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Advocacy and the “Iron Triangle” of Deficit Reduction

January 13, 2017

This week, Washington was all about confirmation hearings and repealing the Affordable Care Act. Both will continue during the upcoming shortened week (MLK’s birthday is Monday and the Inauguration on Friday is a federal holiday in the DC area). Yet this month, we expect that the Congress will begin working on tax reform and, also, a federal budget. It is unclear when the appropriations committees will gear up, but hearings on FY 18 appropriations might start as early as mid-February.

With a new Administration that has a different set of priorities than the prior Administration — and with tax reform, budgets, and appropriations upcoming in Congress — it is a good time to revisit “the iron triangle of deficit reduction.” This concept, which we have discussed a number of times in prior years, focuses on the three ways in which annual government deficits can be reduced or eliminated: discretionary spending cuts (defense and/or non-defense); reduction in entitlement payments; and increases in federal revenue through economic growth or additional taxes. Deficits, already large, are projected to increase for years because growth in our aging population causes higher levels of entitlement spending.

Of relevance to the FDA stakeholder community is the outsized attention paid to cutting discretionary spending, especially relative to the other two pathways. Based solely on political rhetoric, it would be easy to imagine that the federal budget could be balanced if we only eliminated fraud, waste, and abuse in government, maybe along with two or three government departments that some deem unneeded. However, the numbers say otherwise. Eliminating ALL discretionary spending (defense, as well as non-defense) would still not be enough to balance the budget 5 to 8 years from now.

Eventually Congress will need to deal with either entitlements or revenue. Until that occurs, discretionary spending is likely to stay flat or possibly even decline, regardless of the important national and human needs met by such spending. Non-defense discretionary spending may be subject to even greater downward pressure because President-elect Trump and many Members of Congress are advocating for substantial increases in defense spending. Pressures may also build further if tax reform produces a net decrease in revenue (a possible outcome, but not a certain one).

Looking at the big picture of non-defense discretionary spending (about $518 billion in FY 17), there is still ample room to give FDA funding increases that match its growing responsibilities. However, that growth almost certainly will have to come at the expense of other programs. Needless to say, that will be difficult.

All of this suggests that every year will be a battle to get FDA the funding it needs. We will need to be even more effective advocates for FDA’s budget in 2017 and beyond.

Note: The Analysis and Commentary section is written by Steven Grossman, Deputy Executive Director of the Alliance for a Stronger FDA.

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