The Fiscal Responsibility Act (FRA) in FY2024: Current Status

The Fiscal Responsibility Act (FRA) in FY2024: Current Status

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INSIGHTi

The Fiscal Responsibility Act (FRA) in FY2024:
Current Status
January 10, 2024
Spending Limits
The Fiscal Responsibility Act (FRA, P.L. 118-5), enacted in June 2023, temporarily suspended the debt
limit and established statutory discretionary spending limits for FY2024 and FY2025 for both defense and
nondefense discretionary spending, as shown in Table 1.
Additionally, the FRA included a provision described as incentivizing Congress to enact regular, full-year
appropriations legislation instead of relying on short-term continuing resolutions (CRs). This provision
requires that if a CR is in effect on January 1, 2024, for any budget account, the discretionary spending
limits for FY2024 be revised to the levels also shown in Table 1. The revisions reduce the overall amount
of spending permitted by $4 billion but entail a $33 billion increase to the original nondefense
discretionary spending limit and a $37 billion decrease to the original defense discretionary spending
limit. These revised levels, however, would not be enforced until April 30, 2024, should a CR still be in
effect, and will revert back to the original limits upon the enactment of full-year appropriations.
Table 1. FY2024 Original and Revised Discretionary Limits on Budget Authority Under the
FRA
In Billions of Dollars

Defense
Nondefense
Total
Discretionary
Discretionary
Original levels
$886.35
$703.65
$1,590.00
Revised levels under a CR
$849.78
$736.45
$1,586.23
Sources: P.L. 118-5 and the Congressional Budget Office cost estimate referenced in P.L. 118-5 as “table 1–S of H.R.
2617, published on December 21, 2022,” minus 1%.
Notes: These levels reflect only base spending, which excludes funding that would be exempt from budgetary
enforcement.
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Enforcement
If discretionary appropriations are enacted that exceed a statutory limit for a fiscal year, a sequester is
triggered, making across-the-board reductions to nonexempt spending to eliminate spending above the
limit within the applicable category (defense and/or nondefense). The Office of Management and Budget
(OMB) has the sole statutory responsibility of determining whether sequestration is required and, if so,
the amount of sequestration needed. Any sequestration of affected discretionary budget authority would
not occur until OMB issues a final sequestration report specifying the amount of any breach, as well as
the sequestration percentages necessary to achieve the required reduction. A complex set of deadlines
currently governs the date on which OMB must issue any required final sequestration report (as shown in
Table 2).
Current Status
The government is currently operating under a short-term CR (P.L. 118-15, as amended by P.L. 118-22),
which provides continuing appropriations for four of the regular appropriations acts through January 19,
2024, and the remaining eight through February 2, 2024. Because a short-term CR was in effect on
January 1, the revised limits, as shown in Table 1, are currently operational. These revised levels,
however, are not enforced immediately and will revert back to the original limits if full-year
appropriations are later enacted. Table 2 provides information on which spending levels will be in effect,
and when those levels will be enforced, under three different potential scenarios.
Table 2. Current Potential Enforcement Scenarios
Scenario
Limits in Effect
Date of OMB Final Sequestration
Report
Ful -year FY2024 appropriations are
Original Limits
15 business days after enactment of all
enacted for all 12 bil s on or prior to
ful -year appropriations
April 30, 2024.
A short-term CR is operational for any
Revised Limits
April 30, 2024
appropriations bil on April 30, 2024.
Ful -year appropriations are enacted
Original Limits
15 calendar days after the enactment
after April 30, 2024.
of all ful -year appropriations
Sources: FRA; 2 U.S.C. §904; OMB’s Memorandum for the Heads of Executive Departments and Agencies, Frequently
Asked Questions Related to Fiscal Year 2024 Discretionary Spending Limits, issued December 22, 2023.
While enforcement of the spending limits is not yet required, some Members and media reports have
suggested that adherence to these levels, through legislation or sequestration, could result in substantial
reductions to current funding levels. These reports stem from information provided by the Congressional
Budget Office (CBO), including a recent letter that states that if the levels of funding provided through
the current short-term CR were annualized over FY2024, “sequestration would be required and would
result in across-the-board reductions ranging from 5 percent to 9 percent for nondefense funding and from
zero to 1 percent for defense funding, depending on when appropriations were enacted and what form
they took.” Further information on such amounts is provided below in Error! Reference source not found..
OMB recently issued guidance to agencies stating, among other things, that agencies should “not attempt
to self-sequester and must continue as normal” in order to comply with current law, as enforcement of the
spending limits will not occur until after the enactment of further FY2024 appropriations legislation.

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Figure 1. Comparison of Original and Revised FRA Discretionary Limits for FY2024 to the
Annualized CBO Estimate of the Current Short-Term CR

Source: For FRA original levels, Section 101 of the Fiscal Responsibility Act of 2023 (P.L. 118-5); for FRA revised levels,
Section 102 of the Fiscal Responsibility Act of 2023 (P.L. 118-5); for the annualized rate provided under Division A of P.L. 118-
22, Table 1 of the CBO cost estimate for H.R. 6363 (signed into law as P.L. 118-22), and CBO, Implementing the Statutory Limits
on Discretionary Funding for Fiscal Year 2024, January 2024.
Notes: The original limits represent those established for the defense (“Security”) and nondefense (“Nonsecurity”) categories
for FY2024 in Section 101 of the FRA. The revised limits represent those established for the defense (“Security”) and
nondefense (“Nonsecurity”) categories for FY2024 in Section 102 of the FRA, which went into effect on January 1, 2024, as a
short-term CR was in effect. The annualized levels in the current CR represent the estimated total budget authority in the
defense and nondefense categories for FY2024 if the current CR (P.L. 118-15, as amended by P.L. 118-22) were in effect for the
ful fiscal year, as estimated by CBO.

Author Information

Drew C. Aherne
Megan S. Lynch
Analyst on Congress and the Legislative Process
Specialist on Congress and the Legislative Process

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of

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