Budget Control Act of 2011

The Issue
President Obama has signed the Budget Control Act of 2011 (S. 365), a two step bipartisan plan to raise the debt limit through 2012 and reduce the deficit.

Budget Control Act Framework
Highlights of the two-part deal include:

Part I

  • Raises the debt ceiling by $900 billion.
  • Imposes $917 billion in spending cuts.
    • Cuts are achieved by imposing overall limits (caps) on budget authority (Below).
    • Separate discretionary spending limits are provided for security programs (Defense, Homeland Security, Veterans, Intelligence, and State Department, including foreign aid) and non-security programs for 2012 and 2013.
    • Specifics about which programs will be cut, and how deeply, will be resolved by the appropriations' process.

Caps on Discretionary Budget Authority

FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
$1.043 trillion
$1.047 trillion
$1.066 trillion
$1.086 trillion
$1.107 trillion
$1.131 trillion
$1.156 trillion
$1.182 trillion
$1.208 trillion
$1.234 trillion

Part II

  • Creates a special 12-member bipartisan "Joint Select Committee on Deficit Reduction."
    • 3 members from each party in each chamber appointed by party leadership; House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) will appoint co-directors.
    • Tasked with identifying at least an additional $1.2 trillion in deficit reduction (Optimal deficit reduction target set at $1.5 trillion).
      • Spending cuts, revenue increases, and entitlements are on the table.
      • Congressional committees, including House Ways and Means and Senate Finance, may submit recommendations to the joint committee before October 14, 2011.
      • Joint committee may hold its own hearings.
      • Recommendations must be introduced by Thanksgiving and a Congressional vote must take place by December 23, 2011.
  • If at least $1.2 trillion in further deficit reduction is not enacted by January 15, 2012, $1.2 trillion in automatic cuts, also known as sequestration, will be triggered, with the cuts beginning January 2, 2013 .
    • Split evenly between defense and non-defense spending.
    • Cuts would exempt most programs intended to serve low-income. Americans and seniors, including Social Security.
      • Medicare spending could be reduced by a maximum of 2%, with the cuts being made to payments to providers, rather than benefits to recipients.
  • Authorizes the president to raise the debt ceiling by an additional $1.2 trillion to $1.5 trillion depending on the outcome of the joint committee recommendations.
  • Congress is required to vote on a balanced budget amendment between October 1, 2011 and the end of the year.

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