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FY 14, Sequestration, and the Eshoo Initiative

July 19, 2013

No topic is more frustrating to the Alliance than sequestration. For FY 13 — an extremely tough appropriations cycle — we achieved our goal of having appropriators recognize FDA’s accomplishments and growing responsibilities. As a result, FDA stood virtually alone in the Agriculture/FDA appropriations bill by having been given an increase. Admittedly, it was not a large increase (about 2%), but it was an important accomplishment and would have allowed FDA to increase programming. Then Congress applied a rescission and OMB applied sequestration and FDA saw its net appropriation decrease from the prior fiscal year.

FY 14 has started off about the same way. We have a significant increase in the Senate appropriations bill and a much smaller but meaningful increase in the House. Once again, being slated for a raise puts us in rarified company among federal agencies. In relative terms, FDA is one of the few winners so far. If we can actually get the Senate funding level, then FY 14 might even be a year to celebrate.

However, even if were to gain the Senate funding level, there is no guarantee that FDA will have more money to work with. If, in the aggregate, Congress appropriates more money than the Budget Control Act funding caps, then all federal programs will see their budgets cut across-the-board through sequestration. The amount may be more or less than this year’s 5% cut, depending on how much appropriations exceed the cap. If the cut is large enough, it will wipe out the proposed gains for FY 14.

As we have noted in previous Updates, Congress has three choices for FY 14:

  • Cut a major budget deal to allow enough discretionary spending to reach pre-sequester (base) levels and appropriations committees can pick winners and losers;
  • Only pass appropriations bills that in the aggregate do not exceeds the BCA level; or
  • Don’t cut a deal, pass bills that exceed the allowable total, and allow across-the-board sequestration bring the total back to the BCA level.

A budget deal, the first approach, is in the best interests of FDA, but seems very unlikely at the moment. The House is attempting the second approach, limiting spending through large cuts in discretionary funding. The Senate is on a collision course with the third approach, hoping that a budget deal or other relief can give them both a higher spending level and no sequestration.

Finally, a few words are in order with regard to the Eshoo bill that would prevent sequestration of user fee funds. One of the devastating impacts of sequestration is that it reduces both appropriated (public) spending and the agency’s fee income. The Alliance’s focus is the appropriated portion of FDA funding. However, anything that diminishes FDA total resources is bad. Anything that will restore funds to the agency (whether user fees or appropriations) is likely to be good. Sequestration took $209 million from FDA in FY 13, of which $85 million was from user fees. The whole process is bad policymaking and, with specific regard to FDA, the consequences are an agency that can’t do all of its job. The user fee part of sequestration is particularly egregious because it can’t even masquerade as lessening the tax burden on Americans. We wish the Eshoo effort well.

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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