Discretionary Spending Caps

For sequestration reports regarding the FRA spending caps see: https://govbudget.com/sequestration-reports/.

Fiscal Responsibility Act (FRA) Spending Caps for FYs 2024 and 2025  
 (billions of $)
 
FY 2023
(enacted)
(rounded)
FRA §101 2024 Caps¹
 
Jan. 7, 2024 Johnson-Schumer Agreement
(rounded)
FRA §102
2024 Caps as adjusted on 1/1/24
(but reverted to §101 caps on 3/23/24 w/ completion of
FY ’24 appropriations)
¹
Fiscal Respon-sibility Act
2025 Caps
 
Defense Discretionary
(base funding)
858.4 886.3 (President’s requested level) 886.3
(+3.3%)
849.8 895.212
(+1.1%)
Non-Defense
Discretionary (NDD)
(base funding)
743.9 703.7 703.7 736.5 710.688
Total Discretionary
(base funding)
1,602.2 1,590.0 1,590.0 1,586.2 1,605.9
   
NDD adjustments, aka $69 billion Side Agreement ²
     CHIMPs 15.0 25.0 15.0
     Emergencies 12.5 23.0 12.5
     IRS Rescission 10.0 20.2
     Commerce Rescission 11.0 12.4
     Covid-19 Rescissions   6.1
     BA offsets from housing receipts   2.8 (approx.) 
     Subtotal, NDD Adjustments 69.0 69.0
NDD Total
(w/ adjustments)
771.4 772.7 772.7
¹Pursuant to FRA §102, on 1/1/2024, the statutory discretionary caps were technically adjusted to levels one percent below FY 2023 base levels–which would have been enforced through OMB sequestration (uniform percentage across-the-board cuts) on April 30, 2024 if a CR had remained in effect for discretionary spending programs. This was designed to be an incentive to complete all 12 annual appropriations bills. Since all FY 2024 bills were completed on 3/23/24, the discretionary spending caps reverted to FRA §101 levels.  For sequestration reports regarding the FRA spending caps see: https://govbudget.com/sequestration-reports/.  
²Side agreement refers to $69 billion in additional nondefense funds enabled by budgetary adjustments agreed to by President Biden and Speaker McCarthy during negotiation of the FRA: rescission of $10 billion in IRS funding and $11 billion from a Commerce Department account that creates room for more discretionary spending under the cap; Changes in Mandatory Programs (“CHIMPs”) where rescission of $25 billion in mandatory budget authority allows for additional discretionary spending under the cap; and $23 billion in emergency funding, which is exempt from the discretionary caps.  See this explanation for more details.  However, the January 7, 2024 agreement changed the composition of the $69 billion, as reflected in this table, and reported by Roll Call.
 
 
Sources:  Sources: Letter from CBO to Speaker McCarthy, “CBO’s Estimate of the Budgetary Effects of H.R. 3746, the Fiscal Responsibility Act of 2023” (May 30, 2023), Tables 2 and 3; for FY 2023 BA levels, CBO table 1-S for H.R. 2617 published 12/21/2022; for FY 2022 BA levels, CBO Table 1 for HR 2471 published 03/14/2022; Jan 7, 2024 Johnson memo to House Republicans; CAP appropriations summary; CBPP explanation of side agreement.
 
 

Archives:  Discretionary Spending Caps

Overview:  Spending Caps

The congressional budget process, established by the Congressional Budget and Impoundment Control Act of 1974 (Budget Act; P.L. 93-344), was designed to be result-neutral. It gave Congress tools to evaluate and make changes to fiscal policy—Budget Committees, budget resolutions, and the Congressional Budget Office (CBO). The Budget Act was not designed to promote a particular fiscal policy.

Subsequent budget laws have added new procedures aimed at specific fiscal objectives. In 1985, the Balanced Budget and Emergency Deficit Control Act (BBEDCA, P.L. 99-177) sought to balance the federal budget through statutory maximum deficit amounts (deficit caps), and created the budget sequester mechanism—automatic across-the-board cuts in nonexempt budget accounts—to incentivize and enforce the intended result.

