3 Center for American Progress | Why One Simple Fix Would Dramatically Reduce the Sequester
Te nondeense sequeser is no allocaed evenly wihin he domesic budge. Forunaely, many programs ha orm he oundaion o American reiremen securiy and he social saey ne are proeced compleely, such as Social Securiy, Medicaid, and he Supplemenal Nuriion Assisance Program, or SNAP, commonly known as ood samps.
Medicare and some oher ederal healh programs are also parially proeced by limiing he sequeser cus o 2 percen.
Any sequeser cus ha exceed his 2 percen hreshold are reallocaed o he res o he domesic budge, meaning exra cus.
As a resul, he sequeser has made paricularly deep cus o invesmens in educaion, scieniﬁc research, and inrasrucure, which all ino he broad caegory o nondeense discreionary spending.Since he nondeense discreionary budge is hi hardes by he nondeense sequeser, i also beneﬁs mos rom reducing he sequeser. I he ﬁscal cliﬀ savings are included in he sequeser calculaion, he nondeense sequeser becomes an across-he-board cu o 1.82 percen. Ta delivers a small amoun o relie o Medicare, bu Medicare cus were already limied o 2 percen. Te bigges impac is in he nondeense dis-creionary budge. While he sequeser is currenly se o cu abou $37 billion rom nondeense discreionary spending,
accouning or he ﬁscal cliﬀ savings reduces he sequeser cus o $9 billion. Accouning or he savings in he ﬁscal cliﬀ deal reduces he nondeense discreionary sequeser by 75 percen, while he overall sequeser is reduced by 61 percen. Ta means Congress can allocae $28 billion o preven more cus o job raining, schools, ranspora-ion, and wherever else hose unds are mos needed wihin he nondeense discreionary budge o ge our economy back on rack.
Caluclating the 2014 sequester under current law and with fiscal cliff savings included
Note: All figures in billions of dollars. Totals may not add up due to rounding.
Current lawIncluding fiscal cliff
Start with $1.2 trillion in required deﬁcit reduction$1,200.00$1,200.00
Subtract enacted deﬁcit reduction (in current law, only super committee savings is counted)0.00737.001,200.00463.00
Deduct 18 percent for debt service savings, leaving 82 percent in required program cuts984.00379.66
Divide by nine to calculate annual reductions109.3342.18
Split reductions 50/50 between defense and nondefense functions
Sources: Oﬃce of Management and Budget; Jeﬀ Zients, “American Taxpayer Relief Act Reduces Deﬁcits by $737 Billion,” The White House blog, January 1, 2013.