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Sequestration Update Report for Fiscal Year 2003 [i] (August 2002)

handle is hein.congrec/cbo0717 and id is 1 raw text is: Sequestration Update Report for Fiscal Year 2003 August 15, 2002 Under the Balanced Budget and Emergency Deficit Control Act of 1985 (as amended by the Budget Enforcement Act of 1997), the Congressional Budget Office (CBO) issues a sequestration update report each year on August 15. This report provides current estimates of discretionary spending and the limits on that spending for 2002 and 2003. It also updates the pay-as-you-go (PAYGO) scorecard for legislation enacted through August 14, 2002, that affects mandatory spending or revenues. The Deficit Control Act has two mechanisms to govern federal spending, both enforced through sequestration (a cancellation of budgetary resources). Section 251, which expires on September 30, 2002, sets limits on the spending provided through the annual appropriations process. If estimated discretionary spending exceeds those limits, the act prescribes a sequestration to eliminate the excess. Section 252 established a PAYGO scorecard to record the projected five-year budgetary effects of each piece of legislation that affects mandatory spending or revenues. If such legislation is estimated to result in a net increase in the deficit or decrease in the surplus, the act calls for reductions in mandatory programs (that are not otherwise exempt) sufficient to offset that change. Although legislation enacted after September 30 will no longer be recorded on the PAYGO scorecard, the possibility of a PAYGO sequestration will continue through 2006 as a result of legislation enacted before the end of fiscal year 2002. The limits on discretionary spending apply to four categories for 2002: overall discretionary, highway, mass transit, and conservation. CBO estimates that spending from appropriations enacted to date is within the limits. Limits for the two transportation categories continue through 2003, and caps for conservation spending extend through 2006. However, when section 251 expires, those caps will become moot. Legislation affecting mandatory spending or revenues enacted during the current session of Congress has increased the projected deficits for 2002 and 2003 by $52.7 billion and $53.5 billion, respectively. The largest contributor to those amounts is the Job Creation and Worker Assistance Act of 2002 (Public Law 107-147), which accounts for an estimated $50.9 billion this year and $42.9 billion next year. That law, also known as the economic stimulus package, was designated an emergency requirement, thereby excluding it from the PAYGO scorecard. To avoid a PAYGO sequestration, the Congress would need to eliminate or offset the balances for 2002 and 2003--a total of $123.1 billion (mostly from legislation enacted in previous years)--before it adjourns this year. Discretionary Sequestration Report On February 1, 2002, CBO published its preview sequestration report for fiscal year 2003; shortly thereafter, the Office of Management and Budget (OMB) issued its equivalent report. Because OMB's

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