Update on Sequestration

Posted on: August 17th, 2012 by NADO Admin

NADO Webinar on Sequestration (http://vimeo NULL.com/47607198) from NADO (http://vimeo NULL.com/nado) on Vimeo (http://vimeo NULL.com).

When President Obama signed the Budget Control Act (BCA) (P.L. 112-25) in August 2011, ending a Congressional standoff over increasing the debt limit, the January 2, 2013 deadline for Congress to agree on a way to reduce the federal budget deficit—and thereby avoid the across-the-board cuts to federal agencies called for by the BCA’s sequestration process—seemed to be in the distant future.

Now, with a little over four months until the sequester is scheduled to begin, debate over the issue is heating up as Congress looks for ways to prevent or postpone the defense and nondefense cuts, estimated by the Congressional Budget Office (CBO) to be approximately $984 billion over nine years, or almost $109 billion annually.

Congress is currently in recess and will not return to Washington, D.C. until September 10. When members of the House and Senate return, the first order of business will be approving a six-month spend plan (also known as a continuing resolution or “CR”) to keep the federal government operating from October 1 through the end of March 2013.  While passage of the plan will avoid a possible government shutdown during election season, it will not end the threat of sequestration in January.

So What’s Next…..And Could Congress Prevent Sequestration?

Before leaving for the August recess, Congress passed legislation (H.R. 5872) requiring the Obama administration to provide Congress with more details regarding the projected impact on federal agencies and functions of sequestration. The president signed the bill on August 7, and under the terms of the legislation, the White House and OMB have 30 days to provide the required report.  The bill also requires that OMB and federal agencies consult with the House and Senate Appropriations Committees about the potential impact of the cuts.  Over the past few days, NADO staff has been in contact with Appropriations Committee staff and were informed that these consultations are well under way.

With the upcoming November elections, and even after the elections, it will be difficult for Congress to negotiate a compromise.  However, many are hopeful that the White House/OMB report will provide enough information to force action in time to avoid cuts that were designed to be unthinkable for both parties.  As a result, Congress could enact legislation that would avoid or postpone the sequestration which would need to be signed into law by President Obama before January 2, 2013.

But for now, OMB and the federal agencies are acting as if the sequestration will occur.  On July 31, OMB Acting Director Jeff Zients sent a letter to all federal agencies warning that significant preparations will begin over the next several months and that OMB officials would be meeting with all departments to discuss how the cuts under sequester work and what programs could be exempt.

Up to now, administration officials have indicated that they believe Congress will find a way to avoid the sequester, and Acting Director Zients stated the White House still believes a budget agreement to replace the sequester is possible.  “The president remains confident that Congress will act, but because it has not yet made progress towards enacting sufficient deficit reduction, the Office of Management and Budget will work with agencies, as necessary, on issues raised by a sequestration of this magnitude,” Zients said.  In the meantime, he suggested that agencies should not adjust their rate of spending at the October 1 start of the fiscal year but “continue normal spending and operations since more than five months remain for Congress to act.”

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