Obama Orders FY 2014 Sequester Alongside Budget Plan to Stop It

Daily Report for Executives provides in-depth coverage of unfolding legislative, regulatory, and judicial news from the nation’s capital, the states, and around the world. This daily news service...

By Cheryl Bolen  

 

President Obama on April 10 formally ordered sequestration for fiscal year 2014, as required by law, on the same day he submitted his FY 2014 budget to Congress with proposals to stop the across-the-board spending cuts.

Under the Budget Control Act (Pub. Law No. 112-25), the sequestration order had to be issued on whichever day the president released a budget.

If adopted, the president's budget would eliminate the sequester and replace it with specific spending cuts, as well as revenue increases (see related story in this issue). But until a budget is signed into law or another agreement is reached, sequestration remains the law. The Office of Management and Budget on April 10 released two required reports, listing the mandated across-the-board cuts to all agencies.

According to OMB, in FY 2014, the law requires the lowering of discretionary caps by $91 billion and the sequestration of $18 billion in direct spending.

Specifically, the defense discretionary cap will be reduced by $53.9 billion and the nondefense discretionary cap will be reduced by $37.1 billion, OMB stated.

Additionally, OMB calculated that the sequestration of nonexempt direct spending requires reductions of 2 percent to nonexempt Medicare spending, 7.3 percent to other nonexempt nondefense mandatory programs, and 9.8 percent to nonexempt defense mandatory programs.

Budget Would Stop Sequester

The report noted that the president's budget included several proposals to revise the discretionary caps, which would replace the sequester.

If adopted, these reductions to the discretionary caps would replace the automatic reductions, restore the 2013 sequestration amounts, and cancel the 2014 mandatory sequestration order, the OMB said.

The budget would adjust upward the 2014 defense and nondefense caps to the levels agreed to by the Congress in the American Tax Relief Act, according to the OMB.

The president's budget proposes to extend discretionary caps through 2023, the report said. These caps would achieve additional discretionary outlay savings of $200 billion over 10 years, compared to current law.

“These reductions are split between the defense and non-defense categories and are timed to take effect beginning in 2017 when the economy is projected to have fully recovered,” the report stated.

By Cheryl Bolen  


OMB's sequestration review report and report to Congress are available at http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/fy14_preview_and_joint_committee_reductions_reports_04102013.pdf.