In 1990 Congress shifted its budget control strategy from deficit caps to controlling the growth of spending and deficits. The Budget Enforcement Act of 1990 (BEA; P.L. 101-508) established
statutory limits on discretionary spending (programs funded through annual appropriations). The BEA also established a new “pay-as-you-go” (PAYGO) deficit-neutrality requirement that legislation providing new mandatory spending, or reducing revenues, must be paid for with offsets. Violation of the discretionary spending caps, or the PAYGO requirement, were enforced using the sequester mechanism.

With the emergence of budget surpluses in the late 1990s, spending caps and PAYGO were allowed to expire in FY2002. By the end of the decade, however, concerns over budget deficits in the wake of the financial crisis and recession led to enactment of a new, permanent PAYGO statute in 2010, and new budget control legislation in 2011. The Budget Control Act of 2011 (BCA; P.L. 112-25) established new discretionary spending caps for each year through FY 2021, estimated to save $917 billion over ten years. The BCA also established a Joint Select Committee on Deficit Reduction (Joint Committee) to negotiate another $1.5 trillion in budget savings by December of 2011. As a fallback, the BCA provided that automatic spending reductions would be triggered if Congress did not enact at least $1.2 trillion in Joint Committee budget savings by January 15, 2012.

The January 2012 deadline was not met and $1.2 trillion in Joint Committee automatic reductions were triggered. The BCA applied most of the automatic budget savings to discretionary spending through reductions in the BCA spending caps (often called “sequester caps”), and the remainder of the savings were applied to mandatory spending through annual sequestration (across-the-board cuts in mandatory spending).

Subsequent legislation (four Bipartisan Budget Acts or “BBAs”) partially or fully rolled back the automatic discretionary cap reductions that were to take effect in each year through FY2021. However, the annual sequester of mandatory spending has been implemented each year—and extended numerous times, now in effect through FY 2031.


Budget Control Act of 2011

The Budget Control Act of 2011 (BCA; P.L. 112-25) was the result of negotiations between the President and Congress in response to two developments: (1) concern over annual budget deficits in the wake of the financial crisis and the 2007-2009 recession; and (2) the impending expiration of the Treasury’s borrowing authority under the statutory limit on the public debt (debt limit).

Two Tranches of Budget Savings:  In order to secure agreement to raise the debt limit, the BCA included two tranches of budgetary savings: (1) discretionary spending caps saving an estimated $917 billion over 10 years; and (2) a “Joint Committee process” to achieve another $1.5 trillion in deficit reduction.

For the initial tranche of budgetary savings, the BCA placed statutory limits on discretionary spending for FY 2012 through FY 2021.

To accomplish the second tranche of savings, the BCA established a bipartisan, bicameral Joint Select Committee on Deficit Reduction (Joint Committee). The committee was to negotiate a broad deficit reduction package to reduce deficits by $1.5 trillion over 10 years. As a fallback, automatic spending reductions would be triggered if Congress failed to enact at least $1.2 trillion in budget savings by January 15, 2012.

The January 15, 2012 deadline was missed—triggering the automatic reductions. Under the BCA, most of the $1.2 trillion in automatic reductions was to be achieved through annual reductions in discretionary spending—by across-the-board sequestration in FY2013, and formulaic reductions in the defense and nondefense discretionary spending caps in FY 2014 through FY 2021. However, subsequent legislation (the Bipartisan Budget Acts explained below) have rolled back much of these discretionary savings.

The remainder of the $1.2 trillion in savings was to be achieved through annual across-the-board cuts (sequestration) in all nonexempt mandatory spending. The automatic reductions in mandatory spending have been fully implemented—and extended for an additional 10 fiscal years through FY 2031.

