Episode 13: Demystifying the Federal Budget

How do budgets evolve into policies? As Congress starts to appropriate money for President Biden’s 2023 budget requests, we talk with Matt Hourihan, director of the R&D Budget and Policy Program for the American Association for the Advancement of Science. Hourihan tells of his own introduction to the byzantine mysteries of the budget, how the process works (and sometimes doesn’t work!), and what the numbers reveal about today’s science policy priorities. 



Josh Trapani: Welcome to The Ongoing Transformation, a podcast from Issues in Science and Technology. Issues is a publication of the National Academies of Sciences, Engineering, and Medicine and Arizona State University. I’m Josh Trapani, senior editor of Issues in Science and Technology. I’m joined by Matt Hourihan, director of the R&D Budget and Policy Program for the American Association for the Advancement of Science. Matt is a valuable source of information and insight on science budgets for policymakers and the science community. On today’s episode, we’re going to do a deep dive on the recently released Fiscal Year 2023 budget, and see how understanding these numbers can help us understand priorities and values for the administration overall.

Matt, thank you for being here. It’s so great to have you with us. So the administration released its FY23 budget on March 28 this year, and you’ve studied federal R&D budgets and the budget process for years. I was wondering if there’s anything in particular that surprised you about this year’s budget request?

Matt Hourihan: Maybe the most surprising thing is the fact they released it so soon after the omnibus, right? The FY22 omnibus was adopted just a few weeks before the new budget came out. Among other things, it meant something of a complicated interpretation of this year’s budget request, because none of the numbers that showed up in the final omnibus appeared in the FY23 budget documentation. Instead, the administration simply assumed CR levels, or continuing resolution levels, for FY22. When they started, they used that as a baseline for their increases for FY23. And those numbers, I mean, you can throw them all right out; they’re meaningless because we now have an actual omnibus to work from.

So you had to jump through some hoops to get a clearer sense of what would increase, or not increase, in the administration’s budget. And it also, frankly, means if the administration was using a baseline based in unreality, you could say, and from a CR that was no longer in place, you have to take a lot of these numbers with a grain of salt. For example, the Institute of Education Science: technically, the administration in their budget request would tee up that institute for a 10% cut from FY22 levels, just because their budget documentation didn’t include that FY22 under the spending level where it did get an increase. Do they actually want to cut that institute by 10%? No. So it kind of complicated things, and there was a little bit of grumbling about that. Made it a bit harder. But beyond that, in terms of priorities, there’s a lot in the budget request that continued ongoing themes from this administration from last year.

Trapani: Yeah. I heard that using the CR numbers instead of the omnibus numbers was driving people crazy all over town, as they tried to put together comparisons and understand exactly what the administration was asking for, versus what they actually got, versus what had been in the previous budget. Can you talk a little bit about what some of those priority areas are in terms of R&D?

Hourihan: Yeah, I can. There’s a few I can mention. I think the number one priority for this administration—arguably anyway—the number one priority is probably climate science and clean energy. So on the climate side, there are lots of federal programs that deal with various aspects of understanding climate change, understanding its impacts on various ecosystems.You have the NASA Earth Science program. You have climate programs, climate science programs within the US Geological Survey. You have earth modeling programs within DOE. Of course, NOAA climate research is another one, and lots of programs like that. A lot of those would see big plus-ups, and bigger plus-ups than other parts of the budget. You also have, on the clean energy front, you have offices like the Office of Energy Efficiency and Renewable Energy, within the Department of Energy. It’s the flagship efficiency and renewables R&D office in government. They’d get a big increase of nearly 25%, as I recall. You have the Advanced Research Projects Agency-Energy. One of these DARPA-style, dynamic, high-risk, highly innovative offices for energy, R&D would get a big increase.

So energy and climate, certainly a big one, maybe the biggest. Relatedly, you also have a lot of manufacturing programs that would see plus-ups, including DOE’s Advanced Manufacturing Office, certain manufacturing programs within the Department of Commerce, and some other places. Again, manufacturing R&D, manufacturing innovation has been one of those areas dealing with the supply chain, strengthening the domestic supply chain. These are all areas that the administration has been focused on from the beginning. We’d see plus-ups there.

Maybe two other areas, just to quickly mention, would be pandemic preparedness. And that would take the form of an $82 billion proposal for pandemic preparedness funding across Health and Human Services. From a research perspective, maybe most notable would be $12 billion of that would go towards NIH.

And then STEM education, again, much like energy and climate, lots of different programs throughout government. Many of those, not all of them, but many of them would see plus-ups as well. So those would be the, I think, big priorities for the administration. And again, these are echoes of what we saw at last year’s budget request as well.

