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Looking Ahead to FY 2013: OMB Issues Budget Guidance

Richard M. Jones
Number 105 - September 2, 2011  |  Search FYI  |   FYI Archives  |   Subscribe to FYI

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Approximately five months from now President Barack Obama will send his FY 2013 budget request to Congress.  The request will be bound by the provisions of the Budget Control Act that the President signed into law early last month limiting discretionary spending to $1.047 trillion, a level that is 0.4 percent over than that for FY 2012.

The Office of Management and Budget (OMB) plays a key role in shaping the budget request.  On August 17, OMB Director Jacob Lew distributed a two-page memorandum for the heads of departments and agencies calling for FY 2013 budget submissions to be 5 percent and 10 percent below the FY 2011 enacted discretionary appropriation.  He acknowledged “I know this will be a difficult year, but it will also offer an opportunity to make the hard decisions to invest where we can get the most done and pare back in other areas.”

Lew’s specific directions stated:

“In light of the tight limits on discretionary spending starting in 2012, your 2013 budget submission to OMB should provide options to support the President's commitment to cut waste and reorder priorities to achieve deficit reduction while investing in those areas critical to job creation and economic growth. Unless your agency has been given explicit direction otherwise by OMB, your overall agency request for 2013 should be at least 5 percent below your 2011 enacted discretionary appropriation. As discussed at the recent Cabinet meetings, your 2013 budget submission should also identify additional discretionary funding reductions that would bring your request to a level that is at least 10 percent below your 2011 enacted discretionary appropriation.”

Of note, Lew’s memorandum states: “At the same time as your submission shows lower spending overall, you should identify programs to ‘double down’ on because they provide the best opportunity to enhance economic growth.”

Lew comments on the importance of programs enhancing economic growth in his August 18 posting on the OMBlog as follows:

“In light of the tight limits on discretionary spending starting in 2012, we asked agencies for budget submissions that provide options to support the President's commitment to cut waste and re-order priorities to achieve deficit reduction while investing in those areas critical to job creation and economic growth.”

Again using the word “invest,” Lew stated:

“We do not believe in making across-the-board cuts; rather, we believe that we should cut what is wasteful or not essential and invest in what is critical to long-term growth and other priorities. Thus, some agency budgets will decrease (and some more than others), some will stay flat, and some may increase (and, again, some more than others) – and the same goes for programs within agencies.”

Lew then echoed the guidance in his August 17 memorandum: “And as we look for savings, we also will be looking for opportunities where we can ‘double down” on investments that spur economic growth and job creation.”

The Administration has frequently described R&D funding as an investment.  During his State of the Union address this January, the President stated:

“Our free enterprise system is what drives innovation.  But because it’s not always profitable for companies to invest in basic research, throughout our history, our government has provided cutting-edge scientists and inventors with the support that they need.  That’s what planted the seeds for the Internet.  That’s what helped make possible things like computer chips and GPS.  Just think of all the good jobs - from manufacturing to retail - that have come from these breakthroughs.”

A January 2011 White House statement regarding the President’s address explained “The President is calling for new investments in American innovation. The President’s Budget will help increase the nation’s R&D investments, as a share of GDP, to its highest levels since President Kennedy.”  The President called for non-security spending (with the exception of that for homeland security, defense, and veterans’ programs) to be frozen for five years in this address.

Importantly, an August 11 posting on the OSTP blog described a recent meeting that OSTP Director John Holdren hosted as follows:

“Dr. Holdren thanked the representatives from the science and technology organizations for their longstanding efforts to sustain the public-private partnership in science and engineering that has kept the US’s innovation engine the strongest in the world. Dr. Holdren reiterated the Obama Administration’s commitment to protecting Federal investments in research and education in the recent budget agreement and in future budgets. In doing so, he noted the President’s remarks after signing the budget bill last week:

‘We can’t make it tougher for young people to go to college, or ask seniors to pay more for health care, or ask scientists to give up on promising research …’

“In his 2011 State of the Union address and the 2012 Budget he put forth, the President announced his commitment to winning the future through investments in innovation, education, and infrastructure within a fiscally responsible framework.”

Richard M. Jones
Government Relations Division
American Institute of Physics