FY 15 Appropriations: Macro- and Micro-Budgetary Drivers Redux

The Ryan-Murray budget agreement -- supposedly the guarantor of a smooth appropriations process -- has not brought the expected one-year hiatus in the budget wars. As chronicled in this week's Advocacy at a Glance and in the last two weeks' Analysis and Commentary columns, the breakdown in the FY 15 appropriations process has accelerated. It is now reasonable to expect there will be a Continuing Resolution covering most or all of the government on October 1, 2014. The CR is likely to run until mid-November, with the expectation that a lame-duck session of Congress will work things out. Alternatively, the CR could run until February 15, 2015 (enough time for the new Congress to organize itself) or March 30, 2015 (the mid-point of the fiscal year).

While the duration of the CR matters, the reality is still the same: a CR starting October 1 is not a conclusion to the process, just a deferral. Sooner or later, Congress must finally decide how much to spend in FY 15 and to which programs the money will be allocated. Eventually, there will be appropriations bills passed into law or a continuing resolution through September 30, 2015 (last day of FY 15) or an omnibus bill -- a combination of appropriations bills for part of the government and a continuing resolution for the rest.From the perspective of FDA’s growing responsibilities, the best that can be hoped for is an Ag/FDA appropriations bill tucked into an omnibus, along with some increased resources that reflects FDA’s status as a national priority. In contrast, under a CR, FDA is unlikely to receive special treatment -- virtually all of the government will be held to the same spending level as FY 14.

This reflects the dynamic that FDA’s appropriation is subject to both macro- and micro-budgetary factors. Macro are the issues that affect the entire federal budget. No matter how much FDA needs additional resources, Congress will not respond to that need by increasing overall spending targets, or abandoning deficit reduction, or setting the CR at a higher spending level. It is these macro-budgetary factors that put all federal agencies in the same, roughly equal peril. It is hard to do better when the federal budget is being allocated based on last year’s spending, rather than national priorities.

Despite the dominance of macro factors over the last few years, micro-budgetary considerations are still important. This means that FDA and its funding needs are always being judged on their own merits, regardless of whether there are appropriations or a CR. As in FY 14, there is always the possibility that appropriations bills will pass and that some national priorities will be determined and provided with better funding. It matters to us how much FDA receives relative to: previous year’s funding; other agencies within the same appropriations bill; and its growing mission.We would like FDA to be judged solely on a micro basis. However, macro will continue to drive decision-making until Congress and the President deal with the iron triangle of deficit reduction. That is, there are only three choices: cut discretionary spending; reduce the growth in entitlement programs and other mandatory spending; raise additional revenue through taxes or closing “loopholes". Until the deadlock is broken on entitlements and taxes, discretionary spending will keep going down in absolute terms, as well as a proportion of government spending. And, in the end, that is the reason that this year’s smooth appropriations process has fallen completely apart.

Note: This week’s Analysis and Commentary was written by Steven Grossman, the deputy executive director of the Alliance for a Stronger FDA