(Fiscal) Cliff Notes

It appears that Congress is doing a pretty good Wile E. Coyote impression.

On Jan 1, 2013, Congress passed the American Taxpayer Relief Act (ATRA) of 2012, which (among other provisions) ended the Bush tax cuts for citizens making more than $400,000, extended federal unemployment benefits for another year... and put off resolving the budget sequestration issue until March 1. So we absolutely did not go over the cliff. Nope, no-sirree. Glad we avoided that. (That is, as long as we don’t look down...)

“Sequestration” is the threat that makes “going over the cliff” so dangerous for the economy and potentially devastating for scientists who rely on federal funding. It derives from the Budget Control Act of 2011, which was passed last year to temporarily resolve the last fiscal hullaballoo over the debt ceiling (ie. to allow the country to pay for what we had already purchased), which, you may recall, resulted in Standard & Poor’s decision to downgrade the credit rating of the United States for the first time in our history.

In exchange for agreeing to raise the nation’s debt ceiling, Congress enacted discretionary spending caps estimated to reduce spending by about $1.2 trillion over 10 years, and appointed a bipartisan and bicameral “Super Committee” to come up with at least $1.2 trillion in additional cuts to discretionary spending. The threat of sequestration was included as a “gun to the head” in order to galvanize this committee: failing to pass the required budget reductions would trigger much more dramatic across the board cuts that could cripple the economy.

Unfortunately (and apparently unexpectedly), the Super Committee was not able to reach a compromise, and threw up its hands in November 2011.

Hence the fiscal cliff: failure to act by the end of the 112th Congress on Jan 3, 2013 would have triggered tax increases on everyone, expiration of federal unemployment benefits, cuts to Medicare, and the sequester: $109 billion in automatic cuts to discretionary spending spread across the entire federal government every year for 10 years.

Sequestration would be devastating to scientific research, which depends on federal support. Around 60% of science funding in the US comes from the federal government. Science has already been hit hard by the recession – over the last couple of years, federal R&D spending has already dropped by 10%, and AAAS estimates sequestration would strip out $58 billion over the next 5 years – an additional loss of 8.4 percent. The effects would be particularly dramatic because existing grants are theoretically already guaranteed (though funders could also modify the terms). So most of these automatic cuts would have to come from reducing the number of new grants awarded.  The NIH alone expects to drop at least 2000 new grants if the sequester goes into effect. These research grants pay for everything from graduate students, post-docs, and technicians to computers, lab equipment, and reagents. Less funding means people get fired, labs close, and promising careers are destroyed or seriously delayed.

So what happened to this terrible specter when Congress passed ATRA on January 1?

Well, the bad news is that the cliff still yawns before us. No budget deal was reached, so sequestration is still a real possibility. All ATRA did was put off the day of judgement: it reduced the 2013 sequestration by $24 billion (in exchange for a pledge of an additional $12 billion in cuts over the next two years) and delayed the deadline to reach an agreement on the required budget cuts until March 1.

That’s right – two months until the next crisis.

Of course, when that crisis comes, it seems Congress can simply continue delaying and revising, putting off deadlines, and inventing new mechanisms to shirk their responsibilities to compromise and govern.

You have to wonder how long this can go on before it becomes clear that it’s all fakery. I suspect we can only fool ourselves into running on thin air for so long. Eventually we’re going to look down and see the cacti far below us, and hopefully we’ll have time to hold up a sign that reads “Bye!” before – poof!

So what can you do? All I can advise is to keep yelling at our elected representatives until they actually decide to engage in responsible governance instead of ideological brinksmanship. Email, call, threaten to support their opponent in the next election.

After all, the power in a democracy belongs to the people right? Right.

(For more info, check out this video from SfN, and these resources from AAAS.)