APA Federal Budget Blog

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Republican Appropriators sound off.

The House and Senate Appropriations Committees have begun holding hearings as a prelude to drafting the Fiscal Year 2014 funding bills. The Chair of the House Appropriations Committee, Rep. Harold Rogers (R-KY), was quoted in early May saying that that his party’s lawmakers will face tough choices given that they are now planning to produce bills with an overall cap of $91 billion less than this year under sequestration.

The recent budget-control laws would cap the federal government’s regular discretionary operating expenses at about $967 billion. The current level of $984 billion has led to furloughs of workers and other cutbacks throughout government programs. At NIH, for example, the agency expects to lose $1.6 billion or 5.5 percent this year under sequestration. NIH expects to fund more than 1,300 fewer grants this year, including 703 fewer new grants.

Chairman Rogers, who opposes the sequester, said that he expects the cuts in spending to be replaced in a broader fiscal deal sometime later this year. Rogers speculated that his committee may have to work on two sets of bills for Fiscal 2014, one group reflecting the $967 billion cap and the other set at a different spending level determined by a future agreement between Democratic and Republican leadership.

The Senate-adopted budget level was higher than that of the House because it assumed sequestration would be canceled. Senate Appropriations Chairwoman Barbara Mikukski (D-MD), is trying to get Republican support to draft bills in her committee and chamber at the pre-sequester level of $1.058 trillion. Senate Republicans, who did not vote for the Senate-passed budget, are still pushing back.

Policy differences between the two parties remain as strong as ever. A conference committee to resolve differences between the House and Senate budgets remains unlikely. A failure to resolve differences in spending in the next few months could mean very different sets of spending bills emerging from the House and Senate, which would each still require negotiation later in the session. So if negotiation doesn’t take place over the budget levels, it will still be required for Congress to adopt spending legislation.

Pat Kobor, sr. science policy analyst
Science Government Relations Office
American Psychological Association

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Meditations on pain and gain.

Your blogger and her ilk have been wondering when the pain of sequestration would start to ripple through the wider public. Scientists and academics have been keenly aware of the difficulties spawned by the automatic across-the-board cuts that went into effect on March 1. In fact, as White House public outreach staff tell us, the science community has been the most active of all concerned constituencies when it comes to advocating against the cuts. But when, we wondered, was everyone else going to begin to notice that the cuts have real consequences?

Perhaps in early March when outraged congressmen began to scold the White House for cancelling tours?  Perhaps in mid-March when the House and Senate office buildings closed some entrances to allow for furloughs of Capitol police, resulting in long lines of visitors at the entrance metal detectors?  No—the answer is this week, because as we head into summer vacation season, delays have begun at many major airports. The Federal Aviation Administration has begun implementing furloughs of all staff, including air traffic controllers, to reach its target of $637 million in savings by Sept. 30. Each of the nation’s 15,000 controllers will take 11 furlough days before the end of the fiscal year, and the days are carefully scheduled to minimize the impact on the traveling public. And yet, the traveling public was hit with noticeable delays on April 22, the first day of furloughs.

You can see flight delays and the reasons for them on the Current FAA Airport Delays page at the Flightstats website. Flyer beware!

The Internal Revenue Service is also commencing furloughs, but has chosen to close IRS offices completely on furlough days to realize additional savings from building operations, etc. IRS Acting Commissioner Steve Miller said in a note to staff on April 19: “The first furlough days will be May 24, June 14, July 5, July 22 and Aug. 30, with another two days possible in August or September. All public-facing operations will be closed on these dates, including our toll-free operations and taxpayer assistance centers.”

Adding to the drumbeat of serious news about sequestration, Secretary of the Army John McHugh and Army Chief of Staff Gen. Ray Odierno testified (PDF, 228KB) before the Senate Armed Services Committee on April 23, expressing concern about the cuts the Defense Department is experiencing. The department is required to cut nearly $42 billion by the end of September. If no action is taken to reverse sequestration, the cuts will continue into future years. The Army's share of the automatic cuts over the next six months is $7.6 billion. According to Secretary McHugh, the Army may have to reduce its force by over 100,000 beyond currently planned reductions if sequestration continues into fiscal year 2014 and beyond.

