Default to Current CR Law or an Unpredictable Agreement?

The bipartisan, bicameral Budget Conference Committee will attempt to resolve the budget and appropriations stalemate between now and December 13. Once they report (or not), it will fall to House and Senate leadership to put a government funding bill in place by January 15 to avoid another government shutdown. Things are likely to be tense.Based on the first meeting of the conference committee, it is impossible to evaluate the prospects. Maybe they will reach a deal, maybe not. So far, everyone seems locked into their partisan positions, while stating their willingness to compromise. This is what we would expect them to say at this point.

The one hopeful sign is that both parties seem to recognize that sequester is probably the worst way to reduce spending. It cuts every program equally instead of assuring full funding for the highest national priorities, such as FDA. While the Senate has held this position all along, the House seems to have emerged from the mini-CR process with a new appreciation that some programs and agencies should not be cut at all, even if (in their view) others need to be cut more or eliminated.As a starting point for educating our membership about the options and the consequences for FDA, we use the default situation -- the conference committee cannot agree upon a plan and House and Senate leadership decide that the only way to fund the government after January 15 is to continue the current CR. This is not necessarily a probable or desirable scenario, just one that illustrates key points. The impact on FDA is as follows:Current law CR. If the BCA is not amended and there is a full-year CR at the current levels, then:

• The sequester (about $20 billion) will come exclusively from defense funds.

• FDA’s appropriated budget would be the FY 13 post-sequester level of $2.386 billion, which is $120 million below FY 12

• There would be no sequester of either FDA’s appropriation or user fees

To be clear, we think this is a terrible situation for FDA and one for which we should not advocate. The FDA FY 14 appropriation would be much less than the amount that either the House or Senate appropriations committees had allocated for FDA. Further, there is a risk that Congress could ameliorate the defense sequester through a rescission of non-defense appropriated funds, including FDA, which would not require an amendment to the BCA. We see great risk in complacency about a CR.

Should Congress come to an agreement, rather than default to a “current law CR,” the Alliance would want the proposed Senate funding level for FDA ($2.563 billion) and no sequester or rescission of agency funds. In search of a budget deal, Congress might well:

1. Appropriate dollars by individual agencies and programs (not by formula),

2. Use a different funding formula than the current CR,

3. Amend the BCA to raise the ceilings or change the balance between cuts in defense and non-defense programs, or

4. Adopt a rescission of non-defense discretionary programs in lieu of -- and having the same effect as -- a sequester.

Given these possibilities, FDA funding cuts and/or a sequestration of non-defense spending may well occur, with potentially devastating impact on both FDA appropriations and user fee income. The negotiations are totally unpredictable at this juncture and the Alliance and all its members need to be aware that the agency is very much “at risk.”

Note: This analysis and commentary is written by  Ladd Wiley, the Executive Director, and Steven Grossman, the Deputy Executive Director, of the Alliance for a Stronger FDA.