The Budget Control Act was passed by the House (269 to 161) and Senate (74 to 26), and signed into law by President Obama on August 2nd. The law provided for an immediate increase in the debt ceiling and stepped increases in the debt ceiling that should suffice until early 2013.
In addition, the Budget Control Act provides for a three-step process:
- Raising the debt ceiling (the legal amount the federal government is allowed to borrow) and placing caps on discretionary programs. This is expected to cut about $1 trillion in spending from discretionary programs over a 10 year period (2012-2021). These cuts must be balanced between defense and non-defense spending (which could include important disability-related programs like housing, education, employment, and transportation). Entitlement programs (Medicare, Medicaid, Social Security, and Supplemental Security Income (SSI)) are protected from cuts in the first step. There is also an increase in spending for a few programs that Congress believes will lead to more savings, including new spending for the Social Security Administration to do more Continuing Disability Reviews and more spending for stopping fraud and abuse in entitlement programs.
- Cutting an additional $1.2 to $1.5 trillion from the federal budget over 10 years. This will be initiated by a twelve-member, bipartisan Joint Select Committee on Deficit Reduction that will propose specific spending cuts by November 23rd. The Committee can include new or increased revenues, changes and cuts to entitlement programs, and additional caps to discretionary programs at this step. The Committee’s plan must get the support of at least 7 of its Members to be voted on by the full Congress. Congress will then hold an up or down vote, with no amendments allowed, on the spending cuts legislation by December 23rd.
- If this Committee fails to obtain agreement from at least 7 of its members to cut $1.2 trillion or if Congress fails to enact it, then automatic, across-the-board spending cuts will be triggered for 2013-2021. The amount of these cuts will be the difference between the amount enacted (if any) and $1.2 trillion (for example, if only $1 trillion in cuts are enacted, then there will be across-the-board cuts to achieve the additional $200 billion in cuts). However, any automatic, across-the-board cuts would exempt the low income entitlement programs, such as the Medicaid and SSI programs. Medicare cuts of 2 percent are allowed but will fall on the providers only. Cuts would take effect in January 2013.
The Budget Control Act also requires a Congressional vote on a balanced budget amendment to the Constitution which would require a balanced budget every year. The balanced budget amendment vote, however, would not impact the increase in the debt ceiling or the 3 steps outlined above for reducing the deficit.
The Budget Control Act does not provide details about which programs will be cut or by how much. That work will be done over the upcoming months through the normal Appropriations Committee process and working with the new Joint Select Committee or “super committee.” It remains to be seen how disability-related programs will fare. Important discretionary programs such as education, housing, vocational rehabilitation, and transportation can be cut in the first phase. Deeper cuts can happen in the second phase, as well as cuts to entitlement programs. Congress is not required to raise revenues though they are not prohibited from doing so. Therefore, aggressive advocacy to protect the programs that are important to people with disabilities will need to continue through the end of the year.