Discretionary Spending Limits through FY 2021:  The BCA established limits on discretionary spending for a 10-year period, FY 2012-FY 2021.  Discretionary spending caps had previously been established by the Budget Enforcement Act of 1990 (BEA) and were twice extended in 1993 and 1997. However, when the federal budget was in surplus for four consecutive years—FY 1998 – FY 2001—the BEA caps were allowed to expire after FY 2002. Unlike the BEA caps that had placed limits on both budget authority and outlays for FY 1991 – FY 2002, the Budget Control Act of 2011 placed limits on budget authority alone.

Similar to the earlier BEA caps, the BCA caps are: (1) adjustable, effectively exempting certain types of spending from the caps; and (2) enforced through sequestration of budgetary resources in excess of the limits.

Categories: Security/Defense and Nonsecurity/Nondefense:  Initially, for F Y 2012 and FY 2013, the BCA established spending limits for “security” and “nonsecurity” categories. Security included discretionary spending for the Departments of Defense, Homeland Security, and Veterans Affairs, the National Nuclear Security Administration, intelligence community management, as well as discretionary spending in the international affairs budget function. All other spending was included in the “nonsecurity” category.  For FY 2014 through FY 2021, the BCA established only one cap, for all discretionary budget authority.


 Table 1. Statutory Limits on Discretionary Spending: FY2012 – FY2021 ($ in billions)

(“Defense” is a shorthand for “security revised” and “Nondefense” is a shorthand for “nonsecurity revised”)
Laws Fiscal Year: 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
BCA
2011
Security 684 686 1,066 1,086 1,107 1,131 1,156 1,182 1,208 1,234
Nonsecurity 359 361
Automatic
Reductions
Jan. 2012
“Sequester
Caps”
Defense 641 498 512 523 536 549 562 576 589
Nondefense 333 469 483 493 504 516 530 543 558
BBA-13
Dec 2013
Defense 520 521
Nondefense 492 492
BBA-15
Nov 2015
Defense 548 551
Nondefense 518 518
BBA-18
Feb 2018
Defense 629 647
Nondefense 579 597
BBA-19
July 2019
Defense 666.5 671.5
Nondefense 621.5 626.5

When Congress missed the January 15, 2012 deadline for enactment of a “Joint Committee” deficit reduction plan, the BCA automatically triggered: (1) reduced discretionary spending categories; and (2) automatic spending reductions to enforce the new caps.

The security category became a narrower “revised security” category consisting solely of defense spending—and is typically referred to as the “defense” category.  The nonsecurity category became a broader “revised nonsecurity” category consisting of all other spending—and is typically referred to as the “nondefense” category.

The new defense and nondefense categories were extended through FY 2021, enabling automatic spending reductions to be applied equally to defense and nondefense spending.


Adjustments (Spending Exempted from the Caps):  BBEDCA, as amended by the BCA and subsequent acts, allows for upward adjustments to the defense and nondefense spending limits when discretionary appropriations are provided for certain purposes—effectively exempting that spending from the caps. Permissible adjustments included the following:

  • Funding designated in statute and by the President for the wars in Afghanistan and Iraq and related operations, referred to as “OCO” or “OCO/GWOT” for Overseas Contingency Operations/Global War on Terrorism, 2 U.S.C. §901(b)(2)(A).
  • Funding for spending designated in statute, and designated by the President, as an “emergency requirement.” There were no dollar limits on emergency designations. 2 U.S.C. §901(b)(2)(A).
  • Program integrity initiatives aimed at reducing improper benefit payments by the Disability Insurance (DI) and Supplemental Security Income (SSI) programs, known as continuing disability reviews (CDRs). CDR adjustments were subject to specified limitations, 2 U.S.C. §901(b)(2)(B).
  • Program integrity initiatives to reduce improper healthcare payments from Medicare, Medicaid, or the Children’s Health Insurance Program (HCFAC, Health Care Fraud and Abuse Control). HCFAC adjustments are subject to BCA limitations, 2 U.S.C. §901(b)(2)(C)
  • Disaster relief, subject to annual limitations tied to average disaster spending over the previous decade, 2 U.S.C. §901(b)(2)(D).
  • New budget authority for FY2019-2021 for “reemployment services and eligibility assessments” under section 306 of the Social Security Act, subject to limits, 2 U.S.C. §901(b)(2)(E).
  • New budget authority, above a threshold, for wildfire suppression operations for FY2020-FY2027, 2 U.S.C. §901(b)(2)(F).
  • Appropriations designated for the 2020 census, not to exceed $2.5 billion, 2 U.S.C. §901(b)(2)(G).
  • Cap adjustments by OMB to accommodate changes in budget concepts and definitions, in consultation with House and Senate Budget and Appropriations Committees, 2 U.S.C. §901(b)(1).

