As we reported in our recent White Paper on Sequestration and in the latest edition of Legal Briefs, one of the first steps in the sequestration process is the preliminary announcement by OMB of the cuts to be made on January 2, 2013, unless Congress takes some other action. (In this regard, please note that the fact that Congress passes a Continuing Resolution to maintain government spending at the FY 2012 level through the first six months of FY 2013, until March 2013, will have no effect on sequestration. The amount to be sequestered will simply be subtracted from the amount made available by the Continuing Resolution for the agencies to spend.)

On Friday, September 14, 2012, OMB came out with its report. The report included a breakdown of exempt and non-exempt budget accounts and a preliminary estimate of the funding reductions that would be required across non-exempt accounts. In the preamble, the Administration indicated that, "The sequestration itself was never intended to be implemented" and "that it strongly believes that sequestration is bad policy," (i.e., that it is a blunt and indiscriminate instrument which is not the responsible way to achieve deficit reduction), and "that Congress can and should take action to avoid it by passing a comprehensive and balanced deficit reduction package."

The report indicates sequestration would result in a 9.4 percent reduction in non-exempt defense discretionary funding and an 8.2 percent reduction in non-exempt nondefense discretionary funding. The sequestration would also impose cuts of 2.0 percent to Medicare, 7.6 percent to other non-exempt nondefense mandatory programs, and 10.0 percent to non-exempt defense mandatory programs. More specifically, the report provides preliminary estimates of the sequestration's impact on more than 1,200 budget accounts and makes clear that sequestration would have a devastating impact on important defense and nondefense programs.

DEFENSE SPENDING CUTS

While the Department of Defense would be able to shift funds to ensure war fighting and critical military readiness capabilities were not degraded, sequestration would result in a reduction in readiness of many non-deployed units, delays in investments in new equipment and facilities, cutbacks in equipment repairs, declines in military research and development efforts, and reductions in base services for military families.

NONDEFENSE SPENDING CUTS

On the nondefense side, OMB notes, among other things, that:

  • Sequestration would undermine investments vital to economic growth, threaten the safety and security of the American people, and cause severe harm to programs that benefit the middle-class, seniors, and children. Education grants to States and local school districts supporting smaller classes, after-school programs, and children with disabilities would suffer;
  • The number of Federal Bureau of Investigation agents, Customs and Border Patrol Agents, correctional officers, and federal prosecutors would be slashed;
  • The Federal Aviation Administration's ability to oversee and manage the Nation's airspace and air traffic control would be reduced;
  • The National Institutes of Health would have to halt or curtail scientific research, including needed research into cancer and childhood diseases; and
  • The Federal Emergency Management Agency's ability to respond to incidents of terrorism and other catastrophic events would be undermined.

PRELIMINARY AMOUNTS TO BE SEQUESTERED

Set forth below are the preliminary amounts to be sequestered in some of the accounts regarding which our wide array of clients are interested.

Click here to view table.