CBPP Examines Dollar and Percentage Calculations Required by Law
The automatic budget cuts known as ‘sequestration’ took effect on March 1, 2013. Under the requirements of the 2011 Budget Control Act (BCA) as amended by January’s American Taxpayer Relief Act (ATRA), both defense and non-defense programs were automatically cut, or sequestered, reducing total funding by $85 billion.
While the press and public have focused on the programmatic effects of sequestration, this analysis explains the dollar and percentage calculations required by the sequestration law.
The origin of sequestration lies with the BCA, which established a congressional Joint Select Committee on Deficit Reduction (super-committee) to propose legislation that would reduce deficits by $1.2 trillion over ten years. It also created a backup sequestration procedure to ensure that this level of deficit reduction would be achieved even if the super-committee failed to reach agreement, which is what happened.
The sequestration mandates cuts to defense and non-defense funding totaling $109.3 billion in each year from 2014 to 2021. For 2013, however, the mandated cuts are $85.3 billion; ATRA reduced the required cuts. The sequestration law requires that the cuts be split 50-50 between defense and non-defense programs.