Enforcement of the BCA Spending Caps

In order to enforce the BCA spending caps, OMB was required to issue three regular appropriations reports each year, and a report following enactment of each appropriations bill:

  • Sequestration preview reports—included by OMB in the President’s February budget transmittal—provided the status of discretionary caps for the current year and each year thereafter through FY2021, based on current law and including adjustments.
  • Sequestration update reports, due by August 20 each year, provided a mid-year status report on enacted appropriations, if any, and cap adjustments.
  • Final sequestration reports—within 15 days after the end of the congressional session—provided final estimates of enacted appropriations, calculated permissible adjustments to the discretionary caps and, if it was determined by OMB that a breach had occurred in either of the categories, a presidential order implementing an across-the-board sequester.
  • OMB was also required to report on individual appropriations bills within seven days of enactment, providing estimates of budget authority (BA) and outlays provided by the legislation and, if current year supplemental funds are included, a determination of whether the additional BA would cause discretionary appropriations to exceed the defense or nondefense caps.

CBO was required to issue parallel reports five days prior to release of each OMB report, although only OMB reports can trigger enforcement actions (since cancellation of budget authority is an executive branch function). Section 254 of BBEDCA, as amended by the BCA, requires OMB to explain differences between OMB and CBO estimates.


End-of-Session Discretionary Sequester: The BCA discretionary spending caps weree enforced through a sequestration process. Sequestration is the across-the-board cancellation of nonexempt “budgetary resources”—the collective term for new budget authority and unspent balances of budget authority from prior years. Sequestration was triggered if the final sequestration report issued by OMB indicated that discretionary appropriations in either the defense or nondefense categories exceeded the spending limit for that category. In the event of an overage, the President was required to issue a sequestration order canceling budgetary resources in that category by the uniform percentage reduction required to bring budget authority within the applicable spending cap.

  • The statutory requirements for the sequester process are prescribed in BBEDCA, as amended. OMB would determine the total dollar amount of necessary discretionary spending reductions, and the “sequestrable base,” which is the total amount of nonexempt discretionary spending in the relevant category (defense or nondefense). OMB would then calculate the uniform percentage by which non-exempt budgetary resources must be reduced to bring discretionary budget authority within the relevant statutory cap. Once a uniform percentage reduction was determined, it would be applied to all programs, projects, and activities (PPAs) within a budget account.
  • During the BCA period, there were no sequesters to enforce the defense or nondefense discretionary spending caps.

Within-Session Discretionary Sequester: Under the BCA, a within-session sequester would be triggered if a supplemental appropriation would cause a spending limit to be breached during a fiscal year. In this case, sequestration would occur 15 days after the enactment of the supplemental appropriation. However, if such a breach occured in the last quarter of the fiscal year (i.e., July 1 through September 30), the applicable spending limit for the following fiscal year would be reduced by the amount of the breach.


Additional Spending Cap Enforcement through House and Senate Rules

The BCA also provided for enforcement of the discretionary spending limits by points of order during consideration of appropriations legislation (Section 314(f) of the Budget Act).[18]

In the case of nondefense appropriations bills, the order in which the bills are considered determined whether a particular bill or amendment was vulnerable to a point of order—with the last bill up being the one vulnerable to violating the nondefense cap.