Recall that the budget adopted by the House would cancel sequestration for defense, but not for non-defense accounts. The budget adopted by the Senate and the one proposed by President Obama would cancel sequestration for both defense and non-defense accounts. Only a law passed by both houses and signed by the president could end sequestration, and that hypothetical law would have to include provisions for revenue that would replace the savings yielded by the automatic cuts. So far the odds of such a law passing both houses of Congress have not improved, but as the consequences of the cuts become more onerous, the odds may change.

Pat Kobor, sr. science policy analyst
Science Government Relations Office
American Psychological Association

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The budget is equal parts “vision” and “negotiating position.”

President Obama released his 2014 budget on April 10. Maintaining the nation’s investments in research and development and Science, Technology, Engineering and Math (STEM) education was a primary theme. The budget request for research and development totaled $142.8 billion, a 1.3 percent increase over fiscal 2012 enacted levels but a small decline when inflation is taken into account. Non-defense research spending would rise to $69.6 billion, a nine percent increase from 2012 levels. That increase would be offset by a significant reduction to the development side of R&D, which would get $71.5 billion, focused mainly on weapons programs at the Pentagon.

White House Office of Science and Technology policy director John P. Holdren told representatives of scientific organizations at an OSTP budget briefing that the request demonstrates the administration’s commitment to scientific research, particularly considering that the overall budget reduces discretionary spending to its lowest share of the economy since President Eisenhower’s administration.

Funding for the National Institutes of Health (NIH), the National Science Foundation (NSF) and the Veterans Administration (VA) Medical and Prosthetic Research Program would increase above the FY 2012 enacted levels.

The NIH program level for FY 2014 is $31.331 billion, an increase of $471 million (1.5 percent) over the FY 2012 program level of $30.860 billion. NIH estimates that it will spend $16.9 billion to support 36,610 research project grants (RPGs) in FY 2014, an increase of $382 million and 351 grants over than FY 2012. Within this total, NIH estimates it will support 10,269 new and competing renewal RPGs, an increase of 1,283 grants over FY 2012. Programs emphasized within the NIH budget include: the BRAIN Initiative; opportunities and challenges associated with big data; translational science; and recruiting and retaining diverse scientific talent and creativity.

The administration’s budget requests an appropriation of $7.6 billion for NSF. This is $593 million or 8.4 percent above the FY 2012 enacted level and maintains the administration’s commitment to increase funding for basic research agencies. NSF will invest in a broad portfolio of fundamental inquiry, as well as strategic investments in areas such as cyber infrastructure, clean energy and training. The NSF budget includes focused investments on scientific and engineering training, as well as the cultivation of a globally-competitive high-tech workforce. Other proposals include the consolidation of science, technology and mathematics education programs across the federal government; the expansion of research opportunities for early college students through an increase of $13 million above the 2012 enacted level, to $79 million; and the consolidation of an array of NSF’s graduate education programs into a single $325 million fellowship entity.

The president’s budget reduces funding for the Centers for Disease Control and Prevention (CDC) by over $270 million from the FY 2012 enacted level, for a total program level of $6.895 billion. The president’s request slashes the agency’s actual budget authority by $439, and continues the trend of relying on backfilling from the Prevention and Public Health Fund and other fund transfers. The agency’s Prevention Research Centers program sees a decrease in funding, while the National Center for Health Statistics sees a significant increase.

The VA Medical and Prosthetic Research program would receive $586 million, an increase of $5 million (0.8 percent) above the FY 2012 level. A summary (98KB, PDF) of the proposed VA budget notes that investing in medical and prosthetic research supports efforts to advance the care and quality of life for veterans. The National Aeronautics and Space Administration (NASA) request proposes $17.7 billion, down a scant 0.3 percent from fiscal 2012’s enacted levels.

Overall the budget would increase spending in 2014 by nearly $160 billion beyond what the Congressional Budget Office projected in February — a result of canceling sequestration and of new spending initiatives. Many of the president’s proposed savings would phase in toward the end of the 10-year budget window, such as the plan to recalculate cost of living increases to reduce entitlement spending. The deficit would drop to $744 billion, or 4.4 percent of GDP — the lowest of the past five years — and continue dropping to 2.8 percent of GDP in 2016 and 1.7 percent in 2023 assuming the economy continues to improve. The accumulated U.S. debt, meanwhile, would rise $8.1 trillion to $25.3 trillion over the decade.

