House of Representatives Budget Resolution for FY2013

1
House of RepresentativesBudget Resolution for
FY2013
2

• On March 23 Chairman of the House Budget
  Committee, Paul Ryan (R-WI) introduced
• H. Con. Res. 112
• CONCURRENT RESOLUTION
• ON THE BUDGET--
• FISCAL YEAR 2013

3

• On March 23 House Budget Committee reported the
  measure to the full House on a vote of 19-18.
• Two Republicans on the Budget Committee voted
  not, Huelskamp and Amash, because the resolution
  did not go far enough in cutting spending.

4

• On March 29 the Full House Passed
• H. Con. Res 112 by a vote of
• 228 to 191

5

• What policy recommendations are contained in
• H. Con. Res. 112?
• How do these recommendations fit into the Budget
  Control Act and what the President recommended in
  February?

6
H. Con. Res. 112 House Concurrent Budget
Resolution for FY2013

• Sets a FY 2013 discretionary budget cap
• lower than the one set by the Budget Control Act

7
H. Con. Res. 112 House Concurrent Budget
Resolution for FY2013

• Cancels the January 2013, BCA-mandated
  sequester of discretionary and mandatory spending
  in order to shield defense spending from cuts.

8
H. Con. Res. 112 House Concurrent Budget
Resolution for FY2013

• Sequestration is replaced with cuts to
  non-defense discretionary and mandatory spending
  (which would be accomplished through budget
  reconciliation).

9
H. Con. Res. 112 House Concurrent Budget
Resolution for FY2013

• Calls for reforming state grant programs, with
  Medicaid and the Supplemental Nutrition
  Assistance Program (SNAP) specifically identified
  for possible conversion to block grants.

10
H. Con. Res. 112 House Concurrent Budget
Resolution for FY2013

• It also calls for a deficit-neutral overhaul of
  the tax code, with two personal income tax rates
  replacing the current structure and the repeal of
  unspecified tax preferences.
• It also would reduce the top corporate tax rate.

11
H. Con. Res. 112 House Concurrent Budget
Resolution for FY2013

• April 3, President Obama characterized
• the Ryan budget as
• Social Darwinism .
• The survival of the fittest basically at the
  expense of others.

12
Behind the NumbersHow Does All This Work
Together?

• House Budget
• Senate Budget
• Presidents Budget
• Budget Control Act
• Sequestration
• Reconciliation
• Appropriations

13
The Congressional Budget Process
14
Congressional Budget Act of 1974
15
Congressional Budget Act of 1974

• Establishes A Timetable For Congress To Consider
  Bills
• 15th Day After A New Session Congress Begins
• President Submits Administration's Budget
• (Feb 2, 2012)

16
Congressional Budget Act of 1974

• Establishes A Timetable For Congress To Consider
  Bills
• April 15House And Senate Budget Committees
  Report Budget Resolution

17
Congressional Budget Act of 1974

• Establishes A Timetable For Congress To Consider
  Bills
• May 15Congress Completes Action On Budget
  Resolution

18
Congressional Budget Act of 1974

• September 15Congress completes action on bills
  and resolutions providing new budget authority
  and new spending authority.

19
Congressional Budget Act of 1974

• Establishes A Timetable For Congress To Consider
  Bills
• October 1Beginning of Fiscal Year

20
What Does A Budget Resolution Do?
21
What Does A Budget Resolution Do?
The Budget Resolution is a concurrent resolution,
meaning it is not sent to the President for
approval or disapproval. Does not have the force
of law. It is solely a Congressional mechanism
used to help both the House and Senate come to
agreement on overall spending and tax levels
prior to drafting of appropriation bills or
revenue measures for the upcoming fiscal year.
It also sets spending and revenue policies for
the next ten fiscal years.
22
What Is Contained In A Budget Resolution?
23
What Is Contained In A Budget Resolution?

• The amount, if any, of the surplus or the deficit
  in the budget

24
What Is Contained In A Budget Resolution?

• The recommended level of Federal revenues and the
  amount, if any, by which the aggregate level of
  Federal revenues should be increased or
  decreased.

25
What Is Contained In A Budget Resolution?

• The appropriate level of the public debt, and the
  amount, if any, by which the statutory limit on
  the public debt should be increased or decreased.
  

26
What Is Contained In A Budget Resolution?

• The appropriate level of total budget outlays and
  total budget authority.

