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Apr 17, 2012

Tussle over FY 2013 Budget Size Adds Wrinkle to Wrangle Over Spending Limits

Rep. Paul Ryan’s plan, which passed the House on March 29, sets lower levels than the President’s proposal.

Tussle over FY 2013 Budget Size Adds Wrinkle to Wrangle Over Spending Limits

Rep. Ryan’s Path to Prosperity spending guidelines cut nondefense discretionary spending, which includes agencies in biopharma regulation, by $19 billion from the current cap. [© kentoh - Fotolia.com]

  • This year’s edition of the annual wrangle over the federal budget interweaves two stories in one. There’s the usual tussle over how much money various agencies should receive. And then there’s an overlaying dispute that threatens to keep Congress from resolving the details of agency-by-agency spending—namely what the overall size of the federal budget should be.

    Last month the chairman of the House Committee on the Budget, Rep. Paul Ryan (R-WI), staked out a Republican position on the budget. He is trying to set up the party as more prudent spenders than President Barack Obama and Democrats. His FY 2013 budget resolution is essentially a new version of his “Path to Prosperity” spending guidelines, introduced last year.

    The bill incorporating the Path to Prosperity spending caps, HCR 112, passed the Republican-controlled House on March 29 on a mostly party-line vote of 228–191. Path to Prosperity calls for overall spending of $3.53 trillion, including $1.028 trillion in nondefense discretionary spending for agencies including those in biopharma regulation. The nondefense discretionary spending cap is $19 billion, or 1.8%, below the $1.047 trillion level set under the Budget Control Act (BCA), the August agreement by Congressional leaders and President Barack Obama that staved off a shutdown of the federal government.

    “This budget would continue funding essential government missions, including energy security and basic research and development,” according to Path to Prosperity. “Basic research and development” is Washingtonese for NIH funding.

    Jennifer Zeitzer, legislative director for the Federation of American Societies for Experimental Biology (FASEB), remarked to GEN, “The House’s decision to breach BCA spending limits, I think, is just going to make the appropriations process even more chaotic than usual. It’s really going to upend the appropriations process again this year.”

  • Rep. Ryan’s Budget

    Ryan says his plan cuts more than $5.3 trillion, including $3.3 trillion in projected deficits, over the next decade, so that federal spending reaches 20% of GDP by 2015; federal spending was 24.1% of GDP in 2011 and 18.2% of GDP in 2001. The reductions would come from a repeal of President Obama’s healthcare law—a likely nonstarter with Democrats, assuming the measure survives Supreme Court review—as well as an overhaul of the Medicare and Medicare programs.

    Ryan’s proposed budget blueprint quickly ran into opposition, with the Democratic-controlled Senate vowing to retain the BCA spending limits. “Ryan’s action is a breach of faith that will increase the likelihood of an unnecessary and harmful government shutdown later this year,” Senate Budget Committee Chair Kent Conrad (D-MT) warned in a March 20 statement.

    Conrad went further, submitting a “deeming resolution” that would formalize the BCA’s $1.047 trillion nondefense discretionary spending limit by enabling the Senate Appropriations Committee to determine its top-line funding levels, or “302(b)” allocations, for spending bills in each of its 12 subcommittees.

    Dave Moore, senior director, government relations for the Association of American Medical Colleges (AAMC), told GEN that his group was among more than 900 stakeholders from the health, education, and labor communities to sign a March 16 letter urging the House and Senate appropriations leaders to “provide the largest possible FY 2013 302(b) allocation to the Labor, Health and Human Services, Education, and Related Agencies Appropriations Subcommittee, within the discretionary cap established by the Budget Control Act.” The subcommittee plays a key role in shaping the budget of NIH and other agencies at the Department of Health and Human Services.

    “We haven’t seen the allocations yet for each of the 12 subcommittees,” Jon Retzlaf, managing director of science policy and government affairs, American Association for Cancer Research, pointed out to GEN. “But if they try to mark up bills that are $18 billion less than the Senate, we’re potentially in for some challenging times.”

