Skip Navigation

Sequestration--the cancellation of budgetary resources--is an automatic procedure to control discretionary appropriations and legislative changes in direct (mandatory) spending and receipts.¹ The Congress and the President can avoid a discretionary sequestration by keeping discretionary spending within established statutory limits, and a pay-as-you-go sequestration by making sure that the cumulative effect of legislation dealing with direct spending or receipts is deficit neutral in each fiscal year.

Federal law requires the Congressional Budget Office (CBO) each year to issue a sequestration preview report five days before the President submits a budget, a sequestration update report on August 15, and a final sequestration report 10 days after a session of Congress ends. Each sequestration report must contain estimates of the following items:

• The current limits on discretionary spending and any adjustments to them; and
  
  
• The amount by which legislation enacted since the Budget Enforcement Act of 1990 that affects direct spending or receipts has increased or decreased the deficit, as well as the amount of any required pay-as-you-go sequestration.

The final sequestration report must also include the amount of discretionary new budget authority for that fiscal year, estimated total outlays, and the amount of any required discretionary sequestration.

This update report to the Congress and the Office of Management and Budget (OMB) provides the required information.

1. Current sequestration procedures were established by the Budget Enforcement Act of 1990, which amended the Balanced Budget and Emergency Deficit Control Act of 1985 and the Congressional Budget and Impoundment Control Act of 1974. The Omnibus Budget Reconciliation Act of 1993 extended the application of those procedures through 1998. The Budget Enforcement Act of 1997 further extended them, with modifications, through 2002 (or in some cases 2006).

This document is available in its entirety in PDF.