The Annual Mandatory Spending Sequester Through FY2033

Since FY2013, the Office of Management and Budget (OMB) has been required to calculate, and the President to order, annual across-the-board reductions (“sequestration”) to certain mandatory spending accounts and programs. This process—often referred to as either the “Joint Committee,” “BBEDCA 251A,” or “mandatory” sequester—requires annual reductions at a uniform percentage of budgetary resources available to certain mandatory spending programs or accounts in the defense and nondefense categories. Reductions in the nondefense category include reductions to Medicare, which are capped at 2% annually under current law. The Budget Control Act of 2011 (BCA, P.L. 112-25) established the mandatory sequester as a fallback means of deficit reduction in the event Congress and the President did not enact legislation developed by the Joint Select Committee on Deficit Reduction. The mandatory sequester was originally set to occur under the BCA for the nine-year period of FY2013-FY2021 but has been extended by subsequent legislation on multiple occasions. Under current law, reductions to all nonexempt mandatory spending programs under the sequester are set to occur for each fiscal year through FY2032. For Medicare only, reductions are required to continue for the first part of FY2033. OMB and the President carry out the mandatory sequester pursuant to several provisions of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the BCA and subsequent laws. These provisions define the process for calculating and implementing reductions, general and special sequestration rules, and programs or accounts exempt from sequestration. Pursuant to these requirements—on the date of submission of the President’s budget for the corresponding fiscal year—OMB is required to submit a report (a “sequestration report”) to Congress determining reductions under the mandatory sequester. The President is then required to issue a sequestration order directing agencies to implement the reductions set forth in OMB’s report. Many mandatory programs and activities—comprising around three-quarters of total mandatory spending—are exempt from sequestration under current law. In addition, BBEDCA establishes certain general and special rules for sequestration that OMB is required to follow while implementing the mandatory sequester. These general and special rules define how the mandatory sequester is applied to certain accounts, programs, or categories of mandatory spending. The mandatory sequester affects a wide range of programs and activities across the federal government. For FY2026, OMB estimates that roughly $1.4 trillion in budgetary resources available for 254 individual accounts or programs will be subject to reductions under the mandatory sequester. OMB estimates that reductions will total $35.19 billion—including reductions of $2.37 billion in the defense category, $24.57 billion for Medicare, and $8.24 billion for other nondefense programs and accounts. OMB’s reports to Congress on the mandatory sequester include information on each individual program or account for which the sequester applies, including the applicable sequestration percentage and estimated reduction amounts for each. Reduction amounts reflected in OMB reports on the mandatory sequester represent estimates of the amounts that will be reduced over the period the sequester order is in effect. Actual amounts of budgetary resources permanently cancelled under the mandatory sequester for certain programs or accounts may differ from these estimates for various reasons. OMB is not required to, and generally does not, report actual amounts of total budgetary resources permanently cancelled under the mandatory sequester. Information on actual reductions to individual accounts through sequestration can be found in the President’s budget Appendix, however.