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, CSFP, 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.
Since the super committee failed to produce a bill, automatic across-the-board cuts (a “sequestration”) in the amount of $1.2 trillion are scheduled to take effect (unless Congress intervenes this year). One half of those cuts will be in defense (just defense – not the other “security” programs), and one half will be in entitlement programs. However, Social Security, Medicaid, Unemployment Insurance, SSI, SNAP/Food Stamps, child nutrition programs and TANF are exempt from the cuts (the bill’s language refers back to a 1985 law providing exemption from cuts for specified programs). Medicare can be cut, but there is a cap on that cut and it only applies to providers.
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