Sequestration: DC's Weird Idea of Cuts

The basics of automatic spending cuts.

ByABC News
February 15, 2013, 6:20 PM

Feb. 18, 2013 — -- It's the dirtiest word in Washington right now: "sequester."

Formerly wrapped up in the "fiscal cliff" that was poised to wreck America's economy at the end of the year, the dreaded "sequester" is the spending half of that taxes-and-spending equation: It amounts to across-the-board budget cuts that will strike in March barring an agreement on deficit reduction.

The "sequester" is yet another deadline in a long line of fiscal-policy stalemates that have hounded the U.S. political system in the last two years. Because its origins were esoteric and convoluted, the "sequester" is shrouded in a degree of Washington policy mystique.

Hopefully a few answers can de-mystify it:

Read more: Sequester Siren! Meat in Danger?

What Is the Sequester?

Across-the-board budget cuts. On March 1, barring agreement on a broader deficit-reduction package, many federal programs will see across-the board automatic spending reductions take effect over the next 10 years.

The 10-year cuts will total $1.2 trillion, and they'll apply equally to defense and non-defense spending.

Read more: Boehner Not Budging on Sequester Until Senate Acts

Where Did It Come From?

From Washington's ineptitude at decision-making. Budget sequestration was brought into existence as an enforcement mechanism to make Congress and the White House agree to a package that would reduce the deficit. They still haven't done it.

In August 2011, with the nation's debt-limit deadline fast approaching, and with the threat of credit downgrades and government shutdowns looming over partisan negotiations in Washington, congressional Republicans refused to up the federal debt ceiling without accompanying spending cuts to shrink the deficit.

When talks broke down, sides agreed on the Budget Control Act -- a measure that applied discretionary spending caps and also included a mandate for more deficit-reduction in the future. It created the congressional budget "supercommittee" -- the panel of representatives and senators that were given another deadline to propose a package of spending cuts and/or tax hikes to lower the deficit.

Sequestration was agreed upon as the unpleasant consequence of failure: If the committee couldn't recommend a package by late 2011, and if Congress couldn't pass it in January 2012, $1.2 trillion in automatic cuts would be triggered.

The ploy didn't work.

Read more: AG, FBI Warn Against Across-the-Board Spending Cuts

A Rolling Deadline

Sequestration should have happened by now, but Congress and President Obama gave themselves an extension.

When Congress missed its Jan. 15, 2012 deadline to approve a broad package of spending cuts, sequestration was triggered, slated to begin Jan. 2, 2013. But both sides agreed they could have until the cuts were actually supposed to take effect, giving themselves another (election) year to negotiate.

On the day of the deadline, however, Washington granted itself another extension. Along with their agreement to extend most of the Bush-era tax rates, Obama and Congress approved legislation to extend the sequestration deadline to March 1.

What Will Be Cut?

Federal agencies and their budgets, including defense spending. Both mandatory and discretionary spending will be cut.