Budgetary Battlefield

John Shinkle/POLITICO

Politics is the allocation of resources by other means. And scarcely is that more true than in the writing of a federal budget. As President Trump unveiled his own proposal for FY18, every other interested party will begin to do the same. The Presidential budget is simply the first step in an arduous exercise in government haggling.

The president’s budget is essentially his wish list to push lawmakers in a direction he sees fit, but as anyone can tell you, directing Congressmen is like herding cats. Everyone has a different constituency with different needs and different strengths.

As the Office of Government Relations will readily remind the Duke community, budgets are a process, not an order. This process, as with so much of our current political ecosystem, will likely be dominated by hot rhetoric and divisive actions. The president’s budget has already met strong opposition from lawmakers and interest groups alike. Research funding has strong bipartisan support in both houses of Congress. Federal research funding touches many lives across the country and Duke finds itself allied not simply with universities of similar calibre but also with the tech industry, energy and environmental groups, health care entities, NGOs and a myriad of private advocacy groups.

The following analysis pays attention to programs with strong bearing on Duke’s research enterprise.

The National Institutes of Health (NIH) budget would be cut by 21 percent from 2017 spending levels, down to $26 billion. The National Cancer Institute, which falls under the NIH umbrella, would see a budget cut of 19 percent as would almost all NIH institutes. This is identical to the proposed ‘skinny’ budget. It should be noted that this proposed cut came weeks after Congress gave the biomedical research agency a $2 billion boost in its 2017 spending bill.

The presidential proposal wraps the Agency for Healthcare Research and Quality into NIH while maintaining $272 million in discretionary funding for the agency’s work. It also proposes restructuring the way the agency processes grants to reduce overhead costs. It includes a $500 million health block grant for states to respond to public health threats. Advocates question whether the money will be redirected from other programs.

The Centers for Disease Control (CDC) budget would take a 17 percent cut, which shakes out to a $6.3 billion decrease in funding. Spending on HIV/AIDS, hepatitis, sexually transmitted infections, and tuberculosis prevention would be reduced by 17 percent. The CDC’s global health program — which is responsible for helping fight disease outbreaks abroad — would take an 18 percent cut.

Meanwhile, public health groups remain concerned about the House’s proposal to gut the Prevention and Public Health Fund as part of the Republican Obamacare repeal bill. The fund accounts for roughly 12 percent of the CDC’s budget and includes money for immunization programs, preventive health services and disease detection programs, among other things. Advocates are working with Senate lawmakers to spare the prevention fund in their version of the repeal bill.

In all, the Trump proposal cuts about 32 percent from U.S. diplomacy and aid budgets, or nearly $19 billion. The budget proposal envisions cuts to the President’s Emergency Plan for AIDS Relief (PEPFAR) program, a cornerstone of U.S. global health assistance, which supports HIV/AIDS treatment, testing and counseling for millions of people worldwide. Under Trump’s budget, PEPFAR funding would be $5 billion per year compared to about $6 billion annually now.

Trump’s proposed NIH and CDC cuts are a nonstarter on Capitol Hill. Rep. Tom Cole, who chairs the House appropriations panel overseeing health agencies, called the expected cuts to NIH “penny wise and pound foolish.”

The university community finally saw the official proposal related to a cap on facilities and administrative (F&A) costs previewed by HHS Secretary Tom Price in March. The budget document outlines an F&A rate for NIH grants capped at 10 percent of total research. This issue was raised again at an NIH budget hearing before the House Labor-HHS-Education Appropriations Subcommittee.

In response to questions from subcommittee members, Francis Collins, the Director of the NIH, said that cuts to F&A would be viewed by the research community as cuts to essential research costs. He also stated that university leaders continue to tell him that they are already subsidizing the research they perform for the NIH, in part because of the costs associated with complying with increasing federal regulations.

At NSF, basic science would fall by $620 million, or 13%, to $4.3 billion. NSF is a major funder of basic research outside of biomedical science. The proposed budget would reverse the basic research agency’s growth back to fiscal year 2007 levels. The Trump plan adds more uncertainty for the agency, which is already struggling to cope with the federal hiring freeze the president instituted in January 2017. The NSF is scheduled to move its headquarters later this year, and an internal survey suggests that 17% of its 2,000 staff plan to leave within the next two years because of this change.

The administration is also seeking a vast simplification of student loan programs – something Republicans have pushed for several years. And there’s wide agreement on both sides of the aisle the federal government’s array of federal repayment programs for student borrowers have become unwieldy and needs to be overhauled.

The political reality is that any changes to loan programs will be tough to pull off — even with the best of intentions. Many of the government’s repayment options, which cap loan payments based on a borrower’s income and family size, are popular not just with low-income Americans, but also with middle- and high-income families.

Trump’s budget would eliminate subsidized student loans, producing nearly $39 billion in savings over the next decade, and a loan forgiveness program for public servants, which would free up more than $27 billion over the next decade. The budget continues funding for year-round Pell grants, which Congress restored earlier this year by reallocating $3.1 billion in mandatory spending on the program over the next decade.

Under Trump’s budget proposal, the Environmental Protection Agency (EPA) would be reduced by more than 30%, larger than in earlier reports. The Department of Energy would receive about a 6% funding cut. That includes a number of Obama-era energy and environmental initiatives, including eliminating the DOE’s Advanced Research Projects Agency-Energy (ARPA-E) and making a 17 percent reduction to the DOE’s basic research portfolio at the Office of Science.

The budget plan, which calls for the elimination of four independent cultural agencies — the National Endowment for the Arts, the National Endowment for the Humanities, the Institute of Museum and Library Services, and the Corporation for Public Broadcasting —would also radically reshape the nation’s cultural infrastructure. Although the budgets of the four organizations slated for elimination are negligible as a percentage of the larger federal budget, they play a vital role in a cultural economy built on a system of federal stimulus.

The word ‘unprecedented’ gets thrown around a lot these days. The president himself has employed the term once or twice. But the budget cuts America’s research institutions face now are not that new. They have a history that dates back to the Apollo mission and the original Reagan budget proposals. President Reagan came into office shockingly bullish on America’s research enterprises. Although Trump’s cuts are the steepest proposed in decades, they are close to Reagan’s initial proposals. Reagan’s budgets met stiff opposition and federal science R&D funding actually increased throughout his tenure.

Although the Obama Administration was largely considered ‘good’ on science and research funding, the percent of R&D (overall and non-defense discretionary) of the total budget was actually higher under George W. Bush. Research funding and higher education enjoy a significant amount of bipartisan support.

Innovation is the lifeblood of American strength and technological charisma. Congress has demonstrated a strong understanding of this reality as have our partners in industry. The current research slash-and-burn attitude is nothing new. The value of a well-oiled university research system is not lost on many of the appropriators key to the budget-writing process. And it is to their quiet remarks and not to hot rhetoric to which we should pay attention to truly understand what an FY18 budget is likely to be. Sometimes, the only thing more valuable than actual capital is political capital; and these days, neither is in great supply.