The perils to research of the U.S. ‘fiscal cliff’

Research supported by the U.S. National Institute of Health (NIH) is in serious jeopardy. NIH’s inflation-adjusted budget today is almost 20 percent lower than it was in FY2003 and is facing even more severe cuts on Jan. 2 unless Congress proposes alternative legislation to avert them.

These reductions are the result of a looming “fiscal cliff” due primarily to:

• Expiration of the Obama tax cuts provided for in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
• Across-the-board spending cuts to most discretionary programs as directed by the Budget Control Act of 2011.
• Reversion of the Alternative Minimum Tax thresholds to their 2000 tax year levels.
• Expiration of measures delaying the Medicare Sustainable Growth Rate from going into effect, most recently extended by the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA).
• Expiration of the 2% Social Security payroll tax cut, most recently extended by the MCTRJCA.
• Expiration of federal unemployment benefits, most recently extended by the MCTRJCA
• New taxes imposed by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.

With the U.S. presidential election behind us and nearly $6 billion dollars spent to retain the previous administration – a Republican-led house and a Democrat-led Senate – we are asking the same players under the same circumstances to produce different results. The repercussions of inaction have nevertheless become more severe. A sudden reduction in the American deficit by the measures proposed in the Budget Control Act of 2011 would almost certainly force the U.S. into another recession, pulling Canada along with it. The consequences for both countries are dire and Canada’s stake in the U.S. fiscal cliff is significant.

Bilateral trade between Canada and the U.S. amounts to more than $1.7 billion a day, and a financially healthy and confident U.S. consumer is vital to Canadian exporters. Canada’s Finance Minister Jim Flaherty recently echoed this concern, telling reporters that the fiscal cliff is the “biggest” international economic risk facing Canada and other countries and confirming fears that it would put Canada in recession.

If unchanged, existing legislature will result in tax increases, spending cuts and a corresponding reduction in the budget deficit (also known as sequestration) beginning in 2013. Biomedical research is expensive and sequestration would force cuts of 8-10% to the NIH, eliminating an estimated 2,400 extramural grants, limiting scientific innovation and slowing development of new treatments and cures for all people, regardless of political affiliations. More importantly, scientists at all levels (graduate students, research fellows, professors) derive their salaries from 2 to 4-year contracts funded by taxpayers. There is no safety net in academic science; careers end (particularly for students and untenured faculty) when the next grant goes unfunded – forcing scientists into other professions or abroad. These cuts, if enacted, will rob us of an entire generation of young investigators and the scientific breakthroughs in human health their research will provide.

“The world would be immensely helped if the Americans could deal with this immediate issue” – Canadian Prime Minister Stephen Harper

It is critical that Congress, members of the media and other key stakeholders hear from scientists about the impact inadequate government funding has on the primary drivers of biomedical research and scientific innovation. Our perspective is necessary to ensure representatives in Congress take a balanced approach to reducing the deficit that doesn’t further cut NIH funding; a position Canada must prioritize as well to remain a global leader in health research, and for Canadian science and innovation to weather this economic storm. I will be sharing my personal story in my next post. I welcome yours.