Tiny Explainer: The Budget Sequester

Unless Congress reaches a deal before January, the budget is slated to be cut with a blunt axe. Here's how the cuts will work.

It's one of those classic pieces of Washington jargon everyone uses but few really understand: the sequester.

Let's start at the beginning. As part of a deal to raise the debt ceiling in August 2011, congressional leaders agreed to increase the ceiling on borrowing on condition that the deficit be reduced. Democrats wanted to shrink it by increasing taxes on high earners (a revenue solution), while Republicans wanted to cut it by lowering spending. Both parties appointed members to a "supercommittee" charged with meeting in the middle to find a way to reduce the deficit by $1.2 billion.

As an incentive to reach a deal, the committee agreed that failure would lead to automatic budgets cuts of $600 billion starting in January -- half from defense*, and half from discretionary spending (basically, everything else, minus Social Security and Medicaid). The discretionary cuts would be taken proportionately from everything but Pell Grants, veterans' care, and Medicare. The idea was to endanger things that were widely popular with the public and dear to each party (defense for Republicans, other programs for Democrats). These automatic cuts are the "sequester," because the money is set aside for mandatory use.

Perhaps unsurprisingly, the supercommittee did not reach a deal. Now, unless Congress can agree on a deficit reduction plan before January, the first-year cuts of $109 billion will kick in. Senate hawks like John McCain are particularly apoplectic about reduced Pentagon funding, but members of both parties are worried about the changes, and there have been discussions about legislation to repeal the sequester. President Obama has said he'll veto repeal bill, and demands that Congress either come up with its own cuts or else take the unpleasant medicine of the sequester. Mitt Romney has accused Obama of a failure of leadership and says the defense cuts would be disastrous.

For a more detailed but mostly plain-English description, read this paper from the Center for Budget and Policy Priorities.

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*Clarification: ProPublica's Justin Elliott notes that defense cuts will actually be $492 billion, not $600 billion. The remaining $108 billion reduction consists of interest payments that the Pentagon wouldn't have to make.