&D]
$69
Medicare
$583
Social Security
$938
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
Composition of the Federal Budget
Outlays as share of total budget, 1962 - 2016
80%
70%
60%
Payments to
Individuals
50%
All Other
40%
30%
Defense (non-R&D)
20%
10%
0%
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
Phase 1: Planning within Agency w/ OMB and
OSTP oversight
Phase 2: OMB
Review
Budget
Release
A Typical Federal Budget Process:
Three Years, Four Phases
Phase 3: Congressional
budget and appropriations
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Phase 4: Execute the fiscal year’s
budget (not shown)
Arranged by fiscal year (October to September)
Phase 1: Planning within Agency w/ OMB and
OSTP oversight
Phase 2: OMB
Review
Budget
Release
The Federal Budget Cycle
Phase 3: Congressional
budget and appropriations
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
 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
Coordination (?)
and Top-Down
Guidance
White House S&T
priorities (OSTP,
NSTC)
OMB fiscal
directives
Congressional
Directives and
Agreements
One Agency’s R&D Budget
Agency heads
and staff
Decentralized
planning and
scientific input
Strategic
Plans
Last Year's
Budget
Advisory Panels and
Review Committees
External Panels
(i.e. NAS) and
broader science
community
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, OMB
 Endorsements, guidance from advisory panels, other
outside experts
 Appropriators and authorizers on board
 Separately and slightly behind, NIH sets up its own
program
 Interagency rivalry evolves to collaboration
Phase 1: Planning within Agency w/ OMB and
OSTP oversight
Phase 2: OMB
Review
Budget
Release
The Federal Budget Cycle
Phase 3: Congressional
budget and appropriations
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
 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
Total R&D by Agency, FY 2016
budget authority in billions of dollars
Commerce, $2.1
All Other, $6.2
USDA, $2.9
Total R&D =
$145.3 billion
NSF, $6.3
NASA, $12.2
DOE, $12.5
DOD, $71.9
HHS (NIH), $31.0
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
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
Phase 1: Planning within Agency w/ OMB and
OSTP oversight
Phase 2: OMB
Review
Budget
Release
The Federal Budget Cycle
Phase 3: Congressional
budget and appropriations
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
 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?
Phase 1: Planning within Agency w/ OMB and
OSTP oversight
Phase 2: OMB
Review
Budget
Release
The Federal Budget Cycle
Phase 3: Congressional
budget and appropriations
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
 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)
Senate
House
Budget
Cmte
Approps
Cmte
Budget
Cmte
Approps
Cmte
Energy +
Commerce
Cmte
Subc on
Energy +
Water
Env and Pub
Works Cmte
Subc on
Energy +
Water
Natural
Resources
Cmte
Subc on
Interior +
Env
Energy and
Nat Res
Cmte
Subc on
Interior +
Env
The Federal Budget Cycle
Phase 4: Spend the Fiscal Year Budget
Phase 2: OMB
Review
FY 2017
Phase 1: Planning within Agency w/ OMB and
OSTP oversight
Budget
Release
FY 2016
Phase 3: Congressional
budget and appropriations
Phase 4: Spend the Fiscal Year Budget
Phase 2: OMB
Review
Budget
Release
FY 2015
Phase 3: Congressional
budget and appropriations
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
 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
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?
Limits on Discretionary Spending Since FY 2010
billions of constant 2015 dollars
$1,200
$1,150
$1,100
$1,050
$1,000
$950
$900
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
Limits on Discretionary Spending Since FY 2010
billions of constant 2015 dollars
$1,200
$1,150
$1,100
$1,050
$1,000
$950
$900
Actual Base Budget Authority
BCA: Original Baseline
BCA: Sequester Baseline
Based on past budget resolutions, the Budget Control Act, and subsequent legislation. Adjusted for inflation using deflators from the FY16
budget request. © AAAS 2015
Limits on Discretionary Spending Since FY 2010
billions of constant 2015 dollars
$1,200
$1,150
$1,100
$1,050
$1,000
$950
$900
Actual Base Budget Authority
BCA: Original Baseline
BCA: Sequester Baseline
Current Law
Based on past budget resolutions, the Budget Control Act, and subsequent legislation. Adjusted for inflation using deflators from the FY16
budget request. © AAAS 2015
Limits on Discretionary Spending Since FY 2010
billions of constant 2015 dollars
$1,200
$1,150
$1,100
$1,050
$1,000
$950
$900
Actual Base Budget Authority
BCA: Original Baseline
BCA: Sequester Baseline
Current Law
President's FY 2016 Budget
Based on past budget resolutions, the Budget Control Act, and subsequent legislation. Adjusted for inflation using deflators from the FY16
budget request. © AAAS 2015
FY16 R&D in the Base Budget by Function
percent change from FY 2015, nominal dollars
Commerce (includes NIST)
44.8%
Applied Energy Programs
23.3%
Agriculture
20.5%
Transportation
17.8%
Environment Agencies
12.6%
Defense Activities
8.1%
General Science (NSF, DOE SC)
5.0%
Health (includes NIH)
2.2%
Space
0.9%
-35.5%
Justice (DHS)
TOTAL
-40%
6.4%
-20%
0%
20%
Source: OMB R&D data, agency budget justifications, and agency budget documents. © 2015 AAAS
40%
60%
Trends in Federal R&D, FY 1977-2016
in billions of constant FY 2015 dollars
$200
$180
$160
Total R&D
$140
Defense
$120
$100
$80
Nondefense
ARRA Total
$60
ARRA Defense
$40
$20
ARRA Nondefense
$0
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
Federal R&D in the Budget and the Economy
Outlays as share of total, 1962 - 2016
14.0%
2.5%
12.0%
2.0%
10.0%
1.5%
8.0%
6.0%
1.0%
4.0%
0.5%
2.0%
0.0%
0.0%
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
R&D as a Share of GDP by Funder
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Total
Federal
Industry
Source: National Science Foundation, National Patterns of R&D Resources series. © 2015 AAAS
Other
Research as a Share of GDP by Funder
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
Total Research
Federal Research
Industry Research
Source: National Science Foundation, National Patterns of R&D Resources series. © 2015 AAAS
Other
 3. agency notes
 R&D
 STEM
For more info…
[email protected]
202-326-6607
http://www.aaas.org/program/rd
-budget-and-policy-program