Federal Relations

Sequestration Now Seems Likely

With just a month to go before sequestration is schedule to take effect, many on Capitol Hill now seem to accept that sequestration is likely to happen on March 1st.  This may be in part because Congress is also facing the expiration of the current continuing resolution (CR) just a few weeks after (March 27th), which they believe will provide an opportunity to address federal spending and maybe mitigating some of the impacts of sequestration.   And there are others who believe the sequester will not be as bad as first thought since the original cuts that were to take effect on January 2nd were modified by the fiscal-cliff deal.  The cuts overall would be $24 billion less than in the original sequester, and the percentage by which domestic spending would be cut falls markedly. The original sequestration required under the August 2011 Budget Control Act (PL 112-25) would have cut spending by $109 billion beginning January 2nd.  Now, as modified by the fiscal cliff law, the sequestration would cut spending by $85 billion starting March 1st.  This translates to a 5.1% cut to non-defense discretionary spending for FY2013 as opposed to the 8.2% cut mandated by the original sequestration.

That 3-week window between the sequestration deadline and expiration of the CR gives Congress and the White House time to reach agreement to fund the government for the rest of FY2013 as well as deal with the automatic cuts, perhaps by replacing them in part or in full with other deficit reduction efforts.