Take a look at the history of sequestration from its first use in the 1980s to today’s cuts.
Take a look at the history of sequestration from its first use in the 1980s to today’s cuts, according to information from the University of California-Berkeley's "Slaying the Debt" research project, Slate.com, Politifact and other sources.
The concept of sequestration was introduced in 1985 as an amendment on a bill to raise the debt ceiling. This amendment included a plan to reduce the deficit and balance the budget by 1991. It was called the Balanced Budget and Emergency Deficit Control Act, better known as Graham-Rudman-Hollings.
As an incentive to stick to the plan, Graham-Rudman-Hollings included automatic spending cuts, or sequestration, that would go into effect if yearly budget goals weren’t met, with half of the cuts going to defense programs and half to other domestic spending. Social Security, Medicare, anti-poverty programs and debt payments wouldn’t be affected by sequestration.
Graham-Rudman-Hollings passed both chambers with bipartisan support, and President Ronald Reagan signed it into law in December 1985.
The Supreme Court overturned Graham-Rudman-Hollings in 1987, ruling the way the sequestration was set up gave Congress too much power. The law was rewritten and passed again in 1987. The new law called for a balanced budget by 1993.
In 1990, the Budget Enforcement Act, which was part of a larger spending bill, created a new set of rules. This set up the pay-as-you-go system, or PAYGO. Under this system, any increased entitlement spending -- for instance, an increase in Medicare benefits -- would need to be paid for by equal cuts in another area or tax increases. The same was true of any tax cuts. For other parts of the budget, yearly spending targets were set.
This act was designed by President George H.W. Bush and moderate members of Congress from both major parties. It didn’t initially pass, partially because conservative Republicans rejected tax hikes included in the bill and liberal Democrats didn’t like other measures. Bush wouldn’t sign an extension of the existing budget, which put pressure on Congress to act quickly. The act ultimately passed and was signed into law.
PAYGO was in place for most of the 1990s, and many give it partial credit for a budget surplus in 1998. However, the act that instituted PAYGO expired in 2002.
The House of Representatives put PAYGO back into place in 2006, shortly after Democrats won back control of both houses of Congress, and the Senate passed a similar measure in 2008, but with one key difference: The old PAYGO system was a law that required increased spending be offset by budget cuts or more revenue. The new PAYGO system is a procedural rule that doesn’t legally require those offsets.
In the summer of 2011, the United States was going to bump into the debt ceiling, a limit on the government’s borrowing. Without raising the debt ceiling, the government would not have been able to borrow to cover existing debts. House Republicans wanted spending cuts as part of a deal to raise the debt ceiling.
The result was a compromise crafted in August 2011: In exchange for raising the debt ceiling, a bipartisan committee (which came to be known as the supercommittee), would craft legislation that would cut future spending by $1.2 trillion over 10 years.
If the supercommittee failed, $85 billion in spending cuts -- also known as sequestration -- would hit, targeting both defense spending and other domestic spending starting Jan. 1, 2013. The proposal for including sequestration in the bill originated from members President Barack Obama’s administration and was agreed to by Congressional Republicans, including House Speaker John Boehner. The theory was these cuts were so abhorred by both sides of the aisle that they would be forced to make a better compromise.
The supercommittee failed. Without a better plan, the spending cuts were supposed to go into effect Jan. 1, 2013 -- the same time tax cuts passed under President George W. Bush in 2002 were supposed to expire. Economists and others feared the combination of huge spending cuts, tax hikes and an economy still struggling to recover hitting at the same time would create a huge blow to the economy: the so-called fiscal cliff.
Republicans and Democrats crafted a scaled-down compromise that let the Bush-era tax cuts expire for those making more than $400,000 a year and become permanent for Americans making less. It also delayed spending cuts two months, to March 1.
A few bills have been passed that in theory would avert sequestration, but in reality couldn’t pass both houses with bipartisan support.
A May 2012 bill passed by House Republicans would have shifted all the cuts away from defense and onto other parts of the budget that Democrats generally want to protect. A late December 2012 bill would have replaced across-the-board cuts with cuts that target programs Obama supports, most notably spending to institute the health care law, but that bill expired with the last Congress.
Senate Democrats unveiled two proposals in mid-February that combined spending cuts with more tax revenue. One plan would raise taxes on on millionaires -- the so-called Buffett Rule -- and the other would close tax loopholes, but Republicans have made it clear they want no tax hikes.
In the days before the March 1 deadline, the parties spent more time blaming each other than coming up with a realistic solution. Republicans took to calling the sequestration "Obama’s sequester" to try to shift blame solely to the president. Members of the administration touted the dire consequences cuts could mean to the general public, which many Republicans said were exaggerated to scare people.
March 1 has now dawned with no compromise in sight. A few federal agencies have started handing out furlough notices, and more are expected to come starting Monday, according to CNN. Since federal agencies usually give 30-day notices before furloughs, most effects will likely be felt in early April -- assuming Congress doesn’t pass a deal before then.
The next date to watch will be March 27, which is when the current federal funding authority expires. If the funding authority isn't at least extended by then, the government would be forced to shut down. Whether Congress and the White House would also legislation that would avert a government shutdown to also solve the sequestration remains to be seen.
Click here to read about where Americans will feel the spending cuts the most.
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