May 09, 2012
Update:  The House passed on May 10, by a vote of 218 to 199, the Sequester Replacement Act of 2012, H.R. 5652.  H.R. 5652 combines the earlier version of the Sequester Replacement Act of 2012, H.R. 4966, and the Sequester Replacement Reconciliation Act of 2012.  The Senate is not expected to act on the House-passed bill.
On May 7, the House Budget Committee passed the Sequester Replacement Act of 2012, H.R. 4966, and the Sequester Replacement Reconciliation Act of 2012.  As reported in NCSHA’s March 29 blog post, the House-passed FY 2013 Budget Resolution required six committees, including Financial Services and Ways and Means, to submit recommendations for cutting spending in programs within their jurisdiction to the Budget Committee.  These two bills would combine the six committees’ recommendations for spending cuts and would alter the sequester for 2013 by preventing cuts to defense programs and reducing the amount of required across-the-board cuts to non-defense discretionary programs in 2013.
House Budget Committee materials emphasize that the legislation does not alter the House-passed overall spending cap for FY 2013 appropriations of $1.028 trillion–$19 billion below the Budget Control Act cap being used by the Senate to guide its FY 2013 appropriations.  The legislation also does not alter the sequestration instructions for non-defense mandatory spending.  Because the spending cuts come from non-defense programs and the legislation does not increase revenue by ending tax breaks or increasing taxes, House Committee Democrats opposed the legislation.
Proposals from the House Financial Services Committee passed by the Budget Committee as part of the reconciliation act include terminating Treasury’s authority to provide any additional assistance under the Home Affordable Modification Program (HAMP) and reform of the National Flood Insurance Program.  The House has already passed these proposals separately as individual bills.  Other proposed savings include spending cuts to the Supplemental Nutrition Assistance Program and programs created by health care reform.
The Budget Control Act of 2011 mandates that sequestration, or across-the-board spending cuts, occur on January 2, 2013 if the Joint Select Committee on Deficit Reduction, also called the Super Committee, fails to propose at least $1.2 trillion in savings, over ten years.  Because the Super Committee failed to propose any savings, sequestration will be triggered unless new legislation alters current law.
Unless changed, the projected sequestration-related cuts in 2013 would amount to approximately $109 billion, including $55 billion in cuts to defense, $43 billion in cuts to non-defense discretionary, and $12 billion in cuts to mandatory spending.  Therefore, defense programs would be cut by approximately 10 percent and non-defense discretionary programs, including HUD and rural housing programs, would be cut by approximately 8 percent.  January 2013 is several months into FY 2013, which begins on October 1, 2012.
The House is expected to vote on the legislation May 10.  The Senate is not expected to consider the legislation.  Additional information on the legislation is available on the House Budget Committee website.  While it is expected that members in both chambers will continue to make proposals to alter the scheduled sequestration, it is likely that the best possibility of an agreement will be after the November election.