The Budget Control Act of 2011:
Legislative Changes to the Law and
Their Budgetary Effects
Mindy R. Levit
Specialist in Public Finance
March 6, 2014
Congressional Research Service
7-5700
www.crs.gov
R43411

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Legislative Changes to the BCA and Their Budgetary Effects

Summary
Following a lengthy debate over raising the debt limit, the Budget Control Act of 2011 (BCA;
P.L. 112-25) was signed into law by President Obama on August 2, 2011. In addition to including
a mechanism to increase the debt limit, the BCA contained provisions intended to reduce the
budget deficit through spending limits and reductions. The savings in the BCA are achieved
mainly through two mechanisms: (1) statutory discretionary spending caps covering 10 years that
came into effect in 2012 and (2) a requirement for an additional $1.2 trillion in savings to be
achieved through legislation or an automatic spending reduction process (sometimes referred to
as the “sequester”) covering nine years. Combined, these provisions were projected to reduce the
deficit by roughly $2 trillion between FY2012-FY2021.
Two subsequent pieces of legislation have modified the BCA since it was enacted. First, the
American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) postponed the start of the FY2013
spending reductions until March 1, 2013. ATRA also reduced the FY2013 spending reductions
implemented via this automatic process by $24 billion (i.e., two months’ worth of reductions), to
roughly $85 billion equally divided between defense and non-defense. These provisions were
offset by other changes in spending or revenue. Subsequently, the Bipartisan Budget Act of 2013
(BBA; P.L. 113-67) replaced a portion of the automatic spending process reductions for FY2014
($45 billion) and FY2015 ($18 billion) with other deficit reduction provisions. These changes
allow for more discretionary spending than was provided under the BCA for FY2014 and
FY2015. Various deficit reduction measures were included to offset the cost of the increased
discretionary spending.
Though changes to the BCA implemented through ATRA and the BBA were offset by other
savings, they were mostly paid for outside of the parameters of the BCA itself. These changes
were paid for largely by making other cuts to mandatory spending and by increasing non-tax
receipts. Therefore, the savings originally provided in the BCA were reduced by approximately
$12 billion in FY2013, $45 billion in FY2014, and $18 billion in FY2015 as a result of ATRA and
the BBA.
A goal of the BCA was to achieve deficit reduction through a specified amount of savings.
Individual policy changes cannot be taken in isolation, however, so that the level of savings
contained in the BCA does not mean that the resulting deficit will reach a specified level. Since
the law has been enacted, both ATRA and BBA have changed the amount of savings contained in
the BCA itself. Since the BCA was enacted, legislation has cumulatively increased the deficit by
nearly $1.6 trillion over the FY2012-FY2021 period. If the deficit reduction contained in the BCA
is not included, the deficit over the FY2012-FY2021 period would be projected to be $3.5 trillion
higher as a result of legislative action taken since August 2011.
The BCA was intended to achieve its deficit reduction over a specified 10-year period (FY2012-
FY2021). The changes made to the BCA by ATRA and BBA still achieve the same amount of
deficit reduction over the 10-year period. However, the deficit reduction contained in ATRA and
BBA through FY2021 “pays for” the increases in spending during the FY2013 to FY2015 period.
In other words, the legislative changes to the original provisions of the BCA over the most recent
fiscal years have been replaced by spending cuts in future years, thereby achieving less deficit
reduction in any given year compared to what was contained in the BCA originally for the
FY2013 to FY2015 period. If further changes are made to the BCA, the deficit reduction
originally provided by the law may be revised further.
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Legislative Changes to the BCA and Their Budgetary Effects

Contents
Background on the Budget Control Act of 2011 .............................................................................. 1
Discretionary Spending Caps .................................................................................................... 2
Automatic Spending Reduction Process .................................................................................... 3
Legislative Changes to the BCA ............................................................................................... 5
The American Taxpayer Relief Act of 2012 ........................................................................ 6
The Bipartisan Budget Act of 2013 ..................................................................................... 6
Effects of the BCA on the Federal Budget ....................................................................................... 6
BCA and Discretionary Spending, FY2012-FY2014 ................................................................ 7
BCA and the Budget Deficit ...................................................................................................... 8

Tables
Table 1. Discretionary Spending Caps Under the BCA ................................................................... 5
Table 2. Discretionary Budget Authority, FY2012-FY2014 ............................................................ 7
Table 3. Legislative Changes Affecting the Current Law Baseline Deficit Since August
2011 ............................................................................................................................................ 10

Contacts
Author Contact Information........................................................................................................... 12

