Summary of the Budget Control Act of 2011

Resource Government
August 17, 2012 — 906 views  
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The Budget Control Act of 2011 was a federal statute that was signed into law by President Barack Obama on August 2, 2011. Along with setting the table for creating a more balanced budget, the Act was primarily designed to focus on the debt crisis that has existed in America in recent years. The measure could significantly reduce future budget deficits while simultaneously raising the ceiling limit on public debt.

The legislation contains several different complex elements, according to the Congressional Budget Office. Some of the main points include:

• The establishment of caps on discretionary spending through 2012.

• Changes to the Pell Grant and student loan programs.

• The establishment of a procedure that would increase the debt limit by $400 billion initially, with additional procedures that would allow the limit to be raised twice more, for a cumulative increase of between $2.1 trillion and $2.4 trillion.

• Integrity initiatives intended to reduce the amount of improper benefit payments paid out.

• The creation of a Congressional Joint Select Committee on Deficit Reduction to propose further deficit reductions and to create at least $1.5 trillion in budgetary savings over 10 years.

• The reinstating and modification of certain budget process rules.

• The establishment of automatic procedures to reduce spending by up to $1.2 trillion if this legislation does not achieve the savings intended.

The two main points of the legislation focuses on raising the debt limit while enacting spending cuts that would decrease debt and deficits across the board. According to Keith Hennessey, discretionary spending, also known as annual appropriations, will be cut and capped. Experts project savings from this measure alone to save the government more than $917 billion over the next decade. These discretionary caps would not apply to spending for wars in Afghanistan and Iraq, or any other similar activities, collectively known as overseas contingency operations.

Another unique portion of the legislation providing additional incentives to the Joint Select Committee on Deficit Reduction to stay on top of reducing deficits is the establishment of a backup sequestration procedure. If Congress failed to demonstrate at least $1.2 trillion in cuts, they could trigger across-the-board cuts, also known as sequestrations, that would apply to mandatory and discretionary spending from 2013 to 2021. This would be an amount equal to the difference between $1.2 trillion and the amount that would have been enacted from the joint committee.

Resource Government