27
What Is Contained In A Budget Resolution?

• May include reconciliation instructions
• (more on this later)

28
The Congressional Budget Process

• Once the House and Senate have agreed on a final
  version of the Budget Resolution, the House and
  Senate Appropriation Committees are given
  aggregate caps on discretionary spending.
• Called 302(a) allocations

29
The Congressional Budget Process

• 302(a) allocations represent the maximum amount
  budget authority contained in all appropriations
  bills in the upcoming Fiscal Year.
• Entitlement programs--often called direct
  spending or mandatory spending--do not get their
  budget authority through an appropriations bill
  and are therefore not covered by 302(a)
  allocations

30
The Congressional Budget Process

• 302(a) allocations are further divided up among
  the 12 appropriation subcommittees
• Called 302(b) allocations

31
The Congressional Budget Process

• 302(a) allocations are further divided up among
  the 12 appropriation subcommittees
• Called 302(b) allocations
• Each Subcommittee of the Appropriations Committee
  is responsible for making policy decisions on
  what programs to fund and what their funding
  levels are in order to comply with the 302(b)
  allocations

32
How is a Budget Resolution Different from the
Budget Control Act?
33
The Budget Control Act
Enacted in 2011 as part of the compromise to
raise the national debt Established the Joint
Select Committee on Deficit Reduction JSCDR goal
was to report a bill that would cut federal
deficit over 10 years by 1.2 trillion Establishe
d 302(a) caps in discretionary spending from
FY2013 until FY2021
34
The Budget Control Act

• It does not contain any provisions dealing with
  revenues
• Unless Congress acts the Budget Control Act would
  allow the Bush-era tax cuts to be reinstated in
  full
• It does not distinguish between programs
  considered a priority and those of lesser
  importance
• It contains no policy recommendation on how to
  achieve budget savings

35
The Budget Control Act

• Mandates that 50 percent of all discretionary
  spending cuts must come from the Defense
  Departments budget
• Mandatory and discretionary spending are cut
  proportionally
• Mandates sequestration starting with FY2013 and
  ending in 2021
• Exempted many, but not all, human service
  programs from sequestration

36
What is Sequestration?
January 2, 2013 sequestration is an
across-the-board cut in each non-exempt account
of both mandatory and discretionary spending that
occurs. Between FY2014 and FY2021 sequestration
applies only to discretionary spending. It was
included in the BCA as a incentive to the Joint
Select Committee on Deficit Reduction to avoid
that Committee not act.
37
What is Sequestration?
It was passed with the intention that it never
would happen. Today many members of Congress and
the Administration want to avoid sequestration
because it cuts priority programs as well as
non-priority programs by about 7.5 in January
2013.
38
How Sequestration Works
  The automatic spending reduction process
entails three key steps
39
How Sequestration Works

•  
• The amount of spending reduction required for
  each year is calculated and divided equally
  between two categoriesDefense and non-Defense
  categories

40
How Sequestration Works
  2. The annual amount of spending reductions
required each year in each of these categories is
further divided proportionally between
discretionary appropriations and direct spending
programs (excluding certain programs and
activities) within each category and
41
How Sequestration Works

•  
• The spending reductions required in each year
  (FY2013-FY2021) are achieved through a
  combination of sequestration and a downward
  adjustment of the revised discretionary spending
  limits.

42
Discretionary Spending Caps Post-Sequester(Bud
get Authority in Billions)

• FY2013
• Budget Control Act Pre Sequester 1,047
• Defense 546
• Non---Defense 501
• Sequester -98
• Defense -55
• Non-Defense -43
• Budget Control Act Post---Sequester 949
• Defense 491
• Non-Defense 458

