March 4, 2014
By: Mattea Kramer
Sequestration began on March 1, 2013. While the Budget Control Act originally slated a $54.6 billion cut to defense accounts, that number was reduced by the American Taxpayer Relief Act (ATRA), also known as the fiscal cliff deal. The ATRA and other adjustments to the defense sequester reduced cuts down to $37.2 billion for fiscal 2013.
In addition, the Pentagon was granted flexibility to apply part of these cuts to funds from previous budgets that had not yet been spent; these funds are known officially as “prior year unobligated balances.”
Accounting for these adjustments to the defense sequester, the cuts ultimately amounted to a 5.7 percent reduction to projected pre-sequester spending in fiscal 2013, as the following table summarizes.
| Adjustments to Defense Sequestration in FY2013 | Source | |
|---|---|---|
| Sequestration according to Budget Control Act | $54.6 billion | Government Printing Office |
| Reduction in cuts through American Taxpayer Relief Act and other adjustments | $17.4 billion | Center for Strategic and Budgetary Assessments |
| Cuts applied to "prior year unobligated balances" | $6 billion | Center for Strategic and Budgetary Assessments |
| Actual cut to FY2013 budget | $31.2 billion | |
| Actual cut as percent of pre-sequester Budget Control Act defense cap | 5.7% | |
In fiscal 2014, the Budget Control Act once again mandated a $54.6 billion sequester cut to defense accounts. However, in December 2013, the Bipartisan Budget Act reduced the cuts by more than $20 billion, down to $34 billion.
Sequestration applies only to the Pentagon’s “base” budget – that is, its regular operational budget, excluding war funding. War funding is known officially as “Overseas Contingency Operations” (OCO). According to analysis by Todd Harrison of the Center for Strategic and Budgetary Assessments, the Pentagon included an estimated $20 billion in non-war funding to the OCO budget when it prepared its 2014 budget proposal, thereby mitigating the effects of sequestration.
Furthermore, when congressional appropriators wrote 2014 war funding into law they added an additional $10.8 billion of non-war funding – widely referred to as a slush fund – to the budget, as Winslow Wheeler of the Project on Government Oversight has shown.
In total, these reductions and adjustments reduced the 2014 defense sequester down to 0.6 percent of projected pre-sequester spending, as the following tables summarizes.
| Adjustments to Defense Sequestration in FY2014 | Source | |
|---|---|---|
| Sequestration according to Budget Control Act | $54.6 billion | Governing Printing Office |
| Reduction in cuts through Bipartisan Budget Act | $20.382 | House Budget Committee |
| Non-war funding in 2014 war budget proposal, estimate | $20 billion | Center for Strategic and Budgetary Assessments |
| Additional funds added by appropriators | $10.8 billion | Project on Government Oversight |
| Actual cut to FY2014 budget | $3.4 billion | |
| Actual cut as percent of pre-sequester Budget Control Act defense cap | 0.62% | |
News reports continue to emphasize the devastating effects of sequestration on national security, but the numbers show otherwise. Defense accounts absorbed a modest 5.6 percent cut in 2013 and, through the use of its war budget as a loophole, almost entirely avoided cuts in 2014. At the same time, sequestration has reduced funding for domestic programs – from Head Start to cancer research – that did not have the flexibility to avoid cuts the way the Pentagon has. Yet military spending could much more easily absorb reductions; in the decade following Sept. 11, 2001, U.S. military spending grew by 35 percent, while domestic discretionary programs grew by 12 percent.
The Bipartisan Budget Act of 2013 has already reduced the level of cuts slated for 2015, and with this week’s release of President Obama’s 2015 budget proposal, there is reason to believe the Pentagon will continue to avoid the lion’s share of sequestration in the future. The president has asked for an additional $26 billion in 2015 for military spending as part of his budget request, relative to previously projected spending levels. He’s also asking for an additional $115 billion in military spending for fiscal years 2016 through 2019. Finally, the Pentagon is likely to continue to use the war budget as a loophole to supplement its regular funding. In fact, recent news reports indicate that the Pentagon will continue to ask for a “war” budget even after troops have left Afghanistan.