Supplemental appropriations would be vulnerable to a point of order if not covered by an emergency designation or disaster relief adjustment.[19]

In the Senate, a motion to waive the section 314(f) point of order required an affirmative vote of three-fifths of Senators, duly chosen and sworn (i.e., 60 Senators if there is no more than one vacancy). In the House, a special rule waiving the point of order would require a simple majority vote.


Automatic (Joint Committee) Spending Reductions / Sequestration

The first tranche of budgetary savings required by the BCA established security and nonsecurity spending caps for FY 2012-F Y 2021, estimated to save $917 billion over a decade. The second tranche of $1.5 trillion was to be achieved through the Joint Select Committee on Deficit Reduction.

The BCA provided that if the Joint Committee process did not lead to enactment of $1.2 trillion in deficit reduction by January 15, 2012, implementation of automatic annual spending reductions would be triggered for FY2013-FY2021.

The BCA scheduled the automatic reductions to begin in January of 2013—leaving time for Congress, during 2012, to consider alternatives to the impending automatic reductions.

When alternatives were not forthcoming, the BCA required: sequestration of discretionary and mandatory spending in FY 2013; and for FY 2014-FY 2021, automatic spending reductions were to be implemented by lowering the discretionary spending caps and sequestering mandatory spending.

Subsequent legislation—the Balanced Budget Acts—rolled back much of the automatic discretionary cap reductions, although the annual sequestration of mandatory spending has been fully implemented—and extended for additional eight years through FY2031.


Calculating the Joint Committee Discretionary and Mandatory Reductions:  When Congress missed the deadline to enact $1.2 trillion in Joint Committee deficit reduction, the BCA triggered automatic reductions in discretionary and mandatory spending. The reductions were calculated each year by OMB—following a detailed statutory formula—and the reductions were implemented by the President.

The Joint Committee reductions are calculated as follows:

  • To achieve the required $1.2 trillion of deficit reduction, the BCA first subtracted an amount for debt service savings, then divided the remainder over nine years to arrive at an annual required reduction of $109.3 billion for each fiscal year through FY 2021 (although the reductions for FY2013 were later reduced to $85 billion).
  • That amount was split equally between defense and nondefense spending, and each half was then allocated on a roughly proportional basis between discretionary and mandatory spending, although the 50-50 defense/nondefense split, along with numerous statutory exemptions and special rules, heavily skewed the impact of the reductions heavily towards discretionary spending cuts.
  • The resulting reductions in discretionary spending were to be implemented by lowering the BCA discretionary spending limits—although the required cap reductions were superseded by four Bipartisan Budget Acts (2013, 2015, 2018 and 2019) that raised the caps.
  • The required reductions in mandatory spending in the defense and nondefense categories are achieved through a mandatory sequester (across-the-board cuts)—subject to numerous exemptions and special rules. OMB refers to the mandatory reductions as the “Joint Committee sequester.”
  • OMB is required to explain any differences between their binding calculations and the nonbinding calculations by CBO.

Implementing Joint Committee Discretionary Reductions: The BCA required the Joint Committee automatic reductions in discretionary spending to be implemented in FY 2013 by sequestration; and in subsequent years by automatic reductions in the discretionary spending caps.  (This was largely a function of timing. The reductions in FY 2013 were to take effect after the fiscal year had begun, while the reductions for subsequent years were to be calculated by OMB prior to the budget year.)

The automatic spending cap reductions, however, were largely superseded by subsequent legislation—the Bipartisan Budget Acts.