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Legislative Changes to the BCA and Their Budgetary Effects

ollowing a lengthy debate over raising the debt limit, the Budget Control Act of 2011
(BCA; P.L. 112-25) was signed into law by President Obama on August 2, 2011. In
F addition to including a mechanism to increase the debt limit,1 the BCA contained
provisions intended to reduce the budget deficit. Combined, these provisions were projected to
reduce the deficit by roughly $2 trillion over the fiscal year (FY)2012-FY2021 period.
The savings in the BCA are achieved mainly through two mechanisms: (1) statutory discretionary
spending caps covering 10 years that came into effect in 2012 and (2) a requirement for an
additional $1.2 trillion in savings to be achieved through legislation or an automatic spending
reduction process (sometimes referred to as the “sequester”) covering nine years that was initially
scheduled to come into effect on January 2, 2013. These mechanisms are discussed in more detail
below. Since the enactment of the BCA, two subsequent pieces of legislation have modified it.
First, the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) postponed the start of the
FY2013 spending reductions, until March 1, 2013, and canceled the first two months of spending
cuts. Subsequently, the Bipartisan Budget Act of 2013 (BBA; P.L. 113-67) increased discretionary
spending levels for FY2014 and FY2015 relative to what they would have been under the BCA.
Both pieces of legislation contained provisions that offset these changes.
This report discusses the legislative changes affecting the Budget Control Act and focuses on how
these changes have altered spending levels and deficit projections. Other CRS reports provide
additional analysis of the BCA.2
Background on the Budget Control Act of 2011
The BCA was enacted in response to congressional concern about unsustainable growth in the
federal debt and deficit. The federal budget has been in deficit (spending exceeding revenue)
since FY2002, but deficits became significantly larger between FY2009 and FY2012. That year,
the deficit topped $1 trillion for the first time ever, and remained above $1 trillion through
FY2012.3 This growth in the budget deficit was the result of spending reaching its highest level as
a share of GDP since FY1945 and revenues reaching their lowest level as a share of GDP since
FY1950. Spending peaked at 25% of GDP in FY2009 and revenues bottomed out at 15% of GDP
in FY2009 and FY2010.4 These trends are largely due to the budgetary effects of the recent
recession and policies implemented in response to it, including increased outlays and tax cuts.5 As

1 For information on the debt limit increases in the BCA, see CRS Report RL31967, The Debt Limit: History and
Recent Increases, by D. Andrew Austin and Mindy R. Levit.
2 For an explanation of the BCA’s provisions and procedures, see CRS Report R41965, The Budget Control Act of
2011, by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan. For information on exemptions from
sequestration, see CRS Report R42050, Budget “Sequestration” and Selected Program Exemptions and Special Rules,
coordinated by Karen Spar. For more information on spending levels under the BCA and its effects on the budget
deficit, see CRS Report R42506, The Budget Control Act of 2011: The Effects on Spending and the Budget Deficit , by
Mindy R. Levit and Marc Labonte.
3 The budget deficit is the excess of outlays over revenues in a given year, broadly similar to the amount borrowed from
the public that year. The debt held by the public is the accumulation of all past borrowing from the public. The gross
debt is the sum of (1) debt held by the public and (2) the intragovernmental debt (the debt that one part of the federal
government owes to another part of the government, mainly through government trust funds).
4 Office of Management and Budget, The Budget for FY2014, Historical Tables, Table 1.2.
5 For an analysis of recent budgetary trends and issues, see CRS Report R43068, The Federal Budget: Issues for
FY2014 and Beyond, by Mindy R. Levit.
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the effects of the recession wane, higher tax revenue and lower levels of spending as a percentage
of GDP relative to the last several fiscal years are projected to result in more sustainable budget
deficits over next several years.6 In FY2014, the deficit is estimated to fall to 3.4% of GDP, or
nearly 6 percentage points below its peak in FY2009 (10.1% of GDP).
The BCA reduces spending through two primary mechanisms, discretionary spending caps that
began in FY2012 and an automatic spending reduction process that began in FY2013.
Discretionary Spending Caps
The BCA placed statutory caps on most discretionary spending from FY2012 through FY2021.
The caps place limits on the amount of discretionary budget authority provided through the
annual appropriations process for those years, with adjustments permitted for certain purposes.
The limits can be adjusted to accommodate (1) changes in concepts and definitions; (2)
appropriations designated as emergency requirements; (3) appropriations for Overseas
Contingency Operations/Global War on Terrorism (OCO; e.g., for military activities in
Afghanistan); (4) appropriations for continuing disability reviews and redeterminations; (5)
appropriations for controlling health care fraud and abuse; and (6) appropriations for disaster
relief. The last five of the listed adjustments effectively exempt those types of discretionary
spending from the statutory caps. The BCA limits adjustments for spending on disability reviews
and controlling health care fraud abuse to relatively small amounts and limits adjustments for
disaster relief by a formula based on historical levels.7 By contrast, funds designated as such by
Congress and the President as OCO and emergency spending are not limited.
Budget Authority and Outlays
Budget authority is what federal agencies are legally permitted to spend, and it is granted by Congress through
appropriation acts in the case of discretionary spending or through other acts in the case of mandatory spending.
Budget authority gives federal officials the ability to spend. Outlays are disbursed federal funds. Until the federal
government disburses funds to make payments, no outlays occur. Therefore, there is general y a lag between when
Congress grants budget authority and outlays occur. The budget deficit is measured as the difference between outlays
and revenues.
Cap levels are enforced through a sequestration process (spending cuts that are automatically
triggered if cap levels are breached).8 The caps do not limit specific accounts or appropriations
bills; instead, they are broad caps on discretionary spending. In FY2012 and FY2013, separate
caps existed on security and non-security spending. Security spending is defined by the BCA as
discretionary appropriations associated with agency budgets for the Departments of Defense,
Homeland Security, Veterans Affairs, the National Nuclear Security Administration, the
intelligence community management account, and all budget accounts in the budget function for

