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FY 2016: Out with the Old; In with the New

December 19, 2014

I don’t pretend to know the future, particularly whether Republicans and Democrats can find a way to work together on budget and appropriations issues in 2015.  Most pundits seem to think that harmony is not possible and that the most likely scenario is one battle after another. This view is summed nicely in a recent Wall Street Journal article: “Congress last week barely managed to approve a funding bill negotiated by a bipartisan group of lawmakers, working under spending guidelines set by each party’s budget gurus. Next year could get even uglier.”

I agree. Nothing about the last two weeks inspires confidence that next year’s budget and appropriations issues battles will be orderly or restrained. Even with a Republican majority in the Senate, there will be limits to what incoming Majority Leader Mitch McConnell can accomplish unless he can get six Democrats to vote with him on a regular basis. In addition, without a Democratic Senate to protect the President, White House and OMB staff are going to be increasingly involved in budget and appropriations negotiations. No reason to think White House involvement will make things go more smoothly.

So, it’s most likely to be ugly next year as Congress goes through a series of “fiscal cliffs” that will (1) stoke new partisan debate over budgetary matters and (2) run the risk of setting off a crisis if they are not satisfactorily resolved. For example, physician payment cuts go into effect in early 2015 unless money is found to delay or offset the budgetary savings that have already been booked. There are several more “big ticket” programs that expire and can’t be separated from their impact on budget and appropriations. Additionally, toward mid-year, the federal government will hit the debt ceiling and lose its ability to borrow. Then there is the critical question: what will Congress do (if anything) to avoid the across-the-board sequester cuts scheduled to start in FY 16 (October 1, 2015).  There are several more budget-related deadlines like these — ready-made for heated disagreements.

As bad as successive fiscal cliffs sounds, there could be just as much controversy and ill-will among Members if Speaker Boehner and Majority Leader McConnell decide to move forward with the arcane but powerful budget reconciliation process. This seems more likely with the news that Senator McConnell has hired a new policy director, who is reported to be an expert in the process.  Budget reconciliation requires House and Senate to pass budget resolutions (not subject to presidential review), use a conference committee to iron out differences, then issue directives to multiple committees (not just appropriations) to find savings sufficient to implement the budget resolution. For example, the Senate finance committee might be directed to report legislation that would save $3 billion off baseline spending. The budget committee will have made its suggestion on how to reduce, but the Finance Committee can report whatever legislation it wants as long as it saves the directed amount of money. We will be providing more details early next year, as soon as it is apparent that the budget reconciliation option is under serious consideration.

Even if the macro-budgetary struggles of 2015 (fiscal cliffs, budget reconciliation) are as bad as I’ve described … at some point every federal agency will nonetheless be given a micro-level number: “Here is how much you will have to spend in FY 16.” So even if all the attention is on the dramatic macro budgetary issues (such as new taxes, entitlement reform), the micro-budget will still be critical to FDA.  It is predictable that there will be a thaw — perhaps 10 seconds long, maybe 10 weeks long — when each agency will be judged for FY 16 funding.

When that brief momentary thaw comes, the Alliance will be ready — having already met with appropriations, budget, and leadership staff. We know that no federal agency can sell itself. Others must say: “FDA serves the American people.” With your help, we will be doing that.

Note: This week’s Analysis and Commentary was written by Steven Grossman, the deputy executive director of the Alliance for a Stronger FDA.

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