Impact of Budget Control Act of 2011

UPDATE: February 5, 2013

  • Video editorial by Vice President Steve Forrest on the dangers of sequestration: http://youtu.be/3P0EPhBEQYo
  • More information and opinion on sequestration is on the Science Works for Us [www.scienceworksforus.org/] website, hosted by the AAU, the APLU, and The Science Coalition

UPDATE: September 25, 2012

On September 14, 2012, the White House released the OMB Report Pursuant to the Sequestration Transparency Act of 2012 itemizing the impact of sequestration on nondefense and defense discretionary and mandatory spending for FY 2013. FY 2013 cuts amount to $109 billion.

A table linked below, built off one circulated by the Consortium of Social Science Associations (COSSA), provides a good summary of the impact sequestration will have on agencies.

OMB Estimates of Sequestration Impact by Program (in millions)

What does this mean for faculty/researchers?

Although it is unclear what the fate of a possible sequestration is, the inevitable fact is that federal funding for R&D is going to get tighter and more competitive during these difficult times. Inevitably, budget cuts will be made that will force university research enterprises to become leaner and more efficient.

The good news is that, according to a poll by United for Medical Research (UMR) and Research!America, data indicates that 51 percent of voters oppose across the board cuts that sequestration mandates.

The Information Technology & Innovation Foundation (ITIF) also recently released a report, Eroding Our Foundation: Sequestration, R&D, Innovation and U.S. Economic Growth, indicating that sequestration will result in a “cut of 8.7 percent (or $12.5 billion) of federally-funded research and development (R&D) in 2013,” a loss of approximately 200,000 jobs, and would reduce the nation’s GDP between $203 billion and $860 billion by FY 2021, depending on what baseline is used.

Research!America recently came out with a report, “Sequestration: Health Research at the Breaking Point,” (http://www.researchamerica.org/uploads/RASequestrationReport.pdf) that breaks down how sequestration will impact agencies like the National Institutes for Health (NIH), the Center for Disease Control (CDC), and the National Science Foundation (NSF), among others. In this report, they also highlight past grant success rates for the NIH and NSF and predict a decrease in NIH grant success rates from 19%, in 2012, to 14%, in 2013, and 22% to 16% for NSF, respectively.

Faced with this inevitability, it is important that faculty and research staff understand that federal funding for R&D is going to get tighter and more competitive during these difficult times. Inevitably, budget cuts will be made that will force university research enterprises to become leaner and more efficient.

More Information

This website will continue to be updated to reflect current viable scenarios or proposals that the Congress is considering.

For more information on the budget process and/or sequestration, please refer to the following websites:

To learn more about the U.S. Federal Budget:

If you have any other questions, please feel free to contact Kristina Ko, Director of Federal Relations for Research, at 202-554-0578.

PDF version of this page: budget-sequestration-web-update 09-25-2012


Background
In 2011, Congress passed the Budget Control Act (BCA) because of the mounting federal deficit due to many years of increased discretionary and mandatory spending, and a decrease in revenues. The following chart from the Congressional Budget Office illustrates the dynamics of this situation.

chart of info about the federal budget

One of the primary purposes of the BCA was to reduce the deficit by $2.8 trillion over 10 years. To accomplish this, the Congress created budget caps on discretionary spending between FY 2012-2021, and was tasked to create a “Super Committee” to find an additional $1.2 trillion in decreased funding by November 23, 2011. However, Congress failed to agree on where to find these funds thereby triggering an aspect of the BCA called “sequestration.”

Budget Sequestration – What does it mean for Research?

Under the BCA, sequestration requires automatic across-the-board cuts to discretionary spending across all agencies starting on January 2, 2013,  to meet the requirements of the BCA.

It is estimated that the $1.2 trillion in cuts would save approximately18% in interest payments, resulting in a net of approximately $984 billion in cuts across all discretionary budgets. These cuts are divided between defense and non-defense discretionary spending and include a 2% reduction in Medicare payments.

Non-defense discretionary spending accounts for the majority of all research and development funding. The American Association for the Advancement of Science (AAAS) has done analysis on what sequestration would mean for research. Under the President’s proposed FY 2013 budget, and not accounting for inflation, research and development (R&D) would have received an increase in funding across the majority of all accounts, as summarized below.

R&D in the FY2013 Federal Budget

The following chart shows that under sequestration, research and development across agencies would suffer a significant decrease.

R7D in Budget with sequester

To avoid sequestration, the House passed the Sequester Replacement Reconciliation Act that would protect cuts to the defense budget by creating deeper cuts to the non-defense discretionary budget and as a result, in non-defense R&D agencies. This alternative, however, has not passed the Senate, and the Administration has stated that it would veto any bills that protect defense from mandatory spending cuts.

R&D through 2021 with alternative sequester