What is sequestration?

Sequestration — or, more precisely, the "________ sequestration" — is a group of ____ to ______ spending that took effect ____ 1. More accurately, it's the term for the budgetary ____ through which those cuts are _______.

What is sequestration?

Sequestration — or, more precisely, the "supercommittee sequestration" — is a group of cuts to federal spending that took effect March 1. More accurately, it's the term for the budgetary method through which those cuts are implemented.

Where did it come from?

The supercommittee sequestration was originally passed as part of the ____ Control Act of 2011 (BCA), better known as the ___ ceiling _______.

It was intended to serve as _____ for the Joint Select Committee on Deficit Reduction (aka the "Supercommittee") to come to a deal to cut $___ trillion over __ years. If the committee had done so, and Congress had passed it by ___  __, 2011, then the sequestration would have been ____.

Obviously, that didn't happen.

Where did it come from?

The supercommittee sequestration was originally passed as part of the Budget Control Act of 2011 (BCA), better known as the debt ceiling compromise.

It was intended to serve as incentive for the Joint Select Committee on Deficit Reduction (aka the "Supercommittee") to come to a deal to cut $1.5 trillion over 10 years. If the committee had done so, and Congress had passed it by Dec. 23, 2011, then the sequestration would have been averted.

Obviously, that didn't happen.

Wasn't this supposed to happen at New Year's?

Yes. The Budget Control Act originally stipulated that the supercommittee sequestration cuts would take effect at the beginning of 2013. Together with the expiration of the Bush tax cuts and the payroll tax cut, this would have amounted to a giant fiscal contraction, almost certainly throwing the United States into another recession. The combination of policies came to be known as "the fiscal cliff."

A deal was reached to avert the cliff, in which the sequestration was delayed to March 1.

Wasn't this supposed to happen at New Year's?

Yes. The Budget Control Act originally stipulated that the supercommittee sequestration cuts would take effect at the beginning of 2013. Together with the expiration of the Bush tax cuts and the payroll tax cut, this would have amounted to a giant fiscal contraction, almost certainly throwing the United States into another recession. The combination of policies came to be known as "the fiscal cliff."

A deal was reached to avert the cliff, in which the sequestration was delayed to March 1.

What gets cut?

The supercommittee sequestration cuts are evenly split between domestic and defense programs, with half affecting defense discretionary spending (weapons purchases, base operations, construction work, etc.) and the rest affecting both mandatory (which generally means regular payouts like Social Security or Medicaid) and discretionary domestic spending.

Only a few mandatory programs, like the unemployment trust fund and, most notably, Medicare (more specifically its provider payments) are affected. The bulk of cuts are borne by discretionary spending for either defense or domestic functions.

What gets cut?

The supercommittee sequestration cuts are evenly split between domestic and defense programs, with half affecting defense discretionary spending (weapons purchases, base operations, construction work, etc.) and the rest affecting both mandatory (which generally means regular payouts like Social Security or Medicaid) and discretionary domestic spending.

Only a few mandatory programs, like the unemployment trust fund and, most notably, Medicare (more specifically its provider payments) are affected. The bulk of cuts are borne by discretionary spending for either defense or domestic functions.

What is exempted?

Most mandatory programs, like Medicaid and Social Security, and in particular low-income programs like Temporary Assistance for Needy Families (TANF, or welfare) and the Supplemental Nutritional Assistance Program (SNAP, or food stamps) were exempt from supercommittee sequestration. However some low-income programs, most notably Section 8 housing vouchers, aid for Women, Infants, and Children (WIC) and the Low Income Home Energy Assistance Program (LIHEAP), are subject to cuts.

What is exempted?

Most mandatory programs, like Medicaid and Social Security, and in particular low-income programs like Temporary Assistance for Needy Families (TANF, or welfare) and the Supplemental Nutritional Assistance Program (SNAP, or food stamps) were exempt from supercommittee sequestration. However some low-income programs, most notably Section 8 housing vouchers, aid for Women, Infants, and Children (WIC) and the Low Income Home Energy Assistance Program (LIHEAP), are subject to cuts.