ATRA and BBAs Rollback Spending Cap Reductions, Extend Mandatory Sequester

When Congress missed the January 15, 2012 deadline to enact deficit reduction of $1.2 trillion over 10 years, the BCA triggered automatic spending reductions of $109.3 billion in each fiscal year from FY2013 through FY2021. Subsequent revisions to the Joint Committee reductions can be summed up as follows:

  • FY2013 sequester was reduced from $109 billion to $85 billion and postponed for two months by the American Taxpayer Relief Act (ATRA; P.L. 113-67) due to concerns about its economic impact;
  • Annual discretionary cap reductions for FY 2014 through FY 2021 were partially or fully overturned by cap revisions enacted in four “Bipartisan Budget Acts,” each of which increased the discretionary caps for sequential two-year periods (FY2014-15, FY2016-17, FY2018-19, and FY2020-21); and
  • Joint Committee sequestration of mandatory spending has been fully implemented each fiscal year, and extended through FY2031.

American Taxpayer Relief Act Reduces FY2013 Sequester: The American Taxpayer Relief Act (ATRA), signed into law on January 2, 2013, made adjustments to the BCA in response to concerns about the economic consequences of an impending “fiscal cliff.”  The fiscal cliff referred to nearly simultaneous tax increases and spending reductions that were to occur at the beginning of calendar year 2013. The Congressional Budget Office estimated the automatic tax increases and spending cuts may have pushed the economy into recession.

The tax increases were due to occur in 2013 because of various tax cuts expiring at the end of 2012, along with expiration of tax incentives that were enacted in response to the recession. At about the same time, automatic spending reductions of $109.3 billion per year, triggered by the BCA’s Joint Committee process, were due to begin with a sequester on January 2, 2013.

In response to these fiscal policy concerns, ATRA extended certain expiring tax cuts, while reducing and postponing the scheduled BCA sequester. Title IX of ATRA reduced the FY2013 sequester by $24 billion, from $109.3 billion down to $85.3 billion (still equally divided between defense and nondefense), and postponed the effective date of the BCA sequester from January 2, 2013 until March 1, 2013.


Bipartisan Budget Act of 2013 Raised Caps, Extended Sequester: The Bipartisan Budget Act of 2013 (BBA-13; P.L. 113-67), often referred to as the “Murray-Ryan agreement,” increased discretionary spending limits for the defense and nondefense categories by $22 billion for FY2014 and $9 billion for FY2015 (rounded).

BBA-13 also extended the mandatory spending sequester—beyond its statutory expiration date of FY2021—by two years. The extension through FY2023 was intended to offset the costs of raising the discretionary spending caps.

Discretionary Cap Changes Resulting from BBA-13 (P.L. 113-67)
(budget authority in billions of dollars, rounded)

Fiscal Year Category Original BCA
Caps
Sequester Caps BBA-13 Changes Post BBA-13
FY2014 Defense 1,066 498 +22 520
  Nondefense 469 +22 492
FY2015 Defense 1,086 512 +9 521
Nondefense 483 +9 492

Source: OMB Reports to the Congress on the Joint Committee Reductions for FY2014 and FY2015.
Notes: “Sequester Caps” referred to the BBA caps as reduced by the Joint Committee automatic reductions.


Calculation of the Joint Committee Sequester in the Extension Years: Extension of the Joint Committee mandatory sequester—to offset discretionary cap increases—posed a technical challenge.  As explained above, the Joint Committee mandatory sequester is calculated based on the statutory requirement to save $109.3 billion in each fiscal year from FY2013 through FY2021, with the savings split between the defense and nondefense categories. The defense and nondefense reductions of $54.667 billion per year were then apportioned between discretionary and mandatory programs according to the statutory formula—with the mandatory portions implemented through sequestration.

After FY 2021, however, there was no statutory requirement to achieve $54.667 billion in budgetary savings in defense and nondefense spending and, consequently, no specific amounts to apportion to mandatory savings. Therefore, BBA-13 (and subsequent statutes) that extended the Joint Committee mandatory sequester, in order to pay for discretionary cap increases, tied the sequester calculations for the “extension years” to the uniform percentage reductions calculated by OMB for FY2021. This means that for FY2022 and FY2023, and subsequent extension years:

  • the percentage reduction for nonexempt direct spending for the defense category was the same percent as the percentage reduction calculated for the defense category for FY 2021; and
  • the percentage reduction for nonexempt, non-Medicare direct spending for the nondefense category was the same percent as the percentage reduction for the nondefense category for FY 2021 (subject to the same limitations and special rules for Medicare, student loans, and other accounts).

Bipartisan Budget Act of 2015 Raised Caps, Extended Sequester: As reflected below, the Bipartisan Budget Act of 2015 (BBA-15; P.L. 114-74), enacted November 2, 2015, increased discretionary spending limits for the defense and nondefense categories, each by $25 billion for FY2016, and by $15 billion for FY 2017; the new levels were above the sequester caps but below the original BCA caps. Congress offset the increased spending by: extending the mandatory sequester by one year through FY2025, drawing down strategic petroleum reserves, and other provisions.

The bill also established nonbinding spending targets for Overseas Contingency Operations-Global War on Terrorism (OCO/GWOT) levels for FY2016 and FY2017; amended the limits on adjustments for Program Integrity Initiatives; and temporarily suspended the debt limit through March 15, 2017, followed by an adjustment for amount borrowed.

Discretionary Cap Changes Resulting from BBA-15 (P.L. 114-74)
(budget authority in billions of dollars)

Fiscal Year Category Original BCA
Caps
Sequester Caps BBA-15 Changes Post BBA-15
FY2016 Defense 1,107 523 +25 548
  Nondefense 493 +25 518
FY2017 Defense 1,131 536 +15 551
Nondefense 504 +15 518

Source: OMB Reports to the Congress on the Joint Committee Reductions for FY2016 and FY2017.
Notes: “Sequester Caps” refers to the BBA caps as reduced by the Joint Committee automatic reductions.


Bipartisan Budget Act of 2018 Raised Caps, Extended Sequester: The Bipartisan Budget Act of 2018 (BBA-18; P.L. 115-123), enacted February 9, 2018, increased the defense and nondefense discretionary caps for FY 2018 and FY 2019 to levels above the original BCA caps, as reflected in the table below.

For FY2018, the defense cap was increased by $80 billion and the nondefense cap by $63 billion; and for FY2019, the defense cap was increased by $85 billion and the nondefense cap by $68 billion. The resulting caps were higher than the original BCA caps, but remained below the pre-BCA discretionary baseline.

BBA-18 also extended the mandatory spending sequester by two years, through FY2027 as an offset for the costs of increasing the caps, in addition to extension of certain fees, a drawdown of the Strategic Petroleum Reserve, and other provisions.

BBA-18 also suspended the debt limit through March 1, 2019, providing for the limit to be increased following the suspension period to accommodate obligations issued during the suspension period.

Discretionary Cap Changes Resulting from BBA-18 (P.L. 115-123)
(budget authority in billions of dollars)

Fiscal Year Category Original BCA
Caps
Sequester Caps BBA-18 Changes Post BBA-18
FY2018 Defense 1,156 549 +80 629
  Nondefense 516 +63 579
FY2019 Defense 1,182 562 +85 647
Nondefense 530 +68 597

Source: OMB Reports to the Congress on the Joint Committee Reductions for FY2018 and FY2019.
Notes: “Sequester Caps” refers to the BBA caps as reduced by the Joint Committee automatic reductions.


Bipartisan Budget Act of 2019 Raised Caps, Extended Sequester: The Bipartisan Budget Act of 2019 (BBA-19; P.L. 116-37), enacted August 2, 2019, increased the defense and nondefense discretionary caps for FY2020 and FY2021 to levels above the original BCA caps, as reflected below.