    Ryan and Republican allies argue the lower spending limits of Path to Prosperity are necessary to tame the beast of federal spending. Annual budget deficits under President Obama have hovered in the trillion-dollar range. The GOP budget blueprint envisions a $797 billion shortfall based on revenues of $2.734 trillion.

    That’s 18% below the $977 billion deficit expected for FY 2013 by President Obama in his $3.717 trillion proposed budget, which envisions $2.741 trillion in revenue. House Democrats, led by the budget committee’s ranking minority member Chris Van Hollen (D-MD), have proposed a $3.6 trillion spending plan. Van Hollen’s plan envisions a 10-year deficit of $400 billion less than the $6.4 trillion expected between 2013 and 2022 under the President’s proposal.

  • Aligning Different Proposals

    The House can be expected to mark up spending bills at the lower Ryan/Republican caps compared with the higher BCA caps the Senate’s Democratic leaders will use. Both chambers will have to reconcile how much they’ll spend, let alone how much each agency will receive.

    “What you’re going to see is appropriations bills coming out of the House that will look very austere compared to FY 2012 funding levels and even compared to the president’s FY ’13 budget request. And while the Senate is going to be tight, it won’t be as tight as the House,” Zeitzer said. “It’s certainly going to make the process as chaotic as it has ever been.”

    The House and Senate appropriations committees and their various subcommittees will nonetheless begin marking up their own versions of spending bills, Zeitzer added: “Whether anything goes to the floor seems to be a big mystery. I’m not anticipating that any of the bills will go to the floor, except maybe some of the less controversial ones,” such as the one setting funding for the legislative branch.

    The divide between the chambers on overall spending limits will likely lead to a longer delay for a final budget to emerge than was the case last year. For one thing, 2012 is a presidential as well as congressional election year, which discourages dealmaking as the parties focus on one-upping each other. For another, legislative leaders were determined during FY ’12 not to take as much time crafting a spending plan as they did during FY ’11, when the budget emerged almost halfway through that fiscal year.

    “Despite the recent budget-related activities in the House and the Senate, the different spending caps likely will complicate efforts to proceed with the annual spending bills,” Moore remarked. “Congress is not expected to complete its appropriations work until after the November elections.”

    Moore’s assessment has been echoed by the American Society for Pharmacology and Experimental Therapeutics (ASPET). “In all likelihood, Congress will not make any funding decisions until the ‘lame duck’ Congress that follows the election and maybe even beyond that,” ASPET has commented.

    Ryan’s HCR 112 also called for six House committees to identify a total $261 billion in spending cuts to be carried out over 11 years. That action would supplant the BCA’s “sequestration” process, through which across-the-board reductions in nondefense discretionary spending would take effect in January 2013 unless $1.2 trillion in cuts are made. A “supercommittee” of House and Senate members tried, but failed, last fall to agree on what cuts to make.

    For NIH, sequestration would cut almost $2.4 billion from the agency’s current $30.702 billion budget, based on the measure’s 7.8% across-the-board spending reductions. But those reductions apply agency-wide, not to individual programs, allowing NIH to protect funding for key programs by cutting what it deems of lesser importance.

    “We’re in a perfect storm, so to speak, a very concerning storm,” Retzlaf noted. “That is, we have the sequestration, which is hanging over our heads. It has to happen, it’s in the law, so something has to be done to stop that. Then you’ve got this House budget committee, which has decided to go $18 billion below the budget agreement of last year, which could make any kind of increase for NIH that much more challenging, because there are fewer dollars to go around. Then you’ve got the fact that we’ve gone one decade with flatline funding for NIH. And you’re talking about between 17, 18, nearly 20 percent cut in NIH budget over the past 10 years when factoring in inflation.

    “Past investments that congress and the administration have made to NIH really have put us into a tremendous position today to make a major difference for people suffering from numerous diseases including cancer,”Retzlaf added. “And for us to unwind those prior investments just does not make sense.” Even President Obama’s proposed budget for FY 2013 would freeze NIH spending. There have been numerous efforts to increase NIH’s budget since the President came out with his budget. Final numbers, however, may be months away.

    Which side are you closer to in terms of the FY 2013 budget?


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