The Debt Ceiling Deal

Issues to be considered by supercommittee:
Sequester

If the supercommittee or Congress does not vote for the recommendations, automatic cuts will be triggered. A sequester also will take place if the total $1.2 trillion in cuts are not achieved by Congress. In this case, the sequester would make up the difference.

In the sequester order, Social Security, Medicare, Medicaid and other programs that serve low-income families will be exempt. However, the automatic cuts would trigger a decrease in Medicare payments to providers and insurance plans by 2 percent (a decrease of about $10 billion in 2013). Cuts would not affect beneficiaries, but would affect payments to providers and insurance plans. In addition, the sequester order would call for discretionary programs like Medicare to face a second round of cuts of roughly $55 billion annually from 2013 to 2021.

The sequester would mean that no new revenues would be added to the budget. Instead, cuts would be made to reduce the budget only through spending cuts, which would hit the middle class the hardest.

Fifty percent of these cuts would be in domestic discretionary spending (e.g., education, transportation, health research, aid to state and local governments) and 50 percent in defense spending. It would begin in fiscal year 2013, which starts Oct. 1, 2012. 

« Previous |