FDA and Budget Reconciliation 2025: A Primer
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“A cynic knows the price of everything and the value of nothing.”—Oscar Wilde
Part 1: Meaningful Deficit Reduction Requires More Than Cuts to Discretionary Spending
In FY 2024, the federal government spent $6.75 trillion and collected $4.92 trillion in revenue, resulting in a deficit. The amount by which spending exceeds revenue, $1.83 trillion in 2024, is referred to as deficit spending[1].
There is near-universal agreement that the annual federal budget deficit must be reduced. If allowed to continue, it would add $18 trillion to the national debt over the next ten years.
“The iron triangle of deficit reduction” refers to the three ways (and only three ways) in which annual government deficits can be reduced or eliminated[2]:
discretionary spending cuts (defense and/or non-defense);
reduction in entitlement payments and other mandatory program spending; and
increases in federal revenue through economic growth or additional taxes.
All discretionary spending taken together ($1.7 trillion in FY 24) is less than the annual deficit.
Nonetheless, every year, Congress attempts to achieve meaningful deficit reduction through the appropriations process, while also supporting increases in funding for defense, homeland security, and veterans. This puts overwhelming downward pressure on all other discretionary programs, including FDA.
Meaningful deficit reduction can only be achieved by substantially increasing federal revenue and/or significantly reducing the costs of entitlements and mandatory programs.
Addressing revenue and mandatory programs can be done by stand-along bills. However, as a practical matter, major changes in revenue and/or mandatory programs are unlikely except through budget reconciliation.
Part 2: Budget Reconciliation Explained
As envisioned by the Budget and Impoundment Control Act of 1974, Congress has an obligation to develop and pass a budget resolution that determines spending, revenues, deficit or surplus, and the public debt for a fiscal year.
The appropriations committee then takes over and allocates the discretionary programs monies by subcommittee and program so as not to exceed the amount provided in the budget resolution. Most years, Congress does not pass a budget resolution and, instead, total discretionary funding is set as part of a bi-cameral leadership package that includes appropriations bills[3].
In the years that Congress has passed a budget resolution, it is usually for the purpose of creating “reconciliation instructions” that direct authorizing committee to find specific amounts of savings and/or find offsets for increases in the programs they oversee. Reconciliation directions do not go to the appropriations committees because they are already constrained by spending ceilings.
Since 2000, seven out of the eight budget resolutions/reconciliation instructions are associated with a period when the same party controlled the House, the Senate, and the Presidency and six of them increased projected deficits[4]. This reflects the procedural advantages: the budget reconciliation only requires a majority vote in the Senate and cannot be filibustered. That makes it a more desirable way to move major legislative initiatives than the ordinary legislative route.
There are two notable limitations: reconciliation can only be used to make changes that have budgetary impact; and the reconciliation process can only be used twice in every fiscal cycle.
Part 3: Complex Reconciliation Goals/Politics in 2025
Republicans in Congress are trying to achieve three primary goals in budget reconciliation in 2025:
Increase resources available to support President Trump’s agenda, notably increased funding for efforts to secure the border, bolster our military, and increase American energy independence ($342 billion over four years according to a proposal under consideration in the Senate Budget Committee. Mark-up starts on February 12, 2025).
Reduce the annual federal budget deficit from its current unsustainable levels (a 25% reduction in the annual deficit would require $4.5 trillion over 10 years; halving the annual deficit would require about $9 trillion over 10 years).
Find savings and revenue enhancers to pay for the cost ($4.7 trillion over 10 years) of extending the individual tax cuts enacted in President Trump’s first year (2017) and expiring on December 31, 2025.
In the Senate, Budget Chair Graham is trying to do program changes (bullet one) in a bill now…and deficit reduction (bullet two) and taxes (bullet three) in a bill later in the year. Speaker Johnson is trying to achieve agreement in the House for one bill to do all of this—to be moved this Spring.
The politics of this….and how it will play out…are beyond the scope of a blog focused on FDA issues and policies. However, achieving these three goals will probably require $1 trillion per year in additional revenue (tariffs?), mandatory program cuts[5], and savings from continued powerful downward pressure on domestic discretionary spending.
This is a cynical process (h/t to Oscar Wilde) in which many programs will be cut or eliminated because of their cost (price), regardless of their value.
In such an environment, FDA’s fate is not sealed, but its prospects for sustaining and increasing its budget are not promising.
The arguments for the value of FDA to public health, safety, and commerce will need to be voiced loudly by the entire FDA stakeholder community. They will need to do so repeatedly, until the value produced by FDA is seen as so great that paying the agency’s cost (price) becomes seen as a necessity….even in a dramatically smaller federal budget.
https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/
The fourth major category of budget expenses is interest payments on the national debt. These are set by market forces and cannot be reduced by law or fiat without jeopardizing the government’s ability to finance the totality of the US debt, which exceeds $36 trillion. The public holds nearly $30 trillion of that debt.
There are no consequences if Congress fails to adopt a budget resolution.
https://www.cbpp.org/research/introduction-to-budget-reconciliation
Social Security and Medicare are likely to be spared for political reasons, meaning even deeper cuts in Medicaid, SNAP, and other means-tested human services programs.
According to the 2-12-25 issue of POLITICO Inside Congress, some House Freedom Caucus members are pushing for a $2 trillion target.