Budget Battle Looms over Spending Caps

A key legislative battle is forming that has implications for funding the NIH in FY 2016 and beyond. The threat of sequestration – automatic spending cuts, has returned. Here is quick reminder why. The Budget Control Act (BCA) of 2011 imposed spending caps on discretionary programs (defense and non-defense) intended to reduce their funding by more than $1 trillion over the ten years from 2012 through 2021. A joint committee was established to find another $1.2 trillion in savings, through any combination of spending cuts and tax increases to reduce record budget deficits. The BCA also established a backup trigger mechanism or “sequestration” prod the committee to reach some compromise to achieve the $1.2 trillion savings. Failing any compromise, sequestration would be implemented. As all ASPET members are aware, Congress failed to achieve those goals and automatic spending cuts were applied across the board. There was a brief two year reprieve (FY 2014-2015) when the Ryan-Murray budget deal was passed but that has now expired and the potential of sequestration has returned.

While the President’s FY 2016 budget proposal aims to avoid sequestration through changes in existing tax law and targeted reductions, within the Republican Party there is division on how to raise the spending caps to pay for increases in defense spending. Many Democrats also believe that the spending caps for defense must be raised to help meet growing foreign policy challenges. There are some Republicans who want to raise both defense and non-defense discretionary spending. This includes strong Department of Defense supporters like Sens. John McCain (R-AZ) and Lindsey Graham (R-SC). But many other Republicans only want to increase defense spending while keeping the overall spending cap in place. The only way you can raise defense spending in that scenario is to find offsetting spending cuts to non-defense discretionary programs like the NIH.

ASPET has joined NDD United (Non-Defense Discretionary United) in a letter calling for lawmakers to stop sequestration from taking effect in FY 2016 which begins October 1. NDD United, called for a balanced approach to deficit reduction to make certain that important investments are made in NDD as well as defense programs. NDD United noted that if sequestration is triggered for FY 2016, NDD programs at all federal agencies will decline to the lowest percentage of GDP in over 50 years. ASPET members should contact their Members of Congress to remind them of how important the investment in biomedical research is to the nation’s well-being and that a balanced solution must be found to avoid sequestration.

FASEB Analysis on Funding Trends

Following release of the President’s FY 2016 budget earlier this month, FASEB updated its analysis of NIH funding trends. FASEB found that:

• After devastating cuts in FY 2013 mandated by the Budget Control Act of 2011, NIH provided a sharp increase in funding for research project grants (RPGs) in FY 2014, awarding 931 (11 percent) more grants than in FY 2013
• The success rates for RPG applications rose for the first time since FY 2008. Despite the small increases, success rates remained below 20 percent
• The President’s FY 2016 budget request of $31.3 billion for NIH represents a $1 billion, or 3.3 percent, increase over the FY 2015 level. If approved by Congress, this budget will be the highest in the agency’s history. However, as NIH funding has either been cut or failed to outpace rising costs in 12 of the past 13 years, the budget would still remain 22 percent below the FY 2003 level in constant dollars (Fig. 1)

But FASEB cautions that the increased funding proposed in the president’s budget and continued improvement in success rates will not occur unless the threat of sequestration is eliminated. You can view the FASEB analysis here.