H.R. 4966: Sequester Replacement Act of 2012

H.R. 4966

Sequester Replacement Act of 2012

Sponsor
Rep. Paul Ryan

Date
May 10, 2012 (112th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Thursday, May 10, 2012, the House is scheduled to consider H.R. 4966, the Sequester Replacement Act of 2012. The bill was introduced on April 27, 2012, by Rep. Paul Ryan (R-WI) and referred to the House Budget Committee.

Bill Summary

H.R. 4966 would amend the Budget Control Act (BCA) to repeal the automatic discretionary cuts scheduled to occur on January 2, 2013 as a result of sequestration. The bill would remove the distinction between defense and other discretionary programs subjected to automatic cuts under sequestration and set the caps on all discretionary spending subject to sequestration at $1.028 trillion. The bill would also remove veterans’ medical care from the accounts subject to sequester under the BCA. The automatic defense and discretionary sequestration cuts repealed under H.R. 4966 would be fully replaced by accompanying legislation (the Sequester Replacement Reconciliation Act of 2012) which is also scheduled to be considered on May 10, 2012. Provision of the legislation would be contingent on the enactment of the Reconciliation legislation contained in section 201 of the FY 2013 House Concurrent Budget Resolution (H. Con. Res. 112).  

In addition, the legislation would lower the discretionary spending caps under the BCA in order to reflect the discretionary spending levels contained in tH.Con.Res. 112. The bill would lower discretionary spend limits set forth in the BCA by $19.1 billion, from $1.047 trillion to $1.028 trillion. Under the BCA, the sequestration process would automatically lower the BCA discretionary limits from $1.047 trillion to $949 billion on January 2, 2013. Thus, H.R. 4966 would replace the BCA limit beginning on January 2, 2013, to ensure that the automatic discretionary cuts would not occur and to ensure that new discretionary limits reflect the amounts agreed to in H.Con.Res. 112. The legislation would have no impact on the discretionary spending levels agreed to in H.Con.Res. 112 during the first three months of FY 2013. Discretionary spending from the beginning of FY 2013 through January 2, 2013, would still be subject to the 302(a) limits set forth in the Budget Resolution ($1.028 trillion).

Background

On August 1, 2011, the House approved the Budget Control Act (BCA) of 2011 (S. 365), by a vote of 269-161. Among other things, the bill established the Joint Committee on Deficit Reduction (“Super Committee”) with the stated goal of producing recommendations to achieve between $1.2 trillion and $1.5 trillion in deficit reduction legislation. The BCA provided that, if the specific deficit reduction targets were not met, automatic sequestration of mandatory and discretionary spending would occur beginning on January 2, 2013, to achieve cuts equal to a debt limit increase of $1.2 trillion. Under the bill, half of the annual sequestration under this section would be derived from defense accounts (budget function 050) and half from non-defense accounts.

As a result of political posturing by the Democrats, the “Super Committee” failed to report and Congress failed to enact $1.2 trillion in deficit reduction last December. Thus, current law requires that there be across-the-board cuts, known as a “sequester,” imposed on January 2, 2013. The sequester will result in a 10 percept reduction in Department of Defense programs and an 8 percent reduction in certain domestic programs, such as the National Institutes of Health (NIH) and border security.

Intended as a mechanism to force action, there is bipartisan agreement that the sequester going into place would undercut key responsibilities of the federal government.

As the Obama Administration makes clear in their own Budget, “By design, the sequester is not good policy and is meant to force Congress to take action: it would lead to significant cuts to critical domestic programs such as education and research and cuts to defense programs that could undermine our national security. … [C]uts of this magnitude done in an across-the-board fashion would be devastating both to defense and non-defense programs.” [The Budget of the United States Government, Fiscal Year 2013, p. 24, February 13, 2012]

Of particular concern is the impact sequestration, if allowed to occur, would have on our national security.

The sequestration cuts would be on top of the savings in discretionary defense spending that were already implemented as part of the debt limit agreement last August.

The House Armed Services Committee has analyzed the impact of the sequestration, and found that if left in place, sequestration would cut the military to its smallest size since before the Second World War – all while we are still a nation at war in Afghanistan, facing increased threats from Iran and North Korea, unrest in the Middle East, and a rising China. 