43
302(a) Allocations in Budget Control Act
(In billions) Fiscal Year Original Limits on
all Discretionary 2013 1,047
44
302(a) Allocations in After Sequestration
(In billions) Fiscal Year Original Limits on
all Discretionary 2013 950
45
302(a) Allocations in H. Con Res. 112
(In billions) Fiscal Year Original Limits on
all Discretionary 2013 1,028
46
302(a) Allocations in H. Con Res. 112
(In billions) Fiscal Year Original Limits on
all Discretionary 2013 1,028
To achieve additional savings the House Budget
Resolution includes what are know as
reconciliation instructions
47
What is Reconciliation?
48
What is Reconciliation?
A special procedure to give expedited
consideration to bills enacting the spending,
revenue, and debt policies contained in the
budget resolution.
49
What is Reconciliation?
A special procedure to give expedited
consideration to bills enacting the spending,
revenue, and debt policies contained in the
budget resolution. In order to qualify for
these special expedited procedures, both the
House and Senate must agree on the same budget
resolution and it must include reconciliation
instructions.
50
What is Reconciliation?
To trigger these expedited procedures, the budget
resolution must include reconciliation
instructions calling on specific committees to
achieve specified amounts of savings in programs
within their jurisdictions.
51
What is Reconciliation?
The Budget Resolution may include specific
recommendations on how to achieve savings, or
raise revenues. However these are only
recommendations. The committees of
jurisdiction choose which programs to address and
which policies to adopt. They are required to
specific changes to current law to their Budget
Committee.
52
What is Reconciliation?
A reconciliation bill is a way for Congress to
review and amend entitlement programs to reduce
spending that otherwise would not happen.
53
What is Reconciliation?
A reconciliation cannot be filibuster in the
Senate so it is a very power tool that can be
used to break the normal Congressional deadlock.
54
Budget Resolution
House Appropriations Committee 302(a) Caps
Senate Appropriations Committee 302(a) Caps
House Appropriations Subcommittee 302(b) Caps
Senate Appropriations Subcommittee 302(b) Caps

• Agriculture
• Commerce, Justice Science
• Defense
• Energy Water Development
• Financial Services
• Homeland Security
• Interior, Environment
• Labor, HHS, Education
• Legislative Branch
• Military Construction, VA
• State Foreign Operations
• Transportation, HUD

• Agriculture
• Commerce, Justice Science
• Defense
• Energy Water Development
• Financial Services
• Homeland Security
• Interior, Environment
• Labor, HHS, Education
• Legislative Branch
• Military Construction, VA
• State Foreign Operations
• Transportation, HUD

Conference Committees, Draft Compromise Bills
Final Appropriation Bills
55
Budget Resolution
Reconciliation Instructions

• Agriculture
• Energy and Commerce
• Financial Services
• Judiciary
• Oversight Government
• Reform
• Ways and Means

• Agriculture
• Banking, Housing and Urban Affairs
• Commerce, Science and Transportation
• Energy and Natural Resources
• Finance
• Health and Education, Labor and Pensions
• Judiciary

House Budget Committee
Senate Budget Committee
Reconciliation Bill
Reconciliation Bill
House
Senate
Conference Committee Compromise Bill
House
Senate
President
56
What Does H. Con. Res. 112 Do?
57
What does the House Budget Resolution do?
House Budget FY2013 Outlays 3,624
billion Revenues 2,734 billion Deficit 797
billion Compared to the Presidents budget
proposal Outlays -187 billion Revenues -
7 billion Deficit -180 billion
58
What does the House Budget Resolution do?
House Budget FY2013 Outlays 3,624
billion Revenues 2,734 billion Deficit 797
billion Compared to the Presidents budget
proposal Outlays -187 Revenues -
7 Deficit -180 Includes Reconciliation
instructions
59
Chairman Paul Ryan

• The welfare reforms of the late 1990s are a
  success story of modern domestic policy, but they
  did not go as far as many think. Reformers were
  not able to extend their work beyond cash welfare
  to other means-tested programs. Notably, programs
  that subsidize food and housing for low-income
  Americans remain dysfunctional, and their
  explosive growth is threatening the overall
  strength of the safety net.  

60
Chairman Paul Ryan

• If the government continues running
  trillion-dollar deficits and experiences a debt
  crisis, the poor and vulnerable will undoubtedly
  be the hardest hit, as the Federal Governments
  only recourse will be severe, across-the-board
  cuts.
•  

