Q&A on Reprioritizing Sequester Savings

MYTH: The Sequester Replacement Act alters the spending targets agreed to in the House-passed FY2013 budget.

FACT: Under currently law the statutory cap on discretionary spending is $1,047 billion ($546 billion for defense and $501 billion for non-defense) until January 2, 2013 when it becomes $949 billion. Under the Sequester Replacement Act, the statutory discretionary cap is $1,047 billion until January 2, 2013 when it becomes $1,028 billion the discretionary level set in the House-passed budget resolution. The timing of the change in the discretionary cap is exactly the same as in current law. Consideration of appropriations bills is governed by the budget resolution’s 302(a) allocation. This allocation remains at $1,028 billion. Any appropriations bill that would cause discretionary spending to exceed that level is subject to a point of order under the rules of the House. The Sequester Replacement Act does not change that fact.

Which committees are producing reconciliation legislation?

The Committees on (1) Agriculture, (2) Energy & Commerce, (3) Financial Services, (4) the Judiciary, (5) Oversight & Government Reform, and (6) Ways & Means are each tasked with producing deficit reduction legislation pursuant to the reconciliation instructions in section 201 of the House-passed budget resolution, H. Con. Res. 112.

Replacing the Sequester
(Millions of $ of Deficit Impact)
   2012-13  2012-17  2012-22
Sequester of $78,480 million of Discretionary Budget Authority  -45,410  -77,799  -77,799
Committee on Agriculture  -7,710  -19,700  -33,200
Committee on Energy & Commerce  -3,750  -28,430  -96,760
Committee on Financial Services  -3,490  -16,700  -29,800
Committee on the Judiciary  -100  -11,200  -39,700
Committee on Oversight & Government Reform  -2,200  -30,100  -78,900
Committee on Ways & Means  -1,200  -23,000  -53,000
Gross Reconciliation Savings  -18,450  -129,130  -331,360
Adjustment to remove double-counting of policies assumed in overlapping reconciliation instructions  -100  -12,800  -69,900
Net Total Reconciliation Savings   -18,350   -116,330  -261,460
Reconciliation Savings as a Percentage of Forgone Sequester  40%  150%  336%

Where did $78.5 billion come from?

The House Budget Committee is committed to achieving 100% of the deficit reduction called for in the Budget Control Act. For FY 2013, the BCA starts with a discretionary budget authority cap of $1,047 billion that is automatically reduced by an arbitrary, across-the-board sequester on January 2, 2013 to $949.4 billion. The House-passed budget resolution (H. Con. Res. 112) sets total discretionary budget authority at $1,027.9 billion. Leaving $78.5 billion in budget authority reductions needing to be achieved.

But why then do you show your savings relative to $45.4 billion where does that come from?

When discussing deficit reduction, the relevant considerations are the changes in outlays or receipts resulting from a policy since the size of the deficit is a function of outlays and receipts. The additional $78.5 billion reduction in discretionary budget authority that would have resulted from the BCA would have resulted in lower outlays in FY 2013 of $45.4 billion and from FY 13-21 of $77.8 billion. Since the reconciliation instructions are for committees to report legislation that reduces the deficit by specified amounts, these are the relevant numbers to compare to.

Why are committees marking-up legislation they have previously reported?

A committee has to vote to submit legislation to the Budget Committee to comply with its reconciliation instructions pursuant to a budget resolution passed by the House. The House did not deem a budget resolution to be in force until April 17 with the passage of H. Res. 614 (see sec. 2).

What happens if two committees report the same legislative provision in response to the reconciliation instructions?

Because many House committees have overlapping jurisdictions, it is possible for multiple committees to report the same piece of legislation in order to comply with the committee’s reconciliation instructions. Each committee’s compliance with the reconciliation instruction will be based on the legislation that committee submits to the Budget Committee.

But doesn’t that mean you’ll be overstating the savings your reconciliation bill achieves?

In developing the reconciliation instructions, the Budget Committee was cognizant of the fact of overlapping jurisdictions and included a downward adjustment of $69.9 billion over 11 years to account for this. The net savings expected to be achieved by the reconciliation bill are shown in the second-to-last line of Table 9 of the budget resolution committee report (H. Rep. 112-421).

Why did the deemer change the reconciliation instructions for the Agriculture and Financial Services Committees?

When developing the reconciliation instructions in the budget resolution, the Budget Committee relied on CBO’s estimates of an assumed set of policies. In the intervening weeks, CBO has refined and updated their estimates for these policies. The changes in the reconciliation instructions reflect updated estimates of the deficit reduction the policies contemplated in the instruction will achieve. The total deficit reduction achieved in each period of the overall instruction is unchanged.

What happens if a committee fails to meet its instructions?

In consultation with House leadership and the authorizing committee, the Budget Committee may prepare legislative text to achieve the required savings and seek to have it included in the reconciliation measure.

How does this avoid the sequester?

The six Committees are responsible for producing savings that will more than replace the deficit reduction that would have occurred under the first year of the discretionary sequester. The Budget Committee will be responsible for reporting legislation (pursuant to section 202 of H. Con. Res. 112) that replaces the discretionary sequester.

What are you doing with the Medicare/agriculture/other mandatory sequester?

The Budget Resolution calls for no changes to current law with respect to the non-defense direct spending sequester.