Federal Update: President Trump Releases Full FY18 Budget Request

May 23, 2017

Following up on March’s FY18 “skinny budget,” the Administration released the full FY18 presidential budget request today (full budget available here), titled “A New Foundation for American Greatness.”  The full budget provides the details missing from the March outline (first reported here), but the overall themes are consistent: deep, fundamental cuts to many government agencies and programs, including research and education, and large increases for national and border security accounts.  On the top line, the budget proposal claims it would reduce the deficit $5.6 trillion over a decade, assuming significant economic growth.  The plan would cut $1.6 trillion over the next 10 years in non-Defense discretionary spending and would save a total of $3.6 trillion, in large part from cuts to mandatory funding of social safety nets like Medicaid, SNAP, Children’s Health Insurance, and Social Security Disability Insurance, hitting these low-income assistance programs particularly hard.  The budget also proposes lifting the sequester cap in 2018 for Defense spending by $54 billion and lowering the non-Defense cap by a similar amount – an adjustment that would require a change in current law.

Early reaction from Congress has been largely negative toward the proposals, just as it was following the March release of the budget outline.  Key Republican members of leadership and the Appropriations Committees continue to stress that the Administration’s budget proposal is the first step in a long process, and emphasize that the Congress, through the power of the purse, will formulate a spending plan for the fiscal year to come. On both sides of the aisle, members of Congress have been outspoken in their concerns about the full return of the sequester next year, which will require about $6 billion in reduced spending across the government.  With next year’s midterm elections already on the horizon, Democrats and moderate Republicans would be loath to support the full extent of the proposals put forward by the President.  That said, other lawmakers remain concerned about the growing debt and may look to certain recommendations within the budget for guidance on where to achieve savings.

On University priorities, the President’s budget proposes many devastating research and education cuts that were previously reported in the outline and some new ones as well.  Notably, the budget includes an 11 percent cut to the National Science Foundation, the elimination of Title VI international education, the phasing out of the subsidized student loan programs, an end to Public Service Loan Forgiveness, and consolidation of borrower income-based repayment.  The budget still calls for the wholesale elimination of a host of programs, among them: ARPA-E; SEOG; NEH; NEA; and IMLS.  The budget also spells out, for the first time in detail, the Administration’s plans to cap Facilities and Administrative reimbursements through NIH at 10 percent.  In the Administration’s eyes, this cap would cover the majority of its proposed nearly 25 percent reduction in funding for NIH, relative to the final FY17 amount.

A full chart of the budget’s proposed effects on University priorities is below.

The Appropriations Committees in both Chambers have begun hearings on FY18 funding and these will accelerate with the release of the Administration’s budget today.  In the coming days, various committees will be hearing from Cabinet members, beginning tomorrow with the Director of the Office of Management and Budget, Mick Mulvaney.  However, with the President’s budget coming so late in the year and the delayed completion of FY17 funding, it already seems likely that the press of other business,  like healthcare, tax reform, and a debt limit increase, will force a continuing resolution or other stopgap measure around the start of the fiscal year.

Despite the President’s distressing budget proposals, we remain encouraged by the broad support in Congress for many of the University’s priorities, which, for the most part, received strong funding levels in the recently passed FY17 omnibus bill (first reported here).  And while the fiscal landscape in FY18 may be sparse and difficult with the return of sequester caps, the FY17 process and result give reason to be optimistic that at least these proposed cuts will not become law.

During the FY18 budget process, Harvard’s federal relations team will remain closely engaged with alumni and key policymakers to advocate for the University’s priorities.  As always, please feel free to reach out to Kevin Casey (kevin_casey@harvard.edu), Suzanne Day (suzanne_day@harvard.edu), and Jon Groteboer (jon_groteboer@harvard.edu) with any questions or concerns.