§903 Enforcing deficit targets

Summary

When Congress ends a session (except the One Hundred First Congress), within 15 calendar days there must be a spending cut called a sequestration if, after other required cuts under sections 901 and 902, an “excess deficit” still remains above the allowed margin. The excess deficit means the estimated budget deficit for the year minus three things: the maximum deficit allowed for that year, any amounts officially labeled as emergency under section 902(e), and, in years without a full technical and economic reestimate, the deposit insurance reestimate for that year. To fix the excess deficit, half of the needed cuts come from non-exempt defense accounts (function 050) and half from non-exempt non-defense accounts. Defense accounts are cut by taking each account’s sequesterable funds and applying one uniform percentage, with special adjustments if some military pay is exempt. Non-defense cuts happen in order: first stop certain automatic spending increases, then apply the maximum allowed reductions to guaranteed student loans and to foster care and adoption assistance, and then cut the remaining non-exempt non-defense accounts by a uniform percentage. Medicare and certain health programs cannot be cut by more than 2 percent total (counting earlier cuts under sections 901 or 902). When computing cuts, accounts start from the baseline minus any reductions already required under sections 901 and 902. If only part-year appropriations are in effect when the sequestration is calculated, the dollar cut is taken from the annualized amount available then and later from any full-year appropriation, reduced if the enacted amount is less than the baseline (but not below zero). When the President sent budgets for fiscal years 1992–1995, the maximum deficit limits for those years were to be adjusted using updated economic and technical estimates, and OMB must apply the same adjustments in its sequestration reports. Initial deposit insurance estimates for fiscal years 1994 and 1995 were set in the fiscal year 1993 budget; the reestimate for each year equals the current estimate minus that initial amount, using the same funding and guarantee assumptions.