Budget Control Act of 2011 (BCA; P.L. 112-25) provided for an increase in the
statutory limit on the public debt in conjunction with a variety of
measures to reduce the budget deficit. Included in these measures was the
creation of a Joint Select Committee on Deficit Reduction, which was
tasked to develop and submit a plan to Congress containing deficit reduction to
total at least $1.2 trillion over the FY2012-FY2021 period. However,
because the committee did not report out recommendations, the BCA’s
automatic spending reduction process was triggered. This process, set to
begin on January 2, 2013, would reduce federal outlays over the next decade unless
legislation is enacted to prevent it.
Both President Obama and some Members of Congress have offered proposals for
repealing or modifying the automatic spending reductions. The President’s
FY2013 Budget Proposal eliminates the automatic spending reductions for
all nine years and replaces them with alternative measures to reduce the
deficit. The largest of these proposals include allowing the 2001/2003/2010
tax cuts for singles making over $200,000 and households making over $250,000
to expire; savings generated from changes to Medicare, Medicaid, agriculture,
and other mandatory programs; and placing caps on spending on Overseas
Contingency Operations (OCO). Together, this proposal totals $2,221
billion more in deficit reduction than what would be achieved by the BCA’s
automatic spending reduction process between FY2012 and FY2022.
The Sequester Replacement Reconciliation Act of 2012 (H.R. 5652), agreed to by
the House on May 10, 2012, would cancel the sequester of approximately $98
billion in discretionary defense, discretionary non-defense, and mandatory
defense FY2013 funding scheduled to take place on January 2, 2013; would
lower the current FY2013 cap on discretionary budget authority set by the BCA
of $1,047 billion to $1,028 billion; and would cut other mandatory non-defense
programs. (The sequestration of FY2013 non-defense mandatory funding would
remain in place.) If enacted, this measure would reduce the deficit by
$262 billion more than what would be achieved by the BCA’s FY2013
automatic spending reductions over the FY2012 to FY2022 period.
Representative Chris Van Hollen offered a substitute amendment to H.R. 5652.
His proposal would replace the entire FY2013 sequester with a series of
revenue increases and spending reductions. If enacted, this measure would
reduce the deficit by $30 billion more than what would be achieved by the
BCA’s FY2013 automatic spending reductions over the FY2012 to FY2022 period.
This measure was not made in order by the House Rules Committee.
On September 13, the House passed the National Security and Job Protection Act
(H.R. 6365), introduced by Representative Allen West, by a vote of
223-196. The act cancels the FY2013 sequester on discretionary defense,
discretionary non-defense, and mandatory defense contingent upon enactment
of H.R. 5652, or an alternative measure that would achieve outlay reductions equal
to those to be achieved by the FY2013 sequester in those categories. This
legislation was determined by CBO to not have a budgetary impact.
In addition to the measures proposed above to replace the BCA’s automatic
spending cuts, President Obama signed into law the Sequestration
Transparency Act of 2012 (H.R. 5872) on August 7, 2012. This legislation
requires OMB, in consultation with the House and Senate Appropriations
Committees, to submit a detailed report within 30 days of enactment containing information
on how the BCA’s FY2013 automatic spending reductions will affect each
nonexempt program, project, and activity. The STA report was released on
September 14, 2012.
Date of Report: November 9, 2012
Number of Pages: 13 Order Number: R42675 Price: $29.95
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