Trapani: Thank you for that. Yeah, that’s really helpful. In addition to that, I wanted to ask you about two specific areas where there’s been a lot of attention lately. One is NSFs new Directorate for Technology, Innovation and Partnerships, which they formally established just last month, and I think it’s the first time that NSF has set up a new directorate in about 30 years. The other one is ARPA-H, which is a new agency. It’s been in a lot of discussion. And for the moment, it turns out, I think as a compromise, they’re going to have it sit inside NIH, but report directly to the HHS secretary. And the thinking there is that they could use the administrative support of NIH without necessarily going through the same processes. What is the budget calling for in the cases of those two?

Hourihan: So I’ll start with ARPA-H first, or ARPA Health first. So they would receive $5 billion in the budget request, but that’s been a point of controversy for NIH. And again, this is a product perhaps of not having those omnibus numbers in place when some of these other numbers were baked in. NIH would get a big increase from a top-line perspective in the FY23 request, but almost the entirety of that increase would be eaten up by ARPA Health and by the aforementioned pandemic preparedness funding. Take those out and NIH would actually get—core NIH—would actually get less than a 1% increase from FY22. So certainly some controversy there.

And then on the NSF side and the new technology directorate… it’s kind of an interesting story. As you said, they recently established—authorizers and appropriators seemed to like it, seemed to want to fund it, but in the FY22 omnibus, NSF only got about a 4% increase,I believe, less than $300 million increase in the Research and Related Activities account, which funds the technology directorate. And appropriators also directed—while they provided some other plus-ups for some other programs, and climate, and energy, and quantum, and AI, and some other areas, and they also directed core NSF generally, and support for the core disciplines generally, to be at least flat, or no less than flat, from FY21 levels. So, most likely, we don’t actually know what the new technology directorate, what kind of funding it will get FY22, but there’s very, very little available. So having said all that, the administration in FY23 proposed about a $500 million increase for those existing programs in this new technology directorate, right? There are a handful that predate this new directorate, they’re now under the new directorate umbrella.It would include I-Corps, it would include the Convergence Accelerator program, a couple others. I think SBIR is in there now. So, for those existing programs, plus new programs, the administration would propose, all together, an increase of $500 million. That’s about what they proposed last year as well. In both cases, it’s a request for this new directorate between [$800 million] and $900 million.

So what happens with that going forward? Authorizers have teed up legislation through America COMPETES and through the USICA bill in the Senate (it’s the US Innovation and Competition Act); both of these would authorize much larger increases for this new tech directorate, over a billion dollars in the FY23 fiscal year—much larger than the administration has even asked for, let alone what appropriators were able to give in the most recent cycle.

So what actually happens there, we’ll have to see what happens. I think it’s unfortunate, certainly, that the final appropriation for NSF in the omnibus was so small and so limited, and probably limits their ability to do a whole lot of new things, because there’s a lot of promise in that new directorate. So we’ll have to see how things play out.

Trapani: So I want to pull back just a little bit. We’ll get back to the budget, but I wanted to ask you: you direct AAAS’s (the American Association for the Advancement of Science’s) R&D Budget and Policy Program, which has been around for quite a while. There’s always a lot of interest in science policy careers, and your career seems like an interesting one. And the work of your program seems very interesting. I was wondering if you could just say some more about what it is that you do, and maybe a little bit about how you came to do it?

Hourihan: So we often say that the program that I run, the R&D Budget and Policy Program, we often say it’s here to be an information resource at its heart. So it means a lot of different things. One of the things we’ve been doing the last few years is putting together interactive dashboards to help people follow along with the appropriations process, or, more recently, we’ve put together a dashboard on earmarks. So you can actually go in, this resource that we set up allows you to go in and find out which science-related or STEM education-related earmarks have been put in spending bills, what has been proposed, and all that.

We try to provide those kinds of resources to help people understand what’s happening. We often will do reports on long-term trends in federal R&D, so what’s up, what’s down, how the US compares with other international leaders including China and Korea and Germany. One of the most useful things we do, I think, and certainly the thing that seems to be highly valued by policymakers, is that, trying to be a source of information on comparative R&D spending. I give a lot of talks on both the “what’s happening in the R&D budget” front, as well as just breaking down the appropriations process and the budget process for audiences who aren’t experts on this stuff—grad students or fellows, and people like that. And then there’s some media work as well, dealing with reporters and helping them understand what’s happening and what’s changing.

