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OMB Report

OMB Report

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Published by Rebecca Berg

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Published by: Rebecca Berg on Sep 14, 2012
Copyright:Attribution Non-commercial

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01/18/2013

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OMB Report Pursuant to theSequestration Transparency Act of 2012(P. L. 112–155)
 
1
Introduction
The Sequestration Transparency Act of 2012 (STA) (P.L. 112-155) requires the Presidentto submit to Congress a report on the potential sequestration triggered by the failure of theJoint Select Committee on Deficit Reduction to propose, and Congress to enact, a plan to re-duce the deficit by $1.2 trillion, as required by the Budget Control Act of 2011 (BCA). In re-sponse, the Office of Management and Budget (OMB) is issuing this report based on assump-tions required by the STA. The report provides Congress with a breakdown of exempt andnon-exempt budget accounts, an estimate of the funding reductions that would be requiredacross non-exempt accounts, an explanation of the calculations in the report, and additionalinformation on the potential implementation of the sequestration.In August 2011, bipartisan majorities in both the House and Senate voted for the threatof sequestration as a mechanism to force Congress to act on further deficit reduction. Thespecter of harmful across-the-board cuts to defense and nondefense programs was intendedto drive both sides to compromise. The sequestration itself 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 deficitreduction package. As the Administration has made clear, no amount of planning can mitigate the effect of these cuts. Sequestration is a blunt and indiscriminate instrument. It is not the respon-sible way for our Nation to achieve deficit reduction. The President has already presentedtwo proposals for balanced and comprehensive deficit reduction. It is time for Congress toact. Members of Congress should work together to produce a balanced plan that achieves atleast the level of deficit 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 classifications in the report are preliminary. If the sequestration wereto occur, the actual results would differ 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 func-tions. Under the assumptions required by the STA, the sequestration would result in a 9.4percent reduction in non-exempt defense discretionary funding and an 8.2 percent reductionin non-exempt nondefense discretionary funding. The sequestration would also impose cutsof 2.0 percent to Medicare, 7.6 percent to other non-exempt nondefense mandatory programs,and 10.0 percent to non-exempt defense mandatory programs.The percentage cuts in this report, and the identification of exempt and non-exempt ac-counts, reflect the requirements of the laws that the Administration is applying. With thesingle exception of 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 forward proposals to responsibly avoidthese arbitrary cuts: first, in the President’s Plan for Economic Growth and Deficit Reductionthat was presented to the Joint Committee in September 2011, and second, in the President’sfiscal year (FY) 2013 Budget. Both of these plans made tough choices to reduce the deficitwith a balanced package of spending cuts and revenue increases, with the FY 2013 Budgetproposing $2.50 in spending cuts for every $1 in new revenue. Both plans included over $4trillion in deficit reduction, including the deficit reduction in the BCA itself, far exceeding theamount that would have been required of the Joint Committee to avoid sequestration. Impor-

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