61
H. Con. Res. 112Policy Recommendations
62
H. Con. Res. 112Policy Recommendations
Reduce Spending on the Low Income Home Energy
Assistance Program LIHEAP. Assumes the same
level of funding for LIHEAP in President Obamas
fiscal year 2013 budget request.
63
H. Con. Res. 112Policy Recommendations
Reduce Spending on the Low Income Home Energy
Assistance Program LIHEAP. . LIHEAP provides
low-income families with help to pay heating
bills. However, many states are providing
families with 1.00 in LIHEAP benefits in order
to increase SNAP benefits. This proposal would
eliminate that abuse.
64
H. Con. Res. 112Policy Recommendations
 Block Grant the Supplemental Nutrition
Assistance Program SNAP. Spending on
SNAPformerly known as the Food Stamp Programhas
increased dramatically over the past three years.
SNAP spending grew from 20.6 billion in 2002
to nearly 40 billion in 2008, and is projected
to be over 80 billion in 2012. While the
increase between 2008 and 2012 is partially due
to the recession, SNAP spending is forecast to be
permanently higher than previous estimates even
after employment has recovered.
65
H. Con. Res. 112Policy Recommendations
Block Grant the Supplemental Nutrition Assistance
Program A variety of factors are driving the
high growth in SNAP funding, but one major reason
is that while the States have the responsibility
of administering the program, they have little
incentive to ensure it is well run. The budget
resolution envisions converting SNAP into an
allotment tailored for each States low-income
population, indexed for inflation and
eligibility. This option would make no changes
to SNAP until 2016after employment has
recoveredproviding States with time to structure
their own programs.
66
H. Con. Res. 112Policy Recommendations
Block Grant the Supplemental Nutrition Assistance
Program It would also envision improving work
incentives by requiring a certain amount of
people to engage in work activity, such as job
search, community service activities and
education and job training. This proposal is
estimated to save 122.5 billion over 10 years.
67
H. Con. Res. 112Policy Recommendations
Eliminate Broad-Based Categorical
Eligibility Broad-based categorical eligibility
allows for households to be made eligible through
receiving a minimal Temporary Assistance for
Needy Families TANF fund benefit or service.
Typically, an individual is made eligible by
receiving a TANF brochure or being referred to a
social services 800 telephone number. This
allows individuals to qualify for SNAP benefits
under less restrictive criteria. For example, 40
states currently have no asset test for receiving
SNAP benefits.
68
H. Con. Res. 112Policy Recommendations
Reform Supplemental Security Income Welfare
programs typically pay benefits on a sliding
scale. However, SSI is different, paying an
average of 600 for each and every child in a
household that receives benefits. This reform
would create a sliding scale for children on
SSI.
69
H. Con. Res. 112Policy Recommendations
Reform Means-Tested Entitlements Congress
should act to reform means-tested entitlements.
These programs have grown rapidly over the past
10 years, and Congress should cap these programs
and begin devolving them to the States. This
would build upon the historic progress of
bipartisan welfare reform in the late 1990s.
These reforms transformed cash welfare by
encouraging work, limiting the duration of
benefits, and giving states more control over how
money was being spent. The TANF reforms of the
old Aid for Families with Dependent Children cut
welfare caseloads in half as poverty rates
declined.
70
H. Con. Res. 112Policy Recommendations
Terminate the Duplicative Social Services Block
Grant The Social Services Block Grant is an
annual payment sent to States without a matching
requirement to help achieve a range of social
goals, including child care, health services, and
employment services. Most of these are also
funded by other Federal programs. States are
given wide discretion to determine how to spend
this money and are not required to demonstrate
the outcomes of this spending, so there is no
evidence of its effectiveness. The budget
recommends eliminating this duplicative
spending.
71
H. Con. Res. 112Policy Recommendations
Medicaid Block Grant Medicaids flawed
financing structure has created rapidly rising
costs that are nearly impossible to check.
Mandate upon mandate has been foisted upon states
under the flawed premise that the best ideas for
repairing this important health care safety net
can come only from Washington. This budget ends
that misguided approach and instead converts the
federal share of Medicaid spending into a block
grant, thus freeing states to tailor their
Medicaid programs to the unique needs of their
own populations.
72
H. Con. Res. 112Policy Recommendations
Medicaid Reform Secure Medicaid benefits by
converting the federal share of Medicaid spending
into a block grant indexed for inflation and
population growth. This reform ends the misguided
one-size-fits-all approach that has tied the
hands of so many state governments. States will
no longer be shackled by federally determined
program requirements and enrollment criteria.
Instead, they will have the freedom and
flexibility to tailor Medicaid programs that fit
the needs of their unique populations.
73
H. Con. Res. 112Policy Recommendations
Medicare Reform For younger workers, when they
reach eligibility, Medicare will provide a
Medicare payment and a list of guaranteed
coverage options including a traditional
fee-for service option from which recipients
can choose a plan that best suits their needs.
This plan is called primum support. It is
similar to a plan first introduced by former head
of CBO Alice Rivlin. Medicare will provide
additional assistance for lower---income
beneficiaries and those with greater health care
needs.
74
H. Con. Res. 112Policy Recommendations

• Simplifying the Tax Code and Promoting Job
  Creation and Economic Growth
• Consolidate the current six individual income tax
  brackets into just two brackets of 10 and 25
  percent.
• Reduce the corporate rate to 25 percent. Repeal
  the Alternative Minimum Tax.
• Broaden the tax base to maintain revenue growth
  at a level consistent with current tax policy and
  at a share of the economy consistent with
  historical norms of 18 to 19 percent in the
  following decades.

