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FDA Stakeholders Need to Start to “Up Our Game”

October 6, 2017

With a Continuing Resolution funding the government from October 1 to December 8, there is no immediate pressure on Congress to pass full year appropriations bills for FY 18. In any case, progress is unlikely until the House and Senate agree on an FY 18 Budget Resolution and decide what to do with the Budget Control Act’s spending caps. So, FDA has an interest in the speedy completion of the budget resolution (and any spending cap issues) in order to obtain full-year funding as soon as possible.

Beyond that, the agency has a large, long-term stake in the specifics of what Congress does about the budget resolution and the spending caps. If there is less — or possibly a lot less — money to spend on non-defense discretionary programs, then the more pressure there will be to reduce FDA’s budget.

This makes it a good time to revisit what I call the “iron triangle of deficit reduction.” The point is that there are three ways — and only three ways — by which annual government deficits can be reduced or eliminated: discretionary spending cuts (defense and/or non-defense); reduction in entitlement payments and mandatory spending; and increases in federal revenue through economic growth or additional taxes.

Republicans (in general) favor tax cuts that will stimulate economic growth and eventually achieve greater revenue (this year’s Senate budget priority). Independent of that, Republicans feel the deficit should be reduced by cutting mandatory spending (in both resolutions, but the House’s budget priority this year). Democrats (in general) are against entitlement changes and are willing to see revenue (tax) increases to balance the federal budget. They believe there is a need to increase discretionary non-defense spending.

A closely divided Congress has meant that the Rs and the Ds have been stalemated on making changes in either taxes or entitlements. As a result, discretionary programs have received outsized attention as a source of possible cuts. Since increases in defense spending enjoys broad support, this really means ever-greater pressure to cut non-defense programs.

Of course, there are problems with this. First, discretionary non-defense programs represent necessary services that the public needs and expects. Second, and most importantly, the non-defense discretionary pot of money is small — about an eighth of total spending. Eliminating non-defense discretionary programs in their entirety would still not produce enough dollars to make a difference. Seen more broadly, 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 have no choice but to deal with revenue and entitlements (as they are beginning to do this year). That may reduce pressure on other federal spending.

In the meantime (and this may stretch many years), the discretionary pot from which FDA receives its money is, and will continue to be, in a tight squeeze, With $518 billion spent on non-defense discretionary programs in FY 17, there still should be a lot of room to give FDA funding increases that match its growing responsibilities … but only if we assume that there are very large non-defense cuts that can be made without touching the FDA.

In short, competition for available appropriated dollars is going to get more and more intense, made worse by global decisions on spending. If FDA is to survive and prosper, the FDA stakeholder community is going to need to “up its game” every year.

Editorial 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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