How much gets cut?

The 2013 supercommittee sequestration includes:

• $42.7 billion in defense cuts (a 7.7 percent cut).

• $26.1 billion in domestic discretionary cuts (a 5.1 percent cut).

• $11.1 billion in Medicare cuts (a 2 percent cut).

• $5.4 billion in other mandatory cuts (a 5.2 percent cut).

That makes for a total of $85.3 billion in cuts.

How much gets cut?

The 2013 supercommittee sequestration includes:

• $42.7 billion in defense cuts (a 7.7 percent cut).

• $26.1 billion in domestic discretionary cuts (a 5.1 percent cut).

• $11.1 billion in Medicare cuts (a 2 percent cut).

• $5.4 billion in other mandatory cuts (a 5.2 percent cut).

That makes for a total of $85.3 billion in cuts.

Is the supercommittee sequestration the only set of across-the-board cuts?

Nope! In addition to the "supercommittee sequestration" described above, there's the "cap sequestration." The Budget Control Act of 2011 set caps on discretionary spending going forward, which took effect regardless of the supercommittee's outcome. If the caps are exceeded, spending is cut across the board in a manner very similar to the supercommittee sequestration process, but the intention was for policymakers to keep spending under the caps on their own, preventing across-the-board cuts.

In fiscal year 2013, that's what happened: a full-year appropriations bill was approved that kept spending below the cap levels, so the cap sequestration did not take effect.

Is the supercommittee sequestration the only set of across-the-board cuts?

Nope! In addition to the "supercommittee sequestration" described above, there's the "cap sequestration." The Budget Control Act of 2011 set caps on discretionary spending going forward, which took effect regardless of the supercommittee's outcome. If the caps are exceeded, spending is cut across the board in a manner very similar to the supercommittee sequestration process, but the intention was for policymakers to keep spending under the caps on their own, preventing across-the-board cuts.

In fiscal year 2013, that's what happened: a full-year appropriations bill was approved that kept spending below the cap levels, so the cap sequestration did not take effect.

Is the 2014 sequestration like the one this past year?

Nope! In 2014 through 2021, the "supercommittee sequestration" operates on discretionary sspending by lowering the BCA's (Budget Control Act)  budget caps below where they'd be if the supercommittee had reached a deal. The distinction between "security" and "nonsecurity" spending is also junked in favor of a defense/non-defense distinction, with half of cuts going to each category. For Medicare and other non-exempt mandatory spending, the supercommittee sequestration works the same as it did in fiscal year 2013.

From 2014 to 2021, the caps — including the supercommittee-related reductions in cap levels — will cut $109.3 billion annually. Whether that is achieved by across-the-board reductions or targeted cuts is up to Congress.

Is the 2014 sequestration like the one this past year?

Nope! In 2014 through 2021, the "supercommittee sequestration" operates on discretionary sspending by lowering the BCA's (Budget Control Act)  budget caps below where they'd be if the supercommittee had reached a deal. The distinction between "security" and "nonsecurity" spending is also junked in favor of a defense/non-defense distinction, with half of cuts going to each category. For Medicare and other non-exempt mandatory spending, the supercommittee sequestration works the same as it did in fiscal year 2013.

From 2014 to 2021, the caps — including the supercommittee-related reductions in cap levels — will cut $109.3 billion annually. Whether that is achieved by across-the-board reductions or targeted cuts is up to Congress.

Does the cap sequestration exclude low-income programs too?

For the most part, yes. With a handful of exceptions — to whit special health programs, health centers and the Indian Health Service and administrative expenses of Supplemental Security Income (SSI), which are subject to caps but not the supercommittee sequestration — the cap sequestration exempts all the same categories as the supercommittee sequestration. The cap sequestration's exemption rules apply for all cuts from 2014 to 2021, as both sequestrations are implemented through caps during that period.

Does the cap sequestration exclude low-income programs too?