6 Economists generally consider a budget deficit sustainable if it causes the debt to grow at a lower rate than the growth
rate of the economy (GDP growth). For the most recent budget deficit projections, see CBO, Updated Budget
Projections: Fiscal Years 2013 to 2023, May 2013, Table 1.
7 The BCA allows annual disaster spending in amounts up to “the average funding provided for disaster relief over the
previous 10 years, excluding the highest and lowest years” plus the difference between disaster spending in the
preceding fiscal year and the applicable average funding level for that year. Disaster spending is defined in the BCA as
spending classified in specified budget accounts.
8 The sequestration process to enforce statutory spending levels is separate and distinct from the sequester that carries
out the “Automatic Spending Reduction Process” described in the next section.
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international affairs (function 150).9 The largest amounts of spending in the non-security category
are tied to the Departments of Health and Human Services, Education, and Housing and Urban
Development. For FY2014 to FY2021, there are separate caps for defense (function 050) and
non-defense spending. Decisions about how these caps will affect specific agencies or programs
will be made by Congress and the President through the regular appropriations process.
Automatic Spending Reduction Process
Title IV of the Budget Control Act established a Joint Select Committee on Deficit Reduction
(hereinafter Joint Committee) composed of an equal number of Senators and Representatives
instructed to develop a proposal that would reduce the deficit by at least $1.5 trillion over
FY2012 to FY2021. To ensure this level of savings was achieved even if a Joint Committee bill
was not enacted, Section 302 of the Budget Control Act of 2011 established an automatic process
to reduce spending. On November 21, 2011, the co-chairs of the Joint Committee announced that
they were unable to reach a deficit-reduction agreement before the committee’s deadline. As a
result, a $1.2 trillion automatic spending reduction process was triggered, scheduled to begin in
January 2013.
Of the $1.2 trillion in savings, the BCA specifies that 18% of the total ($216 billion) be credited
to debt service savings that would result from the spending reduction.10 Therefore, the amount of
the reduction in budget authority would equal the remaining 82% of the required total savings.
The amount of the automatic spending reduction under the BCA is spread evenly over the nine
years from FY2013 to FY2021 and split evenly between defense (defined as budget function 050)
and non-defense spending categories and applied proportionally to non-exempt discretionary and
mandatory programs within each of these categories.11 The automatic spending reduction would
amount to a reduction in budget authority of $109.3 billion each year for nine years, with $54.7
billion of the reduction to be applied to defense and $54.7 billion applied to non-defense
programs.
Within the defense and non-defense categories, some programs are exempted from an automatic
spending reduction and the cuts to other programs are limited by statute.12 For example, the
automatic spending reduction to Medicare is limited to 2% of program spending.13 Although the

