Sequestration, or the “automatic cuts” in federal spending, is dead! Long live sequestration!
What does that mean? It means that the government is no longer calling the budget cuts “sequestration,” but they still have to be made. Here’s some background:
The Budget Control Act of 2011 (BCA) was passed by Congress and signed by President Obama in August of that year. It stated that across-the-board spending cuts would go into effect on January 2, 2013—including cuts in funding of the Centers for Disease Control and Prevention (CDC) and other reductions that would have a negative impact on public health laboratories and on healthcare generally. The BCA also created a special Congressional committee that was given the job of producing legislation that would reduce the federal budget by $1.2 trillion. The idea was, if the committee succeeded, the sequestration would not go into effect. But the committee, comprised of an equal number of Democrats and Republicans, was unable to produce legislation that would have the necessary bipartisan support.
As January 2, 2013, approached, Congress passed, and the President signed, the American Taxpayer Relief Act of 2012. It delayed the beginning of sequestration until March 1, 2013. But as that date approached, no legislation had been produced to put into effect a more permanent solution. Calling the cuts “deeply destructive,” on March 2 President Obama signed an order putting them into effect, as he was required to do by law.
However: more recent Congressional actions mean that, strictly speaking, the nation will no longer have to go through the drama of the imposition of the automatic spending cuts that occurred on March 1. This is not, however, because Congress and the White House have reached an agreement that suspends sequestration and puts in place a balanced and responsible plan for deficit reduction.
Congress has passed and the President signed into law a funding measure for the remainder of federal fiscal year 2013. That action avoided a shut-down of federal governmental operations past March 27, 2013, but it maintained the application of the automatic spending cuts for fiscal year 2013. This meant that federal agencies must now produce plans on how they will address the reduction in spending for their operations. For CDC, the reduction in fiscal year 2013 funds is $340 million; for the Health Resources and Services Administration (HRSA), which helps to provide access to healthcare for the uninsured, $365 million; for the Food and Drug Administration (FDA), $209 million; for Global Health, $411 million; and for the Environmental Protection Agency (EPA), $385 million. Each reduction must occur between now and September 30 of this year.
The automatic spending cuts feature of the BCA was limited to the fiscal year 2013 funding cycle. In fiscal years 2014 through 2022, the mechanism for achieving the level of cuts required by BCA will instead occur behind the scenes by means of a reduction in the spending caps for each of those fiscal years. This means that each year the appropriations committees in Congress will have $109 billion less than the amounts they anticipated—and specifically that each year there will be at least $33 billion less for non-defense discretionary accounts, including the one that funds the department of Health and Human Services (including the CDC). The reduction in funding will vary between $33 billion and $37 billion each year, a cut of about 5.5% to 7% annually.
Please forgive the flurry of numbers, but I hope it illustrates a point: we may not be calling it “sequestration” anymore, but the potential perils to funding relevant to healthcare have not disappeared.
And differences between the House- passed budget resolution for fiscal year 2014 and the Senate-passed budget resolution seem likely to lead to further complications and stalemates down the road. The Republican-controlled House and the Democratic-controlled Senate will probably move to consider appropriations bills and other deficit reduction legislation under the direction of their specific budget resolutions—laying the groundwork for further irreconcilable differences on those measures. The most significant difference is that the House-passed budget resolution for fiscal year 2014 not only assumes a continuation of the reduced funding for non-defense discretionary caused by the sequester and its evolution; it also cancels the reductions in defense and transfers those cuts onto non-defense discretionary. That’s just the beginning. In total, the House-passed budget would impose an additional (in addition to sequestration for defense being transferred to non-defense) cut of $700 billion on non-defense discretionary over the next ten years. The Senate, however, eliminates sequestration and the annual cuts in the budget caps.
William Shakespeare wrote in Romeo and Juliet, “What’s in a name? A rose by any other word would smell as sweet.” Coming cuts in funding for public health, whether they are called sequestration or not, may not smell very good at all for operations of public health laboratories.
