	Introduction

"Sequestration" is a process of automatic, largely across-the-board spending reductions to meet or enforce certain budget policy goals. It was first established by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, Title II of P.L. Readers also may wish to consult the following CRS reports:
CRS Report R41965, The Budget Control Act of 2011 , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] CRS Report R42949, The American Taxpayer Relief Act of 2012: Modifications to the Budget Enforcement Procedures in the Budget Control Act , by [author name scrubbed] CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions , by [author name scrubbed] CRS Report R42675, The Budget Control Act of 2011: Budgetary Effects of Proposals to Replace the FY2013 Sequester , by [author name scrubbed] CRS Report R42051, Budget Control Act: Potential Impact of Sequestration on Health Reform Spending , by [author name scrubbed] CRS Report R42994, The Budget Control Act, Sequestration, and the Foreign Affairs Budget: Background and Possible Impacts , by [author name scrubbed] CRS Report R43021, Proposed Cuts to Air Traffic Control Towers Under Budget Sequestration: Background and Considerations for Congress , by [author name scrubbed] CRS Report R43065, Sequestration at the Federal Aviation Administration (FAA): Air Traffic Controller Furloughs and Congressional Response , by [author name scrubbed], [author name scrubbed], and [author name scrubbed] CRS Report R42506, The Budget Control Act of 2011: The Effects on Spending and the Budget Deficit , by [author name scrubbed] and [author name scrubbed] CRS Report R41157, The Statutory Pay-As-You-Go Act of 2010: Summary and Legislative History , by [author name scrubbed]

		Sequestration Triggers Under the Budget Control Act (BCA)

The Budget Control Act of 2011 (BCA) was enacted on August 2, 2011. The BCA has two primary components that can trigger a sequestration of discretionary and/or mandatory (or direct) spending:
Title I of the BCA established discretionary spending limits, or caps, for each of FY2012-FY2021. If Congress appropriates more than allowed under these spending limits in any given year, the automatic reduction process of sequestration would cancel the excess amount. Failure by Congress to enact legislation by January 15, 2012, developed by the Joint Committee and reducing the deficit by at least $1.2 trillion, would trigger a series of automatic spending reductions intended to achieve that level of savings over the FY2013-FY2021 period. These automatic reductions include sequestration of mandatory spending for each of FY2013-FY2021, a one-year sequestration of discretionary spending for FY2013, and lower discretionary spending limits for each of FY2014-FY2021. Because the Joint Committee did not, in fact, develop legislation to achieve the specified level of deficit reduction ($1.2 trillion) by the deadline set in the BCA, and Congress did not subsequently enact such legislation by January 15, 2012, the automatic budget enforcement procedures provided by the law were triggered. 112-240 ). Office of Management and Budget (OMB) Calculation of March 2013 Sequestration

On March 1, 2013, President Obama signed the sequestration order triggered by failure of the Joint Committee process under the BCA, and the Office of Management and Budget (OMB) issued a report containing the percentages by which budgetary resources must be reduced in order to achieve the necessary spending reductions in FY2013. 111-139 . The act requires various scorekeeping procedures, including 5-year and 10-year scorecards that track costs and savings associated with enacted legislation. At the end of each congressional session, OMB generally must determine whether the net effect of direct spending and revenue legislation enacted during the session has increased the deficit, and if so, a sequestration will be triggered. Program Exemptions and Special Rules for Sequestration

Certain programs are exempt from sequestration, and special rules govern the sequestration of others. For the most part, these provisions are found in Sections 255 and 256 of the Balanced Budget and Emergency Deficit Control Act (BBEDCA), as amended. These provisions apply to sequestration orders that occur under either the BCA or the Statutory PAYGO Act. Most are mandatory, although a few are discretionary, most notably programs administered by the Department of Veterans Affairs (VA). Payments to individuals in the form of refundable tax credits. At the President's discretion (subject to notification to Congress), military personnel accounts may be exempt entirely, or a lower sequestration percentage may apply. Most Section 256 special rules apply to mandatory programs, although some discretionary programs are included (e.g., certain health programs). However, Section 255 of BBEDCA, as amended in 2010 ( P.L. As an example, while Supplemental Security Income (SSI) is exempt from sequestration, the federal administrative expenses associated with this program would generally not be exempt. Supplemental Nutrition Assistance Program (12–3505–0–1–605). Temporary Assistance for Needy Families (75–1552–0–1–609). 256.
"Sequestration" is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. It was first authorized by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, Title II of P.L. 99-177, commonly known as the Gramm-Rudman-Hollings Act).
Sequestration is of current interest because it has been triggered as an enforcement tool under the Budget Control Act of 2011 (BCA, P.L. 112-25). Sequestration can also occur under the Statutory Pay-As-You-Go Act of 2010 (Statutory PAYGO, Title I of P.L. 111-139). In either case, certain programs are exempt from sequestration, and special rules govern the effects of sequestration on others. Most of these provisions are found in Sections 255 and 256 of BBEDCA, as amended.
Two provisions were included in the BCA that can result in automatic sequestration:
Establishment of discretionary spending limits, or caps, for each of FY2012-FY2021. If Congress appropriates more than allowed under these limits in any given year, sequestration would cancel the excess amount. Failure of Congress to enact legislation developed by a Joint Select Committee on Deficit Reduction, by January 15, 2012, to reduce the deficit by at least $1.2 trillion. The BCA provided that such failure would trigger a series of automatic spending reductions, including sequestration of mandatory spending in each of FY2013-FY2021, a one-year sequestration of discretionary spending for FY2013, and lower discretionary spending limits for each of FY2014-FY2021.
In fact, the Joint Committee did not develop the necessary legislation and Congress did not meet the January 15, 2012, deadline. Thus, automatic spending cuts under the BCA were triggered, with the first originally scheduled for January 2, 2013. P.L. 112-240 subsequently delayed this until March 1, 2013, and President Obama signed a sequestration order on that date.
Under the Statutory PAYGO Act, sequestration is part of a budget enforcement mechanism that is intended to prevent enactment of mandatory spending and revenue legislation that would increase the federal deficit. This act requires the Office of Management and Budget (OMB) to track costs and savings associated with enacted legislation and to determine at the end of each congressional session if net total costs exceed net total savings. If so, a sequestration will be triggered.
Under sequestration—triggered either by the BCA or Statutory PAYGO Act—the exemptions and special rules of Sections 255 and 256 of BBEDCA apply. Most exempt programs are mandatory, and include Social Security and Medicaid; refundable tax credits to individuals; and low-income programs such as the Children's Health Insurance Program, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, and Supplemental Security Income. Some discretionary programs also are exempt, notably all programs administered by the Department of Veterans Affairs. Also, subject to notification of Congress by the President, military personnel accounts may either be exempt or reduced by a lower percentage.
Special rules also apply to several, primarily mandatory, programs. For example, under Section 256 of BBEDCA, Medicare may not be sequestered by more than 4%. However, under a BCA- triggered sequester, reduction of Medicare is limited to no more than 2%.