Sequestration, if implemented, would require defense and nondefense agencies to make a total of $984 billion in automatic cuts over nine years ($109 billion per year) according to a report sent to Congress last week by the Office of Management and Budget (OMB). The cuts would be evenly distributed between defense and nondefense functions. Reductions of this magnitude, the report stressed, would have a “devastating impact on important defense and nondefense programs,”
OMB prepared the report as required by the Sequestration Transparency Act of 20152 (P.L. 112-155). The report shows estimates of the reductions (by account) that would be made if sequestration goes into effect on January 2, 2013. Reduction estimates for over 1,200 accounts (defense and nondefense) are identified in the report.
OMB estimates that $492 billion would be cut over nine years from defense accounts: $491.4 from discretionary accounts and $.6 billion from the few defense mandatory accounts. Each year, beginning in FY2013, defense discretionary accounts would be cut by $54.6 billion and mandatory accounts by less than $.1 billion.
Nondefense functions would also have to be reduced by $54.7 billion annually. Of this total each year, nondefense discretionary accounts would be cut by $38.0 billion. Medicare would be cut by no more than 2 percent ($11.1 billion) and other non-Medicare mandatory accounts would be reduced by $5.6 billion).
OMB estimates that sequestration would require a 9.4 percent cut in defense non-exempt discretionary funding for defense accounts. The report shows reduction estimates for more than 80 separate DoD appropriations accounts (e.g., O&M, Army; Shipbuilding and Construction, Navy; Aircraft procurement, Air Force; Military Construction, Army National Guard; Procurement, Defense Agencies), which accounts for almost 95 percent of the total defense function. The remainder includes accounts in other agencies’ defense functions (e.g., Department of Energy National Nuclear Security Administration weapons activities).
The president exercised the option to exempt Military Personnel accounts, so no cuts would be made from those accounts. The OMB report notes that Overseas Contingency Operations (OCO) accounts and unobligated balances from prior years are sequestrable.
The report does not identify the effects on specific DoD programs, although the working assumption has been that the cuts within the accounts would be distributed “across-the-board.” The report does state that some flexibility is needed for DoD to shift some funds to protect war fighting and critical military readiness capabilities. Nevertheless, OMB points out that sequestration would reduce the readiness of non-deployed units, delay new investment, cut research and development efforts, and reduce support for servicemembers’ families.
Nondefense non-exempt discretionary funding would be cut by 8.2 percent. Medicare would be cut by 2 percent and other nondefense mandatory accounts would be cut by 7.6 percent. As with defense, the OMB report does not show estimates of sequester cuts by program. As with defense, the report does not address the effects on specific nondefense programs.
OMB stresses the estimates in the report are preliminary. Actual reductions would be “based on changes in law and ongoing legal, budgetary, and technical analysis.”