The document discusses sequestration, which mandates automatic spending cuts to reduce the federal deficit. It notes that sequestration was originally set to begin on January 2nd, 2013 but the American Taxpayer Relief Act of 2012 delayed it until March 1st, 2013. This Act also reduced the total spending cuts for 2013 from $109 billion under the original law to $85 billion. The document provides pros and cons of sequestration and shows how different areas of the budget would be impacted by the reduced cuts compared to the original levels.

1. Sequestration Update
Exclusively For National Journal Members
Policy Background and Projected Impact

2. Source: Congressional Research Service. 3
KeyTerms
Measures meant to reduce federal spending; primarily consists
of deficit reduction sequester, mandating automatic,
across-the-board spending cuts for federally funded programs
in order to meet national budget goals, and discretionary
caps, limiting future federal spending
Mandated sequestration starting Jan. 2, 2013 if Congress
could not reduce deficit by $1.2T–$1.5T over a 10-year
period
American Taxpayer Relief Act
(ATRA) of 2012
Mandates modified sequestration starting March 1, 2013 if
Congress cannot negotiate a way to avoid it

3. Source: Congressional Research Service. 3
Upsides and Downsides of Sequestration as a FiscalTool
Pros and Cons of Sequestration
Pros Cons
If Threatened Strongly encourages legislative
action to reduce deficit
Disrupts federal workplaces and
government contractors by driving
unnecessary preparations for job
cuts
If Implemented
Forces deficit reduction and
restraint in government spending;
helps economy in long-term
Results in immediate–and
potentially catastrophic–job cuts;
hurts economy in short-term
Intended impact of
sequestration

4. Source: Budget Control Act of 2011. 4
In 2011, Sequestration Mandated if No Deficit Deal Struck
Raised U.S. debt limit for short term to prevent
default
Established 12-member Joint Select Committee
(“Super Committee”) charged with reducing
deficit by $1.2T – $1.5T over 10-year period
Mandated long-term deficit reduction through
sequestration threat if Super Committee failed
to reach goals
Super Committee failed to meet objectives;
Congress faced sequestration threat in 2013
Budget Control Act of 2011 (BCA)

5. In 2013, Sequestration Delayed (Without Deficit Deal)
Source: U.S. House of Representatives Committee on the Budget Democrats, “Sequestration: An Update for 2013,” Jan. 17, 2013; Congressional Research Service, “The ‘Fiscal
Cliff’ and the American Taxpayer Relief Act of 2012,” Jan. 4, 2013.
5
Jan. 17, 2013
BCA start date for
discretionary caps
March 1, 2013
ATRA delayed start date for deficit
reduction sequester
March 27, 2013
ATRA delayed start date for
discretionary caps
Impact on deficit reduction sequester: Two-month delay
prorates 2013 spending cuts by total of $24B
Impact on discretionary caps: ATRA lowers cap for 2013 by $4B and 2014
by $8B to offset cost of delay
Jan. 2, 2013
BCA start date for deficit
reduction sequester
AmericanTaxpayer Relief Act (ATRA) Pushes Sequester to March

6. ATRA Reduces BCA’s 2013 Cuts
Source: Center on Budget and Policy Priorities, “Here’s How the March 1 Sequester Would Work,” Jan. 22, 2013. 6
Comparison of 2013 Budget Cuts Under BCA and ATRA*
In Billions of Dollars
Total: $109.3B*** Total: $85.3B***
$11.1B
$11.2B
$5.5B
$5.0B
$26.4B
$38.0B
$54.6B
$42.5B
*Mandatory defense funding is too small to be represented on this graph: $0.1B in both BCA’s and ATRA’s sequestration, a 10% cut under BCA and 7.8% cut under ATRA
**Cuts to Medicare are not to benefits; Medicare percentage remains the same because Medicare cuts are capped
***Breakdown of cuts does not add to totals due to rounding and omission of mandatory defense funding
BCA Jan. 2 Sequestration ATRA March 1 Sequestration
Discretionary Non-
Defense Funding
Discretionary
Defense Funding
Mandatory Non-
Defense Funding
Medicare**

7. ATRA Reduces BCA’s 2013 Cuts
Source: Center on Budget and Policy Priorities, “Here’s How the March 1 Sequester Would Work,” Jan. 22, 2013. 6
Comparison of 2013 Budget Cuts Under BCA and ATRA*
In Billions of Dollars
Total: $109.3B*** Total: $85.3B***
$11.1B
$11.2B
$5.5B
$5.0B
$26.4B
$38.0B
$54.6B
$42.5B
*Mandatory defense funding is too small to be represented on this graph: $0.1B in both BCA’s and ATRA’s sequestration, a 10% cut under BCA and 7.8% cut under ATRA
**Cuts to Medicare are not to benefits; Medicare percentage remains the same because Medicare cuts are capped
***Breakdown of cuts does not add to totals due to rounding and omission of mandatory defense funding
BCA Jan. 2 Sequestration ATRA March 1 Sequestration
Discretionary Non-
Defense Funding
Discretionary
Defense Funding
Mandatory Non-
Defense Funding
Medicare**