9 Budget functions are classifications of federal budgetary activities into major purposes of the federal government,
regardless of the type of financial transaction or agency organization. For more information, see CRS Report 98-280,
Functional Categories of the Federal Budget, by Bill Heniff Jr..
10 The actual amount of debt service savings will depend on future interest rates and the timing of the deficit reduction;
18% was set by the BCA. As described in CBO’s analysis of the net budgetary savings resulting from an automatic
$1.2 trillion reduction in the event a Joint Committee bill is not enacted, debt service savings amount to 16% of the
total between FY2013 and FY2021. See Congressional Budget Office, Estimated Impact of Automatic Budget
Enforcement Procedures Specified in the Budget Control Act, September 12, 2011.
11 These defense/non-defense categories are separate designations from the discretionary spending caps as described in
the previous section. In most years (i.e., FY2014-FY2021) these categories are the same as the caps. For FY2013, the
defense/non-defense categories were used solely for the purpose of calculating the automatic spending reductions
implemented by the sequester. In that year, the discretionary spending caps were in terms of the security/non-security
designations.
12 These exemptions and special sequester rules are found in 2 USC 905 and 2 USC 906, Section 255 and 256 of the
Balanced Budget and Emergency Deficit Control Act of 1985, as amended.
13 Some Medicare spending is exempt from automatic spending reductions, including Medicare Part D low-income and
catastrophic subsidies and qualified individual (QI) premiums. For more information see 2 USC 906(d)(7).
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calculation of the annual amount of the automatic spending reduction ($109.3 billion) would not
be revised in subsequent years under the BCA’s framework described above,14 the amount applied
to any given budget account could be recalculated if the relative size of budget accounts changes
or the exempt/non-exempt status of an account changes.
For purposes of the automatic reductions, the BCA reorganizes the discretionary spending caps in
terms of defense (defined as budget category 050) and non-defense for the 10-year budget
window. The amount of the automatic reduction is then subtracted from the new defense/non-
defense cap levels. In FY2013, the automatic spending reduction was carried out through an
across-the-board sequester of previously enacted budgetary resources. After the first year
(FY2013), the automatic spending reduction will be carried out through a sequester for mandatory
spending and through reductions in the discretionary caps, rather than a sequester, for
discretionary spending. The sequester is applied proportionately to all non-exempt accounts,
while it is left to future Congresses to determine how to apply the reductions to discretionary
accounts within the caps. Cuts to discretionary programs as a result of the automatic spending
reduction process would be in addition to the savings already projected to result from the initial
discretionary caps in the BCA.
The automatic spending reduction process is not meant to ensure that a specific deficit or
spending level is realized in the future nor would it prevent deficit savings accomplished by the
automatic spending reduction from being undone by future legislation. The amount of automatic
spending reduction does not change if future budget deficits turn out to be larger or smaller than
projected at the time the automatic spending reduction is determined. Future budget deficits could
turn out to be larger or smaller than projected because of subsequent legislative changes or
because of forecasting errors, which have historically been large.15
The FY2013 sequester reduced non-exempt defense discretionary spending by 7.8% relative to
the cap levels, non-defense discretionary spending by 5.0% relative to the cap levels, Medicare by
2% relative to baseline levels (per the statutory limit), and other mandatory spending by 5.1%
relative to the baseline levels.16 For FY2014, a sequester order was issued which reduced defense
mandatory spending by 9.8% and non-defense mandatory spending by 7.2%. Reductions to
Medicare remained capped at 2% per the statutory limit.17
Table 1 displays BCA discretionary cap levels, before and after the automatic spending
reductions, as amended by the American Taxpayer Relief Act of 2012 (ATRA) and the Bipartisan
Budget Act of 2013 (BBA). These changes are discussed in the next section.

14 The automatic spending reduction amounts have been revised for FY2013 to FY2015 by subsequent legislative
action. See discussion in “Legislative Changes to the BCA”.
15 For more information on the accuracy of projections, see Congressional Budget Office, CBO’s Economic
Forecasting Record: 2010 Update, July 2010, available at http://www.cbo.gov/ftpdocs/115xx/doc11553/
ForecastingAccuracy.pdf. CRS Report R41134, The Impact of Major Legislation on Budget Deficits: 2001 to 2010, by
Marc Labonte and Margot L. Crandall-Hollick, also examines the reasons why the budget balance changed over time
between FY2001, when surpluses were projected by CBO throughout the decade, and FY2010, when the budget deficit
was large.
16 Office of Management and Budget, Report to the Congress on the Joint Committee Sequestration for FY2013, March
1, 2013.
17 Office of Management and Budget, OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year
2014, May 20, 2013 (corrected version). Executive Office of the President, “Sequestration Order for Fiscal Year 2014
Pursuant to Section 251A of the Balance Budget and Emergency Deficit Control Act, As Amended,” 22407-22409,
April 15, 2013.
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Table 1. Discretionary Spending Caps Under the BCA
(billions of $)

2013 2014 2015 2016 2017 2018 2019 2020 2021

BCA Cap Levels
Defense
546 556 566 577 590 603 616 630 644
Non-Defense 501 510 520 530 541 553 566 578 590
Total
1,047 1,066 1,086 1,107 1,131 1,156 1,182 1,208 1,234

Changes Made by ATRAa
Defense
552 552 n/a n/a n/a n/a n/a n/a n/a
Non-Defense 491 506 n/a n/a n/a n/a n/a n/a n/a
Total
1,043
1,058 n/a n/a n/a n/a n/a n/a n/a

Automatic Spending Reductions
Defense
-34 -54 -54 -54 -54 -54 -54 -54 -54
Non-Defense -21 -37 -37 -37 -37 -36 -35 -34 -33
Total
-55 -91 -91 -91 -91 -90 -89 -88 -87

