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Proposed House Debt Limit Conditions Will Reduce Research Funding

Please see below an update on the current federal landscape. Funding for federal research, workforce development, healthcare, and education programs are all at risk if Congress and the White House do not find a compromise on raising the debt ceiling and top level funding for FY 2024 appropriations. 

The White House and Democrats have insisted on a “clean” debt ceiling increase with no conditions, such as major spending cuts.  Republicans agreed to raise the debt ceiling three times during the Trump Administration with no conditions or demands and the Biden Administration has called for similar treatment.  The Biden Administration was also not willing to negotiate or compromise with House Republicans until they offered their own budget proposal and list of demands.  On April 26, House Speaker Kevin McCarthy (R-CA) was able to pass a debt limit bill with a slim majority through the House on a 217-215 vote.  Key elements of the House debt ceiling bill include:

  • Raising the federal debt ceiling by $1.5 trillion, allowing federal spending through March 2023 based on current projections;
  • Cut nondefense discretionary spending by $130 billion in FY 2024 compared to FY 2023 spending levels and limit future discretionary spending increases to 1 percent a year for a decade (see graphic);
  • Rescind unobligated COVID relief funds provided under the 2020 pandemic laws and the 2021 COVID relief package;
  • Block student loan regulations on payment suspensions and debt discharge;
  • Expand work requirements under several social safety net programs, including Medicaid and Supplemental Nutrition Assistance Program;
  • Repeal clean energy tax incentives and production and investment tax credits from the Inflation Reduction Act, such as credits for nuclear power, clean hydrogen, and domestic production of solar and wind components; and
  • New energy permitting and leasing rules primarily to streamline federal permitting for energy industries and expand oil and gas leasing on federal lands.

 

Adding a new sense of urgency to negotiations, on May 1, Treasury Secretary Janet Yellen notified Congress that the U.S. could default on its debt as early as June 1 if Congress does not raise or suspend the debt limit.  To kickstart debt-limit negotiations, President Biden invited Speaker Kevin McCarthy (R-CA), Senate Majority Leader Chuck Schumer (D-NY), Senate Minority Leader Mitch McConnell (R-KY), and House Minority Leader Hakeem Jeffries (D-NY) to meet on May 9.  While waiting for a final resolution, the House and Senate Appropriations Committees have put forward a plan to start advancing FY 2024 appropriations bills.  House Appropriations Chairwoman Kay Granger (R-TX) laid out an ambitious schedule to advance all 12 appropriations bills through the Committee by June 15 and Speaker McCarthy plans to bring up many of them for a full House vote later in the summer.  Chairwoman Granger used the $1.47 trillion discretionary spending cap in the House debt ceiling bill to set funding allocations for the 12 appropriations bills on April 29.  With expected increases in funding for the Department of Defense and major national security programs, veterans health care programs, and border security, this puts additional pressure on non-defense discretionary spending and associated federal agencies, such as the National Science Foundation, National Institutes of Health, Department of Energy, and Department of Commerce.  Cuts to non-defense programs would be closer to FY 2021 spending levels if applied evenly across all non-protected agencies.  Senate Appropriations Committee Chairwoman Patty Murray (D-WA) also announced that she plans to advance the first Senate FY 2024 appropriations bill on May 18, but it is contingent on reaching a compromise on proposed FY 2024 spending with Ranking Member Susan Collins (R-ME).  The Senate is not expected to propose major cuts to spending.

In advance of the House releasing funding levels for major appropriations bills starting the week of May 15, below is a possible funding scenario for major federal science agencies.  This assumes a $130 billion cut to discretionary spending and all of the cuts applied to non-defense programs, which is the guidance provided to the House Appropriations Committee.  The impact would be closer to FY 2021 funding levels for major federal science agencies (see graphic below).  Those types of proposed cuts would have major impacts to biomedical research at the National Institutes of Health (NIH); fundamental research at the National Science Foundation (NSF); use-inspired and clean energy research and scientific infrastructure projects at Department of Energy (DOE) national labs and research universities; scientific missions of the National Aeronautics and Space Administration (NASA); agricultural research at the U.S. Department of Agriculture (USDA) National Institute of Food and Agriculture (NIFA); and economic development projects, including management of Regional Technology Hubs at the Department of Commerce Economic Development Administration (EDA).  The cuts would also prevent federal agencies from advancing new initiatives proposed in the FY 2024 budget request.  In anticipation of these cuts, the House Appropriations Committee Ranking Member Rosa DeLauro had asked the heads of each federal agencies to summarize impacts on their agencies by cutting discretionary spending back to FY 2022 funding levels.  Summaries of their responses are available here.  The impact to federal science agencies could be even bigger is there was an across the board cut to all federal agencies rather than Congress prioritizing funding across agencies.  The White House Office of Management and Budget estimates that an across the board cut applied evenly across all federal agencies and programs would be closer to a 22 percent cut.

Advocacy communities will have an important role to play once the House releases details of its proposed spending bills.  To help inform Congress and influence future spending decisions to prevent major cuts to federal programs, advocacy communities will need to provide a clear and detailed description of the impacts, such as loss of jobs, elimination of programs, increased cost and schedule of construction projects, falling behind international competitors, and risk to health and safety.  The Biden Administration and Democrats to date have rejected these types of proposed cuts.  If Republicans and Democrats cannot find a compromise on top line spending levels for FY 2024, either as part of a debt ceiling bill or a separate budget agreement, the most likely scenario would be a full year Continuing Resolution (CR). While a full year CR would prevent federal agencies from advancing new initiatives and boosting funding for priority programs, it would prevent major cuts proposed by House Republicans.

 

 

 

 

Lewis-Burke Associates LLC
Washington, DC 20001
nathan@lewis-burke.com