Funding for Fiscal Year 11 is approved

Fiscal year 2011 funding is finally settled, and the House Budget Committee chair reveals his budget proposal.

We can breathe a small sigh of relief: federal agencies now know how much money they have to spend between now and October 1. On April 14 the House passed H.R. 1473 that will keep the government running through late September, while cutting $38.5 billion in federal spending (details in the Tuesday, April 12 posting below). The deal passed the House on a bipartisan 260-to-167 vote, with 179 Republicans and 81 Democrats voting in favor; 59 Republicans and 108 Democrats opposed the measure. Shortly afterward the Senate approved the bill with a bipartisan 81-to-19 vote. Before the final vote, the Senate voted to reject two ‘riders’ that would have defunded the national health-care reform law and Planned Parenthood. As part of the budget deal, the Senate had agreed to hold those two votes. President Obama has signed the measure.

The Congressional Budget Office review of H.R. 1473 showed the bill would actually cut much less than Congress and the President had declared, perhaps as little as $352 million. The Washington Post reported on April 14 that many of the cuts were to ‘budget authority,’ meaning agencies had authorization to spend but may or may not have been actually planning to spend the money. Still, ‘permission to spend’ is ‘permission to spend,’ and cuts in budget authority aren’t considered accounting gimmicks.

For any readers who were betting on a government shutdown, your next opportunity to score will be in the early summer when the President and Congress must negotiate an increase in the debt ceiling. Congress’s failure to raise the debt ceiling would probably result in more of a meltdown than a shutdown, but since it has never happened, we can only speculate about the chaos that would result.

Obama Shakes It Up

In a speech at George Washington University on April 13, President Obama laid out a long-term plan for deficit reduction that he said pulls many suggestions from the December report of the bipartisan Fiscal Commission. His plan would involve $4 trillion in deficit reduction through spending cuts, tax reform and targeted tax increases, enforced by a failsafe ‘trigger.’ This plan isn’t in the form of a legislative proposal, yet, and does not take the place of the President’s proposed FY 2012 budget. It should be considered a good summary of his thinking about tax and fiscal policy and thus a marker for the Democrat-led Senate, and his opening gambit in any legislation to come on entitlement reform or tax reform.

The President lauded scientific research several times in his speech, although he gave no specifics about either potential cuts or new investments: “We have led the world in scientific research and technological breakthroughs that have transformed millions of lives. That’s who we are. This is the America that I know. We don’t have to choose between a future of spiraling debt and one where we forfeit our investment in our people and our country… We will make the tough cuts necessary to achieve these savings, including in programs that I care deeply about, but I will not sacrifice the core investments that we need to grow and create jobs. We will invest in medical research.… We will invest in education… We will do what we need to do to compete, and we will win the future.”

The House Budget Committee’s “Path to Prosperity”

H. Con. Res. 34, the Fiscal Year 2012 proposal from the House Budget Committee’s Chairman Rep. Paul Ryan (R-WI), will come to the floor of the House today. It is expected to pass. The rule makes in order three substitute budgets, all offered by Democrats, none of which is likely to pass.

Called “The Path to Prosperity,” Chairman Ryan’s budget calls for cutting about $6 trillion in spending over ten years, restructuring Medicare and Medicaid, and simplifying the current tax system.

The budget would return non-security discretionary spending to 2008 levels and freeze it there for five years. For the National Institutes of Health, that would mean a maximum funding level of $29.23 billion, approximately a 3.7% cut from the newly enacted FY 11 level ($30.639 billion). What we at APA see as the bigger problem for research funding agencies is not a cut for one year but the proposed five-year freeze. The measure of biomedical inflation, or BRDPI (PDF, 605KB), was 2.8% in 2010, and 2.9% is anticipated for 2011. NIH could expect a significant loss of purchasing power with a five-year freeze, as could all research funding agencies whose costs can be expected to rise.

The National Science Foundation’s Fiscal Year 2008 appropriation was $6.065 billion. For FY 11, NSF is funded at $6.8 billion, a 1.0 percent ($67 million) cut from FY 10.

What will happen to H. Con. Res. 34 when it reaches the Senate? The Senate is not expected to approve the budget as written. The Senate will vote on its version of the budget and then negotiations between the House and Senate will begin. Although congressional rules presuppose that a budget will be approved, in some years the negotiators are too far apart and no budget blueprint is available. You may remember from high school civics that the President does not sign the budget: it’s a blueprint to guide Congress in appropriating funds and managing revenue. The budget sets limits on budget authority for the authorizing committees; guides the division of discretionary dollars among the appropriations subcommittees; and may be the vehicle for guiding language but that language would not carry the force of law.

Congress will be in session the week of April 18, 2011, so it’s a good time to catch up on your budget reading!