The BBA of extended the mandatory sequester through , and then a law modifying military retiree benefits extended the sequester through These extensions did not specify the amount of savings that the sequester would need to achieve in fiscal years after FY , but instead directed OMB to apply the percentage reductions calculated for FY to subsequent fiscal years.
Under the BCA, across-the-board reductions are made to all mandatory programs that are not specifically exempt. In addition, the cut is limited for certain programs, such as Medicare, which receives cuts to providers that are capped at 2 percent regardless of the size of the sequester. Even though the Medicare cut is limited, it still comprises about three-quarters of the non-defense mandatory sequester in dollar terms.
The remaining reductions come mostly from farm programs, but student loans, the Social Service Block Grant, vocational rehabilitation, and dozens of other programs are also affected. Excluding , eligible non-defense non-Medicare mandatory programs have been cut through sequester by about 6 to 7 percent, and defense mandatory programs by about 9 percent.
The cap does not apply to certain Medicare administrative spending classified as mandatory, which is sequestered at the rate that applies to all other non-defense mandatory programs—5. Most Medicare administrative spending is discretionary, however, and thus not subject to this sequester.
The 2 percent cut is a reduction in payments to Medicare providers and plans and has been in place every year since Beneficiaries see few direct impacts, as the sequester does not affect their benefit structure. Forty-eight state and territorial health agencies report budget cuts since , and more than 45, state and local public health jobs have been lost.
Health departments must be kept whole to ensure that all Americans are safe. CDC funding holds together a fragile nationwide network of front-line public health responders; sequester would make all Americans less safe, increase preventable illness, and increase healthcare costs.
Virtually every state and community in the United States would be at higher public health risk from natural or terrorist threats, and the ability to stop deadly outbreaks would be undermined…The time it takes to deliver medical countermeasures after an attack or natural disaster will increase. More than , mothers and infants will be cut from WIC. The time to identify and appropriately treat victims of a chemical attack would double from five days to up to two weeks , increasing suffering and death, as support is eliminated for laboratories, which can diagnose and help doctors treat patients.
The uncertainty resulting from this delay would have significant consequences in national security and economic stability. Government Executive. MedPage Today. Public Health Newswire. GAO provides fact-based, nonpartisan information to Congress. Skip to content. Sequestration and mandatory spending Sequestration is an across-the-board reduction in federal agency budgets. Excerpted from GAO Both mandatory and discretionary spending were sequestered in fiscal year Uneven application In fiscal year , only mandatory spending was sequestered, but some programs were affected more than others.
Questions on the content of this post? Contact Michelle Sager at sagerm gao. Contact blog gao. Like this: Like Loading In fact, the Joint Committee did not develop the necessary legislation and Congress did not meet the January 15, , deadline. Thus, automatic spending cuts under the BCA were triggered, with the first originally scheduled for January 2, Under the Statutory PAYGO Act, sequestration is part of a budget enforcement mechanism that is intended to prevent enactment of mandatory spending and revenue legislation that would increase the federal deficit.
This act requires the Office of Management and Budget OMB to track costs and savings associated with enacted legislation and to determine at the end of each congressional session if net total costs exceed net total savings.
If so, a sequestration will be triggered. Some discretionary programs also are exempt, notably all programs administered by the Department of Veterans Affairs. Also, subject to notification of Congress by the President, military personnel accounts may either be exempt or reduced by a lower percentage. Special rules also apply to several, primarily mandatory, programs. In the s, sequestration was used to enforce statutory limits on discretionary spending and a pay-as-you-go PAYGO requirement on direct spending and revenue legislation.
A sequestration was triggered by the Joint Committee's failure to achieve its goal and was originally scheduled to occur on January 2, , to affect spending for FY Congress enacted legislation that delayed the effective date of this sequester until March 1, American Taxpayer Relief Act of , P. In general, sequestration entails the permanent cancellation of budgetary resources by a uniform percentage. That is, certain programs and activities are exempt from sequestration, and certain other programs are governed by special rules regarding the application of a sequester.
While the report makes references to the sequestration currently in effect, triggered by failure of the Joint Committee process under the BCA, it discusses exemptions and special rules in general and should not be viewed as a comprehensive examination of the current or any future sequestration under either the BCA or the Statutory PAYGO Act. To provide some context for the exemptions and special rules applicable to these sequestration procedures, brief descriptions of the budget goals that may be enforced by sequestration are provided below.
Readers also may wish to consult the following CRS reports:. It provided for increases in the debt limit and established procedures designed to reduce the federal budget deficit. The security-nonsecurity distinction is significant because sequestration is imposed within these categories.