The president positioned his budget to the political right of the budget the Senate approved last month, especially with the inclusion of entitlement reforms, with the expectation that it could serve as a blueprint for a new round of negotiations with the more conservative House leadership on long-term economic policies. However, the Obama budget did not receive a positive reception. The president’s proposed $580 billion in tax increases (including a tobacco tax increase that would pay for a new preschool program for four-year-olds) remains a sticking point.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Science agency budgets caught in debates about federal spending.

A summary of how research funding fared in the FY 2013 budget and what to look for as congress moves to the FY 2014 budget is provided in the latest issue of Psychological Science Agenda.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Sequestration was not repealed.

The good news is that Congress has finally approved H.R. 933, FY 2013 Appropriations, after a series of temporary resolutions. This means that science funding agencies can finally make decisions about how to manage their programs between now and Sept. 30, 2013.

In the category of "not good news": the bill sets up nearly $10 billion in cuts to research and development. The bill reduces research and development funding by $506.6 million from FY 2012 levels, according to estimates by the American Association for the Advancement of Science (AAAS) (PDF, 35KB), but because it also leaves sequestration in place, federal R&D may be reduced by $9.6 billion in all below last year’s levels, a 6.9 percent decline.

According to a useful summary by AAAS, Department of Defense (DOD) R&D will be reduced by around $7.0 billion (9.4 percent below FY 2012), with Congress cutting $1.3 billion and sequestration accounting for the rest — though the percentage cut from the Defense Health Program research will be somewhat smaller than that of the DOD overall cuts due to a congressional boost.

Cuts to nondefense research agencies were not uniform. National Science Foundation R&D received an increase of $152 million or 2.7 percent, which would leave the agency's R&D budget only 2.4 percent below FY 2012 levels after sequestration. The political science research program at the National Science Foundation was preserved but with evident restrictions: see Coburn amendment restricts NSF political science funding. And despite a small boost to NIH, sequestration will still leave the agency’s R&D funding roughly $1.4 billion or 4.8 percent below FY 2012 levels.

When adjusted for inflation, these figures put federal R&D investment at its lowest level since FY 2002, and more than $25 billion in constant dollars below the all-time peak in 2010. This represents a roughly 17.1 percent decline in just three years. AAAS’s R&D Budget website has additional details.

The House and Senate passed their respective budgets last week: our next blog post will include an examination of the two chambers’ differing visions for fiscal health and governance.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Will either of these bills fix sequestration? Don't hold your breath.

The House and Senate must agree on legislation to fund the final six months of fiscal year 2013 before the current spending legislation expires on March 27. Because the House is scheduled to recess for Easter beginning March 21, the pressure is on for the Senate to complete its bill and send it back to the House. Problem is, senators like to offer amendments, and voting on or tabling all the amendments has been a challenge. The Senate is amending H.R. 933, the House-passed bill. 

Like the House bill, the Senate amendments preserve existing spending caps, which set non-emergency discretionary spending authority for 2013 at about $984 billion after the spending sequester is taken into account, down from $1.043 trillion in fiscal 2012. So far, senators have rebuffed efforts by members of both parties to make substantial changes to the bill in order to speed its completion. Last week, the Senate rejected an amendment by Sen. Tom Harkin, D-Iowa, that would have boosted funding for education and medical research, but also rejected an amendment to bar funding for the Affordable Care Act. At press time the Senate had amended the bill to include $164 million more for programs in the Departments of Labor, Health and Human Services and Education, $83 million more for Defense, and less for programs in Commerce, Science, Transportation (-$224 million) and Interior (-$779 million). It appears that the sequestration will not be repealed in this legislation, although agencies may be allowed more flexibility to distribute the automatic cuts in less harmful ways.

It's worth remembering as the House begins consideration today of H. Con. Res. 25, the Republican fiscal year 2014 Budget Resolution, that budgets are guidelines and aspirational documents. We pay attention to them for the "big picture," since they don't carry the force of law, and any assumptions about changes to law must be enacted separately. Authored by House Budget Committee Chair Paul Ryan, R-Wis., H. Con. Res. 25 would cut non-defense discretionary spendingby more than $1 trillion over 10 years below the level of the 2011 Budget Control Act caps, which already reduced spending to its lowest level as a share of the Gross Domestic Product since 1962. The resolution would end the Medicare guarantee for future retirees and replace it with a voucher program. It would also save $810 billion by turning Medicaid into a capped block grant. This budget also relies on a repeal of the Affordable Care Act, despite the fact that the ACA was upheld by the Supreme Court and withstood over 30 votes on repeal last Congress. One reason this budget is so draconian is that it was very important to the Republican Caucus that Chairman Ryan offer a budget that balances in ten years.

