Fiscal Cliff Threatens Research Funding, Education Grants, Leaving College …

NEW YORK — The looming fiscal cliff could mean colleges and universities around the country — both public and private — will lose billions of dollars they previously received from the federal government. As the deadline approaches, presidents of the institutions are nervously watching for a solution from Congress.

“I’m very worried about it,” said James Barker, president of Clemson University in South Carolina. “It’s keeping me awake — honestly — it’s keeping me awake at night.”

As detailed in a report released by the White House’s Office of Management and Budget, the sequestration’s 8.2 percent across-the-board cut for domestic discretionary programs and 7.6 percent cut for mandatory spending programs would impact several funding streams that are critical for universities, including sources of scholarship programs and research grants.

One area is safe from automatic cuts: the Pell Grant, which offers federal funding that does not need to be repaid to students with financial need. Bentley University President Gloria Larson, who also jointly chaired Massachusetts Gov. Deval Patrick’s 2006 transition team, said she believes President Obama will “fall on his sword,” to guard the Pell Grant program from cuts. “But I’m worried about some of the other programs,” she said.

The National Science Foundation, National Institutes of Health and the National Endowment for the Humanities are all subject to cuts that fall within both the 7.6 percent cut to mandatory spending and the 8.2 percent cut to discretionary spending. Other domestic departments with money for research grants would also see cuts if Congress fails to reach an agreement to avoid the sequester cuts. As Inside Higher Ed noted, the Supplemental Educational Opportunity Grant and federal work-study would fall under the 8.2 percent cut. Federal student loan origination fees would also be expected to increase, making it even more expensive to borrow money to go to college. Several scholarship programs would also likely be slashed as part of the cuts, Inside Higher Ed reported.

Cuts to the Department of Defense would also impact federal research dollars.

Sequestration will require a major slashing of defense and domestic spending if Congress and the White House do not come to an agreement on an alternate deal before the end of the calendar year. The arrangement was intended to force a Congressional super committee to identify ways to reduce the national deficit. What’s referred to as the fiscal cliff includes the sequestration paired with the expiration of Bush-era tax cuts, which both occur on Jan. 1, 2013.

“We still are a country that wants more government than we’re willing to pay for,” said Kenneth P. Ruscio, president of Washington Lee University. Ruscio said he hopes that during any discussion about what specifically should be cut, the importance of investment in education will be recognized.

Lester Lefton, president of Kent State University in Ohio, didn’t sound as optimistic.

“I think [the cuts are] going to force us to have less education, rather than more education,” Lefton said.

Some of the top research universities get a majority of their research funding from the federal government. Massachusetts Institute of Technology, for example, reported that 69 percent of the institution’s campus research expenditures were sponsored by federal funding in its 2012 fiscal year. Ivy League institutions, like Yale, Harvard, Brown and Dartmouth, get 20 to 25 percent of their revenue through federal money, the Yale Daily News reported.

The leaders of Harvard and MIT, along with several other institutions in their state including Tufts, Northeastern and the University of Massachusetts, penned a letter to their Congressional delegation sounding the alarm on the billions they stand to lose just in the Bay State.

TRIO and GEAR UP, federal college access programs, would also see an 8.2 percent cut, Washington Monthly reported.

Arizona State University President Michael Crow offered a different reason for worrying about the fiscal cliff. “I’m only worried because it’d be a symbol of ultimate foolishness led by fools if they can’t solve this,” he said. “I’m worried about being led by fools.”

Also on HuffPost:

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  • Military Health Care – $16 Billion

    In his last offer to House Speaker John Boehner (R-Ohio), President Barack Obama lobbied for $16 billion in cuts from the military’s health care program, TRICARE. In 2012, the president also proposed hiking fees for military personnel and veterans who receive benefits under the program in an effort to help cut the defense budget. His proposal drew significant fire from Republican lawmakers and veterans’ groups.

  • Military Retirement Program – $11 Billion

    Both sides agreed to cuts from the military retirement program. Rep. Eric Cantor (R-Va.) claimed during July 2011 talks that lawmakers had reached a tentative deal to slash a href=”” target=”_hplink”$11 billion/a. Under the current system, military personnel receive immediate retirement benefits after serving for 20 years. According to a recent report from the Congressional Budget Office, the appropriation cost per active military service member has a href=”″ target=”_hplink”increased at a higher rate/a than either inflation or the total pay package of private-sector employees. Given the budget constraints looming before the Defense Department, the CBO floated the idea of transitioning the military retirement program to a matching-payment model.

