Sequestration

Sequestration is the cancellation of budgetary resources across a broad range of programs, applied by uniform percentages, when spending exceeds a limit set in law. It was introduced by the Balanced Budget and Emergency Deficit Control Act of 1985, known as Gramm-Rudman-Hollings, signed on December 12, 1985, which set declining deficit targets enforced by automatic cuts. The Supreme Court struck down its original trigger in Bowsher v. Synar in 1986 because it gave the Comptroller General, an officer removable by Congress, an executive role, and Congress shifted the job to the Office of Management and Budget.

The Budget Enforcement Act of 1990 replaced deficit targets with caps on discretionary spending and a pay-as-you-go rule for new tax cuts and mandatory spending, each enforced by sequestration. The Statutory Pay-As-You-Go Act of 2010 restored a version of the PAYGO rule. The Budget Control Act of August 2, 2011, set new caps and, after a special supercommittee failed to agree on deficit reduction, triggered sequestration that took effect on March 1, 2013, cutting defense and nondefense programs alike. Many programs are exempt, including Social Security, Medicaid, and most low-income programs, and Medicare cuts are limited to 2 percent.

Congress has repeatedly raised the caps or waived sequestration when the cuts became politically painful, and it has routinely exempted major deficit-increasing laws from statutory PAYGO. The reconciliation law of July 2025, which CBO estimated would add trillions of dollars to deficits, would trigger a statutory PAYGO sequester including Medicare cuts unless Congress waives it. Supporters say sequestration creates a credible threat that forces budget discipline, while critics say indiscriminate cuts are a poor way to make budget choices and that the threat is rarely carried out.