University funding under threat from Trump tax reform

Public universities and research institutions are facing an 18 percent budget cut, as Republicans push forward with plans to reduce the tax take. 

The Republican Party’s quest for large tax cuts will create a gaping hole in the budget of universities in the United States, according to John Douglass, a senior research fellow in public policy at the University of California, Berkeley.

Douglass was speaking in London on 16 October at a briefing organised by the Higher Education Policy Institute. He said that Republicans were looking to “starve the beast”, meaning government, and to reduce taxes for companies. Higher education spending, he added, would be among the budget lines to be cut as a result of a lower federal tax take.

Agencies such as the National Science Foundation (NSF), the Centers for Disease Control and Prevention, and the National Institutes for Health are facing cuts of up to 18 percent. America’s two premier arts and humanities funders, the National Endowment for the Arts and the National Endowment for the Humanities are to be abolished altogether.

However, as the Senate is resisting NIH funding cuts, the axe will fall on the Department of Education, which could see a $9-billion cut in 2018.

The $990-million federally subsidised work-study programme, which enables students to work during term time, would be cut in half, while student loans and financial aid for low-income households would also take a hit.

“No one has ever proposed to slash 22 percent off the NIH budget,” Douglass said, referring to the Trump administration’s original budget proposal that was announced in May. “Historically, research was one of the only acceptable areas of public financing as it leads to corporate welfare. But the Republicans need a win [for their long-term political health].”

Having failed to “repeal and replace” the Affordable Care Act, known as Obamacare, Republican lawmakers are quickly moving onto a second campaign promise, which is tax reform.

Their proposed plan would reduce the tax rate for companies and high-income earners from 35 percent to 20 percent. According to treasury secretary Steve Mnuchin, this is expected to result in an overall increase to household incomes and a 3 percent boost to the country’s GDP.

But Douglass noted that the Committee for a Responsible Federal Budget, an independent watchdog, said the plan could add $2.2 trillion to the deficit through 2027.

According to Douglass, federal funding plays a critical role for universities, as in most states, higher education is competing for funds with healthcare, pensions and prisons. Therefore, pushing costs to states in the name of tax cuts would have a major impact on university resources.

“The initial budget is very scary,” said Douglass. “At the University of California, with 10 research-intensive campuses, federal funding for research is the single largest source of income.” He added that in 2016, Berkeley received more than $1.8bn from NIH.

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