Here’s How the March 1 Sequester Would Work

January 22, 2013 at 2:14 pm

Update March 4:  Click here for the Office of Management and Budget’s calculations of the cuts under sequestration.

Automatic budget cuts — known as sequestration — had been scheduled for January 2, but the so-called “fiscal cliff” budget deal postponed them until March 1.  We’re getting lots of questions about what will happen if sequestration takes effect as scheduled.  The table below lays it out:

The deal sliced the scheduled 2013 sequestration by $24 billion, from $109.3 billion to $85.3 billion.  This reduces the percentage cuts in full-year funding for most eligible programs (those that the law does not exempt from the automatic cuts).  The Medicare percentage does not drop, however, because Medicare cuts were and are still capped at 2 percent, and the across-the-board cut that applies to other non-defense programs remains larger than 2 percent.

We have also adjusted the figures to reflect the extension of Emergency Unemployment Compensation in the fiscal cliff deal and the likely enactment of additional disaster funding in response to Hurricane Sandy.  Both sources of extra funding are subject to sequestration, which spreads the scheduled cuts more broadly.

We explained the cuts scheduled for January 2 in detail last month.  We are revising that explanation to reflect the planned March 1 sequester and will issue that report soon.

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More About Richard Kogan

Richard Kogan

Richard Kogan rejoined the Center in May 2011 after having served as a Senior Adviser at the Office of Management and Budget since January 2009. During his second tour at the Center, from 2001 to 2009, he served as a Senior Fellow specializing in federal budget issues, including aggregate spending, revenues, surpluses and deficits, and debt. Kogan is also an expert in the congressional and executive budget processes and budget accounting concepts.

Full bio | Blog Archive | Research archive at CBPP.org

6 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. 1

    Now is not the time to cut any relief for the poor, including WIC.Thank you.

  2. 2

    Do you read the changes as a 5.1% cut to the March-Sept portion of the 2013 budget, or a 5.1% cut to the entire 2013 budget? A 5.1% cut over the entire fiscal year, but taken in only seven months of it, is an 8.6% cut to the budget available over those 7 months.

    • Richard Kogan #
      3

      The 5.1% NDD cut you refer applies to the entire 2013 budget. You are correct that if this cut must be squeezed into the final 7 months of the fiscal year, it would be a de facto 8.7% reduction in agency activity from before the cut to after it. But there are many cases where this will not be the case: wherever the funding being cut was provided as forward-funded money for the following school year, as multi-year money, or as no-year money (which do not expire on September 30); and wherever an agency has already chosen to operate at restrained levels from October through March 1 in anticipation of the sequestration. Thus, the actual effects will vary case by case.

      • Thomas #
        4

        How would this apply to the 2 percent Medicare cut — fitting it into the final seven months? Would or could the de facto reduction to which you refer above have to be larger? Thanks.

        • Richard Kogan #
          5

          The law provides a special rule for Medicare, under which the cut in reimbursement rates is precisely 2.0%, starts the following month (April 1, 2013), and lasts for 12 months (through March 31, 2014). The entire 12-month Medicare savings count toward reaching the $85.3 billion sequestration target.”

  3. Janet Hodnik #
    6

    Hello –

    I am greatly concerned to cuts to IDEA. In my opinion and experience, special education programs are seriously underfunded already. With the cuts proposed, special education children will not receive appropriate education to meet their needs. This must be reconsidered. Actually, I do not believe there should be any cuts affected the poor, elderly, children and the disabled. It speaks to who we are as a country and our civilization.

    Sincerely,

    Janet Hodnik



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