Revised Cap Levels
Defense
518 498 512 523 536 549 562 576 590
Non-Defense 470 469 483 493 504 517 530 544 557
Total
988 967 995 1,016 1,040 1,066 1,093 1,120 1,147

Cap Levels As Revised by the Bipartisan Budget Act of 2013
Defense
n/a 520 521 n/a n/a n/a n/a n/a n/a
Non-Defense n/a 492 492 n/a n/a n/a n/a n/a n/a
Total
n/a 1,012
1,014 n/a n/a n/a n/a n/a n/a
Source: CRS Report R42949, The American Taxpayer Relief Act of 2012: Modifications to the Budget Enforcement
Procedures in the Budget Control Act, by Bill Heniff Jr., Congressional Budget Office, Sequestration Update Report,
August 2013, Tables 1 and 2 and CBO’s Estimate of Discretionary Budget Authority for Fiscal Year 2013 Showing
Amounts for Defense and Non-Defense Programs, September 2013.
Notes: See Table 2 for more information on discretionary spending levels in 2012, 2013, and 2014. Totals may
not sum due to rounding.
a. For FY2013, discretionary cap levels were in terms of security and non-security fol owing the enactment of
ATRA ($684 billion for security and $359 billion for non-security). For the purposes of calculating the
automatic spending reductions, the caps were reset to defense ($544 billion) and non-defense ($499 billion).
Budget enforcement of the caps for FY2013 was evaluated on the security and non-security breakdown.
Legislative Changes to the BCA
Since the enactment of the BCA, its spending reductions have been modified by two pieces of
legislation, the American Taxpayer Relief Act of 2012 (ATRA) and the Bipartisan Budget Act of
2013 (BBA). Neither of these actions modified the provisions of the BCA that affect discretionary
spending beyond FY2015. However, the BBA extended the BCA’s mandatory spending sequester
for two years, through FY2023.
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The American Taxpayer Relief Act of 2012
The enactment of ATRA postponed the start of the FY2013 spending reductions until March 1,
2013. ATRA also reduced the FY2013 spending reductions implemented via this process by $24
billion (i.e., two months’ worth of reductions), to roughly $85 billion equally divided between
defense and non-defense ($42.7 billion for each category). Several other minor modifications
were also made to the process by which these spending cuts would be calculated. Although ATRA
reduced the total spending cuts achieved by the automatic process, these provisions were offset
by other spending reductions and revenue increases. On the spending side, the BCA’s
discretionary spending caps were reduced by $4 billion in FY2013 and $8 billion in FY2014,
which was intended to offset roughly half of the cost. In addition, ATRA contained a provision
which raised revenue during the budget window by permitting certain retirement accounts to be
transferred to designated Roth accounts without distribution. This was used to offset the other half
of the cost.18
The Bipartisan Budget Act of 2013
The Bipartisan Budget Act of 2013 (BBA) replaced a portion of the automatic spending process
reductions for FY2014 ($45 billion) and FY2015 ($18 billion) with other savings. These changes
allow for more discretionary spending than was provided under the BCA for FY2014 and
FY2015. The BBA increased discretionary spending levels relative to the levels allowed under the
BCA caps after the caps had been adjusted downward to account for the prior automatic spending
reductions. The savings to offset this additional spending included various provisions affecting
civilian and military retirement, higher education, and transportation. In addition, the measure
also contained a provision which extended the BCA’s sequester of mandatory spending by two
years, though FY2023.19
Effects of the BCA on the Federal Budget
As discussed above, the BCA as enacted contained over $2 trillion in deficit reduction over 10-
years, affecting primarily the discretionary side of the budget.20 As of the time of this report,
appropriations for three fiscal years have been all or partially provided under the constraints of
the BCA. The effects of the BCA and the subsequent revisions from ATRA and the BBA on
spending and the budget deficit are discussed below.

