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Points to Keep in Mind for Next 8 Weeks

January 11, 2013

The 8-week reprieve from sequestration has benefited all federal discretionary programs. “Live to fight another day” is not to be taken for granted.

Sequestration still, however, looms as an existential threat to the mission of the FDA. If it occurs — as presently scheduled, on March 1 — we estimate the agency will have to generate about $250 to $270 million in savings over 7 months.

Looked at another way, the agency will need to spend about $37 to $38 million less per month immediately after the sequester takes effect. The longer it takes the agency to put cutbacks in place, the more savings it would need to generate during each month that remains in the fiscal year. If, as seems likely, personnel actions become necessary (hiring freezes, furloughs, early retirements, lay-offs), the agency will also have to deal with complicated government personnel rules dealing with both notice and seniority.

As we move toward March 1 and the next sequester threat, there is likely to be increasing political tumult. Here are some points to keep in mind:

  • There are only three ways to reduce the federal deficit: more revenue, changes to entitlements so that they cost less, and cuts to discretionary programs (defense and non-defense).
  • Because the “fiscal cliff deal” was essentially a tax deal, Republicans are arguing that revenue is now off the table. Democrats are taking the position that certain revenue issues have been resolved but that the next deficit reduction package will still have to include revenue items, such as caps on itemized deductions.
  • Speaker Boehner’s ability to deliver House Republicans on January 1 provides little assurance that he will be able to do so again on or by March 1. The key for him will be the substantiality of the spending cuts that he can claim.
  • While most of the talk is now about spending cuts necessary by March 1 (to avoid sequestration), this means different things to different players. Many think of this as entitlement changes because discretionary programs are already subject to about $1 trillion in cuts from the 2011 Budget Control Act. Others think the spending cuts should be a mix of entitlement cuts and further discretionary cuts.

Now, more than ever, the FDA needs the Alliance to be telling the agency’s story — its mission, its accomplishments, what monies are used for, and why the agency cannot do its job properly if sequestration occurs.

Note: This analysis and commentary is written by Steven Grossman, the Deputy Executive Director of the Alliance for a Stronger FDA.

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