Whew! Just hours before the US would have been forced to default on debt, the stars aligned in Washington and the House of Representative passed, and President Obama signed a debt ceiling deal developed by the democratic and republican leaders in the Senate that ended 16 days of government shutdown and extensive furloughs of Federal employees. While I do not believe that it really had an impact on the ability of the Senate leadership to strike an agreement, I found it interesting that the salaries of Senate staff would have ended tomorrow, the 18th of October. In my view, the primary factor was that the majority of congressional members wanted to prevent the economic catastrophe and the embarrassment that would have resulted from a default.
Is the problem solved? Is there no longer a risk of another government shutdown? In a few words, things are okay “for now”. Under the agreement, the government will be open until 15 January 2014 and the Secretary of the Treasury will have the authority until 7 February to use extraordinary measures to prevent a default on US debt. The “continuing resolution” (CR) continues government funding at the fiscal year (FY) 2013 levels after the sequestration was implemented (i.e., generally 5 percent less than the FY 2012 program levels). Between now and then, Congress and the President must approve another CR or appropriations legislation to prevent the government from shutting down again.
Achieving an agreement by January will be no small task as another sequestration that would reduce overall discretionary spending by more than about $110 billion is slated for implementation as of the first of January. Some in Congress are advocating a budget agreement that would raise the overall discretionary spending cap; others are insisting on maintaining sequestration limits and that all cuts be achieved through non-defense programs.
While the majority of members of Congress do not want to see another government shutdown over the debt ceiling, many of those who held the government hostage over the past 16 days continue to believe that it is a good strategy. Thus, as always, posturing has already begun and partisan wrangling in Washington is alive and well.
It’s the 7th of October and at midnight the US government will enter its 8th day of shutdown. While many thought that the shutdown would be short-lived, this has not been the case. Indeed, it now appears as though the shutdown will last at least until the 17th of October – the date by which the US debt limit must be increased to avoid default on government loans. If you are curious as to how the government is (or is not really) operating during the shutdown, you can find copies of all agency plans at this link.
More importantly, AACCI has many members who serve on the staff of governmental agencies and many other members whose research or economic viability depends on access to Federal funding or the variety of regulatory activities that facilitate the vibrant US cereal foods sector. Who is minding these stores during the shutdown?
According to the contingency plans, most of the agencies have a handful (2-5) of employees at headquarters on call for emergency activities and most governmental websites have been shuttered. Here are a few more specific examples of the impact of the shutdown on employees at a few agencies.
· Out of approximately 10,190 staff within the research division of USDA (covering intramural & extramural research, and statistics), 96% of employees have been furloughed. The other 4% are working (albeit mostly without pay).
· The National Science Foundation furloughed 1,970 employees and has kept 30 staff (slightly above 1%) to protect life and property.
· Of the 1,363 employees within the food and nutrition division of USDA, 95% of staff has been furloughed. Several key nutrition programs, such as the school lunch program, will have sufficient carryover to continue reimbursements in October but other programs, such as the emergency food assistance program, have little if any funds for this month.
· The Food & Drug Administration, FDA, is continuing programs funded through user fees and only vital activities related to maintaining consumer protection, high-risk recalls, civil and criminal investigations, import entry reviews, and other critical public health issues. Of the FDA’s 14,800 employees, about 45% of employees have been furloughed, including most of the food safety and nutrition oversight staff, research, and routine inspections.
While there has been a lot of press over the past few days about restoring funding immediately for FDA and USDA’s Food Safety Inspection Service that regulates meat, poultry, and egg products, there is little likelihood that a piecemeal approach will be approved by both houses of Congress.
This week, a multitude of Congressional hearings are being held on the President’s FY 2014 budget request for the Department of Agriculture. USDA Secretary Vilsack appeared before the House agricultural appropriations subcommittee on Tuesday to defend the President’s request, Undersecretary for Research, Education, and Economics (REE), Cathie Woteki, and the administrators within the REE mission area testified yesterday.
While the REE mission area receives less than 2% of the overall USDA budget, research was a major topic of discussion during the Vilsack hearing. Many scientific societies who place absolute priority on increasing funding for the USDA’s flagship competitive grants program, AFRI (Agriculture Food and Research Initiative), must have been disappointed that the focus of the discussions about research were on the importance of USDA’s intramural programs and facilities funded through the ARS (Agricultural Research Service). The hearing illustrates the reality of the constraints under which we must operate if we are to increase funding for agricultural research broadly and for grain health and nutrition research specifically. As former Speaker of the House of Representatives Tip O’Neil frequently said, “All politics is local”. This came through loud and clear at the Vilsack hearing. The subcommittee members were concerned about cuts in funding for research in their districts and the fact that their research facilities were not on the priority list for infrastructure improvement funding.
Because of the need for members of congress to focus on the impacts that legislation and appropriations have on their own districts, the various budget proposals over the past 20+ years to increase competitively awarded funding at USDA by taking funds from ARS or formula funds that support land grant institutions and extension, have most been dead on arrival in Congress. This year, the President’s budget request includes a “net” overall increase in funding for agricultural research. Included in the request is a significant increase in competitively awarded funding but it isn’t taken out of the ARS budget. The administration selected a few priority areas for research increases (e.g., nutrition and obesity) while maintaining overall program levels within the sub-agencies. The Administration deserves a big “thank-you” for requesting a net increase in funding for science at USDA.