Several different budget bills will be considered in the House, including a Democratic version that would slowly scale down some spending while maintaining a projected deficit of $610 billion by the end of 10 years. House conservatives also released an alternative budget resolution on March 18 that calls for a balanced budget in four years. The Ryan budget is expected to pass.

The Senate Budget Committee's budget resolution authored by Chair Patty Murray, D-Wash., employs a combination of new revenue and spending cuts to reduce the deficit by $1.8 trillion according to the Congressional Budget Office. S. Con. Res. 8 would direct the Finance Committee to increase revenue by $975 billion over 10 years. It would replace the fiscal year 2013 sequester with a combination of new revenue and spending cuts. It calls for cutting $23 billion from agriculture programs, and includes some economic stimulus in the form of infrastructure improvements and worker training.

It seems unlikely, given the gulf between House and Senate economic aspirations as expressed in the committee budgets, that the two bodies will be able to conference their budgets and come up with a guideline both chambers will abide by. Still, they must agree to overall spending limits in order to approve fiscal year 2014 appropriations bills later in the year. We'll get back to this conundrum after they've dispatched the fiscal year 2013 funding legislation. Stay tuned!

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Some policy makers believe the impact of sequestration is overblown.

They say that where you stand depends on where you sit. And if you are sitting in a lab supported by federal funds, working with students who are supported by federal funds, eating food that's been inspected with federal funds and riding home on a transit system that's maintained with federal funds, you may well be concerned about the impact of sequestration on your life and work. If you don't do any of those things, or believe the cuts are too small to have any catastrophic effect, you may be unconcerned. It is true of course that the real impact of the cuts will roll out over time, so on this first Monday of sequestration, things for most people are much the same as last Thursday. Some policy makers have accused President Obama and many Democrats of rampant "Chicken Little-ism."

Still, another date of doom is on the horizon, and having done as much as possible to raise the alarm about the impact of March 1, the president and congressional leaders are laying the groundwork for a deal to fund the government through Sept. 30. The good news, if there is any, is that the congressional appropriators have more of a central role in this part of March Madness. The appropriators for the most part understand government programs and compromise, and are eager to reclaim their primacy through the recommencement of "regular order." That means passing all the bills on time. The stakes for the Continuing Resolution negotiations that will now take over congressional energies for the next three weeks are high. No deal means the government shuts down. We at the blog are reasonably sure nobody wants this, although we believed that about sequestration, too, for a while.

You may be wondering if there is anything you can still do to call attention to the impact of sequestration, now that the latest deadline is knocking it off the front pages. We suggest:

• Kicking it up a notch. Instead of writing another letter, go visit your members of Congress at town hall meetings or appearances in the home district, and make your case in person.
• If your lab can offer good "visuals," invite your representative and her/his staff over to see your work and hear more about it.
• Get together with others who are feeling the impact, in other scientific departments and plan joint action.
• Write a letter to the editor or Op-ed for your local paper.

APA can help with good advice about these and other ideas. Contact Pat Kobor if you have questions.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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NIH and its defenders speak out.

To summarize all the summaries you may have been reading: it looks as though the across-the-board cuts known as sequestration will likely go into effect on March 1. Senate Democrats will probably bring multiple bills to the floor next week that would cancel the cuts, but none of the bills appears palatable to the House leadership. Both houses of Congress would need to pass legislation in order to cancel or delay sequestration. But whether sequestration will remain in effect for a month, or for the rest of the year, is not known. That may depend on the public outcry — or lack of it — when the cuts hit.

This week stories about sequestration were all over all the news media. Amid stories about the negative impact of across-the-board cuts on air travel, civilian employees of the Department of Defense and the National Zoo (“sealquestration?”) were two important stories about the impact of cuts on federal science agencies.

