sec. 6. CALCULATING A SEQUESTRATION. 

(a) Reducing Nonexempt Budgetary Resources by a Uniform Percentage.—

(1) In general.—OMB shall calculate the uniform percentage by which the budgetary resources of nonexempt direct spending programs are to be sequestered such that the outlay savings resulting from that sequestration, as calculated under subsection (b), shall offset the budget-year debit, if any, on the applicable PAYGO scorecard. If the uniform percentage calculated under the prior sentence exceeds 4 percent, the Medicare programs described in section 256(d) of BBEDCA shall be reduced by 4 percent and the uniform percentage by which the budgetary resources of all other nonexempt direct spending programs are to be sequestered shall be increased, as necessary, so that the sequestration of Medicare and of all other nonexempt direct spending programs together produce the required outlay savings.

(2) Programs and activities in unified budget only.— Subject to the exemptions set forth in section 11,^[1] OMB shall determine the uniform percentage required under paragraph (1) with respect to programs and activities contained in the unified budget only.

(b) Outlay Savings.—In determining the amount by which a sequestration offsets a budget-year debit, OMB shall count—

(1) the amount by which the sequestration in a crop year of crop support payments, pursuant to section 256(j) of BBEDCA, reduces outlays in the budget year and the subsequent fiscal year;

(2) the amount by which the sequestration of Medicare payments in the 12-month period following the sequestration order, pursuant to section 256(d) of BBEDCA, reduces outlays in the budget year and the subsequent fiscal year; and

(3) the amount by which the sequestration in the budget year of the budgetary resources of other nonexempt mandatory programs reduces outlays in the budget year and in the subsequent fiscal year.

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COUNSEL NOTES

Codification

This section is classified to the U.S. Code as at 2 U.S.C. 935. 

Endnotes

[1] Section 11 (S-Paygo) amended the list of programs exempt from sequestration a set forth in section 255 (BBEDCA). Section 255, though, has been amended since the enactment of S-Paygo and hence this reference is no longer correct in that section 11 (S-Paygo) differs from section 255 (BBEDCA). The Office of Management and Budget ignores the discrepancy in the reference even though it means ignoring the legal requirements. 

Budget Control Act of 2011

This calculation of sequestration is distinct from the procedures applied under section 251A (BBEDCA), which was set forth in the Budget Control Act of 2011 (Pub. L. 112-25) when it amended the Balanced Budget and Emergency Deficit Control Act of 1985. For example, under section 251A, the reduction in Medicare costs is capped at two percent rather than the four percent under the Statutory Pay-As-You-Go Act of 2010. 

S-PAYGO Section-by-Section (Congressional Record)

The Statutory Pay-As-You-Go Act of 2010 (Pub. L. 111-139) does not have a formal report for it. Senator Kent Conrad (D-ND) inserted a section-by-section in the Congressional Record, which summarized this section:   

Section 6. Calculating a Sequestration: Section 6 describes how sequestration is to be implemented if triggered. Many mandatory programs, such as Social Security, veterans’ disability and other benefits, and major low-income entitlements, such as Supplemental Security Income and Medicaid, are totally exempt from sequestration. Only programs in the unified budget are subject to sequestration.

With the exception of Medicare, non-exempt mandatory programs would be cut by a uniform percent, such that the outlay savings produced in the budget year and the subsequent fiscal year would be sufficient to fully offset the budget-year debit on the PAYGO ledger. Medicare can be cut by no more than four percent. If a larger cut is needed to offset the debit on the PAYGO ledger, the uniform percentage cut to the other non-exempt mandatory programs would be increased so that the sequester of Medicare and the other non-exempt programs would together produce sufficient savings to offset the budget-year debit. Sequestrations are temporary, not permanent, and with a few exceptions occur only in the budget year.

For most non-exempt mandatory programs, the uniform sequestration percentage reduces budgetary resources by a specified percent over the course of the entire fiscal year. If a sequestration starts a month or more into the fiscal year because Congress adjourns in November or December, then the reduction during the remaining 9, 10, or 11 months of the fiscal year will be larger than the uniform percentage so that the average sequestration over the year equals the required uniform percentage. In the case of Medicare, the sequestration lasts for a full 12 months even if it takes effect after the beginning of the fiscal year, in which case it will run into the start of the next fiscal year. This means the uniform percentage cut in payments to providers or insurance plans will not be higher at any time than the four-percent limit (or the calculated uniform percentage, if lower).

In the case of price support payments for crops, the sequestration for any given crop will start at the beginning of the next crop year. As a consequence, sequestrations for crops will not all be running concurrently, and some sequestrations may occur partly in the following fiscal year.

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LEGISLATIVE HISTORY NOTES

PUBLIC LAWS

Pub. L. 111–139, title I, §6, Feb. 12, 2010, 124 Stat. 8 (Statutory Pay-As-You-Go Act of 2010).

References in Text

Section 11, referred to in subsection (a)(2), means section 11 of Pub. L. 111–139, which amended section 255 of the Balanced Budget and Emergency Deficit Control Act of 1985.

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[BCR § 286]