After Fiscal Deal, Funding Cuts Still Loom for Harvard

Congressional lawmakers reached an eleventh-hour deal late Tuesday to avert the so-called fiscal cliff, largely postponing what will likely be far-reaching spending cuts expected to cost Harvard and other research universities millions of dollars in federal sponsorship.

The bill allows the top marginal tax rate to rise to 39.6 percent on individuals earning at least $400,000 and families earning more than $450,000, but avoids universal tax increases as well as automatic, across-the-board spending cuts that would have taken effect Wednesday had the legislation not passed. Such cuts would have slashed billions from the federal budget in the coming year alone and left a large hole in Harvard’s balance sheets.

Temporarily postponed but still looming is sequestration, which would result in automatic, across-the-board reductions in spending of 8.2 percent for nondefense programs and 9.4 percent for defense programs. Those cuts include millions of dollars in research funding earmarked for Harvard and other institutions for the current fiscal year, which began July 1, 2012.

Last fiscal year, the University received around $650 million in federal sponsorship—a figure which accounted for about 16 percent of Harvard’s entire operating budget, according to the Office for Sponsored Programs 2012 annual report.

The postponement of sequestration means that Congress now has until March 1 to reach a broader spending deal to avert the automatic cuts. Such a deal would likely be part of a larger federal debate over the debt ceiling by the new Congress, which is set to be sworn in Thursday.

Harvard, which actively lobbies in Washington, will likely continue its efforts to preserve research funding in any future deal. The University did not return requests for comment on Tuesday's deal. University President Drew G. Faust has said in the past that Harvard might look to private sponsorship to help fill any gap that may emerge from a decrease in federal funding.

While Tuesday’s deal largely dealt with questions of federal revenue, the final bill does call for some discretionary cuts to be split between defense and nondefense programs. Whether or not those initial cuts will affect research funding is uncertain. Harvard receives significant funding from the National Institutes of Health, the National Science Foundation, and the Department of Defense, among other programs.

Less than an hour after the House of Representatives passed the measure, President Barack Obama spoke from the White House, thanking Congressional leaders and Vice President Joe Biden for their work on the agreement. He also looked ahead to the looming debt battles, warning that the country must take a balanced approach to further spending cuts as it seeks to avoid hitting the debt ceiling in the future.

“We can’t simply cut our way to prosperity,” Obama said Tuesday night. “We can’t keep cutting things like basic research and new technology and still expect to succeed in a 21st-century economy.”

—Staff writer Nicholas P. Fandos can be reached at nicholasfandos@college.harvard.edu.

—Staff writer Samuel Y. Weinstock can be reached at sweinstock@college.harvard.edu.