Fiscal Responsibility Act of 2023
June 6, 2023
On Saturday, June 3, 2023, President Joe Biden signed the Fiscal Responsibility Act (FRA) of 2023, which raises the debt ceiling to allow the U.S. federal government to continue to pay its bills. The deal suspends the debt limit through January 1, 2025. This suspension is made possible, however, by rescinding unused funds dedicated for the COVID-19 pandemic.
FRA Budget Deal
The deal was negotiated primarily by the Biden White House and the office of House Speaker Kevin McCarthy (R-CA). This agreement suspends the debt limit through January 1, 2025, and establishes topline spending limits for both fiscal year (FY) 2024 and FY 2025.
On Wednesday, May 31, the House of Representatives passed the FRA by a vote of 314 to 177. The Senate passed the bill by a vote of 63 to 36 on Thursday, June 1, followed by President Biden signing the bill on June 3.
The legislation sets caps on discretionary federal spending for the next two fiscal years. For FY 2024, defense spending is capped at $886 billion, the same as requested by President Biden. Nondefense spending is capped at $704 billion, which is significantly below the amount requested by President Biden. Within the nondefense limitation, Veteran Affairs (VA) medical care is set to be at least $121 billion and protected from any cuts.
The remaining amount for FY 2024 (nondefense cap minus VA medical care) is $583 billion. Various appropriation adjustments are then made, including rescission (i.e., the revocation, cancellation, or repeal of a law, order, or agreement) of some unused funds for the COVID-19 pandemic. As a result, nondefense and non-VA medical care funding is—as a practical matter—capped at $637 billion, which is roughly flat compared to FY 2023. There should be a slight increase for FY 2025 of approximately 1%.
Over 20 programs saw their unused pandemic funds rescinded, providing another $27.7 billion for the FRA. These rescinded funds include $1.7 billion from the Centers for Disease Control and Prevention (CDC), $330 million from Health Resources & Services Administration (HRSA) for public health workforce shortages, and another $10.4 billion from the Administration for Strategic Preparedness and Response (ASPR). These amounts do not rescind all unused pandemic funds; CDC still has $1.5 billion and ASPR has $10 billion. The rescission, however, will take significant funding from these agencies.
The Food and Drug Administration (FDA) also suffered from a rescission, but it was for its vaccine efficiency and supply chain monitoring programs, which should not affect environmental health.
The FRA does not include emergency spending, such as funding for natural disasters, wildfires, border security, or the war in Ukraine. This allowance gives Congress the ability to appropriate funding for new programs by categorizing them as emergency spending, rather than discretionary.
Appropriations for FY 2024
Although the FRA clarifies the top-line amount, both the House and Senate will be working with different levels. If the appropriations bill is not completed and passed by both chambers by end of the year, a mandatory 1% cut will be imposed on both defense and nondefense funding.
|Agency||Program or Activity||Estimated Rescission Amount ($M)||Notes and Content|
|HHS-ASPR||Public Health and Social Services Emergency Fund|
|Rescission targeted to protect priority investments like next generation vaccines, test procurement capacity, long COVID research, and other critical needs. Roughly $10 billion will remain after the rescission.|
|HHS-ASPR||Defense Production Act|
|Rescission targeted to protect priority investments like strengthening pharmaceutical supply chains. Roughly $800 million will remain after the rescission.|
|HHS-CDC||CDC-Wide Activities and Program Supports|
|Rescission targeting to protect priority investments like genomic surveillance and investments in vaccine safety and effectiveness. Roughly $1.5 billion will remain after the rescission, in addition to about $500 million in the Infectious Diseases Rapid Response Reserve Fund.|
|HHS-FDA||Vaccine Efficacy and Supply Chain Monitoring|
|The rescission is targeted to protect some funding for staff for FDA to continue some supply chain monitoring activities.|
|HHS-HRSA||Health Resources and Services|
|Most of the remaining funds are for ongoing health workforce awards to address workforce shortages and for administrative expenses.|
Note. ASPR = Administration for Strategic Preparedness and Response; CDC = Centers for Disease Control and Prevention; FDA = Food and Drug Administration; HHS = U.S. Department of Health and Human Services; HRSA = Health Resources & Services Administration.
For more information, contact Government Affairs Director Doug Farquhar.