The House of Representatives adopted a FY15 budget today on a 219-205 party line vote. Budget resolutions set overall spending caps to guide the appropriations process. Since overall caps for FY15 were previously agreed to in the December 2013 budget deal that softened the impact of the sequester for two years, a new budget is unnecessary for appropriators to begin their deliberations and the Senate has no intention of taking the House-passed budget or crafting an alternative. 

However, budgets also take a longer term view beyond the next fiscal year and this plan is intended to create distinctions between fiscally conservative Republicans and their Democratic counterparts in the months leading up to the November midterms. Written by Budget Committee Chairman Paul Ryan (R-WI), this 10-year plan very purposefully stands in marked contrast to the budget request released by the President in early March, with deep cuts to domestic spending in the out years that go beyond those required by sequestration - while making major changes to entitlement programs such as Medicare, Medicaid and Pell Grants.   

Specifically, over the next decade the plan bring the federal budget into balance by enacting over $5 trillion in spending cuts while also lowering corporate and certain individual income tax rates. To do so, it eliminates or substantially reforms a number of entitlement programs, including, for example, changes in eligibility for the Pell Grant program and the elimination of its mandatory funding stream, which would leave the program’s funding entirely up to the annual appropriations process and yearly spending caps. Those caps, however, would be reduced significantly beginning in FY16 as the Ryan budget aims to restore defense spending to pre-sequestration levels at the expense of non-defense spending. In total, non-defense funding – the slice of the federal pie so critical to higher education and university-based research – would be reduced by 8.5 percent, from $492 billion to $450 billion in FY16, and by an estimated 22 percent at the end of the FY24. Such cuts would make maintaining even sequester-level funding for research and education very difficult, given competing domestic priorities.  The budget, while lacking specifics in many areas, does specifically recommend the elimination of other key investments including termination of both the National Endowment for Humanities and the National Endowment for the Arts, as well as cuts to student benefits beyond Pell, such as the elimination of the in-school interest subsidy for undergraduates. 

For research specifically, Ryan’s budget justifies the reduced allotment for non-defense discretionary programs by focusing federal sponsorship on basic research alone at the expense of applied research. According to the budget explanation, “The budget reduces excess and unnecessary spending, while supporting core government responsibilities. The resolution preserves basic research, providing stable funding for NSF to conduct its authorized activities in science, space and technology basic research, development, and STEM education while shifting the focus back to basic research...” The explanation goes on to say that even certain areas of basic research such as biological and environmental research funded by the DOE Office of Science “could potentially crowd out private investment,” and therefore “funding should be distributed accordingly.”

For its part, the Senate will not write its own budget resolution, arguing that the Murray-Ryan agreement fulfilled the primary purpose of the exercise: setting the fiscal year’s overall spending levels. Because of this reality, it is assumed that the document is intended to serve as a blueprint for budget and fiscal talking points for conservative candidates in the upcoming election. It also serves as a capstone for Paul Ryan, who is term limited as chair of the Budget Committee and has set his sights on chair of the Ways and Means Committee next Congress -- and potentially higher office in the future. 

Meanwhile, House and Senate appropriators continue steady and early progress on FY15 funding bills, with hearings ongoing and some early markups completed in House subcommittees. Given the severe budget constraints with only about $2 billion above FY14, appropriators seem to be developing mostly status quo bills with few winners and losers, although they have yet to confront the most challenging and controversial bills such as Labor-HHS-Education, which funds NIH and education programs.  We expect the process to move ahead through the summer but as elections draw near in the fall, we anticipate few bills will be complete before a post-election lame duck session.    

Contact

If you have any questions regarding this update or the Office of Federal Relation’s efforts in Washington, please feel free to be in touch with Suzanne Day or Jon Groteboer at (202) 863-1292.