The program itself has been around since the ’70s, and we try to make a useful contribution to the debate, helping people understand what’s happening, and help lay the ground level for “what are the facts on the ground” regarding R&D and R&D expenditures.

And in terms of how I got here: I actually started out as a journalist. My undergrad degree is in journalism. I’m not a scientist or an engineer. There’s an alternate reality somewhere where the print journalism industry is much healthier and I’m a rumpled ink stain somewhere in some mid-sized American city covering planning commission meetings, which would be A-OK by me. I actually really enjoy that super local, super wonky, boring policy stuff.

But it wasn’t meant to be. And after I’d been in DC for a few years doing communications work, I actually went back to grad school for a master’s in science and tech policy. While in grad school, I was an intern at AAAS in—it’s now called the Office of Government Relations, which is where I work now. The program I run is within the Office of Government Relations, but I interned there, working alongside many of the people I still work with today. And that was the introduction, really, both the organization to me, and also me to the organization.

And a couple of years later, when this position opened up, I applied, and they remembered me and the work I had done, and that’s how I got my foot in the door. And I’m not the only one, either. There’s actually several people, over the years, who have worked at AAAS, or currently work at AAAS, who started out as interns or science and tech policy fellows, which is another program I’m sure many of your listeners are aware of, but it seems to be a pretty good way to get one’s foot in the door at AAAS.

Trapani: So that’s a testament to the power of internships. And I’ve seen that at other places I’ve been too, interns are remembered—interns that do a good job are remembered—and sometimes they come back later. And now you run a program and you’ve been there for 10 years. Was that your first encounter with the federal budget? Because I think one of the services that you provide is taking these documents and these processes that are fairly incomprehensible to most people, even people who work in DC have a lot of trouble really understanding it and extracting it. How did you get up to speed on that?

Hourihan: Over an extended period of time, really. I mean, my first exposure with the federal budget, at a professional level—my first job in DC was at an ocean conservation nonprofit and an advocacy organization. I dealt with the budget a little bit there, budget for NOAA and things like that, we’d draft statements and things when a new budget came out. It wasn’t a huge part of my job, but that was my first introduction.

And then in grad school, I actually had a class on the federal budget and budget policy and public budgeting in general. That was at George Mason University, the professor was Siona Listokin, and it was actually a really great class. I loved it. I thought it was really interesting. I find the budget process, and the idea that you’re marrying big picture debates that fall on ideological lines, or very much driven by values, with like super wonky, detailed spreadsheets and just all the boring stuff that happens within the federal budget. I actually think it’s a really fascinating process.

Trapani: Yeah. That’s really, really interesting. You got a little bit of an introduction, and it turned into becoming a deep expert on it over time. So to turn back to this year’s budget, of course the president’s request is just the first part of the process, and now the Hill will get to work on the FY23 budget. What is your sense of how this request will be received on the Hill?

Hourihan: It’s kind of predictable when a new budget comes out, the opposing party declares it dead on arrival and has loads of criticisms over the amounts of spending, or the priorities, and it’s failure to address public issues X, Y, and Z. On the other hand, the president’s own party comes out speaking positively, embraces it, and then moves on, and everybody kind of moves on and gets to the hard work of making appropriations decisions. This year, I think hasn’t really been any different than that. If anything, my sense is that the response has been almost a little bit muted. Also probably has something to do with the fact that it’s just more difficult than usual to parse this budget, to understand what it’s really asking for, and which numbers to focus on versus which to ignore.

So in the long run, we’ll have to see what happens. I mean, it’s something that not a lot of people really understand, but one of the reasons that FY22 appropriations weren’t quite as big for a lot of science agencies as one might have hoped is because the overall discretionary spending limits were much smaller than the White House certainly had wanted, and that Democrats had been going for on the non-defense side.

Trapani: Yeah, that’s really interesting. There are so many variables at play, and I’ve even read about the role that elections may play this time, too. But separate from that, and tell me if this is not your impression, but I feel like one of the things that we’ve seen over the last 10 years or more is a breakdown of the process, from start to finish.

I can remember—I think I can remember a time when the president’s budget request always came at the same time in mid-February. It was accompanied by coordinated agency briefings.I joined a higher education association in 2010, and they had a very regimented process that they ran every year: getting those numbers and processing them, and getting them out to their members super-duper quickly, because everybody wanted them right away because they were treated as something very, very important.

And now, it seems like slowly, the process has kind of broken apart from there. We see late budgets, we see skinny budgets, we see budgets that don’t come, or they come late, or they have different amounts of detail. And then on the other side, I don’t know how long it’s been since we’ve had Congress actually pass a budget before the beginning of the fiscal year. Right? As we were talking about, they wrapped up FY22 in March, just a few weeks before FY23 was introduced.

So we’re living in a world of continuing resolutions, occasional funding breaks, which have really detrimental effects for science. What is your perspective on, first of all, whether that’s an accurate representation, but then why has this happened? And then I think even bigger, would there be any way to fix it? Or is this what we are doomed to do as a budget process from here on forward?

Hourihan: So first let me just say that, so the last year—it’s a fun bit of trivia I often bring up when I’m talking to folks about the budget—but the last year Congress had what’s called “regular order,” which is getting all their funding done on time before their deadline, was 1996. So, long time indeed. The issue is, and I don’t know that there’s any big secret: there really aren’t strong incentives for Congress to get their work done on time, especially in the age of political polarization. The parties have moved farther apart on some of these big fiscal challenges, and I think just the incentives line up that it’s easier for the parties to take harder lines on overall spending and deficits and some of these issues, and delay key votes and delay action.

Political incentives are there to be tougher about this kind of thing than they are to compromise, to get together, to get their work done on time, because there are downsides to not having budgets finished on time. From a science agency perspective, agencies can’t pursue new projects if they’re under a CR. The uncertainty makes things a lot harder if you’re an agency trying to plan out your year, plan out new or existing programs. It may mean delaying certain expenditures and construction, or repairs or acquisition of equipment or materials. So there’s a lot of downsides to it, but politically, the negatives that come from operating under CRs, and having agencies always spending half of every year, or a quarter of every year, under a CR is that the downsides aren’t sufficient political motivation or incentive to get something done on time.

What do we do about it? I mean, really the question is, what do we do about polarization? That I don’t know. I’m not a political scientist, and there’s lots of other people who probably have better ideas than me on how to address that. One idea that has been floated for many years, and actually going back, I mean, I think the first congressional hearing on this was something like 40 years ago, and that is operating under a biennial budget cycle, or two year budget cycle. Over many years, there’s been proposals and legislation introduced that would shift government from a one year annual appropriation cycle to a two year cycle.

There are different ways you can do it, but it’s gotten quite a bit of support from different legislators over the years. One of the arguments in favor of it would be that because Congress just seems totally incapable of getting their work done on time, if you’re on a two year cycle, you’re still dealing with all the same stuff, CRs and debates over fiscal clips and all that, but you’re only dealing with it half as often, right? You get to take a year off from it every other year, which provides a little more stability. And there’s reasons why maybe this isn’t such a great idea. There’s arguments for and against it. And lately, the pandemic has put this topic on the back burner, but before the pandemic, there had been a fair number of legislators who thought this was a pretty good idea. Whether it happens, we’ll have to see, but that is one idea that often comes up.

Trapani: One of the things that concerns me, as someone who’s in this space, about this situation is, despite all the talk about the need for a stronger, more inclusive STEM workforce and international competitiveness, every time this happens, it puts this pipeline in jeopardy. Because you have postdocs, you have graduate students who are relying on grant money which is being withheld or delayed, and there’s no alternative for a lot of those people, and where do they go? And I know that would take a while to bubble up to being a political concern of maybe sufficient magnitude. But it’s one of the things that seems like a bit of a disconnect in this whole process.

Hourihan: Yeah. That’s a great point, and you’re absolutely right. I mean, just generally speaking, when legislators hear from young scientists or students, that often can be a really useful and important source of input and influence on legislators. And clearly I think there should be much more attention focused on the downsides of CRs, and the uncertainty, from a human capital perspective, when grants, assistantships, or different forms of federal support, when that gets cut off because of this fiscal uncertainty. Those are absolutely stories we should be telling, and I’d certainly encourage anybody who’s dealt with that to try to share their story in ways that they feel comfortable with, because those are all really important anecdotes, and the kinds of things that may get legislators or their staff to pay a little more attention.

Trapani: That’s a great point. We should never forget that budgets affect people. Thank you, Matt, for sharing your insights on the FY23 budget, and what they can mean for federal science programs. And thank you to our listeners for joining us for this episode of The Ongoing Transformation. To find more of Matt’s work, follow him on Twitter @MattHourihan and visit his program’s website at aaas.org/rd.

Please subscribe to The Ongoing Transformation wherever you get your podcast. Email us at [email protected] with any comments or suggestions. If you enjoy conversations like this one, visit us at issues.org and consider subscribing to our magazine. I’m Josh Trapani, senior editor of Issues in Science and Technology. Thank you for joining us.