Monday, July 11, 2011

The Debt Ceiling Deal and Health Research

Time is running out to cut a deal. On August 2nd, the US debt ceiling will be reached and meanwhile, talks between the White House and Congressional leaders have stalled.

If Republicans and Democrats can come to an agreement it may be a short term increase in the debt limit to provide additional time for negotiations. However, President Obama has indicated that he has little interest in short-term measures and prefers to craft a far-reaching compromise that could fundamentally alter the fiscal state of the federal government.

If a major deal can be struck, it will likely contain spending cuts and possibly caps for government programs. On the mandatory side, these cuts could mean reduced benefits for Medicaid, Medicare, and Social Security beneficiaries. The cuts could be dramatic as these programs are considered to be the primary driver of federal spending and have seen unprecedented growth in recent years.

On the discretionary side, caps would limit the amount by which agency budgets are able to grow. The NIH budget, for example, is currently at about the $31B level for this fiscal year. A long-term cap on discretionary spending could place restrictions on spending by budget function, which is a high-level aggregate of spending. The NIH and health research fall into the function 550 category, which is broadly labeled ‘health.’

Caps or cuts to the health budget function could place major constraints on the nation’s ability to carry out health research. In the short term, appropriations hearings are underway in the House and these decisions may impact the makeup of a broader compromise over the debt ceiling and federal spending.

Health research is an engine for innovation critical to the future of our economy, and a source of treatments and cures critical to the health of our population. Act now so your representatives know that cuts to research should not be part of any deal now or in the future.

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