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The Federal R&D Budget: Process and Perspectives

The Federal R&D Budget: Process and Perspectives. Matt Hourihan June 23, 2015 For the Washington Internships for Students of Engineering (WISE ) 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.

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The Federal R&D Budget: Process and Perspectives

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  1. The Federal R&D Budget: Process and Perspectives Matt Hourihan June 23, 2015 For the Washington Internships for Students of Engineering (WISE) AAAS R&D Budget and Policy Programhttp://www.aaas.org/program/rd-budget-and-policy-program

  2. 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

  3. Broad Qualities of the System • Decentralization • “Embeddedness” • Incrementalism

  4. 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

  5. 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)

  6. 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)

  7. Agency Budgeting Coordination (?) and Top-Down Guidance One Agency’s R&D Budget Decentralized planning and scientific input

  8. The Federal Budget Cycle • 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

  9. Major Funding Priorities for FY16 • 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

  10. The Federal Budget Cycle • 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

  11. The Budget Resolution Overall spending framework Discretionary spending figure is divvied up by appropriations committees Budget resolution is a politicaldocument (which is why they can’t seem to pass one?) Reconciliation instructions?

  12. The Federal Budget Cycle • 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”

  13. 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”

  14. 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)

  15. The Federal Budget Cycle • Gov’t is working on 3 budgets at any given time. Right now: • FY15 in progress • FY16: Approps underway • FY17: Agencies ramping up

  16. Looking ahead… • Democratic roadblocks • 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

  17. For more info… mhouriha@aaas.org 202-326-6607 http://www.aaas.org/program/rd-budget-and-policy-program

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