75
What Does The House Budget Resolution Not Do?
76
What Does The House Budget Resolution Not Do?
Because the resolution is a concurrent
resolution, it does not have the force of law.
77
What Does The House Budget Resolution Not Do?
It requires the Senate to concur with
reconciliation before it can occur The House
could pass a bill that contains all of the
recommendations included in the budget.
However such a bill would not have the
protections built into reconciliation such as a
prohibition on against a filibuster.
78
What Does The House Budget Resolution Not Do?
Does not amend or eliminate the provisions of the
Budget Control Act, including sequestration.
79
What Does The House Budget Resolution Not Do?
It does NOT establish discretionary spending caps
(302(a)) allocations for the Senate. The House
will have to pass a resolution deeming that the
provisions of H. Con. Res. 112 are effective as
far as the House is concerned.
80
How Does The House Budget Resolution Work In
Conjunction With The Budget Control Act?
H. Con. Res. 112 contains language requiring the
Budget Committee to report a bill that eliminates
sequestration. However, that bill shall
include language making its application
contingent upon the enactment of a reconciliation
bill. Without a reconciliation bill
sequestration occurs on January 2, 2013
81
What about a Senate budget?
Senate Majority Leader Harry Reid (D-NV) has made
it clear on a number of occasions that he will
not bring a budget resolution to the floor of the
Senate.
82
What about a Senate budget?
It is the Majority Leaders position is that the
BCA sets discretionary spending levels and
therefore no new Budget Resolution is
necessary. He believes that when the House
agreed to pass the BCA they also agreed to the
spending levels contained in the bill. This
opinion is not shared by House Republicans who
view those caps as maximum spending levels, not
actual spending levels.
83
What about a Senate budget?
Since there is strong opposition to the
sequestration provisions of the BCA, it is highly
anticipated that some kind of substitute to
sequestration will be considered but only after
the November elections.
84
What Happens Next?
The House and Senate will each deem their
respective 302(a) allocations and work toward
drafting appropriation bills. No real effort to
pass a tax reform bill of any kind is expected
until after the November elections.
85
What Happens Next?
There will be no reconciliation bill, although
the House will produce a reconciliation-like bill
that will lack special procedural consideration.
It will not pass the Senate. If sequestration is
to be avoided, a bill will have to be enacted,
most likely after the elections. What replaces
sequestrations is impossible to predict this time.
86
What Role Does The Presidents Budget Play?
The House of Representatives voted on a
substitute budget resolution to replace the Ryan
budget with the President's budget. It failed on
a vote of 0-419. Democrats in the House claimed
the amendment, offered by Rep. Mick Mulvaney
(R-SC), a Republican, was nothing more than a
political gimmick to embarrass the
President. Nether the House nor the Senate will
use the President's recommendations in
considering appropriation bills, entitlement
reforms, or revenues measures.
87
What to expect for the rest of the year as
Congress tries to draft appropriations for
FY2013?
Do not expect any of the major recommendations
contained in either the President's budget or the
House Republican budget to be enacted in 2012.
88
What to expect for the rest of the year as
Congress tries to draft appropriations for
FY2013?
It will be difficult for the House and Senate
Appropriation Committees to find common ground.
It is highly likely that the Congress will
have to pass at least one, and maybe a series of
continuing resolutions to fund much of the
government.
89
What to expect for the rest of the year as
Congress tries to draft appropriations for
FY2013?
It is highly unlikely that any bill eliminating
sequestration will pass before November.
However, after the election, there is a very good
possibility that an alternative to sequestration
will be enacted.
90
What Happens In December?

• The Bush-era tax cuts expireadding 5 trillion
  in revenues to the US treasury over the next 10
  years
• Sequestration takes effect January 2, 2013 (98
  billion)
• The Social Security payroll tax break expires
  (100 billion)
• It is likely that Congress will have to increase
  the statutory debt limit
• Strong possibility that a continuing resolution
  to fund the government will need to be passed in
  December
• The current extension on unemployment benefits
  expire
• A new Congress, perhaps with different majorities
  in the House and Senate convenes on January 2,
  2013
• The President is sworn in on January 20, 2013

91
(No Transcript)
92
How To Calculate Spending Caps
93
How To Calculate Spending Caps

• Determine Revised Limits on Discretionary Sending
• Discretionary spending limits are established in
  BCA but are subject to revision

