Last week, the Congressional Budget Office (CBO) released its first updated estimate of the effect of the sequester on outlays (actual spending) since the March implementation of sequestration. CBO projects that the defense sequester cuts to discretionary outlays will ramp up steeply during Fiscal Years (FY) 2014 and 2015, from a $29 billion cut in FY 2014 to $43 billion in FY 2015. Last October, the Bipartisan Policy Center (BPC) made a virtually identical estimate—that the effect of the defense sequester on outlays would rise from a $30 billion cut in FY 2014 to $45 billion in FY 2015.
CBO also issued estimates for the effect of the non-defense sequester on outlays, projecting that these outlay cuts to discretionary and certain mandatory spending (including Medicare) will increase from $30 billion in FY 2014 to $45 billion in FY 2015.
These estimates provide additional evidence that the largest impacts and greatest economic damage from sequestration are yet to come. The recent budget agreement, if enacted, would delay the worst of this damage for 12 to 18 months, but would not serve as a long-lasting solution.
BPC’s full analysis of the economic and national security consequences of the defense sequester are available in the following reports: