New Budget Caps Dampen Outlook for Science Spending Surge

As a result of new spending caps set by Congress, science agencies will likely struggle to secure significant budget increases for the next two fiscal years.

To resolve a standoff over raising the federal debt limit, President Biden signed legislation in June that will hold discretionary spending on non-defense programs roughly flat for fiscal year 2024, which begins on Oct. 1. This cap will rise by about 1% for the year after, well below the current rate of inflation.

Since most science agencies are funded from the non-defense budget, any increases they receive will largely have to be offset by cutting other programs. Even defense research agencies may be constrained: The legislation only allows for a 3% overall increase to the defense budget for the upcoming year and a 1% increase the year after.

The caps mean that Congress will almost certainly undershoot the targets it set for science budgets last year through the CHIPS and Science Act. The act recommends Congress roughly double the budgets of the National Science Foundation and the National Institute of Standards and Technology over five years, and increase the budget for the Department of Energy’s Office of Science roughly 50%. Instead, the House is proposing to hold the DOE Office of Science budget flat at $8.1 billion for fiscal year 2024.

Some lawmakers from both parties have criticized the spending caps, vowing to push for extra spending. Senate Majority Leader Chuck Schumer (D-NY) noted that the caps do not prevent Congress from approving supplementary or emergency funding for “issues of national importance.”

But House Speaker Kevin McCarthy (R-CA) has said he won’t support measures designed to circumvent the caps. McCarthy was a key architect of the caps, seeking to fulfill House Republicans’ pledge to constrain federal spending. House Republicans have also taken aim at spending legislation approved by the previous Congress, seeking, for instance, to rescind parts of the energy technology development initiatives launched by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act — though the Democrat-controlled Senate is unlikely to agree to unwind these acts.

Congress probably won’t be able to finalize agencies’ budgets before the next fiscal year begins on Oct. 1, a deadline it almost always misses. However, a new dynamic is at play this year: The spending cap legislation includes a provision that will automatically cut both defense and non-defense budgets by 1% if Congress does not reach an agreement by Jan. 1, 2024. This may motivate Congress to negotiate quickly, but it could also inspire representatives who want to decrease federal spending to try to scuttle any agreement, triggering the automatic cuts.