November 18, 2011

Update: Federal Spending Without & With Sequester Cuts FY2012-2021

On November 7, Mercatus Center Senior Research Fellow Veronique de Rugy published a chart using data from the Congressional Budget Office to examine the estimated growth in spending without and with the potential Budget Control Act (BCA) sequester.

It was brought to our attention that it would be useful to look at the increase between FY2012-FY2021. Here is what the data looks like in this new window of time:

Spending without and with a potential BCA sequester will go up significantly between FY2012 and FY2021.

Changes in spending from sequestration result in new budget projections below the CBO’s baseline projection of spending based on current law. The federal government would spend $3.62 trillion in 2013, the first year with sequestration, versus the $3.69 trillion projected by CBO. Total spending in FY2012 will be $3.61. By 2021, the government would spend $5.26 trillion versus the $5.41 trillion projected. Overall, without a sequester, federal spending would increase $1.81 trillion (blue line) between FY2012 and FY2013. With a sequester, federal spending would increase by $1.66 trillion (red line).

A further breakdown of the percentage of budget programs reveals that sequestration provides relatively small reductions in spending rates across the board. Between 2012 and 2021 with sequestration, defense increases 16% (vs. 24%); nondefense discretionary increases 4% (vs. 9%); Medicare increases 71% (vs. 74%); and net interest increases 180% (vs. 200%).

As we can see, under sequestration, spending in each categories would go up. The only reduction would be a reduction in the growth rate of spending—which is quite different from a spending cut.