President Trump’s proposed budget would reduce the National Institutes of Health budget 18.3 percent, or approximately $5.8 billion, next year (and also cut $1.2 billion this year). (For the figures, see here.) How can he possibly do this? The answer seems to be that he wants to get, or appear to get, something for nothing. The something he would still get would be all the research that’s currently being done; and the nothing that he would pay for it, or more precisely the reduction of $5.8 billion that he’d pay for it, would come from reducing the “indirect overhead” payments that the NIH makes to researchers’ institutions. Those payments last year totaled $6.4 billion, or 27 % of the total of $16.9 billion that was provided in grants last year. Since $6.4 billion is even more than the $5.8 billion that Trump proposes to cut, it’s clear that in theory he could reduce the budget as he’s proposed just by cutting back very sharply, though not quite eliminating, the indirect overhead payments.
The problem with this scheme is that the indirect cost payments are needed. Essentially, they are what pays to keep the lights on in the nation’s research laboratories, so that inside those labs scientific research can proceed uninterrupted. They’re negotiated, elaborately, institution by institution, and evidently can range from 10 % to 100 % of the direct costs, though the aggregate NIH level is 27 %.
But could it be that the indirect cost payments that the federal government currently pays actually go far beyond the costs that research institutions incur in making it possible for research to go on? That seems to be the administration’s position. An article in Science reports that one Republican congressman “noted that many private foundations limit overhead payments to grantees to 10 %, whereas others, such as the American Lung Association, pay nothing.” But the same article reports that “University and research institutions … say the amount they receive doesn’t come close to covering the cost of the facilities needed to conduct federally funded research and the people needed to manage those grants.” Another Science article notes that private foundations “can get by charging a lower rate because they allow researchers to charge certain costs to their grant – such as leasing space – that can’t be charged to their NIH grant. And nonfederal grants may involve fewer regulations, lowering regulatory costs.”
It would take a detailed knowledge of grant budgeting that I don’t have to tell for sure who is subsidizing whom. But if the federal government is in effect subsidizing some of the costs of private foundations’ grants, or even subsidizing research institutions’ projects that really go beyond the indirect costs of the grants themselves, it still seems pretty safe to say that this money, or at least most of it, is actually needed. There has been an instance of a university claiming depreciation on its yacht as an indirect cost, but the school that did that (Stanford, 20 years ago), got in trouble. (This Science article touches on that story.) As a general matter, I think universities are chronically strapped for money, and research facilities don’t come cheap.
And if that’s true, then we won’t get something for nothing. When the indirect cost payments are reduced, what we’ll get is less research. That matters a lot – to research in general but also, for me now, to the research that will be done that might affect the treatment I personally receive.
One more thing -- last month I wrote about the controversy over the Dana-Farber Cancer Institute's holding its fundraising gala at Mar-a-Lago. Many doctors and students at that hospital felt that their institution should not have been currying favor with the Administration in this way. Maybe not. But when it comes to dealing with the budget, there is no boycott option; anyone who believes this budget is wrong is going to have to deal with the President about it. One Nobel prize winner, Harold Varmus, has already written in the N.Y. Times that "In confronting the president's assault on the N.I.H., all members of Congress face a moment that will define their character and the future of the country." When they do face that moment, they'll have to face it in some sort of a negotiation with Donald Trump.