Below is a summary of the Office of Management and Budget (OMB) report to Congress on the Joint Committee Sequestration mandated budgetary reductions triggered as a result of the failure of Congress to enact legislation to reduce the deficit by 1.2 trillion dollars. This report, dated March 1, 2013, provides OMB's calculations of the percentage and dollar amount of the reduction for each non-exempt budget account.
The law required the President to issue a sequestration order canceling $85 billion in budgetary resources across the Federal Government for FY 2013. The OMB calculates that the Joint Committee sequestration requires the following reductions over the course of the fiscal year:
• 7.8 percent in non-exempt defense discretionary funding
• 5.0 percent in non-exempt non-defense discretionary funding
• 2.0 percent to Medicare
• 5.1 percent to other non-exempt non-defense mandatory programs
• 7.9 percent to non-exempt defense mandatory programs
| Calculation of Total annual Reduction by function (in billions of Dollars) |
| Joint Committee required savings | 1,200.000 |
| Deduct debt service savings (18%) | -216.000 |
| Net programmatic reductions | 984.000 |
| Divide by 9 to calculate annual reduction | 109.333 |
| Reduction for FY 13 pursuant to section 901(a) of American Taxpayer Relief Act of 2012 (ATRA) | –24.000 |
| Net remaining programmatic reduction for FY 2013 | 85.333 |
| Split 50/50 between defense and nondefense functions | 42.667 |
Table 1
JUST SEVEN MONTHS INSTEAD OF TWELVE TO MAKE THE CUTS
The 5 percent cuts, mandated by the Budget Control Act of 2011 and incorporating several changes made by the American Taxpayer Relief Act of 2012, equate to nearly 9 percent cuts for all non-exempt, non-defense programs because they must be achieved over 7 months rather than 12, the report said.
Sequestration must be applied equally at the program, project, and activity level, but need not be applied equally to each type of budgetary resource within a budget account, the report said. The cuts will place many federal employees in administrative furlough, which may not begin until April due to a policy that requires agencies to bargain with federal unions at least 30 days prior to implementing any furloughs. Each agency has discretion to decide which employees will be furloughed.
CUSTOMS & BORDER PROTECTION (CBP) SHOULD PLAN TO TRIM BACK $512 MILLION FROM ITS 2013 BUDGET
The OMB detailed exactly how the $85 billion in cuts (see table 1 above) would affect federal agencies following the President's release of the sequestration order March 1.
CBP will see a 5 percent cut, or $512 million from its $10.2 billion budget, the report said. Programs within CBP said to see cuts as a result include: automation modernization ($17 million), payments to wool manufacturers ($1 million) and Border Security Fencing, Infrastructure, and Technology ($20 million).
The 5 to 5.1 percent cuts in non-exempt non-defense discretionary and mandatory funding translate into millions of dollars per government agency. In addition to CBP, the chart below lists some of the cuts to other agencies that impact international trade.
| Sequestrable Budgetary Resources and Reductions in Sequestrable Resources by OMB Account -- FY 2013 |
| Government Agency | Millions $ |
| U.S. Customs and Border Protection | 512 |
| Immigration and Customs Enforcement (ICE) | 294 |
| Transportation Security Administration (TSA) | 276 |
| Food and Drug Administration salaries and expenses. | 209 |
| Dept. of Agriculture, Animal and Plant Health Inspection Service | 56 |
| Dept. of Agriculture, Food Safety and Inspection Service | 53 |
| International Trade Commission | 23 |
| Federal Trade Commission | 16 |
| Dept. of Commerce, The Bureau of the Census | 14 |
| Consumer Product Safety Commission, salaries and expenses | 6 |
| Dept. of Commerce, International Trade Administration | 4 |
| U.S. Trade Representative's Office | 3 |
| Court of International Trade's salaries and expenses | 1 |
The OMB said the cuts will be "deeply destructive to national security, domestic investments, and core government functions", said a letter signed by OMB Deputy Director for Management Jeffrey Zients. It stated that according to analysis by outside experts, sequestration would reduce real GDP growth for 2013 by 0.5 to 0.7 percentage points were it to continue for the rest of the calendar year.
Source: Office of Management and Budget (OMB) Report
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