While "sequestration" is a medical and a scientific term, it has been in the news lately because of its implications for the federal budget and for the array of federal services on which we rely in our daily lives. In 1985, Congress adapted the term sequestration to explain a fiscal incentive designed to control the size of the federal government's budget deficit. Sequestration was the automatic cutback on annual spending (i.e., appropriations) bills, which would be triggered if the total fiscal year appropriations passed by Congress were in excess of the limits Congress set for itself in its annual Budget Resolution.
Under sequestration, the dollar amount equal to the difference between the cap set in the Budget Resolution and the amount appropriated would be "sequestered," that is, not distributed to the agencies to which it originally was appropriated by Congress. The Pay-As-You-Go Act of 2010 (PAYGO) is one sequestration procedure aiming to ensure that the total of all net new mandatory spending or tax cuts is offset by an equal amount of mandatory spending cuts or revenue increases. If the total shows net deficit reduction, there is no sequester. However, if the net impact has aggravated the deficit, then a PAYGO sequester is imposed.
Today's news items about sequestration arose last year as part of a deal between the two political parties to raise the debt ceiling and avoid the first US default in history. In this bipartisan debt-limit compromise, Congress laid out a scenario for cost-cutting through the Budget Control Act of 2011
(BCA) (P.L. 112-25)1
. The statute established budget enforcement mechanisms estimated to reduce federal budget deficits by a total of at least $2.1 trillion2
over the 2012-2021 timeframe.
One mechanism was to place caps on discretionary appropriations to decrease spending by an estimated $0.9 trillion during the nine-year period, compared with what such spending would have been if annual appropriations had grown at the rate of inflation. Another mechanism to yield an additional $1.2 trillion in deficit reduction was related to a Congressional Joint Select Committee on Deficit Reduction, popularly known as the Super Committee. The bipartisan group was charged with proposing legislation to trim budget deficits by at least $1.5 trillion between 2012 and 2021. However, if they could not agree to shrink the deficit via spending cuts with tax revenues, automatic cutbacks would begin January 2, 2013 of across-the-board sequestration of mostly discretionary spending. On November 21, 2011, the Super Committee announced that it was unable to agree on a legislative package of cuts and taxes to reduce the deficit.
BCA provided that under sequestration, half of the discretionary cuts are supposed to come from defense, and the other half from non-defense discretionary (NDD) spending, resulting in painful reductions such as fewer scholarships and loans for nursing workforce development, fewer medical innovations, fewer educators in classrooms, fewer first responders, and fewer food and drug inspectors. If the full $1.2 trillion in automatic cuts go into effect, funding for NDD programs in 2013 would face reductions of 7.8 percent, dropping each year to 5.5 percent in 2021, according to Congressional Budget Office estimates.3
A troubling element of sequestration is that government activities are profoundly interconnected in our daily lives. Maintaining economic health depends on some form of government service or activity. Examples of the possible impact that a 7.8 percent sequestration cutback in FY 2013 could have on public health matters in various NDD agencies are:
- The elimination of 2,300 National Institutes of Health research grants.
- The Centers for Disease Control and Prevention would cut $445 million, a sum just under the $467 million currently supporting its Public Health Scientific Services on health statistics, surveillance, epidemiology, and informatics that help track disease.
- 12,150 fewer patients would have access to AIDS Drug Assistance Program benefits, administered by the Health Resources and Services Administration.
- The Substance Abuse and Mental Health Services Administration's budgets would shrink to the extent that 169,000 people would not get access to addiction treatment programs.
While NDD programs are core functions government provides for the benefit of all, NDD programs are not the reason behind the nation's debt. The Bipartisan Policy Center released a white paper finding that "if the pending sequester is not addressed by Congress, it will weaken the economy, harm national security, and do virtually nothing to improve the long-term fiscal condition of the United States . . . The full defense and non-defense sequester cuts for just next year could — due to their arbitrary and abrupt nature — reduce US gross domestic product by roughly half a percentage point in 2013 and cause more than one million jobs to be lost over the course of two years . . . [creating] a 'reverse stimulus plan'."4
Sequestration does not appear to be a solid strategy for reducing the deficit.
1. The Budget Control Act of 2011 (Public Law No: 112-25). Available at www.gpo.gov/fdsys/pkg/PLAW-112publ25/pdf/PLAW-112publ25.pdf
. Accessed June 25, 2012.
2. How large is 2.1 trillion? It's difficult to conceive. Instead of using dollars to imagine the size that $2.1 trillion makes, consider time. One million seconds is equivalent to 11.57 days. But there is considerable difference between one million and one trillion seconds. One trillion seconds is equivalent to 31,688.8 years. Multiply that by 2.1 to obtain 66,546.48 years.
3. Congressional Budget Office, Estimated impact of automatic budget enforcement procedures specified in the Budget Control Act, September 12, 2011, Available at http://cbo.gov/publication/42754
. Accessed June 25, 2012.
4. Bipartisan Policy Center, Indefensible: the sequester's mechanics and adverse effects on national and economic security, June 7, 2012. Available at http://bipartisanpolicy.org/library/report/sequester
. Accessed June 25, 2012.
Article prepared by Terri L. Nally, NLN senior public policy specialist.