For the most part, yes. With a handful of exceptions — to whit special health programs, health centers and the Indian Health Service and administrative expenses of Supplemental Security Income (SSI), which are subject to caps but not the supercommittee sequestration — the cap sequestration exempts all the same categories as the supercommittee sequestration. The cap sequestration's exemption rules apply for all cuts from 2014 to 2021, as both sequestrations are implemented through caps during that period.

Does the cap sequestration exclude low-income programs too?

For the most part, yes. With a handful of exceptions — to whit special health programs, health centers and the Indian Health Service and administrative expenses of Supplemental Security Income (SSI), which are subject to caps but not the supercommittee sequestration — the cap sequestration exempts all the same categories as the supercommittee sequestration. The cap sequestration's exemption rules apply for all cuts from 2014 to 2021, as both sequestrations are implemented through caps during that period.

Does the cap sequestration exclude low-income programs too?

For the most part, yes. With a handful of exceptions — to whit special health programs, health centers and the Indian Health Service and administrative expenses of Supplemental Security Income (SSI), which are subject to caps but not the supercommittee sequestration — the cap sequestration exempts all the same categories as the supercommittee sequestration. The cap sequestration's exemption rules apply for all cuts from 2014 to 2021, as both sequestrations are implemented through caps during that period.

Will any programs actually end?

Nope. As we mentioned, the sequestration cuts discretionary spending across-the-board by $109.3 billion a year from 2014-2021 and $85.3 billion in 2013. But no programs are actually eliminated. The effect is to reduce the scale and scope of existing programs rather than to zero out any of them.

Will any programs actually end?

Nope. As we mentioned, the sequestration cuts discretionary spending across-the-board by $109.3 billion a year from 2014-2021 and $85.3 billion in 2013. But no programs are actually eliminated. The effect is to reduce the scale and scope of existing programs rather than to zero out any of them.

Will military personnel see their pay or benefits cut?

Pay: no. Benefits: yes. While military salaries are exempt from sequestration, benefits like tuition assistance and the TRICARE program (which provides health care to personnel and their families, among others) are not.

Will military personnel see their pay or benefits cut?

Pay: no. Benefits: yes. While military salaries are exempt from sequestration, benefits like tuition assistance and the TRICARE program (which provides health care to personnel and their families, among others) are not.

Will federal employee salaries get cut?

Technically, no, but effectively, yes. The Congressional Research Service has written that a sequestration may not "reduce or have the effect of reducing the rate of pay an employee is entitled to" under their federal pay scale. However, the sequestration caused furloughs, which amount to unpaid time off, or, basically, a pay cut.

Will federal employee salaries get cut?

Technically, no, but effectively, yes. The Congressional Research Service has written that a sequestration may not "reduce or have the effect of reducing the rate of pay an employee is entitled to" under their federal pay scale. However, the sequestration caused furloughs, which amount to unpaid time off, or, basically, a pay cut.

Will unemployment insurance be affected?

Partly yes, partly no. The regular unemployment insurance program, which is administered at the state level and paid for with state taxes on employers, is exempt. But Emergency Unemployment Compensation, an extension of the regular program enacted on June 30, 2008 to combat the recession, is not exempt, and is getting cut to the tune of $2.4 billion. The National Employment Law Project (NELP) has a good rundown of the state-by-state impact of those cuts here. As Catherine Rampell at the New York Times wrote, "[NELP] estimates that upward of 3.8 million unemployed workers will ultimately be affected by the cuts. The average weekly benefit check of $289 is being cut by $43, or about 15 percent."

Will unemployment insurance be affected?

Partly yes, partly no. The regular unemployment insurance program, which is administered at the state level and paid for with state taxes on employers, is exempt. But Emergency Unemployment Compensation, an extension of the regular program enacted on June 30, 2008 to combat the recession, is not exempt, and is getting cut to the tune of $2.4 billion. The National Employment Law Project (NELP) has a good rundown of the state-by-state impact of those cuts here. As Catherine Rampell at the New York Times wrote, "[NELP] estimates that upward of 3.8 million unemployed workers will ultimately be affected by the cuts. The average weekly benefit check of $289 is being cut by $43, or about 15 percent."

