OMB Report Pursuant to theSequestration Transparency Act of 2012(P. L. 112–155)
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Introduction
The Sequestration Transparency Act o 2012 (STA) (P.L. 112-155) requires the Presidentto submit to Congress a report on the potential sequestration triggered by the ailure o theJoint Select Committee on Decit Reduction to propose, and Congress to enact, a plan to re-duce the decit by $1.2 trillion, as required by the Budget Control Act o 2011 (BCA). In re-sponse, the Oce o Management and Budget (OMB) is issuing this report based on assump-tions required by the STA. The report provides Congress with a breakdown o exempt andnon-exempt budget accounts, an estimate o the unding reductions that would be requiredacross non-exempt accounts, an explanation o the calculations in the report, and additionalinormation on the potential implementation o the sequestration.In August 2011, bipartisan majorities in both the House and Senate voted or the threato sequestration as a mechanism to orce Congress to act on urther decit reduction. Thespecter o harmul across-the-board cuts to deense and nondeense programs was intendedto drive both sides to compromise. The sequestration itsel was never intended to be imple-mented. The Administration strongly believes that sequestration is bad policy, and that Con-gress can and should take action to avoid it by passing a comprehensive and balanced decitreduction package. As the Administration has made clear, no amount o planning can mitigate the eect o these cuts. Sequestration is a blunt and indiscriminate instrument. It is not the respon-sible way or our Nation to achieve decit reduction. The President has already presentedtwo proposals or balanced and comprehensive decit reduction. It is time or Congress toact. Members o Congress should work together to produce a balanced plan that achieves atleast the level o decit reduction agreed to in the BCA that the President can sign to avoidsequestration. The Administration stands ready to work with Congress to get the job done.The estimates and classications in the report are preliminary. I the sequestration wereto occur, the actual results would dier based on changes in law and ongoing legal, budgetary,and technical analysis. However, the report leaves no question that the sequestration wouldbe deeply destructive to national security, domestic investments, and core government unc-tions. Under the assumptions required by the STA, the sequestration would result in a 9.4percent reduction in non-exempt deense discretionary unding and an 8.2 percent reductionin non-exempt nondeense discretionary unding. The sequestration would also impose cutso 2.0 percent to Medicare, 7.6 percent to other non-exempt nondeense mandatory programs,and 10.0 percent to non-exempt deense mandatory programs.The percentage cuts in this report, and the identication o exempt and non-exempt ac-counts, refect the requirements o the laws that the Administration is applying. With thesingle exception o military personnel accounts, the Administration cannot choose which pro-grams to exempt, or what percentage cuts to apply. These matters are dictated by a detailedstatutory scheme. The Administration does not support these cuts, but unless Congress actsresponsibly, there will be no choice but to implement them.On two separate occasions, the President has put orward proposals to responsibly avoidthese arbitrary cuts: rst, in the President’s Plan or Economic Growth and Decit Reductionthat was presented to the Joint Committee in September 2011, and second, in the President’sscal year (FY) 2013 Budget. Both o these plans made tough choices to reduce the decitwith a balanced package o spending cuts and revenue increases, with the FY 2013 Budgetproposing $2.50 in spending cuts or every $1 in new revenue. Both plans included over $4trillion in decit reduction, including the decit reduction in the BCA itsel, ar exceeding theamount that would have been required o the Joint Committee to avoid sequestration. Impor-
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