The Budget Control Act: A Bipartisan Disaster

What's the story?

It’s budget season and all eyes are on the Budget Control Act (BCA). The BCA mandates that Congress cuts $1.2 trillion in discretionary spending from 2013 to 2021, and annually this requires hundreds of billions in cuts across the federal government. Additionally, the complications of sequestration make this an issue that Congressmen from both parties openly dislike.

Sen. Tom Cotton (R-AR) penned an op-ed for the Wall Street Journal outlining the ways in which sequestration "cripples the military’s long-term planning abilities." He calls for a complete repeal of the law.

His Democratic counterparts agree. Following the approval of three appropriations bills by the Senate Appropriations Committee on Thursday, Sen. Jack Reed (D-RI) said the following in a press release:

"While the bill uses available resources wisely, it still falls short because of the artificial budget caps imposed by the Budget Control Act. Indeed, the funding provided in this bill is still less in nominal terms than it was in 2010. Simply put, we need a need a new deal on the budget."

What's the history?

In 2011, with government debt growing at rapid rates following the Great Recession, Congress and the White House went to the mat over raising the debt ceiling. A group of Republicans, many of them recently elected in 2010, were willing to risk government shutdown and credit default in order to prevent the deficit from rising. Budget negotiations were at a standstill.

And, thus, the Budget Control Act of 2011 was born. It mandated $1.2 trillion in cuts in discretionary spending from 2013 to 2021 in order to allow for a similar increase in the debt limit. A supercommittee of 12 members of Congress, 6 Republicans and 6 Democrats, was given the opportunity to come up with an alternate plan by November 2011 to implement the cuts, to prevent sequestration. They didn’t come up with a plan, and ever since Congress has been stuck with sequestration: a policy that neither party wanted.

In 2013 sequestration started. Sequestration requires across the board cuts of 7.6-9.6 percent to all discretionary spending programs, with 50% of the cuts coming from defense spending and 50% coming from non-defense spending. Lawmakers also refer to the mandated cuts as "budget caps."

Why does it matter?

To achieve the $1.2 trillion dollar goal, the government must cut hundreds of billions of dollars every year, split equally across the federal budget. Here’s what that means in layman’s language, according to Todd Harrison, the director of defense budget analysis at the Center for Strategic and International Studies, as explained to Business Insider:

"To better understand how sequestration works, imagine if you had to cut your personal budget by a certain percentage. If given the flexibility to choose how these cuts are allocated, you would probably cut back on nonessential things, like going out to dinner or buying the latest cell phone."

"But under sequestration rules, you would be forced to cut each item in your budget by the same percentage — even things like rent payments and insurance premiums. That kind of cutting can create a lot of problems and end up costing more in the long run."

Sen. Patrick Leahy (D-VT) has implored Congress to agree to a new budget deal which would allow them to repeal the Budget Control Act:

"While the Chair and Ranking Member did a good job with the resources provided to them, the fact remains that the allocation for this bill is 12 percent below the level it was in fiscal year 2010, and we cannot "Make America Great Again” with these kinds of cuts. We MUST reach a bipartisan agreement to lift the irresponsible and reckless caps set in place by the Budget Control Act. The appropriations process cannot produce responsible legislation to fund the priorities of our government if we do not reach such an agreement.”

The agreement he’s referring to would have to involve the kind of deal that the supercommittee was supposed to develop, involving $1.2 trillion in cuts overall while spreading the burden disproportionately across the federal discretionary budget. If that agreement fails Congress would have to agree not only to an increase in the debt ceiling, but a completely different method for raising or lowering the debt limit moving forward.

Raising the debt ceiling will be at the top of the agenda when Congress returns from their August recess. The government reached the debt limit set in 2011 in March of this year and the Treasury Department has employed "extraordinary measures" ever since to keep the government open and repay U.S. debts. Whether or not they will manage to repeal the Budget Control Act at the same time is unlikely, but we’ll have to see.

What can you do?

Do you think Congress should repeal the Budget Control Act? Or do you think it's essential to reining in spending and reducing the deficit?

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— Asha Sanaker

(Photo Credit: Classenas.com / Creative Commons)