Sequestration is a group of cuts to federal spending which took effect March 1, 2013. Sequestration was originally passed as part of the Budget Control Act of 2011 (BCA), better known as the debt ceiling compromise. It was intended to serve as incentive for the Joint Select Committee on Deficit Reduction (aka the “Supercommittee”) to come to a deal to cut $1.5 trillion over 10 years. If the committee had done so, and Congress had passed it by Dec. 23, 2011, then the sequester would have been averted. Obviously, that didn’t happen. The Budget Control Act originally stipulated that the sequester cuts would take effect at the beginning of 2013. A deal was reached to avert the cliff, in which the sequester was delayed to March 1. February 28th came and went without any modification bill being negotiated in Congress. The sequester automatic cuts took effect March 1, 2013.

The Sequester: Budget Lessons From the 1980s

from Bloomberg BusinessWeek,

In 1979, with a bill to lift the debt ceiling moving through Congress, Phil Gramm, a first-term House Democrat from Texas, proposed an amendment that would require a balanced budget. The amendment failed, but Gramm didn’t give up. He became a Republican, then a senator. And in 1985 President Reagan signed the Gramm-Rudman-Hollings Act, forcing Washington to either cut the deficit to zero within five years or face painful automatic cuts to discretionary spending, called “sequestration.”

(Many) credit Gramm’s idea for ultimately bringing about the breakthrough budget deal of 1990, when George H.W. Bush was president, to reduce the deficit by $482 billion over five years. “If politicians are going to catch hell no matter what they do, they will normally do the right thing,” says Gramm. The stakes are higher today; the country’s debt compared with the size of the economy is two and a half times what it was in 1985. Still, if Gramm’s right, there’s hope the sequester that took effect on March 1 will also lead to a broad deal on spending and taxes that reduces the deficit. It just might take a while.

By the end of 1989, Gramm-Rudman-Hollings had helped the U.S. trim its discretionary spending by only $59 billion, according to a 1992 paper for the Journal of Policy Analysis and Management. Because the law didn’t apply to spending on the major entitlement programs so cherished by voters, lawmakers still had no real incentives to make major changes.

But wriggling out of sequestration was no longer an option by 1990. It was designed to inflict even greater pain with each passing year that Congress didn’t act. Even after rewrites and evasions, lawmakers went from facing cuts of 5 percent in 1986 to 36 percent in 1990. The pain would have been too great.

Instead, Congress and the White House moved their budget talks to nearby Andrews Air Force Base for two weeks and produced what had eluded them for five years: a substantive compromise on taxes and spending. Call it the longest Pac-Man game of the ’80s.

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