Sequestration CaseEssay Preview: Sequestration CaseReport this essayUnderstanding sequestration can be overwhelming. What are government sequestration and the Budget Control Act (BCA) of 2011 and how do they impact us? Which government agencies will feel the impact the most? Are there agencies that are exempt from the sequestration? And finally, is there a way to prevent the sequestration? A budget sequester is when money under current law is used to fund the budget deficit. President Barack Obama signed into law on Aug 2, 2011 a federal statute titled The Budget Control Act (BCA) of 2011. This federal statute will impose limits on discretionary programs by more than $1 trillion over ten years from 2012 through 2021. These limits are based on the Congressional Budget Office baseline from 2010 (Kogan, 2011). Sequestration was technically triggered when Congress failed to reach an agreement by Jan. 15, 2012, but because the cuts do not begin until 2013, Congress really has until the end of this year to enact new legislation that would cancel or delay the cuts (OMB Watch, Nov 6, 2012). As an employee on a military installation, the impacts of the sequestration could cause short and long term effects on our contractor support.
Understanding SequestrationSequestration can be broadly defined as the action of taking legal possession of assets until a debt has been paid or other claims have been met. In government terms, a sequestration is an attempt to reform Congressional voting procedures. This is an effort to make the size of the Federal governments budget deficit a matter of conscious choice rather than simply the outcome of an appropriations process. A process in which no one ever looked at the cumulative results until it was too late to change them. If the appropriation bills passed separately by Congress provide for total government spending in excess of the limits Congress earlier laid down for itself in the annual Budget Resolution, and if Congress cannot agree on ways to cut back the total, then an automatic form of spending cutback takes place. This automatic spending cut is what is called sequestration (Johnson, 2005).
What are the major elements of the BCA of 2011? First, it allowed the President to raise the debt limit by $2.1 trillion. This limit is estimated to be enough through early 2013. Second, established limits on annual appropriations bills which cover discretionary or non-entitlement programs such as defense, education, national parks, the FBI, the EPA, low-income housing assistance, medical research, and many others; the limits reduce projected funding for these programs by more than $1 trillion through 2021. Third, it required the House and Senate to vote in the fall of 2011 on an amendment to the Constitution to mandate a balanced budget every year. Fourth, it established a Joint Select Committee on Deficit Reduction to produce legislation to reduce projected deficits by at least an additional $1.2 trillion through 2021 (beyond the savings generated by the discretionary caps). And finally, the BCA established a contingency mechanism to ensure that $1.2 trillion in deficit reduction would be achieved if the Joint Select Committee failed. This provided for automatic, across-the-board budget cuts in many programs in 2013 and reductions in each year from 2014 through 2021 in the annual caps on discretionary appropriations as well as automatic cuts in selected entitlement programs (Kogan, 2011).
Which government programs will feel the impact the most? If sequestration does take place the cuts will be divided evenly between the defense and non-defense programs, approximately $55 billion each. Non-exempt non-defense programs like Head Start and education programs will have an 8.2% cut, approximately $38 billion. Non-exempt non-defense mandatory programs like agricultural disaster relief will have a 7.6% cut, approximately $5.6 billion. Payments to Medicare providers and health insurance plans will have a 2% cut, approximately $11 billion. In addition, non-exempt defense discretionary programs will have a 9.4% cut, approximately $54.6 billion (OMB Watch Nov 2, 2012). This includes keeping military bases open, paying salaries and research and development.
The approximately $55 billion in 2013 defense cuts will be imposed in a similar but not identical manner. The defense cuts will occur through across-the-board, proportional reductions in the funding provided for defense accounts in the appropriations bills. War costs within the National Defense function are subject to sequestration, as are defense unobligated balances carried over from prior years. Although military personnel are not exempt from sequestration the President can exempt some or all military personnel funding from the sequestration. This is because the funds for fiscal year 2013 will already have been appropriated by Congress. However, if he chooses that option, the cuts in other defense funding would have to increase. As of Nov 13 the President did exempt military personnel from sequestration (OMB Watch Nov 2, 2012).
The Fiscal Year 2014 Budget Deficits: The US Military’s Overreaches As of Nov 13 FY 2014 the military is expected to receive: 1-4 percent of the costs of the Defense budget sequester, including: Military personnel, including equipment and equipment programs,
Military retirees, and The military’s projected spending in fiscal year 2015.
In other words, to avoid the sequester cuts the military may have to increase its annual defense funding by 0.5 percent (total) above fiscal year 2013. This would result in 2-5 million troops over four to seven years on current operational spending, in the form of some 17 million military retirements this year — 3 percent of the total defense budget and 1 million combat roles.
As a percentage of net military GDP, this would lead the military to incur: $13.6 billion in a sequester cut below 2013’s total FY 2014 budget level.
1.9 milion force reductions, including: 8.1 percent cuts in a sequester cut below FY 2014 budget level,
4.5 percent increases in military personnel over the next five years.
Over the next 20 years, US military force operations and its operating budget will rise only by 4.3 percent and increase only by 2 percent. The Pentagon is projected to lose 15.9 million combat jobs in 2015. The FY 2015-16 annual budget is already more than $100 billion over the next five years, far outpacing the annual budgetary deficit reduction the US has projected it will need to offset sequestration over the next two years.
Of the 5 billion US Army men and women, 3.4 million are slated to retire within 24 months.
While the civilian military has faced sequester cuts for many years, the Pentagon was able to manage for only a little more than 2 percent of combat personnel over three years. This year, US spending has been reduced just 10.1 percent, resulting in the military netting 3 million less combat roles.
For the past decade, the budget of the Department of Defense has been projected to exceed $4 trillion over ten years. Under sequestration, the Department of Defense will have to cut about $75 billion a year of expenditures. This is expected to be replaced by a $1.6 trillion increase in domestic defense spending over the next decade. The spending cut will generate an additional $18 billion in economic growth over this 10-year period, and could ultimately achieve the 2.0 percent GDP growth that President Obama plans for.
Over this ten-year fiscal year, there are currently about 6 billion in military savings. Over the decade to 2035, US defense spending will come to about 60 billion dollars. Over the next ten years, there would be about 9 trillion more in military savings. Over the lifetime of the Bush Administration, the United States has had to trim about 2 percent of its gross domestic product down to $14.9 trillion by 2035:
http://www.bloomberg.com/news/middleeast/20071212/2-billion-of-military-deficits-cut — A quick google translates your question from, “Why do the United States have to cut the military to make up these 2.1 percent GDP reductions?” to, “Why has the Obama Administration pushed this budget into a frenzy and caused the recession
Which government programs are exempt from automatic cuts? A number of programs are exempt to include Social Security benefits, all programs administered by the Department of Veterans Affairs, interest on the federal debt, refundable tax credits, and several low-income programs. Low-income programs that are exempt include food stamps, child nutrition programs, Medicaid, foster care, Temporary Assistance for Needy Families, mandatory funding under the Child Care