FDA and the Iron Triangle of Deficit Reduction

FDA and the Iron Triangle of Deficit Reduction

The ongoing negotiations over raising the debt ceiling–and the effort to link that to spending cuts–provides the ideal time to revisit “the iron triangle of deficit reduction.” 

For background, there is a cumulative debt that is financed by selling government bonds and constrained by limitations on the amount that the US government is authorized to borrow.  

The Treasury has used “extraordinary (but lawful) means” to extend the time before the current limit ($31.4 trillion) is breached and a default results. Sometime this summer, possibly as soon as June 1, the Treasury will not be able to pay all of the federal government’s debts and obligations. 

There is also an annual deficit that occurs when the federal government’s total revenue is less than its expenditures for discretionary and entitlement programs and interest payments.  An annual deficit has become the norm and it gets added onto the cumulative deficit. The debt ceiling (limit on federal borrowing) has to be raised every few years because of accumulated annual deficits. 

“The Iron Triangle of Deficit Reduction” focuses on the three ways (and only 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. 

From a political standpoint, there is very little support for cutting entitlement programs such as Social Security and Medicare. Likewise, tax increases seem unlikely. That puts attention on cutting discretionary spending. 

However, scale is a critical feature of the iron triangle. Eliminating ALL discretionary spending (defense, as well as non-defense!) would still not be enough to balance the annual federal budget on a regular basis. Eventually, Congress will need to deal with either entitlements or revenue or both. 

Until that occurs, discretionary spending is likely to be under immense pressure,  regardless of the important national and human needs met by such spending. Non-defense discretionary spending may be subject to even greater downward pressure if–as many members of Congress are asserting–defense (and maybe veterans programs) need continued increases. 

Depending upon how the current negotiations end, there may not be enough non-defense discretionary spending (about $800 billion in FY 23) to provide FDA with funding increases that match its growing responsibilities. If there are steep spending constraints, FDA’s growth may have to come at the expense of other programs. 

Accordingly, this year’s Hill meetings have explained the need for an increase in FDA’s budget, but we also spent more time than in the past on the intrinsic value of FDA’s mission (“the agency provides a core function of government”) (third Q&A here).

In light of greater pressure on Federal spending, FDA needs even greater stakeholder support in 2023 and beyond. If you are not now an Alliance member, this is the time to step up to help us (see here). The more members we have... the louder our voice… and the greater the impact on Congress, policymakers, and the media.

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