The Budget Control Act of 2011 called for achieving $1.2 trillion in deficit reduction through a combination of new revenue and spending cuts. When a House/Senate Super Committee failed to reach agreement on a plan, the fallback was a set of cuts equally divided between defense and non-defense programs set to take place on January 1, 2013. The first $110 billion would be achieved through across-the-board cuts to all non-exempt defense and non-defense discretionary programs as well as Medicare. As part of the American Taxpayer Relief Act of 2012, which dealt with the expiring Bush-era tax cuts and signed into law on January 2, 2013, Congress agreed to replace the first two months of sequestration with a combination of revenue and spending cuts. Without further action, the remaining $85 billion in cuts will take effect beginning on March 1.
The cuts would include $31.4 billion to domestic programs like WIC, Head Start, child care, housing, home energy, and homelessness aid, education and training, and much more. Medicare will be cut by $11.2 billion. On February 8, the White House released a Fact Sheet with examples of the impact sequestration would have on families, jobs and the economy. If a sequester takes effect up to 373,000 seriously mentally ill adults and seriously emotionally disturbed children could go untreated, 70,000 young children would be kicked off Head Start, 10,000 teachers’ jobs would be put at risk, federally-assisted programs like Meals on Wheels would be able to serve 4 million fewer meals to seniors, and more than 100,000 formerly homeless people, including veterans, would be removed from their current housing and emergency shelter programs.
All agree that across-the-board cuts make no sense. Republicans tend to be more concerned about the cuts to the Pentagon, but refuse to include revenues in a package that replaces sequestration. The President and Senate leadership want new revenues from corporations and wealthy individuals to play a big part in replacing the mindless cuts. House leadership has refused to agree to a replacement package that includes revenues and has expressed resignation that the cuts will go into effect. Recently Senator McCain (R-AZ), who has been most vocal in expressing concerns about the Pentagon cuts, has indicated a willingness to consider a package that includes revenues. If other Republicans are open to including revenues the potential for a deal increases.
Congress is also facing a March 27 deadline when funding for appropriated programs will end because the temporary Continuing Resolution for FY 2013 expires. Congress might either find enough savings to replace another month or two of sequestration or allow the across-the-board cuts to take effect for a short period until both sequestration and the rest of FY 2013 appropriations can be resolved at the same time.