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From: David Farber <farber () central cis upenn edu>
Date: Thu, 9 Feb 1995 17:24:10 -0500


        No. 95-7, February 9, 1995

                    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."


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.

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

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


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.

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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