Deficits, the Debt Ceiling and Public Health

By Peter Kyriacopoulos, Senior Director of Public Policy, APHL

The debate on the budget for federal fiscal year 2012 continues as does the debate on raising the debt ceiling – the guarantee that the U.S. government will pay its bills. Both debates appear likely to result in reductions in federal spending that will mean less funding for the Centers for Disease Control and Prevention (CDC). The House of Representatives-passed budget proposal would cut federal non-security discretionary spending to half of its 2012 level in ten years (by 2022) – and then cut it almost in half again by 2050.

Currently, projected spending in fiscal year 2012 includes $456 billion (12% of expected federal outlays of $3.7 trillion) for non-security discretionary accounts – funding for the operational expenses of federal agencies. Health and Human Services is slated to get $89 billion (20% of the $456 billion), and all outlays for CDC are projected to be just over $10 billion (12% of the $89 billion for HHS). It is reasonable to assume an evenly applied reduction in spending under the House budget would mean that total CDC spending would decline annually until it reaches $5 billion in 2022 and continue down to just over $2.5 billion in 2050. Declines of this magnitude would substantially impair and possibly eliminate the ability of CDC and its state and local government partners to perform the work expected of them.

The Senate continues to work on producing their version of the budget, but has not produced it at this writing.

Simultaneously, Republican leaders in the House and the Senate are demanding that any increase in the debt ceiling be accompanied by an equal amount of reductions in federal spending, which means the current proposal to raise the debt ceiling by $2.5 trillion would have to be matched by spending reductions of $2.5 trillion over a 10 to 12 year period. It is not clear if these reductions occur in addition to the reductions presumed by the House budget.

The deadline for increasing the debt ceiling is August 2, and if the debt ceiling is not raised the Department of Treasury would not be able to issue bonds and generate the revenue necessary to pay the bills of the federal government. This would also mean that the Department of Treasury would have to pay higher interest rates once the debt ceiling is finally increased – increasing the amount spent on interest payments and adding further pressure to reduce other spending.

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