Despite Calls for a Grand Bargain, Sequestration is Still a Very Real Possibility

Posted on: September 18th, 2012 by NADO Admin

Last week (on September 14), the White House Office of Management and Budget (OMB) released a congressionally-mandated report on the Administration’s plans to implement sequestration, which are across-the-board, automatic budget cuts to defense and domestic programs that will go into effect on January 2, 2013, unless Congress passes legislation in the lame-duck session to avert the cuts. Reports are circulating that the Administration and Congressional leadership could potentially agree to postpone sequestration for three to six months, which would buy them additional time to negotiate a grand bargain.

In brief, the 394-page OMB sequestration report projects cuts of 9.4 percent to non-exempt defense discretionary spending and 8.2 percent to non-exempt domestic discretionary spending. Most appropriated discretionary defense and domestic spending will be affected, with the exception of programs dealing with the pay and benefits of military personnel. Most mandatory spending programs including Social Security, Medicaid, and food stamps, are exempt from sequestration.

Regarding the impact of sequestration on transportation programs, OMB determined that Highway Trust Fund programs and the FAA’s Airport Improvement program are largely exempt from cuts under sequestration due to a drafting oversight in the Budget Control Act.  However, the report indicates that bailout transfers from the General Fund to the Highway Trust Fund would be subject to the sequestration process.

Click here (http://db to view the full OMB report.

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