  • Federal Employee Retirement Program – $33 -$36 Billion

    Cantor claimed that Republicans and Democrats had agreed to a href=”” target=”_hplink”$36 billion in savings/a over 10 years from civilian retirement programs. The president proposed a marginally more modest figure of a href=”” target=”_hplink”$33 billion/a in his final offer to House Speaker John Boehner. Just this year, Republicans in the House Committee on Oversight and Government Reform also looked to find savings from the Federal Employee Retirement System by a href=”” target=”_hplink”requiring employees to pay more of their salary/a into their pensions, which Democrats opposed as a pay cut that would make civil service less attractive for top talent.

    In September 2011, the federal government employed a href=”” target=”_hplink”over two million individuals/a, either through the cabinets or independent agencies. Many Republicans have complained that the federal workforce has ballooned during the Obama administration, and while the raw number of employees has risen by a href=”” target=”_hplink”14.4 percent/a between Sept. 2007 and Sept. 2011, the percentage of public employees out of the total civilian workforce has a href=”” target=”_hplink”remained fairly constant/a around 1.2 percent since 2001. Much of the raw growth has been concentrated in the Department of Defense, Veteran’s Affairs and Homeland Security.

  • Agricultural Subsidies – $30 – $33 Billion

    Democrats and Republicans agreed to cut as much as a href=”” target=”_hplink”$30 billion/a from agricultural subsidies; the main opposition fell along geographical lines rather than partisan ones. Hailing from an agriculture-heavy state, Sen. Max Baucus (D-Mont.) threatened to pull out of talks entirely if a deal included that much in subsidy reduction. The president ended up pushing for a href=”” target=”_hplink”$33 billion in cuts/a, but that figure also included reductions in conservation programs. Baucus now tells HuffPost any cuts should be made through the farm bill, not fiscal cliff talks.

  • Food Stamps – $2 to $20 Billion

    Cantor pushed hard for significant cuts to food stamps, formally known as the Supplemental Nutrition Assistance Program. He charged that the federal government could save as much as a href=”” target=”_hplink”$20 billion over ten years/a by eliminating waste and fraud, but the White House countered that the real number was closer to $2 billion. Instead, those cuts would force the program to scale back on the number of enrollees and the level of benefits it could offer.

  • Flood Assistance – $4 Billion

    Obama proposed cutting a href=”” target=”_hplink”$4 billion from flood assistance/a funding in his final offer to Boehner in July 2011. But Hurricane Sandy straining the National Flood Insurance Program; The New York Times a href=”″ target=”_hplink”reports/a that thousands of claims are being submitted daily, which could send the overall cost upwards of $7 billion for a program that suffers from a ballooning debt problem. And with climate change promising a href=”” target=”_hplink”future flooding disasters/a along the eastern seaboard, cutting the program looks unwise.

  • Home Health Care – $50 Billion

    The president offered to cut a href=”” target=”_hplink”$110 billion over the next decade/a from the government’s health care spending, excluding Medicare. Among the programs that could lose crucial funding is home health care, where Democrats and Republicans agreed to a href=”” target=”_hplink”$50 billion in reductions/a over ten years. Cantor pushed for closer to $300 billion in spending cuts to health care, but Democrats appeared to stand firm.

  • Higher Education – $10 Billion

    The president proposed cutting a href=”” target=”_hplink”$10 billion from higher education/a over the next decade, mostly from Pell grants. a href=”” target=”_hplink”Over nine million students/a relied on federal subsidized loans to afford college during the 2010-2011 school year, and the skyrocketing costs have continued to diminish the purchasing power of the Pell grant program. Obama has actively worked to make college more affordable for lower-income students. Key Republican lawmakers have attempted to cut funding for student loans; most notably, Rep. Paul Ryan (R-Wis.) slashed the maximum award from $5,550 per student per year down to a href=”” target=”_hplink”just $3,040/a.

  • Medicaid And Other Health- $110 Billion

    The original funding levels proposed by Cantor and the GOP leadership would turn the entitlement program for America’s poor into little more than a block grant program, Democrats claimed during the 2011 debt ceiling talks. Under such a program, they argued that states would then a href=”” target=”_hplink”drop more people from enrollment/a and scale back on health benefits. In fiscal year 2009, a href=”” target=”_hplink”over 62 million Americans/a — many of them children — depended on Medicaid for their health care. But the president did agree to a href=”” target=”_hplink”$110 billion/a in cuts from Medicaid and other health programs.

  • Medicare – $250 Billion +

    Republicans pushed for a drastic overhaul to the entitlement program for America’s seniors. Ryan infamously proposed turning Medicare into little more than a voucher system in which seniors would receive checks to purchase their own health care on the open market — a plan that would ultimately a href=”” target=”_hplink”force individuals to shoulder more of the burden/a for their health care costs.

