Sequestration – or the “automatic cuts” in federal funding – is dead. Long live sequestration! We will no longer go through the drama of the imposition of automatic spending cuts that occurred on March 1, 2013 – but not because Congress and the White House have reached an agreement that suspends sequestration and puts in place a balanced and responsible plan for deficit reduction.
The automatic spending cuts feature of the Budget Control Act (BCA) was limited to the fiscal year 2013 funding cycle. In fiscal years 2014 through 2022, the mechanism for achieving the level of cuts required by BCA will instead occur behind the scenes by a reduction in the spending caps for each of those fiscal years. This means that each year the appropriations committees in Congress will have $109 billion less than the amounts they anticipated – and specifically that each year there will be at least $33 billion less for non-defense discretionary accounts, including the one that funds the department of Health and Human Services (including the Centers for Disease Control and Prevention (CDC)). The reduction in funding will vary between $33 billion and $37 billion each year, a cut of about 5.5% to 7% annually. Defense funding will be reduced to a greater extent: $54 billion each year.
The Congress has passed and the President signed into law a funding measure for the remainder of federal fiscal year 2013, and while that action avoided a shut-down of federal governmental operations past March 27, 2013, it maintained the application of the automatic spending cuts – or sequestration – for fiscal year 2013. So this means that federal agencies must now produce plans on how they will address the reduction in spending for their operations. The reductions – each of which must occur between now and September 30, 2013 – are as follows:
- CDC: $340 million
- HRSA: $365 million
- FDA: $209 million
- Global Health: $411 million
- EPA: $385 million
But wait, there’s more. The House-passed budget resolution for fiscal year 2014, written by Congressman Paul Ryan, not only assumes a continuation of the reduced funding for non-defense discretionary caused by the sequester and its evolution, it also cancels the reductions in defense and transfers those cuts onto non-defense discretionary. That’s just the beginning: In total, the House-passed budget would impose an additional (in addition to sequestration for defense being transferred to non-defense) cut of $700 billion in non-defense discretionary funding over the next ten years. Thankfully, the Senate-passed budget resolution does not follow this extreme path and instead fully replaces the amount lost in the fiscal year 2013 sequester and beyond.
It is extremely unlikely that the considerable differences between the House-passed and Senate-passed budget resolutions for federal fiscal year 2014 can be resolved, and more likely that the House and the Senate will move to considering appropriations bills and other deficit reduction legislation under the direction of their specific budget resolutions – laying the groundwork for irreconcilable differences on those measures. All of which will lead to uncertainty. A rose by any other name most likely will not smell as sweet.