Congress passes reconciliation bill, with impacts for R&D

Republicans passed their reconciliation spending bill in early July, codifying billions worth of tax breaks for private R&D and spending boosts for defense and NASA.

The bill raises the endowment tax rate for certain private colleges and universities to 8% and orders the auctioning of 800 megahertz of spectrum. It also adds funding for scientific AI models at the Department of Energy and reauthorizes the Radiation Exposure Compensation Act.

The bill reintroduces tax rules allowing companies to fully deduct domestic research costs in the year they occurred, reversing a rule that requires companies to spread the deduction of R&D costs over five years. The Joint Committee on Taxation estimates the provision will add more than $141 billion to the federal deficit over the next 10 years.

At DOE, the bill adds $115 million for the National Nuclear Security Administration to accelerate missions through AI and $150 million for DOE to take steps toward developing “self-improving artificial intelligence models for science and engineering,” mainly by cleaning and preprocessing scientific data for use in such models. The bill directs the national labs to partner with industry to curate that data. DOE launched its Frontiers in AI for Science, Security, and Technology initiative last year, which includes efforts in AI for science and AI for national security.

Those AI models will be provided to the research community via a cloud computing service called the “American science cloud” dedicated to scientific research, data sharing, and computational analysis. The bill notes two possible uses for the preprocessed data: rapidly developing next-generation microelectronics and discovering new energy technologies.

The bill reauthorizes the Radiation Exposure Compensation Act and expands eligibility for those seeking compensation, including adding affected areas and modifying qualifying cancers. RECA, which expired one year ago, provides compensation for people exposed to radiation from nuclear weapons testing and manufacturing.

The bill restores the Federal Communications Commission’s authority to auction spectrum through 2034 and requires the FCC to auction at least 800 megahertz within eight years. It specifies some bands with military uses to be excluded from consideration for auction, but does not include carveouts for radio astronomy or meteorology.

The bill includes nearly $25 billion for the “Golden Dome” missile defense shield proposed by President Trump in January, including space-based sensors and phase intercept capabilities as well as directed energy research. It also provides nearly $4 billion for NNSA, much of which goes toward nuclear weapons and facility upgrades.

The bill also includes $250 million for the Defense Advanced Research Projects Agency’s Quantum Benchmarking Initiatives. The bill provides nearly $4 billion for the National Nuclear Security Administration, including $200 million for concept studies of new nuclear weapons, $1 billion to accelerate construction of facilities, $540 million for deferred maintenance, and $100 million to accelerate domestic uranium enrichment.

The bill provides nearly $10 billion for NASA programs, including funds for the Gateway lunar space station, Space Launch System rockets, and a telecommunications orbiter for use in a Mars Sample Return mission, all of which would be terminated under the president’s 2026 budget request.

Clean energy and climate funds are hit hard by the bill, as it rescinds billions of dollars in unobligated Inflation Reduction Act funding from DOE and phases out the clean energy production tax credit.