After Congress’s perennial Medicare pay problem is resolved, the biggest item in health policy on Capitol Hill is the reauthorization of multibillion-dollar fee programs for the Food and Drug Administration. The programs—known as the Prescription Drug User Fee Authorization, or PDUFA, and the Medicare Device User Fee Reauthorization, or MDUFA—both expire in September.
FDA and representatives of the prescription-drug industry sent a negotiation to Congress earlier this month, putting them on track for a spring markup on Capitol Hill. But the medical-device industry and FDA are still squabbling over how much to raise the fees, and they missed a Jan. 15 deadline for submitting a plan to Congress.
Due to the acrimonious political environment on Capitol Hill, lawmakers want to move the big PDUFA and MDUFA bills in one package, in hopes of easing their passage and getting them done before the presidential election freezes all hope for bipartisanship. But the delay on the medical-device agreement has some experts nervous that the process won’t happen on time. If the user-fee programs are not reauthorized before they expire, FDA will likely have to lay off or furlough employees who approve drugs and devices.
Beyond the “UFAs,” Congress will likely attempt to deal with the automatic cuts scheduled for 2013, thanks to the deficit super committee’s failure to find $2.1 trillion in savings at the end of 2011. Without action from Congress, Medicare will take a 2 percent haircut, and nondefense programs—including the National Institutes of Health, the Centers for Disease Control and Prevention, and FDA—will see more than $50 billion in cuts.
HOUSING
Taming the GSEs
The big unfinished financial-services business from the last Congress was mortgage-finance overhaul, and both the House Financial Services Committee and Senate Banking Committee are expected to dedicate much of the year to debating this issue.
With elections around the corner, no consensus on what to do, and a fragile housing market, the White House is not expected to choose and push a path toward reforming the government-sponsored enterprises Fannie Mae and Freddie Mac, however.
The two GSEs provide the bulk of the country’s mortgage credit but are stuck in conservatorship limbo, meaning Congress cannot ignore the issue. The companies were seized by the government in 2008 to prevent their collapse and have received $169 billion—and counting—from taxpayers.
House Republicans pledged to end the bailout as part of their 2010 election platform. Many feel they must press ahead. Rep. Scott Garrett, R-N.J., the Financial Services Committee’s capital markets subcommittee chairman, hopes to wrap up GSE overhaul legislation this year. He has pushed several targeted bills that chip away at Fannie and Freddie through the committee but is trying to build consensus among a divided conference as to how to fully privatize the mortgage market.
Rep. Jeb Hensarling, R-Texas, also has long advocated legislation to phase out Fannie and Freddie, but many members question whether mortgages will remain affordable without some kind of government backstop.
The powerful mortgage and real estate industries oppose any change that eliminates all government guarantees. And no consensus exists among committee Republicans.
Garrett and Hensarling are up against GOP Reps. John Campbell and Gary Miller of California, who have proposed alternatives that would provide government support but through different mechanisms.
Still, Republican leadership would like to push some kind of GSE overhaul through the House this year.
The Senate Banking Committee has held several hearings on the issue but is far from consensus, and Chairman Tim Johnson, D-S.D., has taken a cautious approach. He is waiting for cues from the administration and does not want to take any action that could further destabilize the housing market.
NATIONAL SECURITY
Unfinished Business
Like teenagers wincing through a hated homework assignment, the Pentagon spent last fall devising its plan for trimming more than $450 billion in future budget growth. Everything from the size of the Army to the weapons they buy and how the Pentagon does business can expect a “haircut,” planners announced in January, with lawmakers safely out of town.
In any other year, Congress would give the White House a fight over that figure alone. But there’s an even bigger number that scares everyone. Congress and the administration have less than one year (an election year, no less) to come up with something—anything—to dodge the dreaded “sequestration” bullet that requires roughly $600 billion in across-the-board cuts to defense spending. One former budget official estimates negotiators have until the end of summer before the Defense Department must prepare for things like employee furloughs and not bouncing checks for Afghanistan war suppliers.
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