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The Federal R&D Budget: Process and Perspectives
Matt HourihanMarch 19, 2015for the Marine Geoscience Leadership Symposium
AAAS R&D Budget and Policy Programhttp://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
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
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
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
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
Bud
get
Rel
ease
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
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
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 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
Bud
get
Rel
ease
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
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
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
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
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”
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”
The Federal Budget Cycle
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
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 4: Spend the Fiscal Year Budget
Phase 2: OMB Review
Phase 3: Congressional budget and appropriations
Phase 1: Planning within Agency w/ OMB and OSTP oversight
Phase 4: Spend the Fiscal Year Budget
Phase 2: OMB Review
Phase 3: Congressional budget and appropriations
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
Limits on Discretionary Spending Since FY 2010billions of constant 2015 dollars
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
$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 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
$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 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
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
3. agency notes R&D STEM
$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%
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
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
For more info…
202-326-6607
http://www.aaas.org/program/rd-budget-and-policy-program