In other words, if Congress appropriated more than allowed for either category in a given year, the excess spending would be canceled in the category where the breach occurred. As noted above, security was defined broadly under Title I and spending was divided between the two categories originally for FY and FY However, under the automatic procedures triggered by failure of the Joint Committee, security is defined more narrowly and the separate security and nonsecurity categories remain in effect for each year through FY On March 1, , President Obama signed the sequestration order triggered by failure of the Joint Committee process under the BCA, and the Office of Management and Budget OMB issued a report containing the percentages by which budgetary resources must be reduced in order to achieve the necessary spending reductions in FY OMB noted that the spending reductions for FY must be achieved over a seven-month period rather than the full fiscal year, thus making the effective percentage reductions higher than those shown in the table.
Since the FY appropriations process was still ongoing as of March 1, OMB generally based its calculations on the assumption that discretionary programs would be funded at the annualized level provided under the continuing appropriations resolution for FY that was in effect on March 1 P. In determining the amount of mandatory spending subject to sequestration, OMB used the current law baseline amounts in the President's FY budget, adjusted for any relevant legislation enacted since transmittal of the budget in February Readers are referred to the OMB report for an explanation of the methodology used in making calculations, and to the report's appendix for an itemized list of budget accounts that include spending subject to sequestration, the dollar amounts that are subject to sequestration, the percentage by which they are reduced, and the dollar amount of the reduction.
Readers should note, however, that OMB identifies budget accounts and not "programs, projects and activities" within these accounts. Table 1. Notes: "Defense" and "Nondefense" are the same as the revised Security and Nonsecurity categories discussed above, where Defense or revised Security equals budget function , and Nondefense or revised Nonsecurity equals everything else.
See sections, later in this CRS report, headed " Section Program Exemptions " and " Section Special Rules " for discussion of exemptions and special rules, including those applicable to Medicare and selected health programs. As explained in the second bullet on p. As noted above, sequestration in FY and later years will affect mandatory spending only, unless the lowered discretionary spending limits are breached.
Because defense spending is largely discretionary, sequestration in FY will primarily affect nondefense spending. Readers may consult the OMB report's appendix for an itemized list of budget accounts that include mandatory spending that would be subject to sequestration in FY, the dollar amounts that would be subject to sequestration based on OMB's current law baseline , the percentage by which they would be reduced, and the dollar amount of the reduction.
The act requires various scorekeeping procedures, including 5-year and year scorecards that track costs and savings associated with enacted legislation. At the end of each congressional session, OMB generally must determine whether the net effect of direct spending and revenue legislation enacted during the session has increased the deficit, and if so, a sequestration will be triggered.
Certain costs and savings are not counted toward Statutory PAYGO, including designated emergency spending, debt service costs, costs associated with a shift in timing of certain outlays, and net savings from the CLASS Act.
Certain programs are exempt from sequestration, and special rules govern the sequestration of others. However, the application of these rules for certain programs might differ, depending on the specific provision that triggers the sequestration.
Questions about the impact of sequestration on any particular program or account cannot be answered strictly from reading the relevant provisions of law. As noted earlier, under a sequestration, all nonexempt "programs, projects, and activities" must be reduced by a uniform percentage unless provided otherwise under special rules; see " Section Special Rules ". However, numerous factors potentially affect the sequestration process, including the amount of budgetary resources subject to sequestration and the interpretation of statutory requirements as they apply to specific programs and activities.
Readers should note that these sections have been amended as recently as February under the Statutory PAYGO Act; however, until the most recent action on March 1, an actual sequestration had not occurred since the early s. The following should be considered as a general description of the law and not an attempted interpretation.
In addition, OMB's September report, issued in response to the Sequestration Transparency Act, gave preliminary information on the "sequestrable" or "exempt" classification of budgetary resources, and provided citations for the provisions in BBEDCA that determined these classifications. Readers are referred to those documents for more specific information on OMB's interpretation and implementation of the law in the case of the March 1 Joint Committee- triggered sequester.
Section contains a list of programs and activities that are exempt from sequestration. In many cases, specific budget accounts are provided, so readers are referred to the statute for precise identification of exempted programs and activities see Appendix. While the law provides a list of programs and types of spending that are exempt from sequestration, it provides no definitive list of programs or types of spending that absolutely are subject to sequestration.
As stated above, the impact of sequestration on any given program depends on the actions and interpretations of OMB. The following are selected programs and types of spending identified in Section as exempt from sequestration:. In addition to the exemptions in Section of BBEDCA, Section establishes special rules for sequestration of certain programs or types of spending. Most Section special rules apply to mandatory programs, although some discretionary programs are included e.
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