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January 17th, 2013

DOD calls for proactive spending cuts to deal with fallout from ongoing FY’13 budget woes

Published on January 17th, 2013 | By: Eileen De Guire

The peaceful exterior of the Capitol building belies the contentious budget battles within that Congress faces in the next six weeks. Credit: Architect of the Capitol; Wikipedia.

Sigh.

 

The nation welcomed 2013 by breathing a collective sigh of relief when Congress and President Obama spent their New Year’s Eves beating each other up to avert a lemming-like leap over the so-called “fiscal cliff.” I am not going to review those details here, because unless you were in media isolation all of fourth quarter 2012, especially as it ground down to its ugly end, you know as much as you want to know. If you were miraculously (mercifully?) isolated, this About.com article will bring you up to speed.

 

The nation’s second breath of 2013 was a sigh of frustration. Sure, Congress averted the dismal dive, but it was more like they backed away from the edge of a 5-meter high dive platform to buy some time to “work up the courage” while they climb the ladder to a 7.5-meter platform, instead. Congress agreed to a token tax increase and gave themselves a two-month extension to address spending cuts and the sequester imposed by the 2011 Budget Control Act. I’m not a politician, but I cannot see how this debate can be any less contentious than the spectacle we just witnessed.

 

My favorite source for understanding the effects of federal budget ebb and flow is AAAS’s Jeffrey Mervis, who, in the January 11 issue of Science, deconstructs what these latest Congressional developments mean, or could mean, for federal funding of science research. (Ironically, the topic of the issue is ‘Inflammation,’ as in ‘pain.’)

 

Congress gave itself until March 1, a mere six weeks from now, to decide what to do about sequestration, the nation’s debt ceiling, and the spending freeze that is in place thanks to the Continuing Resolution that is keeping the government open for business. Sequestration, you probably recall, is the $1 trillion in unspecified discretionary spending cuts that are to take place over a ten-year span (that were to have started on Jan. 1, 2013).

 

Mervis points out that Congress indulged in a shell game of sorts by offsetting some of FY 2013’s $109 billion in cuts by letting lawmakers allocate some money from this year’s pot and some from next year’s however they want ($4 billion this year and $8 billion next year). Overall, the New Year’s Eve deal trims the $109 billion by $24 billion for $85 billion in cuts that, technically, kick in on March 1.

 

Keep in mind that the government has been operating on a Continuing Resolution since Oct. 1, 2012 that freezes federal FY 2013 spending at FY 2012 levels. For many agencies, this is effectively already a budget cut because most ’13 budgets were planned for at least modest increases. And, if Congress does take the “blunt ax known as sequestration” to the FY 2013 budget, all of that pain has to be absorbed into the second half of an already tight year.

 

The fallout is already underway. Last Friday the office of Deputy Secretary of Defense, Ashton Carter, released a memo titled, “Handling Budgetary Uncertainty in Fiscal Year 2013.” The gist of it is an exhortation to all of DOD to be smart about spending and to encourage proactive spending cuts. Carter cites two “sources of uncertainty.”

The first is the fact that the Department is operating under a Continuing Resolution (CR) through at least March 27, 2013. Because most operating funding was planned to increase from [FY 2012] to FY 2013, but is instead being held at FY 2012 levels under the CR, funds will run short at current rates of expenditure if the CT continues through the end of ft he fiscal year in its current form.

The second source of uncertainty is the potential sequestration … The possibility of sequestration occurring as late as the beginning of the sixth month of the fiscal year creates significant additional uncertainty for the management of the Department.

Carter goes on to “authorize all Defense components to begin implementing measures that will help mitigate our budget execution risks” and, anticipating the real possibility of sequestration, to “intensify efforts to plan future actions that might be required should that happen.” He offers up a hopeful, “planning does not assume these unfortunate events will occur, only that we must be ready.”

 

Presumably, similar directives are being considered in other federal agencies, too.

 

As far as science and engineering goes, DOD’s problem is sci-tech’s problem, and the effects of the proactive spending cuts may be felt right away. Included on the list of “approved near-term actions” are travel, training, and conferences, as well as termination of temporary and contract employees.

 

Back on the Hill, the case the science community needs to make is that fundamental research leads to innovation, which in turn, drives the economy. This is a tricky argument to make. According to a National Science Foundation report, the absolute dollars spent nationally on R&D grew in 2011, but in relative terms, did not keep pace with inflation. Another measure of “national research intensity” is the fraction of GDP that is represented by R&D expenditures, and this metric declined, too. The NSF estimates that university-based R&D expenditures gained some in 2011 relative to inflation, but the effect was offset by reduced R&D investment by industry and national labs.

 

Last April, Germany’s Max Planck Society president, Peter Gruss, published an editorial in Science (that I wrote about here), arguing that a country’s R&D investment drives innovation, and thus national economies. Unfortunately, our legislators may not be able to see it, especially with their attentions being diverted by the need also to address the contentious dual issues of raising the debt limit and controlling spending on the massive and controversial entitlement programs.

 

Overall, protecting—let alone increasing—this year’s federal science R&D budgets is going to be a very tough sell. Is the new Congress capable of jumping from the March 1 version of a 7.5-meter platform? My guess is they will defer by deciding to “work up the courage” while they climb to the 10-meter platform.

 

Sigh.


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