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August 2 Is Only 10 or 11 Days Away

July 22, 2011

At some point, Congress and the President will come to an agreement on the debt limit and, of course, the deficit reduction package that will need to go with it. As of this morning, the rumors point in every direction. Even if a deal is announced, it may be several days before leadership is sure they have the votes to pass an agreement.

Regardless of the size of the final set of cuts, we expect the deal will be detailed only with regard to big-ticket items (e.g., changing eligibility age for Social Security, changes in how cost of living is calculated, military must cut $xx billion over 10 years, etc.). For domestic discretionary programs, we expect aggregate spending to be capped, but that the appropriation committees will be left with the task of actually figuring out how to spend the capped money.

In every variation, domestic discretionary programs are likely to be hit hard. In response, the Alliance has two items on its wish list:

  • Cuts need to be made by establishing and funding priority programs (by appropriations committees) rather than across-the-board percentage cuts that might be built into the debt limit deal;
  • There is an explicit understanding put into the deficit reduction package that some functions of government are so essential that they can’t be cut; indeed may even need increases.

In short, we hope that the overall cuts are not as deep as feared … and that we will get a chance to make the case for FDA through the appropriations process.

Potentially, there is a second threat to FDA that could be part of any deficit reduction package: government hiring freezes. As far as I can tell, not much has been said about this in news articles and analysis of the debt limit/deficit reduction talks. But that doesn’t really matter. Cutbacks in hiring are implicit in the level of cuts being discussed.

Every federal agency will feel the impact, whether it involves lay-offs, an attrition freeze (no lay-offs, but no new hires), a selective freeze (no new hires in certain agencies or job categories) or a limited replacement freeze (hire 1 employee for every 3 that depart). FDA must be considered particularly vulnerable for two reasons:

  • 80% of its appropriation is used for people costs (salary, benefits, training, travel, rent, IT, etc.), substantially more than most other federal agencies.
  • A substantial number of FDA employees have specialized skills or backgrounds and cannot be replaced internally.

The iron triangle of deficit reduction (discretionary program cuts, entitlement changes and revenue raisers) is guiding all of these negotiations. There is no fourth way to reduce the annual budget deficit or the cumulative federal debt. We wish our leaders the wisdom to come up with a plan that is fair and solves this problem.

Almost everywhere in America, it is supposed to be hot this weekend. It will be even hotter still on Capitol Hill and at the White House. August 2 is only 10 or 11 days away.

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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