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Federal Budgeting: A Brief Refresher Course

May 3, 2019

For all readers, both new and old, we are providing a refresher this week on the federal budget, with an eye on how it applies to FDA resources in the current FY 20 funding cycle.

What we call the macro-budget is the entirety of federal spending (more than $4 trillion), of which a bit more than $1 trillion is spent on discretionary programs (defense, social programs, FDA, etc.). As the budget process moves forward in Congress, FDA will be affected by macro-budgetary considerations, even though its mission, accomplishments, and resource needs are not part of this larger discussion.

The President’s FY 20 request is built on the assumption that discretionary spending on domestic programs will significantly decrease (10 Cabinet departments are slated for a 10% cut or more).  In contrast, Defense would increase by nearly 5 percent and Veterans Affairs and Homeland Security would each get about a 7.5 percent hike.

Against this backdrop, Congress is struggling to increase the budget ceilings set by the Budget Control Act of 2011. Unless Congress adopts higher ceilings, defense would need to shed $70 billion from its FY 19 funding level and non-defense would need to shed about $50 billion.

It seems certain that Congress will raise the ceilings, but by how much is still an unknown. Reportedly, Speaker Pelosi and Senate Majority Leader McConnell are in discussions about the topic. Complicating things, President Trump has expressed an interest in vetoing any cap-raising legislation.

At some point, the House and Senate budget committees (or leadership) will decide how much money will be spent on non-defense discretionary programs. Once the budget is set, the appropriations committees take the aggregate permitted spending and allocate it to each of its subcommittees (known as 302(b) allocations). The share allocated to the Ag/FDA subcommittees represents a ceiling under which virtually  all USDA and FDA programs must fit. Since many USDA programs are threatened with cuts, it is vitally important that the subcommittees have the maximum amount of money to spend.

While macro-budgetary struggles grab headlines, it is Congress’ micro-budgetary judgment of FDA that ultimately decides the agency’s appropriation. Relevant considerations: How much did the President request for FDA? How much do the House and Senate subcommittees have available to spend on FDA? And particularly pertinent: Does Congress perceive that FDA monies are well spent and that there is a strong rationale for prioritizing FDA funding over other pressing demands?

The President’s FY 20 budget request provides a good start to the micro-budgetary discussion. It advocates for a 10% increase in the FDA’s overall budget. Medical products would get a $316 million boost and food safety activities about $42 million. To the President’s level, the Alliance is proposing an additional $60 million for food safety activities.

The Alliance’s ask ($418 million) is ambitious, but it sends the most important signal of all: with more resources, FDA could do more critical tasks to benefit the American public.

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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