Budget “Sequestration” and Selected Program Exemptions and Special Rules Page: 5 of 28
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Budget "Sequestration" and Selected Program Exemptions and Special Rules
The Budget Control Act of 2011: Budgetary Effects of Proposals to Replace the FY2O]3
Sequester, by Mindy R. Levit.
Sequestration Triggers Under the BCA
The Budget Control Act of 2011 (BCA) was enacted on August 2, 2011. It provided for increases
in the debt limit and established procedures designed to reduce the federal budget deficit.' The
BCA has two primary components that could trigger a sequestration of discretionary and/or
mandatory (or direct) spending:'
* Title I of the BCA established discretionary spending limits, or caps, for each of
FY2012-FY2021 * If Congress appropriates more than allowed under these
spending limits in any given year, the automatic reduction process of
sequestration would cancel the excess amount. For FY20 12 and FY20 13, the
spending limits were divided into "security" and "nonsecurity" categories, with
security defined broadly to include the Departments of Veterans Affairs (VA),
Homeland Security (DHS), and State, in addition to the Department of Defense
and certain other activities.7 For FY20 14 and subsequent years, no distinction
was made between security and nonsecurity, and Title I of the law established a
single discretionary spending limit for each year.'
* Title IV of the BCA established a bipartisan Joint Select Committee on Deficit
Reduction. Failure by Congress to enact legislation by January 15, 2012,
developed by the Joint Committee and reducing the deficit by at least $1.2
trillion, would trigger a series of automatic spending reductions intended to
achieve that level of savings over the FY20 13-FY202 1 period. These automatic
reductions include sequestration of mandatory spending for each of FY2013-
FY2021, a one-year sequestration of discretionary spending for FY2013, and
lower discretionary spending limits for FY2014-FY2021. Spending reductions
would be divided equally between security and nonsecurity. However, these
terms are redefined, so that "security" consists only of budget function 050
(effectively, the Department of Defense), and "nonsecurity" includes all other
government spending (including the VA, DHS, and State). The distinction
between security and nonsecurity (as redefined) remains for each of FY20 14-
4For a comprehensive discussion of the BCA, see CR5 Report R41965, The Budget Control/Act of 2011, by Bill Heniff
Jr., Elizabeth Rybicki, and Shannon M. Mahan.
5 Discretionary spending is provided in and controlled through the annual appropriations process and represents a
portion of total federal spending. The other portion, referred to as direct spending (or mandatory spending), is generally
provided in or controlled by authorizing legislation that requires federal payments to individuals or entities, often based
on eligibility criteria and benefit formulas set forth in statute. Some direct spending is funded in appropriations acts,
referred to as appropriated entitlements, but is controlled by the authorizing statute(s).
6 Adjustments are allowed to these discretionary spending limits for certain specified activities, such as costs associated
with disability redeterminations, health care fraud and abuse, overseas contingency operations and the War on Terror,
emergency spending, and funding for disasters.
7 The Office of Management and Budget (0MB) has determined that discretionary amounts provided for FY20 12 were
within the BCA spending limits, so that no sequestration was necessary for that year. See http://www.whitehouse.gov/
sites/default/files/omb/assets/legi slative reports/sequestration/sequestration_finalj an20 12 .pdf.
8 These provisions were amended by P.L. 112-240, to revise the amounts and categories for FY20 13 and FY20 14.
Congressional Research Service2
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Budget “Sequestration” and Selected Program Exemptions and Special Rules, report, January 10, 2013; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc806081/m1/5/: accessed May 25, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.