18 For more information, see CRS Report R42884, The “Fiscal Cliff” and the American Taxpayer Relief Act of 2012,
coordinated by Mindy R. Levit; CRS Report R42894, An Overview of the Tax Provisions in the American Taxpayer
Relief Act of 2012 , by Margot L. Crandall-Hollick; and CRS Report R42949, The American Taxpayer Relief Act of
2012: Modifications to the Budget Enforcement Procedures in the Budget Control Act, by Bill Heniff Jr.
19 For a summary of these provisions, see the “Summary of the Bipartisan Budget Act of 2013” released by the House
and Senate Budget Committees on December 10, 2013.
20 This amount of deficit reduction was measured relative to a baseline using FY2011 appropriated levels adjusted for
inflation. This baseline was used because it was the official CBO baseline for discretionary spending at the time the
BCA was enacted. The amount of savings garnered by the Budget Control Act depends on the baseline to which it is
being compared. For example, if it were being compared with a baseline based on 2010 levels of discretionary spending
adjusted for inflation, the savings would be higher than if it were compared with the 2011 levels. The spending cuts
would also be larger if compared with a baseline where discretionary spending was held constant relative to GDP.
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BCA and Discretionary Spending, FY2012-FY2014
Table 2 illustrates how discretionary budget authority was provided within categories subject to
the caps for FY2012 and FY2013 as well as for those categories not limited by the caps. ATRA
reduced the effect of the FY2013 sequester on discretionary spending, meaning discretionary
spending would have been lower in the absence of ATRA. Estimates for FY2014 are included in
the table based on the most recent figures from the Consolidated Appropriations Act, FY2014
(P.L. 113-76). The BBA increased the level of spending subject to the BCA caps in FY2014 (and
FY2015) to a level that is higher than would have been allowed subsequent to the BCA’s
automatic spending reductions, but lower than the BCA’s original spending caps.
Discretionary budget authority subject to the caps equaled $1,043 billion in FY2012 and FY2013.
Total discretionary budget authority has exceeded the level of the caps in both years because, as
the BCA permitted, some discretionary BA is in categories not subject to the caps ($138 billion in
FY2012 and $152 billion in FY2013). In FY2013, the BCA’s automatic spending reductions were
implemented through a sequester, reducing discretionary BA by $64 billion, from $1,195 billion
to $1,131 billion. Of the $64 billion of discretionary spending reductions from sequestration, $55
billion was from discretionary spending subject to the caps and $9 billion was from OCO,
emergency, and disaster spending. In FY2014, the BCA’s automatic spending reduction process
was set to reduce discretionary spending subject to the cap by $91 billion, from $1,058 billion to
$967 billion. With the enactment of the Bipartisan Budget Act of 2013, the level of the caps was
increased by $45 billion to $1,012 billion. Additional discretionary spending not subject to the
caps will also increase so that the total discretionary spending for FY2014 is currently estimated
at $1,111 billion. (If future legislation, such as a supplemental appropriations bill, provides
additional discretionary funding in the categories not subject to the caps—i.e., for an
emergency—the final discretionary spending levels for FY2014 would be higher.) As a result,
total discretionary BA was $1,181 billion in FY2012, $1,131 billion in FY2013, and is estimated
at $1,111 billion in FY2014.
As shown in Table 2, total discretionary spending declined between FY2012 and FY2013 by $50
billion, largely due to the size of the BCA sequester and a reduction in OCO spending. Those
reductions were partially offset by a sizable increase in emergency spending primarily due to
relief provided for those affected by Hurricane Sandy. Spending not subject to the caps was $14
billion higher in FY2013 ($152 billion) than it was in FY2012 ($138 billion). Absent the
sequester, spending in FY2013 ($1,195 billion) would have exceeded FY2012 levels ($1,181
billion). Spending in FY2014 ($1,111 billion) is estimated to be $20 billion below the FY2013
level ($1,131 billion). However, spending subject to the caps, as modified, is $24 billion higher in
FY2014 ($1,012 billion) than it was in FY2013 ($988 billion).
Table 2. Discretionary Budget Authority, FY2012-FY2014
(billions of $)

FY2012
FY2013
FY2014
(est.)
Spending Subject to the BCA Caps, as modified by ATRA
1,043
1,043
1,058
- Automatic Spending Reductions

n/a
n/a
91
= Revised Caps

1,043
1,043
967
Total Spending Subject to the Caps, as modified by the BBA
n/a
n/a
1,012
+ Adjustments for OCO
127
99
92
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FY2012
FY2013
FY2014
(est.)
Emergency
0
41
0
Disaster
Relief
11
12
6
Program
Integrity
*
*
1
= Total Adjustments

