After President Trump backed a Democratic proposal for a three-month extension of federal agency spending and the debt ceiling, Republican leaders quickly acceded. The law includes a key provision prohibiting the National Institutes of Health from altering research overhead reimbursements.
In a swift and unexpected development, President Trump and Congress enacted a bipartisan agreement extending federal government spending at current levels and raising the federal debt ceiling, both through Dec. 8. The agreement also includes over $15 billion in emergency spending for Hurricane Harvey and wildfire relief.
At an Oval Office meeting on Sept. 6, President Trump sided with congressional Democratic leaders in backing the stopgap measure after congressional Republican leaders had pushed for an 18-month debt limit increase. Speaker of the House Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) then changed their minds and decided to support the agreement.
The Senate passed the three-month spending and debt limit extension on Sept. 7 by a vote of 80 to 16, and the House followed on Sept. 8 with a vote of 316 to 90. President Trump signed the package into law on evening of Sept. 8, buying himself and congressional leaders three months to negotiate agreements on the debt ceiling and appropriations for fiscal year 2018.
A three-month spending extension at the end of the fiscal year is not atypical of Congress. As the chart below produced by the Congressional Research Service depicts, Congress has not funded the federal government by the start of the new fiscal year in over 20 years, although it has varied in the number of days it has taken to provide new appropriations. The fiscal year 2018 budget process got off to an especially slow start in the transition of administrations this year.
In her remarks on the House floor, Lowey said Congress should make use of the extra time to negotiate a bipartisan budget agreement that increases both defense and nondefense discretionary spending caps. In their respective appropriations bills, the House and Senate Appropriations Committees have already proposed spending in excess of this year’s caps. To do so without triggering automatic sequestration of agency funds requires amending the discretionary spending caps that were put into place by a 2011 budget control law.
Mix of political factors drove bipartisan support for extension
Some members of Congress rallied around the bill with appeals of support for Americans impacted by the recent devastating hurricanes. In justifying his support of the legislation, Rep. Randy Weber (R-TX) said,
Harvey brought down a downpour but I will tell you that Texans and Americans, and folks brought in an outpour . . . our folks have stepped up. Please, please vote for this bill, it is time for us to step up, it is time to set politics aside, and it is time now to focus on the tragedy that is called Harvey and may soon be called Irma.
Not all members supported the bill, however, with a number of conservative Republicans withholding support. The chairman of the Republican Study Caucus, Rep. Mark Walker (R-NC), issued a statement saying:
While some have advocated for a ‘clean’ debt limit increase, this would simply increase the borrowing authority of the government while irresponsibly ignoring the urgency of reforms. Worse yet is attaching the debt limit to legislation that continues the status quo or even worsens the trajectory on spending, such as the deal announced yesterday by the President and Congressional Leadership.
Senate Minority Leader Chuck Schumer (D-NY), who proposed the agreement, was pleased with the outcome, saying “This is a good agreement for the American people and everyone should breathe a sigh of relief. This agreement takes the threat of a shutdown and default off the table this month and will help us quickly get resources to FEMA and other agencies that are helping with rescue and recovery in the wake of Harvey and will in all likelihood be needed in the wake of Irma as well.”
NIH barred from changing research overhead reimbursements
In a provision sought by universities and research organizations, the legislation explicitly prohibits the National Institutes of Health from altering its reimbursement rates for facilities and administrative costs, also known as indirect costs, through Dec. 8.
These research overhead reimbursements complement grant funds for the direct costs of research and can make up a large part of any given research grant. Universities, laboratories, and other institutions that conduct research depend vitally on the reimbursements in order to afford to function as hosts for researchers, and NIH negotiates reimbursement rates with most universities on behalf of other science funding agencies.
Earlier this year, the Trump administration proposed capping indirect cost rates at 10 percent of total grant cost, a level significantly below the current average rate awarded. Congress has pushed back strongly during budget hearings and in appropriations committee guidance.
With this provision now law, the administration’s hands are tied on making changes to the formulas by which NIH determines its reimbursement rates, at least for the time being.