The fiscal cliff law (PL 112-240) has changed how discretionary spending caps and automatic spending cuts will be enforced. The new law replaces the first two months of the scheduled sequester with other, longer-term deficit reduction. To replace the savings from the two cancelled months of the sequester, Congress lowered discretionary spending caps by $12 billion over fiscal 2013 and 2014 and raised $12 billion in revenue over a decade by changing Roth retirement account rules.
Provision | Before deal | After deal |
---|---|---|
Lowers fiscal 2013 discretionary caps by $4 billion | Defense: $546 billion Nondefense: $501 billion Total: $1.047 trillion |
Security: $684 billion Nonsecurity: $359 billion Total: $1.043 trillion |
Lowers fiscal 2014 discretionary caps by $8 billion | Defense: $556 billion Nondefense: $510 billion Total: $1.066 trillion |
Defense: $552 billion Nondefense: $506 billion Total: $1.058 trillion |
Delays start date of fiscal 2013 sequester by 2 months | January 2, 2013 | March 1, 2013 |
Reduces amount of fiscal 2013 sequester by $24 billion | $109 billion | $85 billion |
Delays enforcement date for fiscal 2013 discretionary caps | January 18, 2013 | March 27, 2013 |
Changes definition and composition of fiscal 2013 discretionary caps used in enforcement | Defense spending would be reduced by $11 billion below current CR levels | Security spending would be reduced by $7 billion below current CR levels |
Liberalizes conversion of tax deferred retirement accounts to Roth savings accounts | Conversions restricted | Conversions expanded, raising $12 billion in revenue by 2022 |
NOTE: The defense category is defined as national defense budget function 050, which includes Department of Defense military activities, nuclear weapons activities of the Department of Energy and National Nuclear Security Administration, and portions of the FBI, Coast Guard and other agencies. The security category includes the departments of Defense, Homeland Security and Veterans Affairs, the National Nuclear Security Administration, the intelligence community management account, and all accounts in the International Affairs budget function (150).
SOURCES: American Taxpayer Relief Act of 2012; Office of Management and Budget; Congressional Budget Office; Senate Budget Committee; Center on Budget and Policy Priorities