Category Archives: summary

Should We Go Over the Cliff: The Numbers

What does sequestration mean in terms of cuts – how much and to whom?

·         $900 billion in cuts in discretionary programs over the next decade

·         Would impose further automatic across-the-board spending cuts in many programs, unless Congress enacts an additional 1.2 trillion in deficit-reduction measures by Jan. 15, 2012

·         Would take effect in Jan., 2012

·         9% annual cuts in non-defense programs

·         9% cuts in defense programs for each year from 2013-2021

·         New Budget Control Act which implements the debt limit deal

o   Raises debt limit by 2.1 trillion in steps

o   Establishes binding “caps” on annual appropriation bills covering non-entitlement spending – e.g. defense, education, National Parks, FBI, EPA, low-income housing assistance, medical research, etc.

o   Requires Congress to vote on balanced budget amendment this fall

o   Establishes a Joint Select Committee to draft, vote on by Nov. 23rd and report by Dec. 2nd this year – definite reductions through 2021 beyond the $900 billion – if they fail that will touch off automatic cuts known as sequestration

·         Cut 54.7 billion from defense each year from 2013-2021

·         Cut 54.7 billion from non-defense programs each year from 2013-2021 from both mandatory (entitlements) and discretionary programs

Mandatory cuts:

·         Cuts Medicare payments to providers and insurance plans (limited to 2%)

·         5.2 billion to other mandatory programs like farm price supports

·         Social Security, Medicaid, CHIP, SNAP (food stamps), child nutrition, SSI, refundable tax credits, like Earned Income Tax Credit, veterans benefits and federal retirement are exempt from sequestration

That leaves 38.6 billion in non-defense cuts which would come from

·         Across-the-board cuts for discretionary programs except Veteran’s Medical Care and Pell Grants

·         2014 – 2021 – reduction in statutory caps on total funding

I guess what I didn’t realize that these cuts would happen every year for 10 years, although years 2-10 would be configured in a different way. Yikes!