Summary of the Budget Control Act of 2011 

August 3, 2011

The White House, Senate and House leaders have negotiated a bipartisan law that would both raise the debt ceiling and reduce the national deficit.  The total debt reduction over the next ten years is projected to be between $2.2 and $2.5 trillion and the debt ceiling will be raised in phases so that it will not need to be raised again until after 2012.  The legislation passed both the House of Representatives and the Senate with strong majorities and the President signed the bill Tuesday afternoon.  The legislative vehicle was S.365, The Budget Control Act of 2011.  S.365 does the following:

  • Establishes caps on discretionary spending through 2011
  • Requires both the House and the Senate to vote on a joint resolution proposing a Constitutional Balanced Budget amendment
  • Creates a Congressional Joint Select Committee on Deficit Reduction that would propose additional cuts to reduce the deficit by $1.5 trillion over the next 10 years (referred to in the press as the “Super Committee”)
  • Establishes automatic procedures to reduce spending $1.2 trillion if the Joint Select Committee does not achieve the savings through legislation (this is referred to as sequestration)
  • Establishes procedures to increase the debt limit by $400 billion initially and then later with two additional steps to raise the debt ceiling between $2.1 and $2.4 trillion
  • Allows additional discretionary spending for “program integrity” initiatives to bring down the amount of improper payments
  • Reinstates and changes particular budget process rules

Many low income programs are exempt from sequestration.  However, it is important to note that low-income programs can still be reduced in the separate FY 2012 appropriations process.  As you may recall, the Special Supplemental Program for Women, Infants, and Children (WIC) was cut by over $600 million back in June in the House-passed FY 2012 Agriculture Appropriations bill.  The Appropriations process is not complete for FY 2012 and it is unclear the House and Senate will proceed with the budget process when they return from recess in September.  The Senate has not considered FY 2012 Agriculture Appropriations and neither the House nor the Senate has considered FY 2012 Labor/HHS/Education Appropriations.  Also, low-income programs are not exempt from changes and reductions made by the Joint Select Committee deficit recommendations.

The Joint Select Committee will have a total of 12 members of Congress appointed.  There will be three Republicans and three Democrats from each chamber.  This “Super Committee” will be responsible for finding additional cuts in both defense and non-defense spending.  All programs, including mandatory, entitlement, and discretionary, will be eligible for cuts.  For example, S.365 does not prevent the Super Committee from making cuts in the Supplemental Nutrition Assistance Program’s (SNAP, formerly food stamps) benefits or eligibility, which is a mandatory program.  As mentioned above, every program is on the table.  Additionally, the Super Committee can propose making changes to the tax code.  Below is the legislative time table for the Super Committee:

  • 14 days after passage of the debt ceiling bill: Majority and minority leaders of the House and Senate will each appoint three members of the 12-member committee.
  • Oct. 14: Each committee of jurisdiction in the House and Senate will report its recommendations for cuts from the programs under its jurisdiction.
  • Nov. 23: The joint committee will vote on a bill.
  • Dec. 2: the joint committee will release legislative language on the bill.
  • Dec. 9: The committees of jurisdiction will recommend whether or not to pass the committee bill.
  • Dec. 23: The House and Senate must vote on the bill.

If the Super Committee is unable to reach $1.5 trillion in cuts legislatively by Thanksgiving, the law provides for sequestration to automatically produce $1.2 trillion in cuts.  Many of the low-income programs would be specifically exempt from sequestration.  These programs include:

  • Temporary Assistance for Needy Families (TANF)
  • Contingency fund
  • Child Care entitlement to states
  • Supplemental Nutrition Assistance Programs (SNAP)
  • Supplemental Security Income program (SSI)
  • Child nutrition programs, except special milk programs
  • Special Supplemental Nutrition Programs for Women, Infants, and Children (WIC)
  • Family support payments to states
  • Medicaid payments to states
  • Commodity Supplemental Food Program
  • Pell Grants

In addition, a range of related programs are exempt from sequestration such as payments for foster care and permanency in the child welfare system, Social Security, refundable tax credits, and non-defense unobligated balances.  There is a more comprehensive list of exempt programs at 2 USC § 905 which references provisions in earlier laws such as Gramm-Rudman and Pay-go Act.

For further information, please contact either Sheri Steisel or Emily Wengrovius at  NCSL’s Washington DC office at 202-624-5400.