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IEEE-USA ELECTRONIC INFORMATION BULLETIN -- PRESIDENT PROPOSES
From: David Farber <farber () central cis upenn edu>
Date: Thu, 9 Feb 1995 17:24:10 -0500
IEEE-USA ELECTRONIC INFORMATION BULLETIN No. 95-7, February 9, 1995 PRESIDENT PROPOSES FLAT R&D BUDGET FOR FISCAL YEAR 1996 Report prepared by Brian Dougherty American Association of Engineering Societies (adapted from AAES FactsFax, 2/7/95) FY 1996 BUDGET OVERVIEW -- President Clinton officially began what promises to be one of the most intense budget dialogues in years Monday when he forwarded his $1.61 trillion FY 1996 budget request to the Republican-controlled Congress. Two-thirds of the budget will automatically go to entitlements ($806 billion) and to pay interest on the national debt ($257 billion). Thus, only 1/3 ($549 billion) will be subject to Congressional appropriations. This sum--a product of the discretionary budget caps mandated in the 1993 Budget Act--is divided between defense ($262 billion) and non-defense ($287 billion) discretionary spending, and represents a 1.5% increase over the FY 1995 budget. PROPOSED SPENDING CUTS -- The FY 1996 budget proposes cuts projected to result in $144 billion in savings over 5 years. Of the $144 billion in 5-year savings, $23 billion will come from restructuring the Departments of Energy, Transportation, and HUD, as well as the General Services Administration and the Office of Personnel Management. The Administration would also eliminate 131 minor programs and agencies, and consolidate 271 federal programs into 27 "performance partnerships" with state and local governments in areas such as education, job raining, human services, housing, and transportation to produce another $2 billion in savings. Another $80 billion would come from other spending limits such as extending the current caps on growth of discretionary spending through 2000, eliminating the Interstate Commerce Commission, and privatizing the national helium reserve; but details are foggy. Finally, the budget proposes $37 billion in non-discretionary savings including $10 billion through extending expiring provisions of the Budget Act, $13 billion in user fees, accelerated direct student loans, and lower interest on debt. Notably absent were any real savings from entitlements, the fastest growing portion of the budget. MIDDLE CLASS TAX BREAKS -- $63 billion of the $144 billion in projected savings would be allocated to support tax breaks associated with President Clinton's Middle Class Bill of Rights. $36 billion would pay for a $300-500 tax credit per child under age 13 for families making less than $75,000. $24 billion would go toward a tuition tax deduction of $5,000-10,000 for families with incomes under $120,000. The balance would go toward expanded eligibility for Individual Retirement Accounts for families with incomes up to $100,000. R&E TAX CREDIT/SECTION 127 TAX CREDITS -- The administration did not include in its budget a permanent or temporary extension of either the Research and Experimentation tax credit or the exclusion for employer-provided education assistance (Section 127). According the Treasury Department, the President is a supporter of both but simply could not come up with the necessary offsets to pay for them. Instead, the President intends to work with Congress to find the offsets. The Section 127 deduction expired in December, and the R&E credit expires in June. Section 127 costs about $300 million/year, and the R&E tax credit costs about $2 billion/year. Given the cost and the current budget climate, a temporary extension of both will be tough to achieve, and a permanent extension seems very unlikely. Separately, the administration did not cut special tax breaks that favor specific corporations, or so-called "corporate welfare," despite prompting from Labor Secretary Reich. THE R&D BUDGET -- Despite the budget cutting sirens coming from Capitol Hill, the President tried to maintain support for "investment" spending in areas such as education, R&D, national service and crime prevention. Overall, proposed R&D funding is set at $72.8 billion, essentially the same as last year. While defense R&D dropped 2.4% to $37.9 billion, civilian R&D is up 3.2% to $34.9 billion, moving the civilian share of Federal R&D up to 48%, not including dual-use technology investments. Most of the drop in defense R&D is in the applied research area. On the civilian R&D side, basic research is up 4%, applied research up 2.8%, and development up 4.7%. Commenting on the President's R&D budget, House Science Committee Chair Robert Walker (R-PA) said that while "..we both appear to agree on the importance of items like basic research and the space station, I regret the strong emphasis placed on applied science subsidies." HIGHLIGHTS OF SELECTED AGENCIES R&D BUDGETS COMMERCE DEPARTMENT HIGHLIGHTS -- While the Commerce Department is undoubtedly a target for House Republicans, it continues to be an administration favorite. The FY 1996 budget requests a spending increase of $471 million to a total of $4.68 billion, or 11.2% over last year. $219 million of that increase is slated for civilian technology programs, bringing the Department's technology budget to $1.3 billion. The National Institute of Standards and Technology (NIST) would receive $1.023 billion, an increase of $169 million (20%) over FY 1995. Within NIST, the Advanced Technology Program is budgeted at $491 million, up 14% over last year's level of $431 million. The Manufacturing Extension Partnership is slated to rise from $91 million to $147 million, or a whopping 61% over FY 1995. The request for the in-house laboratory programs at NIST is up 17% to $310 million. $70 million is also budgeted for facilities construction, an 8% increase over last year. The Office of Technology Policy - which analyzes capabilities and coordinates technology policy for the Department - is budgeted