U.S. Senator Barbara Mikulski, D-Md., chair of the Senate Appropriations Committee, visited the National Institutes of Health on Feb. 20 to hear from Director Francis Collins how he anticipates that NIH will cope if sequestration goes into effect on March 1. Accounts of their news conference make clear that Sen. Mikulski expects the Senate to consider legislative alternatives next week, and hopes to persuade Senate Republicans to support them. Appropriations Committee bills will be negotiated before March 27 when the fiscal year 2013 Continuing Resolution, which now funds the government, will expire. Most observers expect that legislation to include a fix for sequestration, but how to develop a fix that will appeal to all sides poses real challenges.   

Elias Zerhouni, who served as NIH director under President George W. Bush, spoke to the Washington Post about the adverse consequences of sequestration. He said, "I don't want to sound dramatic, but it's not theoretical. People have crocodile tears for all the various types of cuts, but this kind of cut is damaging. It's not something that you can manage year to year. It's an investment. They cannot go up and down with the political winds.”

Most federal agencies have provided some information about how sequestration would affect their programs and missions. Many agencies sent letters to the Senate Appropriations Committee in response to a request for information on impacts. The U.S. Office of Management and Budget expects to provide more detailed information about impacts in the coming days. 

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Most observers think sequestration will go into effect, temporarily.

APA and other organizations that are urging Congress to avoid disruptive automatic budget cuts were invited to the White House today to hear a short speech on the consequences of sequestration. Standing in front of firefighters and other first responders whose jobs might be in jeopardy if $85 billion in pending cuts go into effect, President Obama made a plea for Congress to work with him to adopt legislation that will delay the cuts set to go into effect on March 1. He suggested that at a minimum, Congress should pass a smaller bill that would allow time for more comprehensive legislation, such as tax or entitlement reform, to be negotiated. 

Senate Democrats plan to bring a deficit reduction bill to the floor the week of February 25 that would include cuts to agricultural subsidies and would tax oil derived from tar sands, as oil from other sources is taxed. The $110 billion bill would also raise taxes on millionaires, and would meet the Budget Control Act’s deficit reduction targets through December. Senate Minority Leader Mitch McConnell, R-Ky., has said the Senate Republicans oppose the inclusion of new revenue in any bill to suspend sequestration. House Speaker John Boehner, R-Ohio, has said if the Senate passes a bill, the House will work with Senate leadership, but cautioned that the House will not consider a bill that does not bring the U.S. budget to balance within ten years.

While it's true that Congress is often able to pull a rabbit out of a hat at the last minute, most observers doubt that any sequestration-lifting legislation can pass the Senate (where 60 votes will be needed to prevent a filibuster) before March 1. A more comprehensive budget agreement might be possible by the end of March, when House and Senate appropriators must extend the fiscal year 2013 Continuing Resolution that currently funds most federal programs.  

If sequestration does go into effect on March 1, it is not known how quickly cuts would then occur. Some programmatic cuts may be immediate, but cuts involving personnel would take longer. Federal agencies are required to give employees 30 days' notice before furloughs occur.

If you have not yet communicated with your U.S. Senators and Representative about this issue, allow us to suggest a quick and easy way: send an email through APA's action alert.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Cuts to be deeper than previously reported.

The White House Office of Management and Budget issued a news release on Feb. 8 with specific information about how the pending across-the-board cuts of sequestration would affect federal agencies. Advocates had been wondering how the level of the pending cuts had altered since passage in January of the American Taxpayer Relief Act (PDF, 245KB).

According to the release, “The Office of Management and Budget now calculates that sequestration will require an annual reduction of roughly 5 percent for nondefense programs and roughly 8 percent for defense programs. However, given that these cuts must be achieved over only seven months instead of 12, the effective percentage reductions will be approximately 9 percent for nondefense programs and 13 percent for defense programs.”

The White House news release also provided examples of the impact of the cuts:

• “Cuts to the Mental Health Block Grant program would result in over 373,000 seriously mentally ill adults and seriously emotionally disturbed children not receiving needed mental health services. This cut would likely lead to increased hospitalizations, involvement in the criminal justice system, and homelessness for these individuals.”
• “Our ability to teach our kids the skills they’ll need for the jobs of the future would be put at risk. 70,000 young children would be kicked off Head Start, 10,000 teacher jobs would be put at risk, and funding for up to 7,200 special education teachers, aides, and staff could be cut.”
• “Cuts to the AIDS Drug Assistance Program could result in 7,400 fewer patients having access to life saving HIV medications.”
• “The National Institutes of Health (NIH) would be forced to delay or halt vital scientific projects and make hundreds fewer research awards. Since each research award supports up to seven research positions, several thousand personnel could lose their jobs.”
• “The National Science Foundation (NSF) would issue nearly 1,000 fewer research grants and awards, impacting an estimated 12,000 scientists and students and curtailing critical scientific research.”

