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Researchers brace for a tough budget year.

Budget season is in full swing in the nation's capital and advocates for science and engineering research programs are once again working to shore up support amid the clamor of election year politicking.

The research community is coming off of what can only be viewed as a major win given the austere fiscal environment over the last few years. In recognition of their importance to U.S. economic competitiveness, research programs fared surprisingly well last year. While overall government spending for fiscal year 2012 was cut by $7 billion from the previous year, basic and applied research accounts at federal agencies generally saw flat funding or slight increases. Some construction and applied research accounts suffered, but Congressional leaders and the White House managed to come to an agreement that preserved and strengthened the funding for core research activities at agencies like the Department of Energy, Department of Defense, National Science Foundation, and the National Institute of Standards and Technology.

The year ahead may not prove so generous to science and engineering programs.

The Budget Control Act of 2011 set tight spending limits through fiscal 2021. Under this legislation, the discretionary budget limit for fiscal 2013 has been set at $1.047 trillion--$4 billion above the fiscal 2012 level. Even with the increase, discretionary spending will remain below the fiscal 2011 level of $1.050 trillion.

The $4 billion increase will be devoted entirely to "non-security" spending. Even so, the budget is expected to yield flat funding levels, or slight reductions when adjusted for inflation.

In addition, the act provides for automatic "sequestration" cuts that are slated to begin in January 2013. These automatic cuts are the result of the failure of last year's Joint Select Committee on Deficit Reduction to reach a broad agreement to reduce the deficit by $1.2 trillion over the next ten years.

The automatic spending cuts of the Budget Control Act are designed to be a painful incentive for Congress to achieve an agreement on $1.2 trillion in savings. Congress still has until January to stave off automatic cuts, yet given the election year, a sweeping agreement seems unlikely. Even so, many are contemplating ways to avoid significant cuts for their favored portfolios, and the indiscriminate nature of the cuts is still a powerful incentive for action.

Assuming Congress cannot reach an agreement on $1.2 trillion in savings, non-security spending would face an additional 7.8 percent cut in fiscal 2013, while security spending would face a roughly 10 percent cut.

According to the Congressional Budget Office, cuts of this size would amount to reductions of about $55 billion for each category of spending, and similar cuts would follow in each year for the next ten years. By 2021, the final effect of automatic cuts, adjusted for inflation, would bring spending for non-security accounts to the equivalent of 2.8 percent of Gross Domestic Product.

The Congressional Budget Office notes that non-security spending has totaled approximately 4 percent of GDP over the last 40 years. Funding for defense, which has averaged 3.4 percent over the last decade, would total 2.7 percent of GDP after the reductions. CBO's figures exclude expenses for the wars in Iraq and Afghanistan, because they are considered emergency spending, so the actual cuts for defense would be much larger.

According to Defense Secretary Leon Panetta, at least one million defense-related jobs would be lost in a sequestration scenario, including military and civilian employees of the Defense Department as well as hundreds of thousands of jobs in the defense industry. Additional impacts would be felt at small businesses and universities around the country, due to fewer new research grants and a scaling back or cancellation of existing research programs.

In light of the strict limits on spending imposed by the Budget Control Act, Congress may spend the remainder of the year debating how to achieve its deficit-reduction goals.

Paul Fakes is an ASME government relations representative. He can be reached at Links to more legislative and regulatory information are at MEWashingtonWindow. For ASME's views of public policy issues, visit the ASME Advocacy & Government Relations Website at:
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Author:Fakes, Paul
Publication:Mechanical Engineering-CIME
Geographic Code:1USA
Date:Mar 1, 2012
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