at $14 million, up from $10 million last year. The National Telecommunications and Information Administration would receive $133 million, of which $100 million will support the development of a national information infrastructure. The National Oceanic and Atmospheric Administration would receive $2.2 billion, an increase of $161 million. DEPARTMENT OF ENERGY HIGHLIGHTS -- The Energy Department's budget is slated to drop by $14.1 billion over 5 years, absorbing 10% of the administration overall budget cuts. Proposed reductions include a projected $4.4 billion in savings by reducing inefficiencies in nuclear waste management, $1.2 billion from cuts to applied R&D funding, $2.8 billion from restructuring operations, $5.3 billion from privatizing the Naval Petroleum Reserve and $4 billion from privatizing the various Power Marketing Administrations. However, total FY 1996 funding is set to increase $300 million to $17.8 billion. Similarly, overall R&D spending at DOE is set to increase 7.4% to $7.1 billion in FY 1996. Reflected in these increases is the cost of work force reductions as well as several new initiatives. The request for fossil energy programs is down slightly from $442 to $437 million, while energy efficiency funding is up 15% to $891 million, solar and renewable energy increases 8% to $452 million, and nuclear energy is up 21% to $383 million. The administration also requested new funding of $100 million to increase support and operating time at DOE's user facilities. The budget for basic energy sciences would increase 10% to $811 million, fusion energy would decline 1% to $366 million, and technology transfer would rise slightly to $300 million. Civilian radioactive waste management funding is set to increase 20% to $630 million-- including $432 million from the Nuclear Waste Fund-- underscoring the importance of evaluating the Yucca Mountain site and temporary storage of spent nuclear fuel. The FY 1996 budget also would terminate funding for the Advanced Neutron Source. NATIONAL SCIENCE FOUNDATION HIGHLIGHTS -- The administration's FY 1996 budget request for NSF came in at $3.36 billion, or $96 million (3%) over FY 1995 levels. Research is budgeted at $2.45 billion, 7.6% more than last year. All research directorates would increase by an average of 6-8%, including a 7.7% increase for the Engineering Directorate to a level of $344 million and a 6.7% increase for the Computer and Information Science and Engineering Directorate to $275.6 million. NSF strategic research investments, as identified across the research directorates, also rise, including increases of 5.1% for civil infrastructure systems ($55M), 5.6% for high performance computing ($297M), 6% for advanced materials ($213M), 6.2% for biotechnology ($166M), 6.2% for manufacturing ($128M), and 7.9% for environment/global change ($329M). By comparison, education is set to drop 1% to $599 million, academic infrastructure grants by 15% to $100 million, and funding for major research equipment by 44% to $70 million. NASA HIGHLIGHTS -- Although NASA's FY 1996 budget request of $14.26 billion is down slightly from $14.46 billion appropriated last year, it is expected to absorb additional cuts of $5 billion over the next 5 years through a fundamental reorganization. As part of that effort, NASA Administrator Dan Goldin stated Monday that "we will make NASA less of an operations agency and more of an R&D agency." NASA's R&D budget is up slightly in FY 1996 to $9.5 billion. Areas receiving budget increases include the New Millennium Initiative (NMI) to further the design of a new class of agile spacecraft that will be faster, lighter, and cheaper; the Reusable Launch Vehicle Technology Program charged with research on more affordable alternatives to the shuttle in cooperation with the private sector; and the National Aeronautics Initiative to pursue research and technologies for the aeronautics industry. The NMI is up 26% to $495 million, the launch vehicle program received a 23% to $159 million, and the aeronautics initiative is up by 25% to $434 million. Space station funding remains at the FY 1995 level of $2.1 billion. NASA will rely on the private sector for communications with spacecraft. DEPARTMENT OF DEFENSE HIGHLIGHTS The President's FY 1996 request for Department of Defense research and development activities is $35.2 billion, a decrease of 3.2%. DoD's five year budget projection shows research, development, test, and evaluation (RDT&E) funding decreasing to $30.6 billion by FY 2001. Primary attention in the President's budget is given to the Advanced Research Projects Agency's Technology Reinvestment Program (TRP), which is characterized as the cornerstone of DoD's new dual use technology strategy. The FY 1996 budget requests $500 million for TRP, a 13% increase. TRP is one of several programs targeted by Republican leaders in Congress for major cuts or elimination. ------- Note: The information in this report was derived from budget materials released to Congress and the public on February 6th. Any opinions expressed are those of the report's author and are not necessarily shared by the IEEE. This electronic bulletin is provided as part of an on-going effort by IEEE's United States Activities Board to apprise IEEE members of important developments related to U.S. technology and career-related policy issues. It is the first in a series of Information Bulletins, which will be prepared to highlight the budget requests of specific Federal departments and agencies. Please feel free to post this message and/or forward it to other individuals who you believe would be interested. Contact: Chris J. Brantley Manager, Government Activities Institute of Electrical and Electronics Engineers - United States Activities 1828 L Street, N.W., Suite 1202 Washington, DC 20036-5104 Email: c.brantley () ieee org Phone: 202-785-0017 ====END OF ITEM====
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