The mood in Washington is pessimistic that sequestration can be avoided this time, but some parties are busy crafting alternatives. Senate Democrats are planning to introduce a bill this week that will offer cuts and revenues and delay the sequester for a few months. Several committees, including Senate Appropriations and Armed Services, are planning hearings.  If the Senate takes up a bill the week of Feb. 25 there will be enough time to pass it before the sequester takes effect on March 1. However, there is no indication that the House would consider the bill.

APA is asking the psychological science community to write your members of Congress to remind them that the discretionary accounts have already absorbed $1.4 trillion in cuts and to urge them to support a balanced approach to deficit reduction that does not rely solely on spending cuts. Take action online and, if you haven't yet, be sure to sign up for APA’s Public Policy Advocacy Network.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Federal agencies brace for impact.

Rep. Paul Ryan, R-Wisc., of the Romney-Ryan presidential ticket and chair of the House Budget Committee, has been strategizing with his party about how Republicans can achieve significant spending cuts in this session of Congress. His eyes have alighted on sequestration, the automatic spending cuts set to strike on March 1 unless Congress acts to avoid them. Given that the recent debt ceiling bill (H.R. 325) did not include spending cuts, and given that other measures that might reduce spending (e.g., entitlement reform) require lengthy and difficult negotiations, sequestration looks to be a logical vehicle on which the House leadership might choose to take a stand.

APA is active in coalitions such as the Coalition for Health Funding and NDD United (remember, that’s ‘non-defense discretionary’) that are advocating against sequestration and in favor of a balanced approach to deficit reduction. Watch for alerts to APA’s Public Policy Advocacy Network suggesting ways you can continue to make your voice heard about these pending cuts.

A Washington Post article yesterday on how federal agencies are preparing for the possibility of sequestration quotes psychologist Steve Higgins of the University of Vermont about the consequences he and his research labs have already experienced. 

The Department of Defense has asked Congress for permission to begin furloughing civilian employees one day a week if the cuts are not avoided. This action would amount to a 20 percent pay cut for civilian employees for the remaining five months of fiscal year 2013. 

U.S. Senator Patty Murray, D-Wash., chair of the Senate Budget Committee, announced today the launch of an online platform through which members of the public can engage with the committee.

Murray writes, “'My Budget' goes live today to help you share your stories, ideas, and priorities. It will give working families, students, and seniors one more way to let us know what a fair budget means to them. And in the weeks and months ahead, we will be adding additional tools and resources to enable people across the country to have their voices heard loud and clear as we tackle our budget and economic challenges and to help them engage their friends, organize, and advocate for their budget values and priorities.”

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Everyone look away: Nobody can see the debt limit until May 19.

On the negative side, this is another short-term fix that will expire in four months, adding another "date of doom" to the calendar. But on the plus side —wow— who expected the House leadership to offer to "suspend" the debt limit? Yes, the debt limit is a creature of Congress, and Congress may, if it chooses, sort of pretend it doesn’t exist. That’s what they’re doing. 

The House proposal would suspend the debt ceiling until May 19, which will allow the U.S. to continue to borrow to meet financial obligations without requiring Congress to vote on raising the debt ceiling. But to be clear, the bill does actually increase the debt limit by an amount to be determined later. The increase can then be tied to a specific date, presumably the date they reach agreement, without Congress having to vote to make it so. Transparent? No. But less excruciating? Definitely. All your blogger can say is, wow.

Legislation to effect the House leadership proposal, H.R. 325, will be brought to the House today (Wednesday, January 23, 2013).

There is one additional condition, however. The (majority Republican) House of Representatives has complained that the (majority Democratic) Senate has not produced its own budget in four years (although Senate Democrats are quick to point out that the Senate did pass the Budget Control Act, which sets overall spending ceilings, which is the primary function of a budget). If the House and Senate fail to produce separate budgets by April 15, members’ salaries would be escrowed until the budgets appear. 

Speaking of dates of doom, H.R. 325 will neither affect the process nor alter the effective date of the sequester: March 1. The current continuing resolution which funds the government lasts through March 27. And we all know that the Ides of March will fall between those two dates. 

