The term sequestration refers to spending reductions applied to programs of the Federal Government. The term “across-the-board” is usually used to describe these, and it is accurate with reservations and caveats. A “sequestration”, or to “sequester” a program, means the deactivation of the authority of a Federal agency to contractually obligate budget resources for a purpose previously authorized by Congress. This occurs as a result of an order issued by the Director of the Office of Management and Budget, and is automatically required when certain statutory events occur. By removing the authority to enter into obligations, the budgetary resources are “cancelled”.
Brief History of Sequestration
Sequestration was first used in the Balanced Budget and Emergency Deficit Control Act of 1985 (Pub. L. 99-177). BBEDCA established annual Maximum Deficit Amounts the automatic spending reductions enforce those levels. In 1987, the Supreme Court struck down important aspects of BBEDCA, including the sequestration administrative authority that had been originally given to the Government Accountability Office (then known as the General Accounting Office) in Bowsher v. Synar. Congress responded by enacting the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (Pub. L. 100-119), which moved the enforcement authority from GAO to the Office of Management and Budget. In doing so, Congress reset the Maximum Deficit Amounts, preventing a sequester from occurring, and extended the years to which the limits applied.
The Budget Enforcement Act of 1990 (Pub. L. 101-508) replaced the MDAs with the pay-as- you-go (PAYGO) procedures. This new deficit control procedure was designed to control new direct spending and new revenue reductions caused by prospectively enacted legislation. It also put in place discretionary spending limits to control the level of discretionary spending. These two enforcement regimes were originally designed to last through fiscal year 1996, but were extended through 1998 and then through fiscal year 2002, both used sequestration as the enforcement mechanism.
The deficit reduction side of the enforcement system was reestablished by the Statutory Pay-As-You-Go Act of 2010 (Pub. L. 111-139) and the discretionary spending limits by the Budget Control Act of 2011 (Pub. L. 112-25), both bringing back the BBEDCA sequestration enforcement mechanism. The BCA, though, also established a a Joint Committee on Deficit Reduction. Section 401 (BCA) created the committee and charged it with producing a law that would reduce the deficit by $1.5 trillion over the period of fiscal years 2012 to 2021 . When it failed to do so, the BCA set up a backstop automatic spending reduction system using the sequestration concept to achieve the somewhat smaller goal of reducing the deficit by $1.2 trillion.
Sequestration (Budget Enforcement Act Term)
Under Budget Enforcement Act (BEA) provisions, which expired in 2002, the cancellation of budgetary resources provided by discretionary appropriations or direct spending laws. New budget authority, unobligated balances, direct spending authority, and obligation limitations were “sequestrable” resources; that is, they were subject to reduction or cancellation under a presidential sequester order. (See also Budgetary Resources; Entitlement Authority; Gramm-Rudman-Hollings; Impoundment; Rescission.)
Reports by the Congressional Research Service
Definitions of Sequester and Sequestrable Resource
Sequester: Pursuant to [the Balanced Budget and Emergency Deficit Control Act of 1985], a presidential spending reduction order that occurs by reducing spending by uniform percentages.
Sequestrable Resource: Pursuant to [the Balanced Budget and Emergency Deficit Control Act of 1985] federal funding authority (budgetary resources) subject to reductions under a presidential sequester order for achieving required outlay reductions (in non-exempt programs).
[The Congressional Budget Process: An Explanation, Appendix J (Glossary), Committee on the Budget of the U.S. Senate, S. Prt. 105-67 (Revised December 1998).]