Normally, this week, those interested in US Federal budgets and appropriations are pouring over the Administration’s budget request for the next fiscal year. The release of the budget typically occurs the first Monday in February, but the Administration announced in January that they would submit the FY2013 budget request to Congress on 13 February this year. Though an intriguing thought, I am not sure that the release of the 2013 budget request on the 13th day has any hidden meanings; rather, I think that it just gave the Administration another week to refine a budget that will include unpopular cuts. Theoretically, we should have had a short reprieve for analyzing the budget this year but the overall economic outlook as released by the Congressional Budget Office (CBO) in late January has everyone concerned about the depth of potential cuts heading our way.
Assuming that there are no major changes enacted in spending programs or revenue laws, we are set for a budget deficit of $1.1 trillion in FY2012. This is slightly lower (2%) than what we saw in 2011 but as CBO indicated, this is higher than any deficit between 1947 and 2008. Again, assuming current laws remain unchanged, discretionary spending (i.e., allocations made through the annual appropriations bills) is slated to decline steadily over the next 10 years to reach the lowest level in more than 50 years, largely because of the statutory caps on discretionary spending that were included in last year’s debt limit deal. Concurrently, spending on mandatory programs (funding allocations set at a specific benefit or funding level by statute and not subject to a separate allocation in an appropriations bill), will increase unless changes in the laws are passed. Agricultural scientists, educators, and extension personnel should be aware of this as virtually all research, extension, and education programs are funded through discretionary spending. For FY 2012, overall discretionary spending for programs that fall under the jurisdiction of the agricultural appropriations subcommittees equaled about $19.5 billion, of which $2.5 billion was allocated for the Food and Drug Administration and $2.3 billion was allocated for the USDA’s Research, Education, and Economics (REE) mission area.
Last week, we discussed the possibility that across-the-board cuts (i.e., a “sequestration”) would occur in January 2013 if Congress does not enact legislation that keeps discretionary spending under the spending cap. For the first two years (FY 2012 and FY 2013), mandatory programs generally are not subject to sequestration so we could see discretionary programs cut by as much as 14%, according to some estimates, in FY 2013. Under this scenario (which could be one of the better ones), REE programs could be cut by $322 million. Why is this one of the better options? Sequestration will be applied to the appropriated funding levels at the time (January 2013) for individual programs. If the President’s budget request reduces spending for the REE mission area, this will be the starting point for the appropriations committees to develop FY 2013 funding levels. It will take a lot of effort (and may be impossible) for us to convince Congress to make the much needed investments in the REE mission area if the budget request starts us out at a significant disadvantage. We will keep you posted over the next few weeks as we analyze the budget request and begin to gain a sense of what APS members will need to do to help avoid a massive cut in January 2013.