Brief Overview of Essential Features

		Debt Ceiling Increase and Disapproval Process

The Budget Control Act is the result of negotiations between the President and Congress held in response to the federal government having nearly reached its borrowing capacity. The BCA authorized debt limit increases up to at least $2.1 trillion dollars (and up to $2.4 trillion under certain conditions) in three installments. Ultimately, therefore, the support of two-thirds of each chamber might be necessary to prevent a debt limit increase. The BCA therefore also established caps on the amount of money that could be spent through the annual appropriations process for the next 10 years, which the Congressional Budget Office estimates will reduce federal spending by $917 billion. Joint Select Committee on Deficit Reduction

Another part of the BCA agreement to increase the debt ceiling was the creation of a Joint Select Committee on Deficit Reduction, instructed to develop legislation to reduce the federal deficit by at least another $1.5 trillion over the 10-year period ending in FY2021. The legislation resulting from the joint committee recommendations can be considered under special procedures that prevent amendment and limit debate in both chambers. These procedures could have a significant impact in the Senate because they allow a simple majority to approve a bill without indefinite delay. Under regular Senate procedures, the support of 60 Senators is often necessary to advance the consideration of legislation. The only procedural consequence of not voting as specified in the BCA is that, if Congress does not approve a constitutional amendment, one of two avenues for increasing the debt ceiling by $1.5 trillion, instead of $1.2 trillion, will not be available. The BCA does not affect procedures for bringing a measure up before the Senate, however. Federal Student Aid Programs

The BCA also makes changes to the William D. Ford Federal Direct Loan (DL) program and the Federal Pell Grant program, two of the largest federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329). The BCA amends the HEA by eliminating the availability of Subsidized Stafford Loans to graduate and professional students for periods of instruction beginning on or after July 1, 2012. CBO estimates these changes in the DL program would reduce direct spending by $9.6 billion over the FY2012-FY2016 period and $21.6 billion over the FY2012-FY2021 period. Approximately $17 billion of the $21.6 billion in estimated savings from the changes in the DL program would be directed to the Pell Grant program for future general use. The expedited procedures represent a significant divergence from regular Senate procedures, under which it can generally become necessary to obtain agreement among at least three-fifths of the Senate (normally 60 Senators) in order to bring debate to a close and the chamber to a vote on a matter. The House and Senate can then each initially consider its own bill. Budget Goal Enforcement: Spending Reduction Trigger

Section 302 of the Budget Control Act of 2011 establishes an automatic process to reduce spending, beginning in 2013, unless a joint committee bill reducing the deficit by at least $1.2 trillion over the period covering FY2012-FY2021 is enacted by January 15, 2012. The process presumably is intended to encourage agreement on such deficit reduction, either by enacting the joint committee proposal by the deadline at the end of 2011, or possibly by enacting other legislation (through existing congressional procedures) by the beginning of 2013, when the automatic process would begin to make reductions. These additional appropriations would reduce the amount of discretionary appropriations required in FY2012 and FY2013. In the Senate, to get to a direct passage vote on a constitutional amendment, it might be necessary to secure support from 60 Senators to begin consideration of such a proposal.
The Budget Control Act (BCA) is the result of negotiations between the President and Congress held in response to the federal government having nearly reached its borrowing capacity.
The BCA authorized increases in the debt limit of at least $2.1 trillion dollars (and up to $2.4 trillion under certain conditions), subject to a disapproval process that would likely require securing the support of two-thirds of each chamber to prevent a debt limit increase. It established caps on the amount of money that could be spent through the annual appropriations process for the next 10 years, which the Congressional Budget Office (CBO) estimates will reduce federal spending by $917 billion. The BCA also created a Joint Select Committee on Deficit Reduction that is instructed to develop a bill to reduce the federal deficit by at least another $1.5 trillion over the 10 year period ending in FY2021.
The legislation resulting from the joint committee recommendations can be considered under special procedures that prevent amendment and limit debate in both chambers. These procedures could have a significant impact in the Senate because they allow the bill to advance with simple majority support; under regular Senate procedures it can be necessary to obtain agreement among at least three-fifths of the Senate (normally 60 Senators) to advance consideration of legislation.
If a joint committee proposal cutting the deficit by at least $1.2 trillion is not enacted by January 15, 2012, then the BCA established an automatic spending reduction process that includes sequestration (the cancellation of budgetary resources). The process presumably is intended to encourage agreement on deficit reduction, either by enacting the joint committee legislation by early 2012, or possibly by enacting other legislation (presumably through existing congressional procedures) by the beginning of 2013, when the automatic process would make reductions. If the enacted bill cuts the deficit by more than $1.2 trillion, an additional increase in the debt limit becomes available in the amount of the excess, up to $0.3 trillion.
The Budget Control Act has two additional elements. First, it directs that the House and Senate must each vote on a proposal to amend the Constitution to require that the budget of the federal government be balanced. The BCA does not alter the procedures for taking up such a measure in the Senate, and therefore the Senate might not be able to vote on passage of a constitutional amendment unless the support of 60 Senators can be secured to begin consideration. The only procedural consequence of not voting specified in the BCA is that, if Congress does not approve a constitutional amendment, the second of two conditions under which the act would permit an additional increase of $0.3 trillion in the debt ceiling, will not be available.
Second, the BCA also makes changes to the William D. Ford Federal Direct Loan (DL) program and the Federal Pell Grant program, two federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329). Effective July 1, 2012, the BCA eliminates the availability of Subsidized Stafford Loans to graduate and professional students and eliminates all but one type of repayment incentives on future DL program loans. CBO estimates these changes would reduce direct spending by $21.6 billion over the FY2012-FY2021 period. Approximately $17 billion of the $21.6 billion in estimated savings from the changes in the DL program would be directed to the Pell Grant program for future general use in FY2012 and FY2013.