94
How To Calculate Spending Caps

• The revised limits on discretionary spending may
  fluctuate to accommodate
• Emergency requirements
• Appropriations for Overseas Contingency
  Operations/Global War on Terrorism
• Appropriations for continuing disability reviews
• Appropriations for controlling health care fraud
  and abuse
• Appropriations designed as being for disaster
  relief

95
How To Calculate Spending Caps

• Subtract estimated amount of saving from payments
  on interest from total amount of spending cuts
  i.e. 1.2 trillion

96
How To Calculate Spending Caps

• Subtract estimated amount of saving from payments
  on interest from total amount of spending cuts
  i.e. 1.2 trillion
• Estimated at 18
• 1,200,000,000,000 x .18 216,000,000,000
• 1,200,000,000,000 - 216,000,000,000
  984,000,000,000

97
How To Calculate Spending Caps

• Divide target amount equally between Defense and
  non-Defense spending
• 984,000,000,000 2 492,000,000,000 (over nine
  years)

98
How To Calculate Spending Caps

• Determine how much the deficit must be reduced
  each year from FY2013 until FY2021 (Total of nine
  years)
• 492,000,000,000 9 54,666,666,666
• The 54.7 billion reduction is for both
  discretionary and mandatory spending combined in
  each category

99
How To Calculate Spending Caps

• To determine proportions of spending reductions
  to allocate toward discretionary or mandatory
• Multiply 54.7 billion by discretionary spending
  cap
• Divide by total (discretionary and mandatory)
  non-exempt spending reduction in discretionary
  spending in that category
• To determine mandatory amount subject to
  sequestration simply subtract discretionary
  reductions from 54.7 billion.

100
How To Calculate Spending Caps

• Example for FY 2014 Non-Defense Category
• Discretionary spending cap 510 billion
• 54.7 billion x 510 billion 27.88 trillion
• 27.88 trillion (510 billion 206 billion)
  38.9 billion

OMBs Baseline Estimate for Mandatory Spending
716 billion in total non-exempt spending
Discretionary Cap
101
How To Calculate Spending Caps

• Example for FY 2014 Non-Defense Category
• Discretionary spending cap 510 billion
• 38.9 billion reduction in discretionary spending
  cap
• 15.7 billion reduction in non-exempt mandatory
  spending
• Total savings of 54.7 billion

102
How To Calculate Spending Caps

• Example for FY 2014 Non-Defense Category
• Discretionary spending cap 510 billion
• 38.9 billion reduction in discretionary spending
  cap
• 510 billion 38.9 billion 471.1 billion
  (new discretionary spending cap for aggregate
  appropriations in fiscal year)

103
How Sequestration Works

• Revised Statutory Limits on Discretionary
  Spending if Automatic Spending
• Reduction Process is Triggered
• (in billions of budget authority)
• Fiscal Year Revised Security Revised
  Non-security
• Category Category
• 2013 546 501
• 2014 556 471
• 2015 566 520
• 2016 577 530
• 2017 590 541
• 2018 603 553
• 2019 616 566
• 2020 630 578
• 2021 644 590

104
How To Calculate Spending Caps

• Example for FY 2014 Non-Defense Category
• Discretionary spending cap 510 billion
• 15.7 billion reduction in non-exempt mandatory
  spending
• 15.7 billion cut from 206 billion in mandatory
  spending via sequestration

105
How To Calculate Spending Caps

• Example for FY 2014 Non-Defense Category
• Discretionary spending cap 510 billion
• 15.7 billion reduction in non-exempt mandatory
  spending
• 15.7 billion cut from 206 billion in mandatory
  spending via sequestration
• 15.7 billion is 7.6 of 206 billion, so all
  non-exempt programs in the non-Defense category
  would be reduced by 7.6.

106
How To Calculate Spending Caps

• Example for FY 2014 Non-Defense Category
• Discretionary spending cap 510 billion
• 38.9 billion reduction in discretionary spending
  cap
• Medicaid is exempted from sequestration and
  Medicare provider cuts are limited no more than
  2.
• Any cuts for Medicare provider benefits above 2
  are subtracted from the discretionary spending
  cap
• Final discretionary spending cap reduction is
  38.9 billion the additional Medicare cuts
  above 2

107
Why is the Budget Control Act and sequestration
so important?
Sequestration in Mandatory spending for FY2014 is
estimated at about 7.5 A budget in FY 2013 of
1, 000,000,000 lowered 7.5 each year for ten
years would have 495,764,693 in FY2021 Or less
than 50 of its FY2013 funding