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Implications of the August 20 OMB Report

September 6, 2013

On August 20th, OMB released a report on the potential for an FY 14 sequestration.   This report allows us to calculate a preliminary estimate on the dollars that would be taken from FDA’s FY 14 budget if a sequestration occurs.  However, no sequester will occur before January 2014 and the timing/size of cuts is dependent on a number of factors that have not yet played out.

As you may recall, under current spending proposals, the House has proposed to keep its aggregate non-defense spending underneath the Budget Control Act cap and the Senate has proposed a number above that cap.  Should the House proposal be passed by Congress, a sequester would not be required.  Should the Senate proposal be passed by Congress, a 7 percent sequester of non-defense discretionary programs would be required unless there is a separate budget deal.

From an FDA perspective, the current Senate FY 14 proposal for FDA (an appropriation of $2.563 billion) is about $78 million higher than the current House proposal ($2.485 billion).  If the  7 percent sequester were applied to the Senate proposal, we calculate FDA  appropriations  would be reduced by $180 million, bringing  it down to $2.383 billion. This would be nearly $100 million lower than the House proposal.  As can be seen in the chart below, this would take FDA back to its FY 13 post-sequester funding level.

In addition, FDA faces the potential loss of $110 to $120 million in user fees if those programs continue to be subject to sequester.

We want to be careful not to suggest that the House proposal is better.  To be clear, we believe the Senate proposal of additional dollars to FDA does a better job of prioritizing resources for the difficult challenges FDA faces.  Our point is that without a budget deal that gets rid of the sequester, there is little opportunity for FDA’s budget to improve.

In the short-term, we expect some sort of continuing resolution to keep the government running.  In the long-term, we must continue our advocacy against the sequester.  Even if Congress’s judgment is to increase FDA funding, with the sequester in place it is certain that FDA will face devastating and indiscriminate cuts.

Function
Note: budget authority
only, no user fees

FY 12
Final

FY 13
Final
Post-sequester

FY 13
Enacted Level
(base level
for calculations)

Proposed
FY 14 Levels

(compared to FY 13
base enacted level)
Sequester scenario
described in
text above:
7% sequester on
Senate #’s only
All BA appropriations
Total (no user fees)
$ 2.506
billion
$ 2.386
billion
$2.46
billion
H: $2.485 billion
(+  $24 million)
H: $2.485 billion
S: $2.563 billion
(+ $102 million)
S: $2.383 billion

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