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Agreement dulls sequester, leaves user fees hanging


By Mari Serebrov
Washington Editor

A new spending framework constructed by congressional budget negotiators would provide some relief from across-the-board sequestration cuts, but it does nothing to protect FDA and Patent and Trademark Office (PTO) user fees from those cuts.

If approved by the House and Senate, the agreement, unveiled Tuesday evening by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.), would pave the way for an actual 2014 budget bill to replace the continuing resolution that’s set to expire Jan. 15.

The compromise deal would provide $63 billion in relief from sequestration by increasing the sequestered discretionary spending caps for fiscal 2014 and 2015. It raises the 2014 discretionary spending cap to $1.012 trillion, a $45 billion increase over the sequester-set cap of $967 billion. Next year’s cap would be $1.14 billion, which would not provide much of an annual increase for individual agencies.

To balance the smaller cuts for the next two years, the agreement would extend the deficit-busting sequestration process through fiscal 2023. It currently is set to end in fiscal 2021.

The deal’s 2014 spending cap is about halfway between the Senate’s proposed budget level of $1.058 trillion and the House level of $967 billion. It’s considerably less than the $1.15 trillion in discretionary spending the president included in his $3.77 trillion budget request for 2014.

Whether Congress goes along with the compromise remains to be seen. It is on a tight time frame, given year-end adjournments and the expiration of the continuing resolution next month. The House is set to break for the holidays Friday, and the Senate, which took a longer Thanksgiving break, is scheduled to leave Washington next week.

Even though the agreement wouldn’t give him everything he’d like, President Barack Obama called the compromise a good first step, as it “clears the path for critical investments in things like scientific research, which has the potential to unleash new innovation and new industries.”

If Congress accepts the deal, it would then have to decide how the funds should be divvied up among the agencies. Separate spending bills for the FDA were floated in the House and Senate earlier this year.

H.R. 2410 would give the FDA $4.3 billion in appropriations, with about $1.8 billion of that coming from user fees. Obama had threatened to veto the House bill. The Senate bill is more generous; it would give the agency $72 million more. (See BioWorld Today, June 27, 2013.)

The president’s 2014 budget included $4.7 billion for the FDA, an increase of $821 million over 2012 funding. Most of that increase was to be funded by user fees, and $10 million was designated to support more agency inspections in China. (See BioWorld Today, April 11, 2013.)

The president’s 2014 request also included a slight funding bump for the NIH – from $30.6 billion to $31 billion. But part of that increase was earmarked for the BRAIN Initiative.

The Ryan-Murray agreement isn’t just about spending. It would generate some savings by cracking down on fraud and waste, adjusting military retirement benefits, increasing airline security fees and raising Pension Benefit Guarantee Corp. premiums. It also would make some changes to the 1985 Balanced Budget and Emergency Deficit Control Act (BBEDCA), which lays out the ground rules for a sequester, but the agreement doesn’t address whether user fees, such as those paid to the FDA and PTO, should be exempt from the automatic cuts.

Last month, several lawmakers urged the budget negotiators to clearly state in the final agreement Congress’ intent to spare all user fees from the sequester. Such fees are “voluntary payments to the government for goods or services,” the lawmakers said in a letter to the negotiators. (See BioWorld Today, Nov. 25, 2013.)

The administration, through the White House Office of Management and Budget (OMB), determined the fees were subject to sequestration since they aren’t expressly exempted in BBEDCA, which excludes federal activities funded by voluntary payments, contributions or donations from sequestration. OMB doesn’t consider user fees voluntary. (See BioWorld Today, Oct. 18, 2013.)