§903 Enforcing Deficit Targets

Summary

After Congress ends a session (except the One Hundred First Congress), within 15 calendar days and after any cuts already made under the rules for discretionary spending (section 901) or pay-as-you-go (section 902), the government must make additional automatic spending cuts if the “excess deficit” is bigger than the allowed margin. The excess deficit is the estimated budget deficit for the year minus three things: the maximum deficit amount for that year, any amounts officially labeled as emergency under section 902(e), and, when a full technical reestimate is not done, the deposit insurance reestimate for that year. The margin is $0 for fiscal years 1992 and 1993, and $15,000,000,000 for fiscal years 1994 and 1995. Half of any needed cuts must come from non-exempt defense accounts (function 050 in the President’s 1991 budget) and half from non-exempt non-defense accounts. Defense cuts are made by reducing each non-exempt defense account by the same percentage of its sequester-able resources, with special adjustments if military personnel pay is exempt. Non-defense cuts are done in order: first reduce automatic increases, then apply the maximum allowable reductions to guaranteed student loans and to foster care/adoption assistance, and finally 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 in total (counting any earlier cuts), and if those caps limit reductions, the uniform percentage for other programs is increased to reach the required total savings. Baseline calculations assume accounts are at baseline levels minus any reductions already required under sections 901 and 902. If only part-year funding is in place when the cut date comes, the dollar cut is taken from the account’s annualized amount and later full-year funding, but the cut is reduced if the enacted amount is below the baseline. Adjustments to the maximum deficit numbers for 1992–1995 follow rules tied to the President’s budget submissions and OMB reestimates. Initial deposit insurance estimates for 1994 and 1995 are set in the FY1993 budget; later reestimates are the difference between current estimates and those initial amounts, assuming the same guarantee commitment and full funding.