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Betting on a 6-Month-Long, CR-based Compromise

August 8, 2012

By the time you are reading this, Congress will have packed its bags and left DC for a 5-week recess. They will be back approximately September 10. With adjournment now scheduled for late September, there are about eight legislative work days between now and Election Day.

So, it is mostly with some relief that there appears to be a deal in place for a 6-month Continuing Resolution (CR) that will fund the government from October 1, 2012 to March 31, 2013. Hopefully, this will be passed by mid-September, soon after Congress returns and well before the October 1 deadline.

Technically, Congressional leaders are saying that discretionary government spending will be at the ceiling set by the Budget Control Act of 2011. This is consistent with the Senate committee-passed appropriations bills.

But with some adjustments to that bottom line, the net will be that agencies will continue into FY 13 at their FY 12 spending level. For FDA, this will be approximately an even split of the House-passed bill (–$17 million from the FY 12 level) and the Senate committee-passed bill (+$16 million from the FY 12 level).

The 6-month CR — as opposed to a shorter one, which is customary — is to leave more time (and energy) for Congress to focus on other budget issues in the post-election session: sequestration, the fate of the Bush tax cuts, and overall deficit reduction. There are also a host of other bills that Congress would like to deal with this year, such as the Farm Bill and cybersecurity.

For both parties, a 6-month CR and limiting legislative action now and in September, is a bet that compromises will be easier to reach after the election. Or a less charitable interpretation: each party is hoping they will have more leverage in November, December, and next year based on how they fare in the elections.

Given the likelihood of a 6-month CR, I have been asked whether the longer CR period will affect the sequestration (across-the-board cut in discretionary spending) that is scheduled for January 2, 2013. The answer is: no effect at all.

The sequestration is part of current law and will go into effect in January 2013 unless Congress acts affirmatively to reduce, repeal, replace, or delay it.  The political consensus in Washington is that sequestration is so broadly damaging that one of these alternatives (reduce, repeal, replace, delay) is certain to pass in the post-election session.

For FDA’s sake, we are optimistic that a deal will be reached. However, history tells us that lame-duck sessions often disappoint — the assumption that Members will be ready to compromise after Election Day must be considered with some skepticism. Depending on the election results, lame duck Congresses also may feel that they do not have a mandate (or the votes) to act on important pieces of legislation.

The best means to “fix” the sequestration problem would be for Congress to agree to a major deficit reduction package ($3-4 trillion over 10 years) that includes entitlements, taxes, and discretionary programs. Alternatively, they might come up with a smaller package that equals the sequestration amount (about $1.2 trillion over 10 years).

Finally, Congress could delay sequestration by a month or two — probably with an offset, although possibly without — but it would require changing the law to make the sequestration take effect on a different date. A one-year delay (sometimes discussed) would count as “spending” and therefore would never pass politically unless it was offset with about $100 billion in cuts.

Meantime, FDA is hanging in there. Continuing at the FY 12 spending level is far from ideal … but the real issue for the agency is the severe retrenchment that would be required by sequestration. Hopefully, that will not come to pass.

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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