The potential sequestration scheduled for January 2013 creates a lot of uncertainty for the government, but if that dreaded scenario occurs, then the recently enacted six-month spending measure makes some things clearer.
Federal employees have wondered how the six-month continuing resolution funding the government through March would affect the automatic, across-the-board spending cuts set to take effect Jan. 2, 2013. One Government Executive reader asked, “I think a lot of us are confused about how the CR at 2012 levels inter-relate with sequestration impacts. Will we toodle along at 2012 funding levels for six months and then [see] draconian cuts in the second half of the year if the reductions are implemented?”
The short answer is, no. Here’s the long answer: If lawmakers can’t agree on an alternative, then agencies will use the sequestration formula to assign cuts in January to more than 1,200 budget accounts, as the law mandates. Those cuts will be apportioned throughout the remaining nine months of fiscal 2013; the figures in the formula are based on the current six-month continuing resolution that sets fiscal 2013 funding at the level the 2011 Budget Control Act mandates, keeping spending at the fiscal 2012 rate for agencies and federal programs with an across-the-board increase of 0.6 percent over the base rate, for a total of $1.047 trillion.
Congress has not passed any fiscal 2013 appropriations bills yet, which made the continuing resolution necessary to avoid a government shutdown on Sept. 30. Regardless of what lawmakers do for the rest of fiscal 2013 after the current CR expires on March 27 -- pass another CR, pass a budget through the regular appropriations process -- the spending reduction levels that sequestration triggered already would be in effect based on that $1.047 trillion figure because it’s the discretionary spending cap dictated by the Budget Control Act for fiscal 2013 and it will be the government funding measure in place on Jan. 2. Of course, if lawmakers halt or delay sequestration through legislative action at any time, that’s another story.
If Congress allows sequestration to take effect, then it will result in savings of $109 billion governmentwide in fiscal 2013, for a grand total of $1.2 trillion in savings through fiscal 2021. It will affect thousands of agency projects, programs and activities, with reductions split equally between defense and nondefense spending (about $55 billion each) in fiscal 2013.
The Office of Management and Budget released a congressionally mandated report in September that estimated sequestration would impose cuts of 9.4 percent in nonexempt defense discretionary funding and 8.2 percent in nonexempt, nondefense discretionary funding. A 2 percent cut would hit Medicare providers, 7.6 percent would affect other nonexempt nondefense mandatory programs, and 10 percent would be applied to nonexempt defense mandatory programs. Those figures were based on fiscal 2012 spending levels, which are slightly below the $1.047 billion CR, so the percentage reductions trigged by sequestration could be a little lower than OMB projected. The difference, however, would be nominal and still significantly impact government operations.