DC Digest – February 18, 2013

In Today’s Issue:

  • A Deal to Turn Off the Sequester Likely to Wait for the FY13 CR
  • Senate to Vote on Dueling Alternative Sequester Plans
  • Secretary Duncan Outlines Grim Consequences of Looming Budget Cuts
  • SOTU: President Urges End to Sequester, More R&D, and Immigration and Student Aid Reform
  • President Proposes Major Changes to Student Aid
  • New Video Editorials Decry Impact of Sequester on Science and Innovation
  • House Committee Reviews Charitable Deduction
  • Reintroduced Startup Act Retains Free Agency Tech Transfer Provisions
  • Open Access Bill Introduced in House and Senate


It appears likely at this point that Congress will allow the budget sequester to go into effect on March 1, though it is possible that its damaging cuts can be addressed through the measure that Congress will need to consider to extend the continuing resolution (CR) that expires on March 27.

Republicans and Democrats remain unable to agree on a formula for stopping the sequester, which was intended to be so egregious when it was passed as part of the 2011 Budget Control Act that both sides would do everything possible to prevent its implementation.  The sequester would impose $85 billion in across-the-board spending cuts on defense and nondefense programs over the remaining seven months of FY13, including on congressional operations.

Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD) held a hearing last week on the sequester, during which she released letters from several agencies, including the Departments of Educationand Health and Human Services, the National Science Foundation (NSF), and NASA, on its damaging impacts.  Senator Mikulski said in her opening statement, “A five-percent cut this late into the fiscal year often translates into a double whammy for our agencies because fixed costs like rent and utilities can’t be cut.  The big cuts will be to salaries, which means furloughs, layoffs, and services not delivered to the American public.”

The original estimated across-the-board cuts in FY13 under the sequester were 9.4 percent for defense discretionary spending and 8.2 percent for nondefense discretionary spending.  The fiscal cliff agreement signed on January 2 lowered those percentages to an estimated 7.3 and 5.1 percent, respectively.  However, a memorandum prepared by Senate Budget Committee Chair Patty Murray notes that because the cuts would be absorbed over the remainder of FY13, “the impact of the cuts will generally not be less dramatic.”  The Congressional Budget Office estimates that the sequester cuts will cost 750,000 jobs by the end of 2013, and cut 0.6 percent off growth in the gross domestic product.

Read More:
Senator Murray Memo on Sequester (pdf)

With little chance that Congress will avert the sequester before March 1, the Senate will nevertheless vote on two competing alternative plans when it returns on February 25.

The proposal released last week by Senate Democrats is a $110-billion replacement plan, divided equally between spending cuts and tax loophole closings.  The $55 billion in savings would come from $27.5 billion in cuts from defense after FY14 and $27.5 billion in cuts to agricultural subsidies.  On the revenue side, the package would set a minimum effective tax rate for the wealthy and increase taxes on the oil sands industry.

In addition to the Democratic plan, the chamber will consider a plan being developed by Senate Republicans that “promises to be all spending cuts,” says CQ.Com.

House Speaker John Boehner (R-OH) has said that the Senate should act first on the sequester.  He said last week that if Senators “are willing to pass a bill, we’ll find some way to work with them to address this problem,” reports Politico.

Read More:
Mikulski Speaks on Senate Floor on Sequester (Mikulski.senate.gov)

In a hearing before the Senate Appropriations Committee, Mr. Duncan said that “sequestration”—the across-the-board spending cuts that are scheduled to take effect on March 1—would slash Federal Work Study and Supplemental Educational Opportunity Grants by $49-million and $37-million, respectively, resulting in 33,000 fewer work-study awards and 71,000 fewer supplemental grants. Pell Grants would be exempt from the cuts this year, but would be vulnerable in future years.

Read More:
Education Secretary Outlines Grim Consequences of Looming Budget Cuts (Chronicle of  Higher Ed) 

During President Obama’s annual State of the Union address last week, he discussed four issues of particular interest to research universities.  He urged Congress to avoid the pending budget sequester, called for significantly increasing federal research and development (R&D) spending, pressed Congress to approve comprehensive immigration reform legislation, and asked lawmakers to include “affordability and value” in determining campus access to certain types of federal student aid (see separate item below).

The Sequester.  In urging Congress to take action to avert the sequester, President Obama said the automatic, across-the-board discretionary spending cuts would not only jeopardize military readiness but “devastate priorities like education, and energy, and medical research.”  He reiterated his support for a “balanced approach to deficit reduction, with spending cuts and revenues.”

Bolstering R&D.  After discussing the importance of bolstering U.S. manufacturing, the President said that in order to make the best products, the nation must “invest in the best ideas.”  He added:

“Every dollar we invested to map the human genome returned $140 to our economy — every dollar. Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s. They’re developing drugs to regenerate damaged organs; devising new material to make batteries 10 times more powerful. Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the Space Race. We need to make those investments.”

Immigration Reform.   In one of the few issue areas where there appears to be meaningful bipartisan support, the President urged the House and Senate to approve comprehensive immigration reform, citing bipartisan groups working in both chambers to develop legislative proposals.  He did not specifically mention creating a path to citizenship for students brought to this country illegally as young children, the DREAM Act.  But he did specifically call for reforming the legal immigration system “to cut waiting periods and attract the highly-skilled entrepreneurs and engineers that will help create jobs and grow our economy.”

Read More:
State of the Union Text (whitehouse.gov)

As he did last year’s State of the Union address, President Obama slammed higher education institutions for rising costs, saying that “skyrocketing costs price too many young people out of a higher education, or saddle them with unsustainable debt.” He went on to say, “taxpayers can’t keep on subsidizing higher and higher and higher costs for higher education. Colleges must do their part to keep costs down, and it’s our job to make sure that they do.”  He called on Congress to change the Higher Education Act so that “affordability and value are included in determining which colleges receive certain types of federal aid.”

The President also promised to release a new “College Scorecard” to enable parents and students “to compare schools based on a simple criterion—where you can get the most bang for your educational buck.”

Page 5 of the supplementary material available on the White House website explicitly mentions the accreditation process, including the possibility of an “alternate system of accreditation”:

“Holding colleges accountable for cost, value and quality: Today, the federal government provides more than $150 billion each year in direct loan and grant aid for America’s students. In an era of limited resources, we must allocate the federal investment in student aid wisely, in order to promote opportunity in higher education and ensure the best return on investment. The President will call on Congress to consider value, affordability, and student outcomes in making determinations about which colleges and universities receive access to federal student aid, either by incorporating measures of value and affordability into the existing accreditation system; or by establishing a new, alternative system of accreditation that would provide pathways for higher education models and colleges to receive federal student aid based on performance and results.”

Read More:
College Scorecard 
Plan for a Strong Middle Class and Strong America – See Page 5 (pdf)