What about our national parks?

Yup, they get cut too. The U.S. Park Police, a division of the National Parks Service, experienced furloughs. Yellowstone cut payroll. The House Natural Resources committee has a good rundown of all the cuts here.

What about our national parks?

Yup, they get cut too. The U.S. Park Police, a division of the National Parks Service, experienced furloughs. Yellowstone cut payroll. The House Natural Resources committee has a good rundown of all the cuts here.

What will this do to the economy?

The CBO estimates that reversing the sequestration would add 0.7 points to GDP growth next year, and 0.6 points this year. Macroeconomic Advisers  estimated that it would shave off 0.6 points from 2013's growth rate (see above chart). Fuller's estimates are more dramatic, putting the loss of 2013 GDP at $158.2 billion, reducing the growth rate of GDP by a full point. Third Way estimates that the sequestration will reduce GDP by $179.6 billion next year, leading to about a 1.1 point reduction in growth.

So it's fair to say that the sequestration cuts growth by somewhere between 0.6 and 1.1 points. Given that quarter 2 GDP growth was 2.5 percent, that amounts a cut in the rate of growth of 20-30 percent, which is hardly trivial.

What will this do to the economy?

The CBO estimates that reversing the sequestration would add 0.7 points to GDP growth next year, and 0.6 points this year. Macroeconomic Advisers  estimated that it would shave off 0.6 points from 2013's growth rate (see above chart). Fuller's estimates are more dramatic, putting the loss of 2013 GDP at $158.2 billion, reducing the growth rate of GDP by a full point. Third Way estimates that the sequestration will reduce GDP by $179.6 billion next year, leading to about a 1.1 point reduction in growth.

So it's fair to say that the sequestration cuts growth by somewhere between 0.6 and 1.1 points. Given that quarter 2 GDP growth was 2.5 percent, that amounts a cut in the rate of growth of 20-30 percent, which is hardly trivial.

What does Obama want to do about it?

President Obama wants to replace the sequestration with small cuts to discretionary spending, big cost reductions to Medicare and other health programs, using chained CPI for tax bracket adjustments and Social Security cost-of-living adjustments, and a new limit on tax expenditures for wealthy taxpayers.

What does Obama want to do about it?

President Obama wants to replace the sequestration with small cuts to discretionary spending, big cost reductions to Medicare and other health programs, using chained CPI for tax bracket adjustments and Social Security cost-of-living adjustments, and a new limit on tax expenditures for wealthy taxpayers.

What do Democrats in Congress want to do about it?

Before March 1, House Democrats, led by Budget Committee ranking member Chris Van Hollen, proposed replacing the $85 billion in 2013 sequester cuts with a mix of tax increases — including a "Buffett rule"-style minimum tax on income above $1 million and repeal of tax subsidies for oil companies — and spending cuts, notably including a reduction in farm subsidy payments to farmers and an increase in flood insurance premiums. Most of these policies would be spread over a decade rather than falling entirely in 2013.

Senate Democrats, led by Budget Committee Chairwoman Patty Murray, introduced the American Family Economic Protection Act, which replaces the 2013 sequester with $110 billion in spending cuts and tax increases, spread out over the course of a decade. Like the House plan, these policies include a "Buffett rule," the closure of tax loopholes for oil companies and cuts to farm subsidies. Additionally, the Senate bill cuts military spending in excess of the sequester's cuts.

Now that the sequestration is actually in effect, Congressional Democrats have become more accepting of its spending levels. The Senate continuing resolution that House Republicans rejected, leading to the government shutdown, spends $986 billion on discretionary programs. Post-sequestration discretionary spending in fiscal year 2014 would be about $966 billion. Especially given that President Obama's budget envisioned more like $1.2 trillion in discretionary spending, it's fair to say that Congressional Democrats have moved very far toward accepting sequestration levels.

