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CBO Confirms: No Sequestration in Fiscal 2016

December budget deal gave both defense and domestic programs new leeway.

As promised, last month’s omnibus spending act will successfully avoid automatic cuts through sequestration in fiscal 2016, according to estimates required of the Congressional Budget Office.

In a late-December report on the spending caps going through fiscal 2021, the nonpartisan agency said: “In CBO’s estimation, such a sequestration will not be required for 2016,” because spending will come in under the caps in the 2015 Bipartisan Budget Act. Congress could still breach the caps if lawmakers provide extra appropriations between now and the end of the fiscal year on Sept. 30, CBO noted. If that is the case, the excess spending would count against the fiscal 2017 total.

The Bipartisan Budget Act that President Obama signed on Dec. 17 modified the caps on defense and nondefense funding for fiscal 2016 that were established by the 2011 Budget Control Act, which introduced the threat of a sequester. The new law reset those limits to a total of $1,066.6 billion—$548.1 billion for defense programs and $518.5 billion for nondefense programs.

Under current law, CBO noted, “the reductions in the caps for defense programs will be proportionately larger than the reductions in the caps for nondefense programs. By CBO’s estimate, the defense cap will shrink by $54 billion each year, a cut that amounts to 8.9 percent in 2018 and slightly smaller percentages in subsequent years. The nondefense cap will shrink by $37 billion in 2018, which represents a cut of 6.8 percent, and by similar amounts (and smaller percentages) in later years.” How those reductions are apportioned among the various budget accounts will be determined by future appropriations acts.

The Pentagon gained $58.8 billion for overseas contingency operations. Domestic agencies gained $14.9 billion for overseas contingency operations, $7.1 billion for disaster relief, $1.5 billion for program integrity initiatives related to Medicare and to the Disability Insurance and Supplemental Security Income programs, and $700 million for emergency funding for managing forest fires, CBO noted.

One area that might put the caps at risk of being violated is disaster relief—given the massive flooding that hit communities along the Mississippi River in the past few days.

For 2016, the report noted, lawmakers designated $7.1 billion in appropriations for disaster relief— some $4 billion lower than the average expenditure for the past decade and $7 billion less than the maximum potential amount CBO projected might be needed based on previous years’ experience up to a statutory cap.

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