Major consequences include:

  • 200,000 soldiers and Marines separated from service, bringing our force well below our pre-9/11 levels;
  • Ability to respond to contingencies in North Korea or Iran at jeopardy;
  • The smallest ground force since 1940;
  • A fleet of fewer than 230 ships, the smallest level since 1915;
  • The smallest tactical fighter force in the history of the Air Force;
  • Our nuclear triad that has kept the US and 30 of our allies safe for decades will be in jeopardy;
  • Reductions of 20 percent in defense civilian personnel; and
  • Two BRAC rounds of base closings.

[House Armed Services Committee Memo “Assessment of Impacts of Budget Cuts”, 9/22/2011]

 

Secretary Panetta and the professional military leadership have also looked at the impact of sequestration and reached similar conclusions:

Secretary Panetta stated, “If the maximum sequestration is triggered, the total cut will rise to about $1 trillion compared with the FY 2012 plan.  The impacts of these cuts would be devastating for the Department… Facing such large reductions, we would have to reduce the size of the military sharply.  Rough estimates suggest after ten years of these cuts, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest Air Force in its history.” [Secretary Panetta, Letter to Senator John McCain, 11/14/2011]

General Dempsey, Chairman of the Joint Chiefs of Staff, stated, “[S]equestration leaves me three places to go to find the additional money: operations, maintenance, and training. That’s the definition of a hollow force.”

The individual branch service chiefs echoed General Dempsey: 

  • “Cuts of this magnitude would be catastrophic to the military…My assessment is that the nation would incur an unacceptable level of strategic and operational risk.” – General Ray T. Odierno, Chief Of Staff, United States Army
  • “A severe and irreversible impact on the Navy’s future,” – Admiral Jonathan W. Greenert, Chief of Naval Operations
  • “A Marine Corps below the end strength that’s necessary to support even one major contingency,” – General James F. Amos, Commandant of the Marine Corps
  • “Even the most thoroughly deliberated strategy may not be able to overcome dire consequences,” – General Norton A. Schwartz, Chief of Staff, United States Air Force

[Testimony of Service Chief before House Armed Services Committee, 11/2/2011]

Armed Services Ranking Member Adam Smith recently gave a speech about the need to reverse sequestration.  During a question and answer period after the speech, he stated, “What I am saying is, we are going to have to re-write the sequestration law before January 1, one way or another, in order to make sure i[t] makes sense and can fit.  I believe that between now and then we will find $1.2 trillion in deficit reduction somewhere, somehow, and avoid the immediate sequestration.  But as the gentleman asked, the problem is now.  If we wait until September we will have done great harm to the economy.”

According to an analysis by the House Appropriations Committee, the sequester will also have a significant impact on non-defense discretionary programs, including:

  • Automatically reducing Head Start by $650 million, resulting in 75,000 fewer slots for children in the program;
  • Automatically reducing the National Institutes of Health (NIH) by $2.4 billion, an amount equal to nearly half of total NIH spending on cancer this year; and
  • A reduction of approximately 1,870 Border Patrol Agents (a reduction of nearly 9% of the total number of agents).

Democrats Have Failed to Offer a Credible Solution

While both Republicans and Democrats have warned of the consequences from both immediate sequestration cuts and the looming debt crisis, the President and leading Senate Democrats refuse to advance credible solutions:

  • The President insists on taking more money from hardworking families and small businesses, a policy that will only exacerbate our current economic problems.
  • Just as bad, Senate Democrats have failed to pass a budget in more than 1,000 days, and have chosen to give up on budgeting again this year.

Common-Sense Republican Reforms

Pursuant to the Budget Resolution, the House will advance a series of reforms that replace across-the-board cuts scheduled in law with common-sense reforms that take steps to address government’s autopilot spending. 

Six House Committees will advance legislation that will:

  • Stop Fraud, by Ensuring that Individuals are Actually Eligible for the Taxpayer Benefits They Receive;
  • Eliminate Government Slush Funds and Stop Bailouts;
  • Control Runaway, Unchecked Spending;
  • Restrain Spending on Government Bureaucracies; and
  • Reduce Waste and Duplicative Programs.

The savings from these reforms will replace the arbitrary discretionary sequester cuts and lay the groundwork for further efforts to avert the spending-driven economic crisis before us.

Cost

According to CBO, if the contingency in H.R. 4966 is met, enacting the bill would increase direct spending by about $72 billion over the 2013-2022 period, relative to the current baseline projections that assume automatic spending reductions under the Budget Control Act of 2011 go into effect as currently scheduled. However, in order for these contingencies to be met, the Sequester Replacement Reconciliation Act of 2012 which reduces spending by $261 billion over ten years would have to be enacted.