2013 United States budget sequestration information
Automatic spending cuts in US federal government
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As a result of the Budget Control Act of 2011, a set of automatic spending cuts to United States federal government spending in particular of outlays[note 1] were initially set to begin on January 1, 2013. They were postponed by two months by the American Taxpayer Relief Act of 2012 until March 1 when this law went into effect.[1]
The reductions in spending authority were approximately $85.4 billion (versus a reduction of $42 billion in actual cash outlays[note 2]) during fiscal year 2013,[2]: 14 with similar cuts for years 2014 until 2021. However, the Congressional Budget Office estimated that the total federal outlays would continue to increase even with the sequester by an average of $238.6 billion per year[2]: 3 during the following decade, although at a somewhat lesser rate.
The cuts were split evenly (by dollar amounts, not by percentages) between the defense and non-defense categories.[note 3] Some major programs like Social Security, Medicaid, federal pensions and veteran's benefits were exempt. By a special provision in the BCA, Medicare spending rates were limited to no more than 2% per year versus the other, domestic percents planned for the sequester.[1] Federal pay rates (including military) were unaffected but the sequestration did result in involuntary unpaid time off, also known as furloughs.[4]
The sequester lowered spending by a total of approximately $1.1 trillion versus pre-sequester levels over the approximately 8-year period from 2013 to 2021. It lowered non-defense discretionary spending (i.e., certain domestic programs) by a range of 7.8% (in 2013) to 5.5% (in 2021) versus pre-sequester amounts, a total of $294 billion. Defense spending would likewise be lowered by 10% (in 2013) to 8.5% (in 2021), a total of $454 billion. Savings in non-defense mandatory spending would total $170 billion, while interest would be lowered by $169 billion.[1] The CBO estimated that in the absence of sequestration, the GDP would grow about 0.6 percentage points faster for 2013 (from 2.0% to 2.6% or about $90B) and about 750,000 more jobs would be created by year-end.[5] As of May 2013, FY2013 spending ($3.455 trillion) was projected to be lower in an absolute sense than FY2012 spending ($3.537 trillion).[6]
The blunt nature[note 4] of the cuts has been criticized, with some favoring more tailored cuts and others arguing for postponement while the economy improves.[8]
Cite error: There are <ref group=note> tags on this page, but the references will not show without a {{reflist|group=note}} template (see the help page).
^ abcCBO (September 2011). "CBO Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act". CBO. Retrieved February 26, 2013.
^ abcdCite error: The named reference CBO Outlook1 was invoked but never defined (see the help page).
^Edelberg, Wendy (February 28, 2013). "Automatic Reductions in Government Spending -- aka Sequestration". Congressional Budget Office.
^Cite error: The named reference WPostEverything was invoked but never defined (see the help page).
^Cite error: The named reference CBO Impacts of Sequester1 was invoked but never defined (see the help page).
^"CBO's Baseline Budget Projections, as of May 2013, With Percentages of GDP Updated to Reflect Recent Revisions by the Bureau of Economic Analysis". Congressional Budget Office. 11 September 2013. Retrieved 5 January 2014.
^"OMB Report Pursuant to the Sequestration Transparency Act of 2012" (PDF). OMB. September 14, 2012. Retrieved March 1, 2013.
^Krugman, Paul (February 21, 2013). "Sequester of Fools". The New York Times. Archived from the original on 2022-02-19.
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