November 19, 2012

BCA Sequester Doesn't Make a Dent in the National Debt

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This week’s chart, based on the Bipartisan Policy Center's (BPC) projections, illustrates the impact of the Budget Control Act’s sequester on the debt trajectory of the United States.

According to the data, sequestration merely delays national debt from reaching 100 percent of GDP by two years. The lack of improvement in reducing the debt is the result of an unwillingness to address its main driver—spending on entitlement programs that must keep up with future demographic and population changes.

Sequestration alone is not an adequate response to reducing debt, but it is a good first step. Additional fiscal-reform measures are needed to tackle explosions in entitlement programs and to significantly reduce the debt. 

Data note: These figures show debt held by the public, which is debt minus intergovernmental debt. Contrastingly, gross national debt is already above 100 percent. The BPC data takes into consideration the extension and plausible adjustments of certain policies set to expire and phase out in the coming year, including the permanent extension of the Bush-era tax cuts, freezing Medicare physician payments, and indexing the alternative minimum tax to inflation.