Scroll over each entry below for more details
- Imposition of Sequester Cuts ($85 billion)
The Budget Control Act of 2011 formed a congressional “super committee” that was instructed to agree on at least $1.2 trillion of deficit reduction. Additionally, as a failsafe, it included automatic cuts to defense and non-defense spending that would be implemented if the super committee did not meet its target. Following the lack of congressional legislation to avoid the across-the-board cuts, the sequester went into effect as scheduled.
- Statutory Debt Ceiling to be Increased from $16.394 Trillion by Approximately $250 Billion
On May 19, the debt limit would be automatically increased by roughly the amount of deficit spending and increased intragovernmental debt after February 4, the date of enactment of H.R. 325 – approximately $250 billion.
- Treasury Begins Using Extraordinary Measures
In order to continue paying bills on time, Treasury would begin disinvesting certain funds, such as the Thrift Savings Plan G-Fund, and could declare a Debt Issuance Suspension Period (DISP). Based on our interpretation of H.R. 325, we estimate that the increase in the statutory debt limit on May 19 will not be sufficient to cover all outstanding debt subject to limit on that date. In this case, Treasury would have to immediately use some Extraordinary Measures in order to remain under the debt limit.
- Additional Extraordinary Measures Become Available
On June 30, 2013, Treasury will have the option to suspend reinvestment of maturing securities in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund, and to suspend the semiannual interest payment to these funds. Using these Extraordinary Measures would create room under the debt limit, allowing additional borrowing to help pay federal government obligations.
- The Interest Rates on Subsidized Stafford Loans Double from 3.4% to 6.8%
On June 30, 2013, the previously extended low interest rates on new subsidized Stafford loans will expire, reverting to 6.8%. The rise in the interest rates will affect only the subsidized loans taken out after the date – the previously issued subsidized loans will still carry the 3.4% interest rate. The unsubsidized Stafford loans will remain unaffected.
- Expiration of Fiscal Year 2013 Continuing Resolution and Appropriations Bill
Following the passage of a continuing resolution and appropriations bill (H.R. 933) at the annualized funding level of $1.043 trillion on March 21, 2013, all federally appropriated programs are funded only through the end of fiscal year 2013, on September 30. For FY 2014, due to the Budget Control Act of 2011, discretionary appropriations caps are set at a total of $966.924 billion, according to the Office on Management and Budget (see source link below timeline), divided as follows: defense cap = $498.062 billion; non-defense cap = $468.842 billion. Unless changed by a future law, these caps are statutorily binding and will cause an across-the-board sequester to that category of spending if they are not met, to eliminate any overage.
- Expiration of Temporary Assistance for Needy Families (TANF)
TANF is a block grant program that funds a wide range of benefits and services for low-income families with children. When Congress passed the continuing resolution and appropriations bill in March, it included a six-month extension of the TANF program, which was set to expire. For grants to the states under TANF to continue beyond September, Congress would either need to pass another short-term extension or a long-term reauthorization.
- Expiration of Partial Farm Bill Extension
Because Congress could not agree on a full reauthorization of a broad assortment of agricultural programs, including subsidies, crop insurance, and the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, a partial extension of the previous farm bill was included as part of the fiscal cliff deal. This extension expires at the end of the fiscal year, at which point Congress would either need to pass another short-term extension or a long-term reauthorization.
- X Date – "Extraordinary Measures" Exhausted
Once the debt limit is reached, the U.S. can no longer borrow money to meet its financial obligations. If Congress does not promptly approve an increase in the debt ceiling, the Treasury Department can take “extraordinary measures” to raise cash to avoid default for a limited time. These measures include borrowing from other government accounts, such as funds related to currency exchange and federal employee retirement. The borrowed amounts must be repaid (in full and with foregone interest) once the debt limit is increased. If these measures are exhausted without Congress acting to increase the debt limit, the U.S. government will be unable to meet all of its financial obligations, which include Social Security benefit payments, the salaries of our men and women in the armed forces, and interest payments on the national debt. Based on our projections, the X Date is most likely to occur sometime in October 2013.
- Expiration of “Tax Extenders”
An array of tax provisions, often referred to as extenders, are set to expire at the end of 2013. The extenders include several popular provisions, such as education tax breaks for individuals and the research and experimentation tax credit for businesses, which have never been made permanent.
- Sequestration of Discretionary Spending
If appropriations for fiscal year 2014 are enacted at levels that exceed sequestration-level caps on discretionary spending, automatic across-the-boards cuts would take effect 15 days after Congress adjourns (likely in January).
Source: FY 2014 discretionary appropriations caps