Automatic Spending Cuts Under BCA Sequester

"This week, Mercatus Center Research Fellow Veronique de Rugy examines the annual and cumulative spending cuts under the $1.2 trillion Budget Control Act (BCA) sequester. Data from the Congressional Budget Office (CBO) and PEW Research estimates the budget cuts in discretionary and mandatory spending that would occur if the automatic enforcement mechanisms were triggered.

With a month to go before its November 23 deadline, the Joint Select Committee on Deficit Reduction (JSC) has left all sides speculating for striking a $1.2 trillion deal. Failure to strike a far-reaching plan will result in automatic cuts.

Under sequestration, an amount of money equal to the difference between the cap set in the Budget Resolution and the amount actually appropriated is 'sequestered' by the U.S. Treasury and not handed over to the agencies to which it was originally appropriated by Congress. Since the Gramm-Rudman-Hollings Act of 1985, the number of exempted programs from sequestration has tended to increase. Today, Congress has chosen to exempt certain high-spending programs from the sequestration process: Social Security, veteran’s benefits, Medicaid, the Children’s Health Insurance Program, unemployment insurance, food stamps, and a host of other programs are all exempt from the sequester. Additionally, the cut to Medicare is capped at 2 percent."