The budget proposal and the hearings this week are instructive as AACCI begins to think about an initiative within the US for increased funding for research in grain health and nutrition. By supporting net increases in funding for science at USDA and then requesting that some of those net increases go to our research priorities, we may have a chance at success.
The sequester has been implemented and there is no sign that it will be reversed for the current fiscal year as action on the FY 2013 continuing resolution is expected to proceed without addressing the 1 March 2013 sequester order. The order requires a 5.0 percent reduction in discretionary domestic spending which includes most of the science, extension, education, and regulatory programs of interest to cereal chemists. Because the cut is being implemented over 7 months, the effective reduction is about 9.0 percent for the remainder of the fiscal year.
In a memorandum to the heads of US agencies and departments, the director of the Office of Management Budget (OMB) suggested that money could be saved by “minimizing noncritical expenditures such as training, conferences and travel”. While participation by governmental scientists in scientific society conferences was expected to be down already due to general, government-wide travel limitations, this will no doubt reduce participation even further.
The following chart depicts a rough outline of the cuts that some of the programs will sustain as a result of the sequester. The “sequestrable amount of budget authority” is the amount of funding within the program or account that is subject to the sequester. For virtually all of the programs listed in the chart, the “sequestrable amount” is equal to the total program funding.
US Department Agency/Account
Agricultural Research Service (ARS) - Salaries & Expenses
National Institutes for Food & Agriculture (NIFA) - Extension Activities
NIFA - Research & Education activities
The sequester (i.e., across the board spending cuts) will be implemented today. Furloughs are not expected until April at the earliest, however, individual agencies may phase-in furloughs at different times and some may be able to avoid furloughs completely. The US Office of Management & Budget is expected to provide specific agency-by-agency details later today.
The sequester will be applied to program funding accounts. This will allow some flexibility to program managers although they won’t be able to shift funds from one account to another. For example, the USDA Grain Inspection Service will be subject to the same percentage reduction as the USDA Food Safety Inspection Service. As specific details are provided, we will be watching closely for potential impacts on AACCI members.
Negotiations between the President and republican and democratic congressional leaders will continue although it is doubtful a deal will be achieved. Several members of congress have introduced a variety of so-called “agency flexibility” bills that would grant some measure of flexibility for agencies to prioritize the cuts.
In the meantime, leaders of the House and Senate appropriations committees are piecing together an omnibus continuing resolution that would provide appropriations through September 2013. This legislation must be enacted by 27 March 2013 to keep the government operating; failure to enact a continuing resolution by that time will result in a government shut-down.
As the continuing resolution is considered, there will be some attempts to replace the sequester with specific funding cuts (e.g., Senate democrats proposed recently to eliminate direct farm payments as one means of raising funds sufficient to avoid a sequester). However, the path of least resistance for congressional democrats and republicans may well be to allow the sequester to stay in place.
Stay tuned for more information.
Over the past few years, in observing the US budget debates and its potential impact on agricultural research, extension, and education funding, I have felt as though I was constantly saying that the “sky is falling” and then the “sky did not fall” as a last minute deal was struck to delay severe budget cuts. Here we go again although it is extremely likely that there will be major reductions in budgets this year. By 1 March 2013, if a consensus is not reached, the $85 billion sequester (i.e., across-the-board budget cuts) will kick-in and all agencies will have no choice but to implement plans to reduce the annual budget of all spending programs by 5 percent. Since 5 months of the year have elapsed already, the effective percentage reduction would be about 9 percent. From a personnel standpoint, this could result in furloughs of up to 15 days between 1 March and 30 September for most government employees, including employees at regulatory agencies such as the USDA-Food Safety Inspection Service, the USDA-Animal Plant Health Inspection Service, and the Food & Drug Administration.
Do agencies have flexibility for allocating the percentage reduction? No. There are a lot of proposals being bandied about that would give the Secretary of Defense and potentially other heads of departments some flexibility, but it is unlikely an agreement will be reached in time.
Will Congress pass one of the proposals to avert/delay the sequester? There will be several votes over the next two days but it is unlikely that any one of them will be adopted by both houses of Congress and signed by the President.
If the sequester is delayed by 1 March, what is the likely timing of the delay? Right now, the government is operating on a continuing resolution that provided funding through 27 March 2013 for all agencies at the fiscal year 2012 level. If the sequester is delayed this week, more than likely it will be delayed no longer than the 27th of March.
What will happen by 27 March 2013? Some of the proposals being discussed right now would enact another appropriations legislation that would continue funding for the rest of the current fiscal year (FY 2013), include budget cuts of $85-115 billion, raise additional revenue, and cancel the sequester. Other proposals would keep the sequester and continue funding at or below the level provided under the sequester.
If Congress passes the FY 2013 appropriations legislation by 27 March, is that all of the budget negotiations for the year? Unfortunately, that legislation will only wrap up the current fiscal year. Congress must also pass appropriations legislation for the fiscal year that begins on 1 October.
Is there anything that US-based AACC International members can do? Absolutely! Please contact your members of congress and encourage them to avoid an across the board reduction in Federal funding that fails to recognize the importance of essential governmental regulatory activities at the USDA and the Food & Drug Administration as well as the need to continue essential investments for the future such as in agricultural science and education programs.