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FDA's GRAMM-RUDMAN-HOLLINGS BUDGET CUTS COULD TOTAL $ 71 MIL

Executive Summary

FDA's GRAMM-RUDMAN-HOLLINGS BUDGET CUTS COULD TOTAL $ 71 MIL. if all cost-saving and revenue-increasing provisions under the current budget agreement between Congress and the Bush Administration are not implemented, the Congressional Budget Office predicts. CBO's projections unit, within its Budget Analysis Division, estimates that nearly $ 70 mil. in FDA program outlays and a total of more than $ 71 mil. -- accounting for costs of buildings, facilities and other services -- would be sequestered under the deficit-reduction act. Under current budget legislation, the fiscal 1990 deficit will exceed the $ 100 bil. sequestration trigger by $ 16.2 bil., according to Office of Management and Budget figures. Gramm-Rudman-Hollings requires sequestration (across-the-board budget cuts) if the deficit exceeds the target by $ 10 bil. or more. OMB estimates that a total cut of $ 23 mil. in FDA funds would be required in the absence of cost-saving and revenue-enhancing provisions in the budget agreement. The Bush Administration's projections were included in the "Initial OMB Sequester Report" for 1990. One provision of the budget agreement involves the Medicare catastrophic care program. In the first year of the program, premium-based revenues are expected to exceed outlays. Ironically, elimination of the expensive drug benefit, in an effort to reduce enrollees' premiums, would increase the overall deficit. This anomaly muddles the review of the Medicare program by the House Ways & Means and Senate Finance Committees ("The Pink Sheet" Aug. 21, p. 6).
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