Federal discretionary spending could drop by as much as 12.1 percent, if a sequestration happens as called for by the Budget Control Act of 2011, according to a new report by the Congressional Research Service.
The automatic spending cut (sequestration) of $1.2 trillion will be implemented in January 2013, unless new legislation is enacted to prevent it. It includes $0.8 trillion in cuts to defense programs and $0.7 trillion in cuts to non-defense programs over 10 years.
In 2013, the first year of the “trigger” cuts, defense discretionary budget authority subject to the BCA caps would decline by 11.5 percent and non-defense would decline by 9.8 percent. An estimated $487 billion in defense cuts is expected over the next 10 years, followed by a $492 billion automatic cut from sequester. The largest spending decline would occur in fiscal 2013, and in fiscal 2014, "discretionary spending subject to the caps increases annually at a rate that is slightly higher than the projected rate of inflation," according to the report.
The cuts do not include Veteran Affairs Department spending and mandatory programs – except for Medicare, which is set for a $6 billion cut.
The House FY2013 Budget Resolution and the President’s FY 2013 Budget both propose eliminating the trigger and replacing it with alternative measures to reduce the deficit.
Under the Budget Control Act, Congress was supposed to approve $1.5 trillion in spending cuts over a decade by January 2012. Since it did not, the consequence is sequestration of 2013 funds and additional budget caps through fiscal 2021, worth a cumulative $1.2 trillion.
Despite the proposed cuts, mandatory spending programs will actually see an increase in spending under the budget act.