Interpreting NASA's Letter to Sen. Mikulski About the Impact of the Sequester

Interpreting NASA's Letter to Sen. Mikulski About the Impact of the Sequester appreciates the insight shared by several Washington insiders on how to interpret NASA’s letter to Senator Barbara Mikulski (D-MD) last week on the impact of the sequester.  It is no easy task for anyone not steeped in intricate budget details and who must rely only on documents in the public domain.  Based on the new information, we need to clarify an article we published on Thursday about the impact on NASA’s budget for space technology.

Mikulski chairs the Senate Appropriations Committee and published letters from many government agencies last week in connection with a hearing on what will happen if the sequester goes into effect on March 1 as scheduled.  NASA was one of the agencies providing a letter in response to her questions.

NASA’s letter includes an attachment that lays out the cuts budget account by budget account.  Anyone can look at that attachment and calculate the percentage reductions in funding.  Space technology, which was the subject of our article Thursday, for example, will suffer an approximately 20 percent cut.  Exploration will take about a 10 percent cut, and science about one percent.  That is what we reported on Thursday.

The key to understanding the letter, however, is that the cuts displayed there are not only because of the sequester even though that was the topic of the hearing and associated letters.

As they are, the numbers imply that choices were made by the Administration about where to cut, rather than applying the sequester on an across-the-board (“meat-axe”) basis of reducing each account by the same percentage — in NASA’s case, 5 percent.  NASA’s letter also repeatedly states that the cuts are expressed in comparison to the FY2013 budget request.  That request reflects Obama Administration priorities, not congressional priorities since Congress has not completed action on that request. Thus, the letter further implies that cuts were based on Obama Administration priorities in the FY2013 request.  Since some budget accounts were cut more than others by percentage, it appeared that someone was choosing winners and losers.

That is not exactly the story, however.

This is our clarified understanding of this complicated situation.  (To simplify matters in the following discussion, we omit nuances, exceptions and other fine details that are important, but add to the confusion.  Kudos to the budget experts who keep track of every one of them.) 

The sequester applies to FY2013 appropriations levels. Congress has not completed action on the FY2013 appropriations bills, however. Instead, the government is being funded through a 6 month Continuing Resolution (CR) that expires on March 27.  The betting is that Congress will extend that CR through the end of the fiscal year — a “full-year CR” — meaning that the FY2013 funding amounts will be roughly the same as FY2012.

In its calculation of the impact of the sequester alone, is now convinced that NASA did in fact apply a 5 percent across the board cut to its FY2012 funding levels for each account, not favoring one over another.

In the letter, however, NASA did not show simply the impact of the sequester.  Instead, it showed the impact of the sequester PLUS the impact of a full-year CR and compared the result to the agency’s request for FY2013.  Consequently, for accounts where the agency requested a big increase for FY2013 (like space technology), the “impact of the sequester” looks really large, while accounts that were level or going down (like science) are shown with a minimal impact.  But that is not due to the sequester alone.  It is the sequester and the full-year CR expressed in comparison to the FY2013 request.

Using space technology as an example, this is how the math works.  (For simplicity, we are going to ignore a 0.612 percent increase for all agencies that was included in the CR).

Space technology’s FY2012 appropriation was $574 million. Remove 5 percent because of the sequester and the new total is roughly $545 million.  For FY2013 NASA requested $699 million. Thus, compared to the FY2013 request, space technology is cut about $150 million or approximately 20 percent.

That is not a 20 percent cut from its current budget, though. It’s a 20 percent cut from what NASA wanted for FY2013.  The reduction is the result of the sequester plus a full year CR.  That was not clear in the Mikulski letter.

Because the letter includes not only sequester cuts, but a full-year CR, all compared to the FY2013 request, the list of programs impacted by the cuts is not very helpful since in some cases it was clear Congress would not approve the requested funding anyway.  Commercial crew is an example.  NASA requested $830 million for FY2013, but the House-passed version of NASA’s FY2013 appropriations bill reduced that to $500 million and the Senate Appropriations Committee approved $525 million. Under the sequester plus a full year CR, it would get its FY2012 appropriated level of $406 million minus 5 percent or about $386 million. That’s a significant cut from the FY2013 request, but it is due more to the full-year CR than to the sequester. NASA and its partners have known for quite some time that they would not get even close to the $830 million they wanted.  If the sequester disappeared tomorrow, they would do better, but not dramatically better.

As for space technology, our article is accurate that creating the Space Technology Mission Directorate is a sign that the Obama Administration considers that an important area for investment, but we stand corrected that it apparently decided to cut it more than other NASA programs as part of the sequester process.  We are now convinced that all the NASA accounts were cut equally in the sequester calculations.  The variations shown in the Mikulski letter are due to calculating the impact of the sequester plus a full-year CR and NASA’s decision to compare that to its FY2013 request rather than to its current operating levels.  We regret the misunderstanding.

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