The Budget Control Act passed last August stipulates that failure of the supercommittee and Congress to act on further deficit reduction will trigger across-the-board cuts of $1.2 trillion in both defense and non-defense programs, starting in 2013. Here is a general look at how those cuts may play out through 2021 (some savings would occur after 2021):
—The Congressional Budget Office says caps on new, Congress-approved spending on defense programs will be reduced from 10 percent in 2013 to 8.5 percent in 2021, with savings of $454 billion.
—Caps on Congress-approved spending on non-defense programs would be reduced from 7.8 percent in 2013 to 5.5 percent in 2021, with savings of $294 billion.
—Most Medicare spending would be reduced by 2 percent a year, with savings of $123 billion. Savings from other mandatory spending programs would produce another $47 billion.
—The CBO estimates that savings would reduce interest payments on the national debt by $169 billion.
—In a further breakdown, the Center on Budget and Policy Priorities says that in 2013 the cuts to mandatory programs include about $10.8 billion in Medicare payments to providers and insurance plans and about $5.2 billion to other programs such as farm price supports.
—Mandatory programs that are exempt from sequestration, or cuts, include Social Security, Medicaid, food stamps, the CHIP children’s health program, child nutrition, Supplemental Security Income, the Earned Income Tax Credit, veterans’ benefits and federal retirement.
—Veterans’ medical care and Pell grants would also be exempt from cuts to Congress-approved, discretionary programs.
—The CBPP estimated that both defense and non-defense cuts would total $54.7 billion in 2013. It said that would represent a cut in 9 percent in defense programs, or 7 percent if the president elects not to exempt military personnel funding from the reductions.
—The Pentagon had been headed for a budget of some $700 billion in 2021. With cuts already enacted under the Budget Control Act and future across-the-board cuts, that would be reduced by more than $100 billion.