2013 Fall Fiscal Agenda — Sequestration of Discretionary Programs

Sep 26, 2013

Back to 2013 Fall Fiscal Agenda: A Critical Time for Action

DEADLINE: Estimated January 2014

The Budget Control Act of 2011 created the Congressional "Super Committee" process, which failed to find the required additional $1.5 trillion in budget savings over 10 years. As a result, the fallback option was triggered, achieving deficit reduction by imposing a sequester of 2013 discretionary spending and lowering caps through 2021 on future discretionary spending.

In 2013, half of the sequestration cuts came from defense. Most of the remaining cuts came from non-defense discretionary spending programs — including scientific and medical research, education, national parks, food inspections, law enforcement, federal employee pay, grants to state and local governments, and the Head Start pre-school program.

Nearly everyone agrees that sequestration has not been a good way of managing the budget. People on both sides of the aisle have identified flaws in the sequester process, including:

  • By enacting across-the-board cuts, the federal government did not prioritize important, efficient, and well-run programs, or eliminate wasteful and inefficient programs.
  • By focusing the vast majority of cuts on discretionary spending, the sequester did not reform the real drivers of our long-term debt: healthcare and entitlement spending. Furthermore, the discretionary spending subject to sequestration included investments in education, research, and infrastructure, areas which can be helpful to future economic growth.
  • The reductions also come at a time when the economic recovery is still fragile. The Congressional Budget Office estimates that the economy will grow more slowly in 2013 — 1.4% instead of 2.0% — due to sequestration.

If policymakers enact a continuing resolution that freezes funding at the post-sequester levels, they would extend all of those sequestration flaws into 2014. If they ignore the limits, or don’t raise them, OMB will be required to issue a new sequestration order 15 days after Congress adjourns at the end of this year. Rather than continuing a policy that almost everyone agrees is bad budgeting — and which could harm our economic recovery — Congress should replace this short-sighted and damaging process with a comprehensive plan that addresses the fundamental drivers of long-term debt.

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