Discretionary appropriations and direct spending accounts shall be reduced in accordance with this section as follows:

(1) Calculation of total deficit reduction

OMB shall calculate the amount of the deficit reduction required by this section for each of fiscal years 2013 through 2021 by—

(A) starting with $1,200,000,000,000;

(B) subtracting the amount of deficit reduction achieved by the enactment of a joint committee bill, as provided in section 401(b)(3)(B)(i)(II) of the Budget Control Act of 2011;

(C) reducing the difference by 18 percent to account for debt service;

(D) dividing the result by 9; and

(E) for fiscal year 2013, reducing the amount calculated under subparagraphs (A) through (D) by $24,000,000,000.

(2) Allocation to functions

On March 1, 2013, for fiscal year 2013, and in its sequestration preview report for fiscal years 2014 through 2021 pursuant to section 904(c) of this title, OMB shall allocate half of the total reduction calculated pursuant to paragraph (1) for that year to discretionary appropriations and direct spending accounts within function 050 (defense function) and half to accounts in all other functions (nondefense functions).

(3) Defense function reduction

OMB shall calculate the reductions to discretionary appropriations and direct spending for each of fiscal years 2013 through 2021 for defense function spending as follows:

(A) Discretionary

OMB shall calculate the reduction to discretionary appropriations by—

(i) taking the total reduction for the defense function allocated for that year under paragraph (2);

(ii) multiplying by the discretionary spending limit for the revised security category for that year; and

(iii) dividing by the sum of the discretionary spending limit for the security category and OMB’s baseline estimate of nonexempt outlays for direct spending programs within the defense function for that year.

(B) Direct spending

OMB shall calculate the reduction to direct spending by taking the total reduction for the defense function required for that year under paragraph (2) and subtracting the discretionary reduction calculated pursuant to subparagraph (A).

(4) Nondefense function reduction

OMB shall calculate the reduction to discretionary appropriations and to direct spending for each of fiscal years 2013 through 2021 for programs in nondefense functions as follows:

(A) Discretionary

OMB shall calculate the reduction to discretionary appropriations by—

(i) taking the total reduction for nondefense functions allocated for that year under paragraph (2);

(ii) multiplying by the discretionary spending limit for the revised nonsecurity category for that year; and

(iii) dividing by the sum of the discretionary spending limit for the revised nonsecurity category and OMB’s baseline estimate of nonexempt outlays for direct spending programs in nondefense functions for that year.

(B) Direct spending

OMB shall calculate the reduction to direct spending programs by taking the total reduction for nondefense functions required for that year under paragraph (2) and subtracting the discretionary reduction calculated pursuant to subparagraph (A).

(5) Implementing discretionary reductions

(A) Fiscal year 2013

On March 1, 2013, for fiscal year 2013, OMB shall calculate and the President shall order a sequestration, effective upon issuance and under the procedures set forth in section 903(f) of this title, to reduce each account within the security category or nonsecurity category by a dollar amount calculated by multiplying the baseline level of budgetary resources in that account at that time by a uniform percentage necessary to achieve—

(i) for the revised security category, an amount equal to the defense function discretionary reduction calculated pursuant to paragraph (3); and

(ii) for the revised nonsecurity category, an amount equal to the nondefense function discretionary reduction calculated pursuant to paragraph (4).

(B) Fiscal years 2014-2021

Except as provided by paragraphs (10), (11), (12), and (13), on the date of the submission of its sequestration preview report for fiscal years 2014 through 2021 pursuant to section 904(c) of this title for each of fiscal years 2014 through 2021, OMB shall reduce the discretionary spending limit—

(i) for the revised security category by the amount of the defense function discretionary reduction calculated pursuant to paragraph (3); and

(ii) for the revised nonsecurity category by the amount of the nondefense function discretionary reduction calculated pursuant to paragraph (4).

(6) Implementing direct spending reductions

(A) On the date specified in paragraph (2) during each applicable year, OMB shall prepare and the President shall order a sequestration, effective upon issuance, of nonexempt direct spending to achieve the direct spending reduction calculated pursuant to paragraphs (3) and (4). When implementing the sequestration of direct spending pursuant to this paragraph, OMB shall follow the procedures specified in section 935 of this title, the exemptions specified in section 905 of this title, and the special rules specified in section 906 of this title, except that the percentage reduction for the Medicare programs specified in section 906(d) of this title shall not be more than 2 percent for a fiscal year.

(B) On the date on which the President submits the budget under section 1105 of title 31 for each of fiscal years 2022 through 2031, the President shall order a sequestration, effective upon issuance such that—

(i) the percentage reduction for nonexempt direct spending for the defense function is the same percent as the percentage reduction for nonexempt direct spending for the defense function for fiscal year 2021 calculated under paragraph (3)(B); and

(ii) the percentage reduction for nonexempt direct spending for nondefense functions is the same percent as the percentage reduction for nonexempt direct spending for nondefense functions for fiscal year 2021 calculated under paragraph (4)(B).


(C) Notwithstanding the 2 percent limit specified in subparagraph (A) for payments for the Medicare programs specified in section 906(d) of this title, the sequestration order of the President under such subparagraph for fiscal year 2022 shall be applied to such payments so that with respect to the period beginning on April 1, 2022, and ending on June 30, 2022, the payment reduction shall be 1.0 percent.

