When politicians and newscasters talk
about sequestration, or "sequester cuts," they are referring to a fiscal
policy enacted by Congress to deal with the federal budget deficit. Sequestration
first appeared in the Gramm-Rudman-Hollings Deficit Reduction Act of 1985. Simply defined, “sequestration” is the automatic
cancellation of budgetary resources. The
Budget Control Act of 2011 (BCA) established a bipartisan 12 member Joint
Select Committee on Deficit Reduction
charged with reducing the deficit by an additional $1.2 - $1.5 trillion
over ten years. The BCA also included a sequestration hammer should the super
committee fail, a provision intended to “force” the super committee to act. Under sequestration, an amount of money equal
to the difference between the cap set in the BCA and the amount actually
appropriated is "sequestered" by the Treasury and not handed over to
the agencies to which it was originally appropriated by Congress.
Despite the threat of sequestration,
the Joint Select Committee failed, and announced its inability to agree in
November of 2011. Accordingly, as
established in the BCA, sequestration was triggered when the Joint Select Committee
failed to agree. Sequestration is scheduled to generate automatic cuts for each
of nine years, 2013 through 2021, totaling $1.2 trillion. Sequestration was
originally scheduled to take effect on Jan. 2, 2013. However, it was delayed
for two months - until March 1, 2013, by the deal struck on New Year's Eve,
called the American Taxpayer Relief Act of 2012.
Now, without Congressional action to
prevent sequestration, the first round of cuts will take place on March 1,
2013.
Will Sequestration Actually
Happen?
No one knows. The prospect of sequestration has come to
seem so catastrophic that Congress so far has been unwilling to actually let it
happen. Instead, Congress has repeatedly delayed the effective date or raised
the Budget Resolution spending caps upward toward the end of the legislative
session in order to match the actual totals already appropriated. Whether this session of Congress will allow
sequestration to occur or not remains to be seen.
The 2013 cuts apply to
“discretionary” spending and are divided between reductions to defense ($500
billion) and non-defense ($700 billion).
How do These Impending Cuts Affect Seniors
and Veterans?
“Discretionary spending” does cover government
programs for poor and vulnerable citizens. However, the Medicaid and Veterans benefits programs
are specifically exempted from the Sequestration plan and will not be affected
at all.
The Sequestration cuts will be devastating to many
when they occur. We here at The
Fairfax Elder Law Firm of Evan H. Farr, P.C.
are thrilled, however, that Veteran’s Pension
Programs and Medicaid are seen as mandatory items and will not be affected in
these cuts. As always, we urge you to
plan ahead for your future and for your loved ones. Call us today at 703-691-1888 to set up a free
consultation.
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