The Deal’s Immediate Impact:
The Budget Control Act immediately raises the debt limit by $2.1 trillion, avoiding further debt limit increases until 2013. It simultaneously locks in a 10-year downward spiral in spending on discretionary (non-entitlement) programs – like WIC, TEFAP Administration (transportation and storage), Meals on Wheels, Title 1 education, Head Start, law enforcement, juvenile justice, LIHEAP and many others.
Over 10 years (FY 2012-FY 2021) the cuts will amount to $900 billion — $350 billion from defense and security spending (defined for this stage as defense, state and foreign operations, homeland security and veterans affairs) and $550 billion from non-defense discretionary, reducing the latter to levels not seen since the 1950s. These cuts are “backloaded” – the FY 2012 cuts will be painful but modest compared to later years. Pell grants are protected from cuts.
For the first two years (FY2012 and FY2013) there is a “firewall” between security and non-security programs —meaning that security cannot “raid” non-security spending and vice versa. That wall comes down in FY2014.
The Act also charged the “Super Committee” to develop a bill that would achieve $1.2 trillion/10 years in deficit reduction by November 23, 2011 and to vote on a bill by December 23, 2011. This process failed, triggering an automatic sequestration that would cut $1.2 trillion over 10 years, beginning in January 2013. These automatic cuts would be shared equally between defense and non-defense programs. Programs like SNAP, child nutrition, TEFAP commodities, Commodity Supplemental Food Program would be protected from these cuts.