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CBR and SGR — This Week’s Acronyms to Watch

April 10, 2015

The Alliance is tracking two issues likely to come up when the Congress returns next week.

First, negotiators are working on a Congressional budget reconciliation (CBR) that will represent a compromise between the House and Senate bills. Should this occur, appropriators would start with a known, agreed-upon total for discretionary spending (so-called 302(a) allocation) and the same number would be used by both houses. As past years have demonstrated, the appropriations process can proceed without a 302(a) allocation (no budget resolution), particularly because the 2011 Budget Control Act sets spending caps for both defense and non-defense spending through into the early 2020s.

Even so, the House and Senate have shown remarkable appetite for setting different budget and spending priorities, leading to repeated showdowns late in the appropriations cycle. Thus, House Speaker Boehner and Senate Majority Leader McConnell have a large stake in the passage of a Congressional budget resolution that ties House and Senate to the same bottom-line and priorities. Such an agreement would make a sequester less likely, thus reducing the likelihood of FDA having substantially less money to spend in FY 16 than in FY 15. On the other hand, a budget resolution is likely to place significant constraints on appropriators — making an increase for FDA less likely and making flat funding or a small reduction a serious possibility.

The soft deadline for the Congressional budget resolution is April 15, but legislators will have a number of additional weeks to craft a compromise, if possible. So that the shortened schedule does not overly-reduce time for appropriations, the Congress will start working on the “easiest” and “least controversial” of the appropriations bills, such as Military Construction.

The second issue we will be watching is the Senate end-game on the House-passed patch for the SGR payment methodology for Medicare. The Alliance has no direct stake in the outcome, but sees the House-passed bill as a litmus test on the possibility of major budget compromises this year. Among other things, the House bill uses entitlement reforms to pay for part of the new costs AND not all of the new costs are offset by savings. The first represents a major concession by Democrats, the latter a major concession by Republicans. The Senate is widely expected to accept the House bill, but this outcome is by no means guaranteed.

The possibility of major budget compromises this year affects FDA in two ways. First, there are a number of “budget cliffs” this year, where failure to reach agreement could result in major disruptions to the spending process, including the possibility of another shut-down. That would be a particularly bad situation for FDA. Second, one of the possible outcomes from major budget compromises could be the freeing up of additional defense AND non-defense discretionary spending. This may provide an opportunity for FDA to make budget progress.

As these two major issues — Congressional budget resolution and SGR fix — reach conclusion, we will keep you posted on the outcomes and the implications for FDA.

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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