Search

Sequestration explained

What is "sequestration", the procedure of sequester that is rarely talked about by the media but has a great effect on the federal government's annual budget? There are two particular statutes of interest:

1) Statutory Pay-As-You-Go (PAYGO) Act of 2010

2) Budget Control Act of 2011 (BCA)


The PAYGO Act of 2010 essentially requires that, on net, enacted legislation does not increase projected deficits. There are various ways around it, like using projected revenue (pass a tax cut, make unfounded claims that the cuts will stimulate X% growth, and use that growth in tax revenue as a justification for the tax cut), the reconciliation process, and the fact that PAYGO only goes into effect at the end of the fiscal year, so you can pass a tax cut or a spending allocation, have it go into effect, and then have to deal with PAYGO at the end of the year, at which point a vote may be held to pass legislation to wipe the slate clean and start over. So there is a limit to the effectiveness in practice.


The BCA, which is an amendment to the Budget Control and Emergency Deficit Control Act of 1985 (BBEDCA), required a joint committee to negotiate an agreement to cut the deficit. When the committee failed to come to an agreement, a backup plan built into the law enacted "sequestration", whereby automatic spending cuts for both non-mandatory and mandatory spending (not counting some specific programs like Social Security, but does include Medicare and the military), went into effect for the 2013-2021 budgets. However, Congress has not allowed this to actually happen for each of those budget years. Instead, 4 times they have voted to raise the cap and suspend the deficit reduction requirements. For reference:


https://budget.house.gov/publications/report/FAQs-on-Sequester-An-Update-for-2020


https://www.americanprogress.org/issues/economy/reports/2017/08/28/437873/potential-impact-paygo-rules-tax-legislation/


https://www.cbo.gov/publication/56506

0 views0 comments

Recent Posts

See All

So against the backdrop of rising debt, where do we go in order to combat this problem? The Democrat solution to raise taxes? Except they just spend more. The Republicans solution to cut taxes to "sti

The United States national debt is the quiet crisis affecting our nation. Very little attention is paid to the issue on a day to day basis, lip service is provided to it by either political party only