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White House Unveils Sequestration Plan White House Unveils Sequestration Plan

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Budget / Budget

White House Unveils Sequestration Plan

OMB issues report on budget cuts that would take place if Congress doesn't act.

September 14, 2012

U.S. weapons purchases would be slashed, programs to protect food and water safety would take a hit, and crime-prevention programs would be scaled back if Congress fails to act to prevent automatic cuts known as the sequester from taking effect at the beginning of next year, the White House warned on Friday.

A report by the White House Office of Management and Budget described sequestration as a "blunt and indiscriminate instrument" and said the cuts would be harmful to the country. They are mandated by the 2011 Budget Control Act, which requires across-the-board cuts of $109 billion per year for nine years in an array of government programs. Sequestration will go into effect starting Jan. 2 unless Congress can reach a deficit-reduction deal to head it off.

The cuts would be divided evenly between discretionary domestic and defense spending. Most entitlement programs, such as Social Security and Medicaid, would be shielded from cuts. Veterans' benefits and unemployment insurance would also be exempted.

 

A House GOP plan that passed the chamber on a party-line vote earlier this year would have made additional cuts to domestic programs in order to shift more money to defense. Congressional Republicans have stressed the dangers of cutting defense spending, but the primary point of contention between them and Democrats has been over whether revenue increases should be part of any deficit-reduction plan.

The 394-page OMB report includes graphs and tables, but its warnings about the consequences of sequestration were part of a push by the administration to ratchet up pressure on Congress to make a deal on the budget. Among the highlights from the report:

  • Discretionary defense appropriations would be cut by 9.4 percent, while nondefense discretionary would be cut by 8.2 percent. Percentages are based on fiscal year 2012 spending before any adjustments made the continuing resolution Congress is currently considering, senior administration officials told reporters on a conference call.
  • Next year’s defense spending would take a $55 billion hit, but military pay and benefits would remain unscathed, because President Obama has made clear that the across-the-board cuts would spare military personnel accounts. Administrative expenses for the Veterans Affairs Department, along with veterans’ benefits and health care, also would preserved.
  • To make up for the exemption of military personnel accounts, other Pentagon budget accounts would be cut deeper—including, for example, spending for weapons procurement and shipbuilding.
  • The Pentagon's Overseas Contingency Operations fund, the source of money spent on the war in Afghanistan, would be subject to cuts. However, the report states that the Defense Department would be able to shift funds as necessary to make sure the country’s “war-fighting and critical military readiness capabilities were not degraded.”  
  • Last month, Deputy Defense Secretary Ashton Carter promised a House panel that the department would try to protect the wartime operating budget as much as possible. Still, the sequestration could result in a reduction of readiness for many non-deployed units, delays in investments for new equipment and facilities, and cutbacks in military research and equipment repairs, the report said. (Carter has previously said civilians could face a partial hiring freeze and unpaid furloughs under sequestration, and the Pentagon would likely buy four fewer F-35 aircraft, one less P-8 aircraft, 12 fewer Stryker vehicles, and 300 fewer Army medium and heavy tactical vehicles compared with Obama’s fiscal 2013 request.) 
  • The administration does not yet have estimates of federal workforce job losses or furloughs if sequestration goes into effect, the administration officials said.
  • Two programs established in the 2010 Affordable Care Act would be protected from cuts — funding for an insurance pool for “high-risk” patients who were denied coverage due to a preexisting condition and a that aims to get consumer insurance exchanges off the ground.
  • Sequestration would also reduce the account for embassy security, construction and maintenance by 8.2 percent, an especially sensitive detail considering the assaults on several U.S. diplomatic posts this week, including Tuesday’s attack on the U.S. Consulate in Benghazi, Libya, that killed ambassador Chris Stevens and three other personnel. Protesters, reportedly incensed by an anti-Muslim film, also stormed the embassy compound in Tunisia’s capital on Friday, setting fire to trees and destroying property, after similar violent protests on embassy grounds in Egypt and Yemen.
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