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Preliminary Positioning and the 2013 Budget Cuts: The FDA Should Remain an Exception

May 11, 2012

As we have been saying here for a couple of years: sooner or later Congress is going to need to look at entitlements, mandatory programs, and tax revenues … because the annual federal budget deficit is too large to be fixed by just cutting discretionary spending. Last summer, the Congress tried to force itself to do this hard work by passing the Budget Control Act of 2011. The Act created appropriations spending ceilings for the next 10 years … accruing “savings” of about $917 billion over that period. No matter what happens with the sequester, this is the minimum contribution of discretionary spending to ongoing deficit reduction.

The Act also calls for a sequester (across-the-board) cut in federal discretionary spending (and some mandatory spending) on January 2, 2013, split 50-50 between defense and non-defense spending. This would be in the range of 8% to 9% and would have the long-term effect of generating an additional $1.2 trillion in savings over 10 years. FDA’s share of the cuts in FY 13 would be in the range of $200 million.

The Congress still has until next January to come up with an alternative to the sequester. The House reconciliation bill that passed on Thursday was the House budget committee’s first effort to use entitlements, mandatory programs, and tax policy to pay for (offset) part of the savings (cuts) that would otherwise have come from the sequester. This is strictly House “positioning” in preparation for negotiations with the Senate after the election, although it is possible that Senate Republicans will offer it as an amendment to other legislation in the near future. The Senate did not adopt a budget resolution this year or issue “reconciliation instructions” to Senate tax and authorizing committees and, thus, has no similar bill.

We have mixed feelings about the House reconciliation effort. It is definitely good for us that the House is starting early to review deficit reduction strategies that are not focused on the appropriations process. However, given that the House’s primary motivation is protecting defense, the bottom-line result may not be any better for non-defense discretionary programs, including FDA.

As the week went on, there continued to be tweaking of the House reconciliation package. Our understanding is that the final version results in cuts in non-defense discretionary spending that are substantial, but still less than would be required under the sequester. Further, we have been told that the appropriations committee will be able to allocate the cuts according to priorities, rather than having an automatic across the board cut. Next week’s Analysis and Commentary will contain final details and further discuss the implications for FDA.

In any case, our focus needs to remain on the FDA’s central, indispensible role in keeping Americans safe and healthy … and how that role continues to grow independent of any Congressional efforts to shrink government. FDA needs to be an exception to any deficit reduction efforts (whether by appropriations, sequester or some sequester-alternative).

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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