Budget Sequestration

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“Budget Sequestration” is a budget enforcement mechanism requiring across-the-board cancellation of non-exempt federal spending by presidential sequester order, utilized by:

• the 1985 Balanced Budget and Emergency Deficit Control Act (BBEDCA or “Deficit Control Act”) to enforce maximum deficit amounts;

• the Budget Enforcement Act of 1990 (BEA) to enforce discretionary spending caps and the Pay-as-You-Go (PAYGO) deficit neutrality requirement for direct spending and revenue legislation;

• the Statutory PAYGO Act of 2010;

• the Budget Control Act of 2011 to enforce discretionary spending caps and implement automatic annual direct (mandatory) spending reductions (that remain in effect through FY 2031 for direct spending generally and FY 2032 for Medicare); and

• the Fiscal Responsibility Act of 2023 to enforce discretionary spending caps in FY 2024 and FY 2025.

Sequestration orders apply to non-exempt discretionary spending categories when used to enforce discretionary spending caps; and apply to non-exempt direct spending programs when enforcing the PAYGO statute or implementing the annual direct (mandatory) spending reductions.

Notably, when an “across-the-board” sequester of direct spending programs is required, it is not really “across-the-board.” Automatic cuts in the Medicare program are limited to four percent under a PAYGO sequester order and two percent under the annual Joint Committee sequester orders, and many other direct spending programs are entirely exempted from sequestration including:

• Social Security,

• federal retirement,

• interest payments,

• most unemployment benefits,

• veterans’ programs, and

• low-income programs including

  • Medicaid,

  • food stamps (now called “SNAP”),

  • children’s health insurance (CHIP),

  • refundable income tax credits,

  • Temporary Assistance for Needy Families (TANF), and

  • Supplemental Security Income (SSI).

Click HERE to open a table displaying links to all sequester reports since 1985.