President Issues Sequestration Order

On March 1, 2013 President Obama notified Congress that sequestration was being triggered.  Sequestration is the mechanism established by the Balanced Budget and Emergency Deficit Control Act of 2011 to make automatic budget cuts if a joint Congressional committee couldn’t reach agreement on a broader deficit reduction plan.

Needless to say the joint Congressional committee failed but the American Taxpayer Relief Act of 2012, passed to avert the fiscal cliff, a broader set of tax increases and spending cuts to occur on January 1, 2013, delayed sequestration until March 1, 2013.

The sequestration order officially cancels $85 billion in budgetary resources across the Federal Government for FY 2013.  The cuts amount to a 5% cut in discretionary spending for non-exempt functions in civilian agencies and a 7.9% cut for non-exempt functions in the defense department.

Since these cuts will only be applied during the final seven months of the fiscal year their impact will be concentrated.  For example, in the remaining seven months non-exempt defense functions will actually be cut 13% and non-exempt civilian agencies will be cut 9%.

Along with the notification the Administration provided a detailed accounting of the cuts by agency and program.  Some examples include military construction being cut nearly $1.6 billion and the US Department of Labor Wage and Hour Division being cut $12 million.

While there seems to growing interest in retaining the amount of reduction there is growing interest in providing more agency flexibility.  This may be accomplished when Congress adopts a continuing resolution, which must be done before March 27, 2013, to fund the remainder of the year.

The sequester order can be viewed at http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/fy13ombjcsequestrationreport.pdf