(D) On the date on which the President submits the budget under section 1105 of title 31 for fiscal year 2032, the President shall order a sequestration of payments for the Medicare programs specified in section 906(d) of this title, effective upon issuance, such that, notwithstanding the 2 percent limit specified in subparagraph (A) for such payments—

(i) with respect to the first 6 months in which such order is effective for such fiscal year, the payment reduction shall be 2.0 percent; and

(ii) with respect to the second 6 months in which such order is effective for such fiscal year, the payment reduction shall be 0 percent.

(7) Adjustment for Medicare

If the percentage reduction for the Medicare programs would exceed 2 percent for a fiscal year in the absence of paragraph (6), OMB shall increase the reduction for all other discretionary appropriations and direct spending under paragraph (4) by a uniform percentage to a level sufficient to achieve the reduction required by paragraph (4) in the non-defense function.

(8) Implementation of reductions

Any reductions imposed under this section shall be implemented in accordance with section 906(k) of this title.

(9) Report

On the dates specified in paragraph (2), OMB shall submit a report to Congress containing information about the calculations required under this section, the adjusted discretionary spending limits, a listing of the reductions required for each nonexempt direct spending account, and any other data and explanations that enhance public understanding of this title 1 and actions taken under it.

(10) Implementing direct spending reductions for fiscal years 2014 and 2015

(A) OMB shall make the calculations necessary to implement the direct spending reductions calculated pursuant to paragraphs (3) and (4) without regard to the amendment made to section 901(c) of this title revising the discretionary spending limits for fiscal years 2014 and 2015 by the Bipartisan Budget Act of 2013.

(B) Paragraph (5)(B) shall not be implemented for fiscal years 2014 and 2015.

(11) Implementing direct spending reductions for fiscal years 2016 and 2017

(A) OMB shall make the calculations necessary to implement the direct spending reductions calculated pursuant to paragraphs (3) and (4) without regard to the amendment made to section 901(c) of this title revising the discretionary spending limits for fiscal years 2016 and 2017 by the Bipartisan Budget Act of 2015.

(B) Paragraph (5)(B) shall not be implemented for fiscal years 2016 and 2017.

(12) Implementing direct spending reductions for fiscal years 2018 and 2019

(A) OMB shall make the calculations necessary to implement the direct spending reductions calculated pursuant to paragraphs (3) and (4) without regard to the amendment made to section 901(c) of this title revising the discretionary spending limits for fiscal years 2018 and 2019 by the Bipartisan Budget Act of 2018.

(B) Paragraph (5)(B) shall not be implemented for fiscal years 2018 and 2019.

(13) Implementing direct spending reductions for fiscal years 2020 and 2021

(A) OMB shall make the calculations necessary to implement the direct spending reductions calculated pursuant to paragraphs (3) and (4) without regard to the amendment made to section 901(c) of this title revising the discretionary spending limits for fiscal years 2020 and 2021 by the Bipartisan Budget Act of 2019.

(B) Paragraph (5)(B) shall not be implemented for fiscal years 2020 and 2021.

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Terms Used In 2 USC 901a

  • account: means an item for which appropriations are made in any appropriation Act and, for items not provided for in appropriation Acts, such term means an item for which there is a designated budget account identification code number in the President's budget. See 2 USC 900
  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Baseline: Projection of the receipts, outlays, and other budget amounts that would ensue in the future without any change in existing policy. Baseline projections are used to gauge the extent to which proposed legislation, if enacted into law, would alter current spending and revenue levels.
  • baseline: means the projection (described in section 907 of this title) of current-year levels of new budget authority, outlays, receipts, and the surplus or deficit into the budget year and the outyears. See 2 USC 900
  • budgetary resources: means new budget authority, unobligated balances, direct spending authority, and obligation limitations. See 2 USC 900
  • category: means the subsets of discretionary appropriations in section 901(c) of this title. See 2 USC 900
  • direct spending: means &mdash. See 2 USC 900
  • discretionary appropriations: means budgetary resources (except to fund direct-spending programs) provided in appropriation Acts. See 2 USC 900
  • Discretionary spending: Spending (budget authority and outlays)controlled in annual appropriations acts.
  • discretionary spending limit: shall mean the amounts specified in section 901 of this title. See 2 USC 900
  • Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
  • Joint committee: Committees including membership from both houses of teh legislature. Joint committees are usually established with narrow jurisdictions and normally lack authority to report legislation.
  • nonsecurity category: means all discretionary appropriations not included in the security category defined in subparagraph (B). See 2 USC 900
  • OMB: means the Director of the Office of Management and Budget. See 2 USC 900
  • Outlays: Outlays are payments made (generally through the issuance of checks or disbursement of cash) to liquidate obligations. Outlays during a fiscal year may be for payment of obligations incurred in prior years or in the same year.
  • revised nonsecurity category: means discretionary appropriations other than in budget function 050. See 2 USC 900
  • revised security category: means discretionary appropriations in budget function 050. See 2 USC 900
  • security category: includes discretionary appropriations associated with agency budgets for the Department of Defense, the Department of Homeland Security, the Department of Veterans Affairs, the National Nuclear Security Administration, the intelligence community management account (95-0401-0-1-054), and all budget accounts in budget function 150 (international affairs). See 2 USC 900
  • sequestration: refer to or mean the cancellation of budgetary resources provided by discretionary appropriations or direct spending law. See 2 USC 900
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