CBO On Sequestration

So long as Congress doesn't pass any supplemental spending bills before the end of the fiscal year, the government should be safe from sequestration, according to a new Congressional Budget Office report issued this afternoon.

By law, CBO must issue a report, by Aug. 15 of each year, giving its estimates of the caps on discretionary budget authority in place for each fiscal year through 2021, the report states.

In a related January report, CBO estimated that the appropriations for fiscal year 2014 "did not exceed the caps." As of now, the Aug. 14 report states, "CBO's assessment remains unchanged -- the discretionary appropriations provided for 2014 do not exceed the caps, and thus, by CBO's estimates, a further sequestration (or cancellation of budgetary resources) will not be required as a result of appropriation actions this year. The Administration's Office of Management and Budget (OMB) has sole authority to determine whether a further sequestration is required; its sequestration report issued in February 2014 also found that appropriations for 2014 were at or below the caps, and the only subsequent appropriation was designated an emergency requirement and thus could not cause a breach of the caps."

CBO further notes:

The Bipartisan Budget Act of 2013 (Public Law 113-67) modified the caps on defense and nondefense funding for fiscal year 2014 that were established by the Budget Control Act of 2011; P.L. 113-67 reset those caps to total $1,012 billion -- $520 billion for defense programs and $492 billion for nondefense programs. The annual limits on funding are adjusted when appropriations are provided for certain purposes. Specifically, budget authority designated as an emergency requirement or provided for overseas contingency operations, such as military activities in Afghanistan, leads to an increase in the caps, as does budget authority provided for some types of disaster relief (up to an amount based on historical spending for that purpose) or for certain "program integrity" initiatives.

Also, section 7 of the Consolidated Appropriations Act, 2014 (P.L. 113-76) authorized OMB to increase the caps for 2014 to reflect estimating differences between that agency and CBO. To date, such adjustments to the caps on discretionary budget authority for 2014 have totaled $98.9 billion, CBO estimates (see Table 1). Most of that amount, $85.4 billion, is an increase in the defense cap to account for budget authority provided for overseas contingency operations. An additional $0.2 billion of funding -- provided in P.L. 113-145 for Israel's Iron Dome defense system -- was designated as an emergency requirement, and OMB has increased the defense cap by another $0.2 billion to account for differences between its estimates and those of CBO. Adjustments to the nondefense cap this year include $6.5 billion for overseas contingency operations, $5.6 billion for disaster relief, and $0.9 billion for program integrity initiatives.

With those adjustments, the caps on budget authority for 2014 total $606.3 billion for defense programs and $504.8 billion for nondefense programs -- about $1.1 trillion in all, CBO estimates. By OMB's estimation, as reported in February, the total appropriations provided for this year are at or below those caps; therefore, CBO expects that no additional sequestration will be required.

The caps could still be breached, however, if lawmakers were to provide supplemental appropriations by the end of September -- unless the additional funding fell into one of the categories that result in an adjustment to the caps or unless it was offset by reductions in funding for other programs, such as rescissions of unobligated budget authority. If the caps for 2014 were breached late in the fiscal year, the caps for 2015 would be reduced to compensate for any excess funding provided this year.