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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Checking under the sofa for a spare $1 trillion.

By now, readers who are employed may have received an altered paycheck, and wondered again just how the American Taxpayer Relief Act (ATRA), which was signed by the president early in 2013, changed several tax laws. For example, the payroll tax "holiday" expired, so your check probably reflects increased Social Security withholding.

The White House released information on ATRA that explains its provisions, along with the administration's take on the legislation.

ATRA raises approximately $620 billion in new revenues and will save more than $100 billion in federal interest payments, according to the Office of Management and Budget. Instead of tackling sequestration directly, ATRA delays sequestration until March 1, 2013, allowing more time for Congress and the administration to negotiate a solution.

Because of the revenues raised, ATRA also reduces the total amount subject to the sequester over the next nine years by $24 billion. So the annual cuts would be smaller, around $107 billion per year instead of $109 billion per year before ATRA. The organization Federal Funds Information for States (FFIS) has released an estimate of the new sequester cuts following enactment of ATRA. Should the sequester take effect in March, FFIS predicts that the cut to non-defense discretionary accounts will be 5.9 percent across the board.

Last year’s uncertain budget picture has become this year’s uncertain budget picture. Federal agencies must continue to plan for the possibility of large 2013 budget cuts, which, if they should happen, would be proportionally more onerous since they would necessarily be distributed over fewer months of the fiscal year.

Keep in mind, to make the threat of spending cuts go away, it will take revenue —approximately $1 trillion to cancel sequestration. And remember it’s very unlikely Congress would go along with a proposal to completely avoid any new spending cuts. The "Boehner Rule" for deficit reduction pushed by the House leadership is $1 in cuts for every $1 in revenue. But wait, there’s more: to stabilize the debt, according to the Center for Budget and Policy Priorities, around $1.4 trillion is needed —the House leadership is very adamant on this principle, though it might quibble with the amount needed. And to raise the debt ceiling for a year (did we mention, Speaker Boehner’s position is, again, $1 of spending cuts for each $1 increase in the debt ceiling) an additional $1 trillion is needed.

That’s right, another wild card is the federal debt ceiling, which must be raised soon —some say, mid-February, others say mid-March— to avoid default on U.S. financial obligations. Although the administration has declined to pursue creative ways of raising the debt ceiling without Congress’s approval (nope, no trillion-dollar coin!) the president has said he will not negotiate with Congress to pay debts the nation has already incurred. The congressional leadership has a different view.

The White House will present its fiscal year 2014 budget a few weeks late, likely in late February. In the meantime, the government is funded via continuing resolution at 2012 levels through the end of March. Congressional appropriations committees are working on completing the 2013 funding bills in the absence of information about whether sequestration cuts will be applied to the bills before the year ends.

It’s all pretty gloomy, and gloomily familiar. But most observers agree that the real dysfunction isn’t that the philosophical and policy differences between parties are so large. The breaking point has been a lack of willingness to compromise and work across party lines. That’s the real significance of the passage of ATRA: the administration and Congress were able to reach agreement (in the classic way that satisfied nobody) and avoided some genuinely bad consequences. So your blogger is thinking of it this way: the financial-policy machinery may be broken, but the players still know their way around duct tape. Sometimes duct tape is all you need.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

Federal Budget Blog RSS Feed

Bill postpones across-the-board spending cuts.

Happy New Year, blog readers! The legislation passed by Congress, which the president is expected to sign this week, deals primarily with expiring tax laws that would have raised taxes on Americans at all income levels. The new legislation raises income tax rates on families making more than $450,000 a year (and individuals making more than $400,000), and extends tax benefits for middle-income families. Those benefits include the American Opportunity Tax Credit, which allows students and their parents to claim up to $2,500 a year for college expenses. Research and development tax breaks, such as the one for investment in wind energy, also were extended.

The new legislation does not eliminate the sequester, but postpones its effects for two months, giving Congress extra time to negotiate a solution. The new bill also does not raise the debt ceiling. The U.S. hit its borrowing limit on New Year’s Eve, and the Treasury Dept. is taking administrative measures to delay the need to raise the debt ceiling in order to avoid default, for what also is projected to be around two months.

More details will be available within the next few days.

Pat Kobor, Sr. Science Policy Analyst
Science Government Relations Office
American Psychological Association

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