That said, now that the government is shut down, Democrats are looking to boost discretionary spending above the $986 billion level.

What do Democrats in Congress want to do about it?

Before March 1, House Democrats, led by Budget Committee ranking member Chris Van Hollen, proposed replacing the $85 billion in 2013 sequester cuts with a mix of tax increases — including a "Buffett rule"-style minimum tax on income above $1 million and repeal of tax subsidies for oil companies — and spending cuts, notably including a reduction in farm subsidy payments to farmers and an increase in flood insurance premiums. Most of these policies would be spread over a decade rather than falling entirely in 2013.

Senate Democrats, led by Budget Committee Chairwoman Patty Murray, introduced the American Family Economic Protection Act, which replaces the 2013 sequester with $110 billion in spending cuts and tax increases, spread out over the course of a decade. Like the House plan, these policies include a "Buffett rule," the closure of tax loopholes for oil companies and cuts to farm subsidies. Additionally, the Senate bill cuts military spending in excess of the sequester's cuts.

Now that the sequestration is actually in effect, Congressional Democrats have become more accepting of its spending levels. The Senate continuing resolution that House Republicans rejected, leading to the government shutdown, spends $986 billion on discretionary programs. Post-sequestration discretionary spending in fiscal year 2014 would be about $966 billion. Especially given that President Obama's budget envisioned more like $1.2 trillion in discretionary spending, it's fair to say that Congressional Democrats have moved very far toward accepting sequestration levels.

That said, now that the government is shut down, Democrats are looking to boost discretionary spending above the $986 billion level.

What do Republicans in Congress want to do about it?

As part of John Boehner's "plan B" approach to avoiding the fiscal cliff (embarked upon after initial talks with the White House broke down), the House on Dec. 20, 2012, passed the Spending Reduction Act of 2012. The plan would have replaced the 2013 defense sequester with a variety of spending cuts, including cuts to food stamps, the Affordable Care Act and Dodd-Frank (including eliminating the "orderly liquidation authority" at the center of the legislation). It would have reduced the size of the domestic sequester in proportion to the $19 billion in discretionary savings included in the bill.

Republicans have conceded that they won't be able to pass the bill again, even in the House, but it provides a model for what Republicans want in a temporary replacement: no tax increases, no defense cuts and considerable domestic spending reductions. Indeed, as recently as August 30 Boehner was touting it and the very similar Sequester Replacement Reconciliation Act as sequestration replacements that the Senate and president should take up.

What do Republicans in Congress want to do about it?

As part of John Boehner's "plan B" approach to avoiding the fiscal cliff (embarked upon after initial talks with the White House broke down), the House on Dec. 20, 2012, passed the Spending Reduction Act of 2012. The plan would have replaced the 2013 defense sequester with a variety of spending cuts, including cuts to food stamps, the Affordable Care Act and Dodd-Frank (including eliminating the "orderly liquidation authority" at the center of the legislation). It would have reduced the size of the domestic sequester in proportion to the $19 billion in discretionary savings included in the bill.

Republicans have conceded that they won't be able to pass the bill again, even in the House, but it provides a model for what Republicans want in a temporary replacement: no tax increases, no defense cuts and considerable domestic spending reductions. Indeed, as recently as August 30 Boehner was touting it and the very similar Sequester Replacement Reconciliation Act as sequestration replacements that the Senate and president should take up.

How does it relate to the shutdown?

Talks around the shutdown have increasingly centered on how to replace sequestration spending levels. Republicans are refusing to embrace any plan that raises discretionary spending above $988 billion this coming year, while Democrats are pushing for funding closer to pre-sequestration levels.

How does it relate to the shutdown?

Talks around the shutdown have increasingly centered on how to replace sequestration spending levels. Republicans are refusing to embrace any plan that raises discretionary spending above $988 billion this coming year, while Democrats are pushing for funding closer to pre-sequestration levels.