What is sequestration?

Background

Sequestration is the term created to describe the $1.2 trillion in arbitrary, across-the-board cuts to federal spending beginning in 2013 and ending in 2021 that were enacted as part of the Budget Control Act of 2011. The intent of the provision was to impose deep cuts to federal spending that were equally split between domestic programs and defense programs. The arbitrary nature of the cuts was meant to be so distasteful to both political parties that it would motivate action to avert the cuts and compromise on a plan for comprehensive deficit reduction.

After the failure of the bipartisan "Supercommittee" to reach an alternative to sequestration, the cuts remained in place and slated to take effect on January 1, 2013. This deadline was delayed to March 1 in the New Year’s Day deal to avert the fiscal cliff. The March 1 deadline has come and gone without additional action, resulting in $64 billion worth of sequestration cuts to discretionary spending in 2013 according to the OMB (Office of Management and Budget.)

FY 2014 and Beyond

Congress failed to pass by the October 1, 2013 deadline a FY 2014 stop-gap spending bill known as a “Continuing Resolution” or CR that would have funded the federal government through mid-November or December at the post-sequester spending level of $986 billion, resulting in the first government shutdown in 17 years. Spending levels that include arbitrary sequestration cuts are likely to continue at least temporarily if a short-term budget agreement is reached that could run for six to ten weeks. However, the ultimate fate of sequestration for FY 2014 remains uncertain since Congress will be prompted to address the FY 2014 spending levels and sequestration cuts again after the pending CR runs out in mid-November or December.

A new round of sequestration cuts will be implemented in January 2014 unless Congress repeals the underlying law or replaces the arbitrary cuts with targeted appropriations decisions. If Congress allows sequestration to continue into 2014, funding levels for non-defense discretionary programs would remain mostly flat relative to 2013 spending levels. The OMB predicts a reduction of $91 billion (or 8.6 percent) through sequestration in 2014. Because the budget caps set under the Budget Control Act of 2011 will increase steadily over the nine-year span of cuts, CBO estimates the reduction in 2021 will decrease to $87 billion (or 7.1 percent).

Due to the indecision and political gridlock surrounding sequestration over the past year, many nonprofits that have contracts with governments at the federal, state, and local levels have, and continue to experience, delays in the renewal of those contracts.

How to Take Action

GiveVoice.org was created to provide nonprofits a place to share information on how sequestration is affecting their operations. The effects are more wide-ranging than simple budget cuts. We anticipate significant increases in demand for nonprofit services as millions of workers across the country are furloughed or laid off. Budget cuts will be compounded as states and localities that received funding from the federal government look for ways to plug new holes in their budgets by further cutting funds that had gone to nonprofits in the past or seeking to implement new fees and attacks on nonprofit tax exemptions. Further, with less income and more uncertainty about their jobs, people will have less to donate to local nonprofits. This perfect storm of factors will severely damage nonprofits' continuing abilities to serve their communities.

We urge all nonprofits to share how these cuts are having an effect on their operations and spread the word to other nonprofit staff members, board members, volunteers, and people served by their nonprofit. The more these stories are relayed to our elected officials and the media, the greater the understanding of the true human costs of what has been happening. Help us raise the voices of those in our communities that it is time for Congress and the President to get back to work, fix the sequester, return to regular order for the federal budget, and ensure no more harm is done to our communities.

Additional Resources

To learn more about how the potential cuts under sequestration and attempts to avoid tax hikes will impact nonprofits and the communities they serve in your state, view the resources below