BUDGET ROUNDUP: Review of Almost $1 Trillion in Cap-Adjusted Spending
- Cap adjustments have allowed Congress to increase spending beyond the levels set forth in the Budget Control Act of 2011.
- These cap adjustments have resulted in almost $1 trillion in additional spending.
- The BCA contains several cap adjustments to increase spending for specified purposes, including emergencies, disasters, program integrity, and overseas contingency operations (OCO), without breaching the law’s spending limits.
- The largest cap adjustments are the OCO and emergency designations.
- Since FY 2012, this has resulted in an additional $723 billion in overseas contingency operations spending not subject to the BCA’s discretionary caps, while the emergency designation has resulted in $180 billion in additional spending.
A Brief History of the Budget Control Act of 2011:
- The Budget Control Act was enacted in 2011 as a compromise to raise the nation’s debt limit in exchange for significant reductions in federal spending.
- The law capped discretionary spending through fiscal year 2021 with the intention of reducing spending by more than $900 billion.
- It also created a Joint Select Committee charged with further reducing the deficit and provided enforcement procedures to lower spending automatically if the Select Committee failed to meet its target.
- The Select Committee failed to come up with an agreement to reduce the deficit. Starting in 2013, and then again in 2015 and 2018, Congress passed two-year spending deals to increase the BCA caps legislatively. These are in addition to the nearly $1 trillion in cap-adjusted spending.
The different types of cap adjustments can be split into three different categories:
- Adjustments without a ceiling.
- These raise the caps as much as is appropriated, as long as Congress and the President agree on the designation.
- This category includes OCO and emergency designations.
- Formula-Driven. The disaster relief cap adjustment has a maximum adjustment the Office of Management and Budget (OMB) calculates annually based on a statutory formula.
- Adjustments with base requirements. These have a maximum adjustment and can only be used if Congress first provides a specific amount of non-adjusted appropriations.
- This category includes four program integrity adjustments and wildfire suppression activities. The wildfire suppression adjustment does not come into effect until FY 2020.
ADDITIONAL RESOURCES ON THE BUDGET CONTROL ACT AND CAP-ADJUSTED SPENDING
- Senate Budget Committee Hearing on Cap-Adjusted Spending
- Budget Bulletin: Cap Adjustments: How the Government Raises Its Spending Limit
- Budget Bulletin: Spending Caps and the New Fiscal Cliff
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