    Democrats refused to accept changes similar to those in Ryan’s plan. The president, however, was a href=”” target=”_hplink”more open to other GOP suggestions/a on Medicare. In his final offer to Boehner, he agreed cut $250 billion over the next ten years — in part by increasing premiums for higher-income seniors and by raising the eligibility age from 65 to 67 (although over a longer time frame).

  • Tax Reform – $800 Billion – $1.6 Trillion

    Republicans have again and again a href=”” target=”_hplink”decried any attempt/a to raise taxes, either on the highest earners or on corporations. (A Democracy Corps/Campaign for America’s Future survey shows that a href=”″ target=”_hplink”70 percent of voters/a support raising taxes on the wealthiest two percent of Americans.) Instead, Boehner has pushed for a a href=”” target=”_hplink”comprehensive tax reform bill/a that would lower the marginal tax rates while closing loopholes and eliminating deductions in order to raise around $800 billion in additional revenues. For many Democrats, a href=”” target=”_hplink”that figure simply isn’t enough/a. White House Press Secretary Jay Carney announced Tuesday that the president was aiming for as much as a href=”” target=”_hplink”$1.6 trillion in new revenues/a, and the president told reporters on Wednesday that it would be a href=”” target=”_hplink”practically impossible/a to raise the amount of revenue he wanted simply from closing loopholes and lowering rates.

  • Social Security – $112 Billion

    Social Security a href=”” target=”_hplink”isn’t driving the deficit/a, yet Republicans have a href=”” target=”_hplink”pursued drastic changes/a to the program. Sen. Harry Reid (D-Nev.) has promised that Social Security would be a href=”” target=”_hplink”off the table/a in the on-going negotiations to avoid the fiscal cliff, but Obama did concede to tying the benefits to a a href=”” target=”_hplink”recalculated Consumer Price Index/a that would ultimately provide less money to retirees. Sen. Bernie Sanders claims that, under such a measure, seniors who are currently 65 years-old would see their benefits drop by a href=”” target=”_hplink”$560 a month in 10 years/a and by as much as a href=”” target=”_hplink”$1,000 in 20 years/a. The Moment of Truth project (led by the two former co-chairs of the president’s deficit reduction commission, former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles) claims that the recalculated CPI could save as much as a href=”” target=”_hplink”$112 billion/a from Social Security over the next ten years.

  • Tax Loopholes And Deductions – Up To $180 Billion

    Although Cantor and other GOP House members demanded that any deficit-reduction deal brokered in 2011 be classiefed as a href=”” target=”_hplink”revenue-neutral/a, they were open to closing particular loopholes in the corporate tax code and limiting itemized deductions for individuals — given that they were offset by other tax cuts. Out of the $50 billion in savings to be found over the next decade from closing loopholes, Cantor proposed getting $3 billion from eliminating the break for corporate-jet owners and another $20 billion from voiding the subsidies for the oil and gas industries.

    On the individual earner side, he proposed eliminating the second-home mortgage deduction for $20 billion, as well as limiting the mortgage deduction for higher-income households to rake in another $20 billion. He also offered to tighten the tax treatment of retirement accounts.

    But Democrats wanted to see even greater action taken on itemized deductions. In June 2011, Rep. Chris Van Hollen (D-Md.) proposed raising $130 billion in new revenues by capping itemized deductions at 35 percent for the highest income brackets. The GOP response to his proposal at the time was a resounding “no.”

  • Bush Tax Cuts For The Wealthy – $950 Billion

    Set to expire on Dec. 31, 2012, the Bush tax cuts represent one of the most controversial elements of the so-called fiscal cliff. They added over a href=”” target=”_hplink”$1.8 trillion to the deficit/a between 2002 and 2009. Yet Republicans argue that an extension is necessary to create jobs and spur economic growth. But a a href=”” target=”_hplink”study/a from the Congressional Research Service found that tax cuts for the wealthiest earners had little economic effect.

    The White House is pushing for a renewal only of those tax breaks for the lower- and middle-class Americans in order to save the average middle-class family a href=”” target=”_hplink”between $2,000 and $3,500/a next year. Letting the cuts expire for those earning over $250,000 a year — or the wealthiest two percent of Americans — would haul in a href=”” target=”_hplink”$950 billion/a in savings over the next decade, according to the CBO. Obama stressed how much the country stood to gain from such an approach Wednesday during a press conference.

    “If we right away say 98 percent of Americans are not going to see their taxes go up — 97 percent of small businesses are not going to see their taxes go up,” he said. “If we get that in place, we’re actually a href=”″ target=”_hplink”removing half of the fiscal cliff/a.”

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