March 1, 2013
Automatic federal spending cuts called for in the Budget Control Act (BCA) of 2011 will go into effect at midnight tonight, March 2. For FY 2013, which started Oct. 1, 2012, the automatic cuts (sequestration) total $85.3 billion and will be implemented on an across-the-board basis on every project, program, and activity. Sequestration is taking effect as a result of Congress not taking action either to replace the automatic cuts with a plan to reduce the federal deficit by $1.2 trillion over 10 years (the so called "grand bargain"), repeal sequestration completely, or delay the effective date further. A proposal to delay the automatic cuts until Jan. 1, 2014 offered by Senate Democrats and a proposal to replace sequestration offered by Senate Republicans both failed on Thursday to get the 60 votes needed to proceed, though the Democratic version got a majority 51 votes. Sen. Reid voted against it so that procedurally he can revisit the bill.
Under the terms of the BCA, the automatic cuts are split 50/50 between defense spending and non-defense spending. For FY 2013, this translates to $42.7 billion in defense cuts and $42.7 billion in non-defense cuts. Since BCA exempts several mandatory spending programs, including Medicaid, SNAP (food stamps), and TANF (Temporary Assistance for Needy Families), the bulk of the cuts will be from discretionary spending, defense and non-defense. Spending for HIV/AIDS programs, domestic and global, are in the non-defense discretionary (NDD) category. NDD cuts will total $42.7 billion in FY 2013.
The impact of sequestration is widely projected to be severe, especially for health care programs and programs serving low-income people. In a letter to Senator Barbara Mikulski, Chairwoman of the Senate Appropriations Committee, Health and Human Services Secretary Kathleen Sebelius projected that cuts to the Centers for Disease Control and Prevention (CDC) would result in approximately 424,000 fewer HIV tests conducted by health department grantees. Cuts affecting ADAP would mean 7,400 fewer people having access to life-saving HIV medications. In testimony before the Senate Appropriation Committee Housing and Urban Development Secretary Shaun Donovan said, "Sequestration cuts to the Housing Opportunities for Persons with AIDS program would result in 7,300 fewer low-income households receiving permanent and short-term supportive housing assistance, including rent or utility assistance."
The House and Senate leadership met with President Obama earlier today to discuss the way out of this manufactured fiscal crisis. President Obama held a press conference after the talks, which are available on the White House site. Many economists agree with AIDS United's call for a balanced approach to resolve sequestration with increased revenue and additional thoughtful cuts to discretionary programs. However, the prospect is grim on reaching a deal in the next couple of days since Republicans have stated that they will not accept a deal that includes increased revenue while the President has said such revenue must be part of a deal. Public polling has consistently shown that most Americans have supported a balanced approach that includes revenue increases.
The next stage in the cascade of fiscal deadlines is March 27, when the current Continuing Resolution (CR) that funds the government expires. It has been reported that House Republicans have agreed to support a House Appropriations Committee plan to move forward next week with a hybrid appropriations bill for the remainder of Fiscal Year 2013. The bill will use bills negotiated with the Senate -- Defense, Military Construction, Veterans Affairs and Related Agencies as the vehicle to carry the continuing resolution for all the other federal agencies through the end of the Fiscal Year (FY) September 30. The entire bill will be written to the funding level prescribed by the Budget Control Act for FY13 and adjusted for budget sequestration -- for a total discretionary spending level of $972 billion. The bill is expected to come up on the House floor early next week.
In the Senate, Appropriations Chair Barbara Mikulski (D-MD) has indicated that she will likely try to amend the entire bill to include complete bills, not just a Continuing Resolution for all the domestic agencies, and perhaps add a package providing alternatives to the sequester. If the Congress does not pass the funding package prior to March 27th the government will shut down. Right now the Congress is scheduled to begin their Passover/Easter two week District Work Period on March 22nd. We urge you to consider meeting with your Members of Congress during the District Work Period if sequestration is not solved by that time. We will continue to update you on the fiscal situation. Please look out for new information and potential alerts in the coming weeks.