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Overview

The failure of the 2011 Congressional “Super Committee” to craft a deficit reduction plan set into motion a process called “sequestration”, which requires approximately $85 billion in federal spending cuts between March 1 and October 1—as a part of a plan to achieve a total of $1.2 trillion in budget savings over the next decade. When Congress passed the Budget Control Act of 2011, they intentionally included this automatic sequestration provision as a universally unacceptable alternative, thereby hoping to force each party to negotiate a budget deal. While leaders in both parties have highlighted the damage expected due to these cuts, Members of Congress appear unable to develop a bipartisan alternative to avert sequestration and prevent the subsequent significant economic consequences.

What type of programs would be cut by sequestration?

Sequestration impacts programs across the government: defense programs, non- defense programs, and Medicare provider reimbursements—reducing spending in each area by 7.7 percent, 5.2 percent and 2 percent respectively. In fact, sequestration applies to all federal programs not specifically exempted by Congress. Those programs exempted in the 2011 Budget Control Act include: Social Security benefits, all Veterans Affairs Department programs, federal pension payments, interest payments on the national debt, food stamps and joint federal- state programs such as Medicaid and welfare.

How does sequestration cut spending in those programs?

After Congress sets the initial parameters—such as establishing special exemptions and determining the total savings required—sequestration applies equally across all programs, projects, and activities within each budget account— providing federal agencies with extremely limited discretion on how to implement the cuts without downstream consequences for program beneficiaries or federal employees. For instance, the Army has explained that in addition to reducing purchase orders, and cancelling depot maintenance—decisions likely to eliminate thousands of jobs—the department must also cut spending for suicide prevention services and other programs supporting active duty and returning soldiers.

What is Congress doing to address sequestration?

Over the past year, Democrats and Republicans in Congress have focused on debating sequestration fixes with little prospects for bipartisan support necessary to pass both the House and Senate. Although Congress and the President reached agreement in late December 2012 to delay sequestration cuts for two months through a mixture of tax increases and spending cuts, party leaders have since indicated that they expect to begin negotiations with their counterparts only after sequestration takes effect.

Key Facts

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