Skip Navigation

Under current law, sequestration--the cancellation of budgetary resources--serves as the means to control discretionary appropriations and legislative changes in direct (that is, mandatory) spending and receipts.¹ The Congress and the President can avoid sequestration by keeping discretionary appropriations within established statutory limits and by making sure that the cumulative effect of legislation dealing with direct spending or receipts is deficit neutral in the current year and the budget year combined.

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 discretionary outlays, and the amount of any required discretionary sequestration.

This final report to the Congress and the Office of Management and Budget (OMB) provides the required information. Because enacted appropriations have not exceeded the spending limits for fiscal years 1996 and 1997, and because direct spending and receipt legislation has not increased the total deficit for those two years, CBO estimates that neither a discretionary spending nor a pay-as-you-go sequestration is required in 1997.

1. Current sequestration requirements 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 to add new enforcement procedures for discretionary spending, direct spending, and receipts for fiscal years 1991 through 1995. The Omnibus Budget Reconciliation Act of 1993 extended the application of those procedures through 1998.

This document is available in its entirety in PDF.