138
152
98
Adjusted BCA Caps

1,181
1,195
1,111
- Sequester

n/a
64
0
= Total Discretionary BA

1,181
1,131
1,111a





Memo: Total Spending Subject to BCA Caps, as modified
1,043
988
1,012
Source: Congressional Budget Office, Sequestration Update Report, August 2012, Table 1; Updated Budget
Projections: Fiscal Years 2013 to 2023, May 2013, Table 3 and Table 4; and CBO Estimate of Discretionary
Appropriations for Fiscal Year 2014, Including H.R. 3547, the Consolidated Appropriations Act, 2014, as Posted on the
Website of the House Committee on Rules on January 13, 2014.
Notes: Totals may not sum due to rounding. * indicates less than $1 billion. Does not include modifications to
original scoring. FY2014 adjustments are estimates from the latest CBO baseline figures. N/a indicates not
applicable.
a. The total discretionary BA for FY2014 as modified by the BBA wil be based on the actual level of
adjustments (i.e., spending not subject to the BCA caps).
Though total discretionary spending followed the trends described above, what happened to
spending in each year can be subject to some interpretation. In other words, the provisions of the
BCA affected spending beginning in FY2012. However, the automatic spending reduction
process was not scheduled to begin until FY2013. Therefore, discretionary spending in FY2012
was, by definition, going to be higher than the FY2013 level because FY2012 spending was not
subject to a sequester or other type of spending reduction via the automatic process. In FY2013,
ATRA reduced the amount of the sequester set to take effect that year, thereby increasing
spending relative to the level provided in the BCA. In addition, spending in FY2014 has been
increased from the level provided in the BCA by $45 billion as a result of the BBA. Though
spending may fall in certain years, it may be useful to compare spending levels to what they
would have been under the BCA absent ATRA and BBA. In that case, spending could have been
$24 billion lower in FY2013 had a portion of the sequester not been eliminated by ATRA and $45
billion lower in FY2014 had the BBA not revised the cap. However, assuming discretionary
spending continued to grow at historical rates of about 5%-6% per year in nominal terms,
discretionary spending in FY2013 and FY2014 would have likely been higher than the levels
shown above, absent the spending reductions from the BCA.
BCA and the Budget Deficit
As originally scored, the BCA was projected to reduce the cumulative deficit between FY2012
and FY2021 by roughly $2 trillion.21 This figure includes both the direct effect of lower spending
and the interest savings stemming from the lower deficits and debt resulting from lower spending.

21 CBO, Letter to the Honorable John A. Boehner, Speaker, Estimate of the Impact on the Deficit of the Budget Control
Act of 2011, August 1, 2011, Table 3.
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Legislative Changes to the BCA and Their Budgetary Effects

A goal of the BCA was to match its deficit reduction provisions to the BCA’s multi-step increase
in the debt limit, although the savings are achieved over a different timeframe than the debt limit
increases. The deficit reduction achieved in the BCA in isolation would not prevent the need for
future debt limit increases.
Because individual policy changes cannot be taken in isolation, the savings contained in the BCA
do not mean that the resulting deficit will reach the specified lower level if other policies are
enacted which increase the deficit. Since the law has been enacted, both ATRA and BBA have
changed the amount and timing of savings contained in the BCA itself. Specifically, since the
BCA was enacted in August 2011, Congress and the President have adhered to the spending
restrictions originally intended in that legislation for only one year, FY2012, prior to the
beginning of the automatic spending reduction process. Outside of the legislative changes made
by ATRA and the BBA, other actions have also led to changes in the baseline budget deficit
projections. As shown in Table 3, since the BCA was enacted in August 2011, legislation has
cumulatively increased the deficit by nearly $1.6 trillion. Absent the BCA, the deficit is projected
to be $3.5 trillion higher over the FY2012-FY2021 period.

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Table 3. Legislative Changes Affecting the Current Law Baseline Deficit Since August 2011
(billions of $)
Effect on Deficit (Increase
FY2012-
(+)/Decrease (-))
FY2012
FY2013
FY2014
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2021
Budget Control Act











Discretionary Spending Caps and
-22 -41 -56 -69 -76 -83 -91 -99 -106 -115 -758
Other Provisions
Automatic Spending Reductions
0
-66
-93
-101
-104
-106
-106
-105
-105
-105
-891
Net Interest Savings from the
0 -1 -3 -7 -15 -25 -37 -50 -62 -76 -276
BCA
Non-BCA Spending Changes
48
49
43
-5
-33
-52
-55
-84
-88
-96
-270
Revenue Changes
89
313
340
269
266
338
369
400
426
465
3,275
Other
Net
Interest
0 2 7 10 22 42 68 88 108 133 480
Total Increase in the Deficit as a Result
137 364 390 274 255 328 382 404 446 502 3,485
of Legislative Action since August 2011
Excluding the BCA
Total Increase in the Deficit as a Result
115 256 235 97 60 114 148 150 173 206 1,560
of Legislative Action since August 2011
Including the BCA












Memo (not including net interest effects):











Effect on the deficit due to ATRA
0
329
354
311
340
371
405
416
448
482
3,456
Effect on the deficit due to BBA
0
0
42
15
-4
-5
-5
-5
-5
-5
30
Source: CRS calculations and CBO, The Budget and Economic Outlook: An Update, August 2011, Table A-1; The Budget and Economic Outlook: Fiscal Years 2012 to 2022,
January 2012, Table A-1 and A-2; Updated Budget Projections: Fiscal Years 2012 to 2022, March 2012, Table 3; An Update to the Budget and Economic Outlook: Fiscal Years
2012 to 2022, August 2012, Table A-1; The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013, Table A-1; Updated Budget Projections: Fiscal Years 2013
to 2023, May 2013, Box 1-1 and Table 6; The Budget and Economic Outlook: Fiscal Years 2014 to 2024, February 2014, Table A-1.
Notes: Totals may not sum due to rounding. A portion of the non-BCA spending changes result from baseline rules that extrapolate discretionary funding from the
current year to future years. For example, non-BCA spending reductions from FY2014 to FY2021 stem primarily from removing FY2013 disaster funding from the
baseline.
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Legislative Changes to the BCA and Their Budgetary Effects

