American Association for Cancer Research

AACR Cancer Policy Monitor

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August 2011



Deficit reduction plan freezes federal funding over the next ten years

Culminating from months of bitter debate, Congress finally approved a plan in early August to raise the debt ceiling and reduce the federal deficit. The agreement, which places significant caps on spending over the next 10 years, will drastically increase competition for federal dollars, especially among non-defense agencies. The following summary breaks down the complex new law to show how it could potentially affect funding for cancer research.

Debt Limit Increase

The law raises the limit on the federal debt by at least $2.1 trillion and not more than $2.4 trillion in FY2012 through FY2021. This will occur in two phases; the first is an immediate $900 billion increase, and then the president is authorized to seek a subsequent increase of as much as $1.5 trillion at any time before next fall.

Spending Caps

The law reduces the deficit by placing a cap on all appropriations for the next 10 years, FY2012 through FY2021. These caps will amount to an actual overall freeze in FY2012 and FY2013, and an inflation-adjusted freeze for the remaining eight years.

In FY2012, all discretionary funding, which includes funding for the National Institutes of Health (NIH), will be constrained by a spending cap of $1.04 trillion. This cap is $7 billion below current discretionary funding levels, however, it is still $24 billion above the limit the House passed earlier this year in its non-binding FY2012 budget resolution, which set discretionary spending at $1.019 trillion.

Joint Deficit Reduction Committee

The law creates a bipartisan, 12-member Joint Select Committee on Deficit Reduction that is tasked with negotiating a plan to reach an additional $1.2 trillion in deficit reduction over 10 years. All aspects of the federal budget are on the table as means to reduce future deficits, including additional discretionary spending reductions, entitlement cuts and revenue increases.

The joint committee will be co-chaired by Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.), and additional appointees include Sen. Max Baucus (D-Mont.), Sen. John Kerry (D-Mass.), Sen. Jon Kyl (R-Ariz.), Sen. Rob Portman (R-Ohio), Sen. Pat Toomey (R-Penn.) Rep. Xavier Becerra (D-Calif.), Rep. Dave Camp (R-Mich.), Rep. James Clyburn (D-SC), Rep. Fred Upton (R-Mich.) and Rep. Chris Van Hollen (D-Md.).

The group must complete its work by Nov. 23, and then the House and Senate will be required to vote on its recommendations by Dec. 23, with no amendments allowed.

If Congress fails to enact a final deficit reduction plan by Jan. 15, 2012, automatic spending cuts, or sequesters, will be triggered. The amount of any sequester will be equal to the portion of the $1.2 trillion savings target that was not achieved, and will be spread equally across nine years.

Balanced-budget Amendment

The law requires both the House and Senate to vote sometime between Oct. 1 and Dec. 31 on a balanced-budget amendment to the Constitution.

Significance for Cancer Research Funding

The direct affect of this law on NIH appropriations won’t be known will be until September, when the House and Senate resume work on FY2012 spending bills. Although the $1.04 trillion discretionary spending cap set for FY2012 is higher than the level set by the House earlier this year—it still falls $7 billion below current FY2011 spending levels.

The 10-year cap on discretionary spending makes it hard to envision a scenario in which NIH’s budget could continue to grow significantly over the next decade, unless serious reductions are made in other agencies and programs.


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