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Does ANYONE Have Real Insight on Sequestration?

February 2, 2013

Who are you going to believe? An overwhelming number of reporters and analysts who cover the Hill are reporting that sequestration will go into effect on March 1 because Congress does not have anything to offer as an alternative. Many Members of Congress are agreeing.

Then, on Wednesday, the Washington Post reports that defense contractors seem to believe that sequestration will not occur. From their standpoint, predictions of gloom from one month out are meaningless indicators of what Congress will do. (Note: It does not seem that their viewpoint is built on the idea that non-defense discretionary spending will take their hit, they just think Congress will fix the problem or kick the can down the road again).

In the face of such uncertainty (and disagreement) about all we can say for sure about FDA’s situation is that if no sequester occurs:

  • The FY 13 Continuing Resolution extended to the whole year would come to $2.505 billion (FY 12 level) with a $15M increase (+ 0.022%).
  • An omnibus bill may replace second-half CR. If so, the mode shifts from across the board funding (CRs and sequester) to the historical appropriations committee role of picking winners and losers. Should there be an omnibus, there is a chance that FDA may get a larger increase, perhaps +$40M to $60M.

Conversely, if sequester occurs:

  • FDA clearly loses; amount TBD, but likely to be at least 5% of FDA’s appropriated and user fee budgets, or about a $200 million cut.
  • There is a small chance that when Congress deals with continuation of the FY13 CR, there may be some additional funds available above the sequester level and that FDA might be considered for some of those dollars. If such monies are available at all, it is not expected that they would offset more than a small proportion of the sequester cut that FDA will have taken.

These are, of course, the “clean/clear” versions of the many possibilities. There is talk that Congress might allow the sequester to go into effect, but then completely rewrite the deficit reduction situation with a package that would be targeted for March 27 when the continuing resolution expires. Congress may find new ways to kick the can down the road. Or there may be some outcome that none of us can envision.

All we can say with absolute certainty is: FDA’s funding is at risk. Anything less than current levels will undercut the agency’s mission; any substantial cut puts the American people at risk along with the agency.

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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