For FY2020, the defense cap was increased by $90.3 billion and the nondefense cap by $78.3 billion; and for FY2021, the defense cap was increased by $82.5 billion and the nondefense cap by $68.5 billion. The resulting caps were higher than the original BCA caps, but remained below the pre-BCA discretionary baseline.[16]

BBA-19 extended the mandatory spending sequester by two years, through FY2029, as an offset for the costs of increasing the caps, along with extending certain customs user fees through FY2029.

BBA-19 also:

  • suspended the debt limit through July 31, 2021 (providing for the limit to be increased following the suspension period to accommodate obligations issued during the suspension period);
  • specified limits for Overseas Contingency Operations (OCO/GWOT) funding;[17]
  • provided for spending cap adjustments to accommodate funding for the 2020 Census;
  • in Title II of the Act, set forth procedures for enforcing spending and revenue levels consistent with this bill as if they were included in congressional budget resolutions for FY2020[18] and FY2021;
  • extended and modified Senate points of order regarding advance appropriations, changes in mandatory programs (CHIMPs), and designations of funds for Overseas Contingency Operations; and
  • zeroed out the balances on the Pay-As-You-Go (PAYGO) scorecards established by the Statutory Pay-As-You-Go Act of 2010.

Discretionary Cap Changes Resulting from BBA-19 (P.L. 116-37)
(budget authority in billions of dollars)

Fiscal Year Category Original BCA
Caps
Sequester Caps BBA-19 Changes Post BBA-19
FY2020 Defense 1,208 576.2 +90.3 666.5
  Nondefense 543.2 +78.3 621.5
FY2021 Defense 1,234 589 +82.5 671.5
Nondefense 558 +68.5 626.5

Source: P.L. 116-37 for revised caps; OMB Report to the Congress on the Joint Committee Reductions for FY2020 sequester caps; CBO estimates for FY2021 sequester caps; and CBO cost estimate for BBA-19, https://www.cbo.gov/system/files/2019-07/BipartisanBudgetActof2019.pdf.
Notes: “Sequester Caps” refers to the BBA caps as reduced by the Joint Committee automatic reductions.


COVID Relief and Infrastructure Laws Extended BCA Mandatory Sequester to FY 2031

Subsequent to the four Bipartisan Budget Acts of 2013, 2015, 2018, and 2019, recent laws have enacted several changes in the BCA’s annual sequestration of mandatory spending.

In 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) extended the BCA mandatory sequester through FY 2030 as a partial offset for the cost of the bill. In 2021, the Infrastructure Investment and Jobs Act,[1] extended the mandatory sequester through FY 2031.

In addition, several adjustments were made to the Medicare sequester to blunt its impact during the COVID pandemic. The CARES Act temporarily suspended the sequester of Medicare spending from May 1, 2020 through December 31, 2020.[2] The Consolidated Appropriations Act, 2021 extended the suspension through March 31, 2021;[3] and the Act to Prevent Across-the-Board Direct Spending Cuts extended the suspension through December 31, 2021.[4] Most recently, the Protecting Medicare and American Farmers From Sequester Cuts Act extended the suspension through March 31, 2022, and limited Medicare sequester reductions from April 1, 2022 through June 30, 2022 to 1 percent,[5]  with annual reductions to resume at two percent thereafter.

[1] Infrastructure Investments and Jobs Act, Pub. L. No. 117-58, § 90001, 135 Stat. 1341.

[2] Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 3709(b), 134 Stat. 422, 2 U.S.C. 901a note.

[3] Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, § 102, 134 Stat. 1950, 2 U.S.C. 901a note.

[4] An Act to Prevent Across-the-Board Direct Spending Cuts, Pub. L. No. 117-7, § 135 Stat. 251. 2 U.S.C. 901a note.

[5] The Protecting Medicare and American Farmers from Sequester Cuts Act, Pub. L. No. 117-71, § 2,135 Stat. 1506. 2 U.S.C. 901a note. The provision also adjusted the Medicare sequestration reductions in FY 2030 to 2.25 percent for the first half of the fiscal year and 3 percent for the second half of the fiscal year.