The legislation that increased the deficit the most relative to current law since August 2011 was
ATRA. ATRA made various changes to the tax code and several spending programs, including
modification of the provisions of the BCA as it related to the FY2013 sequester, as discussed
earlier. As a result of ATRA, CBO projected the deficit would increase by nearly $3.5 trillion
between FY2013 and FY2021. (The total increase in the deficit from the legislation was
estimated at $4 trillion over the FY2013-FY2022 period.22 Compared with a current policy
baseline that assumes expiring provisions will be extended, however, ATRA reduced the
deficit.23)
The BBA increased the amount of discretionary spending allowed under the provisions of the
BCA offset by other changes to mandatory spending and non-tax receipts, as discussed earlier.
CBO projected the deficit would increase by nearly $30 billion between FY2014 and FY2021.
(Over the FY2014 to FY2023 period, the BBA is projected to decrease the deficit by an estimated
$22 billion.24) Other legislation since that time had much smaller effects on both spending and
revenue levels.
Though changes to the BCA implemented through ATRA and the BBA were offset by other
savings measures, they were largely offset outside of the parameters of the BCA itself. In other
words, ATRA and the BBA delayed the start of and amount of the FY2013 sequester, and rolled-
back the FY2014 automatic spending reductions. These changes were paid for largely by making
other cuts to mandatory spending and by increasing non-tax receipts. Therefore, the deficit
reduction attributed to spending cuts in the BCA was reduced by approximately $12 billion in
FY2013, $45 billion in FY2014, and $18 billion in FY2015.25
The BCA was intended to achieve deficit reduction through a specified amount of savings over a
specified 10-year period (FY2012-FY2021). The changes made to the BCA by ATRA and BBA,
including those changes made outside of the parameters of the BCA itself, still achieve the same
amount of savings over the 10-year period. However, the changes made by ATRA and BBA are
intended to “pay for” increases in spending made during the FY2013 to FY2015 period. In other
words, the savings over 10 years contained in ATRA and BBA is intended to replace the spending
increases in the BCA levels for a three-year period. If Congress and the President agree to
implement further changes to the BCA’s provisions, the savings originally provided in the law
may be revised further. These changes in the original provisions of the BCA over the most recent
fiscal years have been replaced by spending cuts in future years. If this dynamic continues, a
lower level of savings will be achieved in any given year compared to what was contained in the
BCA originally.

22 CBO, Estimate of the Budget Effects of H.R. 8, the American Taxpayer Relief Act of 2012, as passed by the Senate on
January 1, 2013, January 1, 2013.
23 See, for example, Office of Management and Budget, OMBlog, American Taxpayer Relief Act Reduces Deficits by
$737 Billion, January 1, 2013.
24 CBO, Cost Estimate of the Bipartisan Budget Act of 2013, December 11, 2013, Table 1.
25 Half of the cost of postponing the FY2013 sequester under ATRA was paid for by lowering the discretionary
spending caps—Changes Made by ATRA category as shown in Table 1—in FY2013 and FY2014. The BBA also
contained a provision that extended the BCA’s mandatory spending sequester by two years through FY2023. The
extension of the mandatory spending sequester for two years is outside the original BCA 10-year scoring window,
however. This provision increased the amount of savings in the BBA by about $20 billion. This was characterized as
additional savings beyond the “pay fors” in the legislation.
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Legislative Changes to the BCA and Their Budgetary Effects

Moreover, these deficit and debt projections assume that current law will remain in place. If
Congress and the President enact subsequent legislation to decrease revenue levels or increase
spending, these projections could change. Besides new initiatives, Congress and the President
have routinely increased the deficit by temporarily extending expiring provisions in recent years,
including preventing scheduled reductions in Medicare payment rates for physicians (“doc fix”)
and the extension of expiring tax provisions (“tax extenders”). If these two policies are extended,
CBO projects that the deficit will increase by nearly an additional $1 trillion over the FY2013-
FY2021 period, with additional deficit increases beyond FY2021.26


Author Contact Information
Mindy R. Levit
Specialist in Public Finance
mlevit@crs.loc.gov, 7-7792


26 CBO, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013, Table 1-7.
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