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BCA and the Sequester

With all the discussion about the funding (or defunding) of the government and the separate need to deal with the debt limit extension, several relevant facts have been overlooked. The BCA created a ten year deficit reduction process that is implemented in the last resort by a sequester. Unless the Budget Control Act (BCA) is changed by Congress, total designated discretionary spending in fiscal year 2014 can be no more than $967 billion. If that spending [in the CR] exceeds $967 billion, then under the BCA, a sequester will reduce that spending to $967 billion. Any sequester ordered will take effect 15 days after the 2013 session of Congress adjourns.

There is a big difference in the application of the next sequester. There will still be a defense sequester and a non-defense discretionary sequester. But, rather than the inelegant across-the-board cuts, the appropriations process will decide how to reduce spending to meet the sequester caps. The spending reduction decisions will be made through the appropriations process. One difference is that there will be no special status for veterans’ health care, Pell Grants, Indian health, as existed in the 2013 sequester. Medicare will still be limited to 2% cuts to providers.

The long and short of the 2014 sequester is that unless the House and Senate unite to change the spending levels and override by legislation the BCA spending levels, the sequester process will force Congress to limit 2014 spending levels to $967B.

This will force those who want to exceed the BCA levels for fiscal year 2014 to offer something in exchange for any increases in spending that they might desire. They also will have to examine their spending priorities very carefully. Presumably they will look to fund the most critical programs that are operational now. They will have to make choices between current program spending and spending on programs that will be implemented in the future.

Such a difficult decision making process may even result in an examination of the unrestricted growth of the entitlement programs. That would clearly require going beyond the boundaries of the appropriations process.

Whether such decisions will become a part of the debt limit discussions is yet to be determined.

Clearly the BCA will continue to force congress to discuss a wider range of issues and to examine a wider range of options than have been discussed thus far.

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