Non-Defense Discretionary Spending Threatened By Budget Reconciliation Shortfalls
“While discretionary spending is not part of the reconciliation process, some policymakers may point to savings from that category as “offsets” for other policies.”[1]
FDA makes significant contributions to public health, public safety, scientific and technological innovation, US investment, and the flow of commerce—producing a positive return-on-investment that far exceeds its budget.[2] Yet, owing largely to our nation’s ongoing and precarious fiscal situation, it gets harder each year to convince the Administration and Congress to provide FDA with robust funding.
FY 26 (which starts October 1, 2025) may be a year when Congressional appropriators have little or no leeway to “plus-up” funding for programs and agencies whose appropriations may be targeted for significant cuts (such as FDA and NIH).
Precarious US Fiscal Situation Worsened Over the Last Two Weeks
Republicans started the budget reconciliation process with the goal of extending tax cuts and enacting other costly Trump priorities…while incorporating enough cuts from mandatory spending so that the total package would be “deficit neutral.”
Instead, the House bill — re-named “The One Big Beautiful Bill Act” (OBBB) — would increase the national debt by an estimated $3 to $4 trillion over 10 years.
This has rattled the bond markets. Notably, Moody’s, one of the three major credit rating agencies, has downgraded US debt.[3]
The Squeeze on Non-Defense Discretionary (NDD) Spending
The FY 25 House Budget Resolution (with impacts through FY 34) drives the current reconciliation process that targets mandatory spending. It also contains assumptions about the amount of discretionary spending in each of the next 10 years — in the aggregate but also by general category.
As described by the Peter G. Peterson Foundation:
The tables associated with the House budget resolution include an unlikely assumption that discretionary spending will be reduced by $1.8 trillion between 2025 and 2034 relative to the Congressional Budget Office’s (CBO’s) baseline — all from non-defense programs.[4]
The President’s FY 26 Discretionary Budget Request, released May 2, also targets non-defense discretionary (NDD) spending, albeit some programs will receive increases while others will face deep cuts or elimination.[5] Specifically, NDD spending is reduced by $163 billion or 22.6 percent from the FY 25 enacted level,[6] “while still providing support for our Nation’s veterans, seniors, law enforcement, and other critical priorities for the Federal Government.”
Of specific relevance to FDA: the House and Senate subcommittees handling Agriculture/FDA appropriations would, under the President’s Request, have $5 billion less (-18.3%) to spend in FY 26 compared to the FY 25 enacted levels.
Spill-over from Reconciliation May Be the Biggest Threat to NDD
As bad as the FY 26 NDD numbers look under the House budget resolution and the FY 26 President’s Budget Request, the greatest threat to NDD funding is the likely failure of reconciliation to achieve deficit reduction.
Conservative Republican “fiscal hawks” in the House reluctantly voted for OBBB, hoping it comes back from the Senate with deeper cuts and a much smaller increase in the national debt.[7] The Senate bill may be more to their liking (or not), but it is hard to imagine at this point that any reconciliation legislation will meet the original goal of deficit neutrality….or, at least, do so without a larger contribution from discretionary spending.
If reconciliation is not deficit neutral, House and Senate fiscal hawks will be looking for any victories that provide recompense for swallowing the bitter pill of a reconciliation that increases the national debt. They could advocate for a smaller tax cut, argue for increased revenues, or redouble their efforts to cut NDD funding. All three may be needed, but you can be sure that the last option will be on the table.
…. and the Hardest for Appropriators to Overcome.
NDD funding was always going to be a target for the fiscal hawks. If their votes are needed to pass the final version of the OBBB and that bill increases the deficit (as seems likely), then they will have incredible leverage to force additional NDD cuts to offset the growing deficit.
There are consequences. Senate Appropriations Chair, Senator Susan Collins, in particular, may find herself in an endgame in which the Appropriations Committees do not have enough discretionary funds for her to patch all the NDD programs she wants to protect (notably, thinking of FDA and NIH).
Conclusion: Advocates for strong NDD funding (including FDA and NIH) have an important stake in the outcome of reconciliation. The larger the amounts that reconciliation adds to the national debt over the next ten years…the greater the risk that Congressional fiscal hawks will press for additional cuts in NDD funding that are greater than those cuts already anticipated under the House budget resolution and the President’s FY 26 request.
The same can be said about the larger cluster of FDA, NIH, CDC, and USDA food safety programs.
By itself, the Moody’s downgrade is more a tremor (signal), than an earthquake. The other two agencies downgraded US debt in 2011 and 2023. Moody’s change in May 2025 is still significant because it is a reaction to growth in the deficit that would occur under OBBB.
The budget resolution compares NDD funding cuts to the CBO baseline while the President’s budget compares NDD funding cuts to the FY 25 spending levels. I have not researched whether there is a way to make the numbers comparable.
https://jeffdufour1.substack.com/p/debt-bomb. My thanks to Jeff Dufour and National Journal for making this document available.