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1 [1] (February 23, 2018)

handle is hein.crs/govcfwz0001 and id is 1 raw text is: 01;0 , riE- . $ ,- * . , . Updated February 23, 2018 Budgetary Effects of the BCA as Amended: The Parity Principle Enactment of the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123) has drawn attention to how recent spending modifications affect certain portions of the budget. Specifically, there has been considerable discussion of the parity principle, which refers to the equality between changes made to defense and nondefense budget authority under the Budget Control Act (BCA; P.L. 112-25) as amended. Though there is no statutory requirement to uphold the parity principle, different types of budget parity have followed from the deficit reduction measures imposed by the BCA and subsequent amendments to its deficit reduction measures. This In Focus summarizes how the parity principle has been applied and has evolved in recent budgetary legislation. For more information on the BCA, see CRS Report R44874, The Budget Control Act: Frequently Asked Questions, by Grant A. Driessen and Megan S. Lynch. Th~e P,,RWvin Pr'nhp,,zn BC The BCA was enacted in August 2011 in response to increased deficits in the wake of the Great Recession. The BCA as enacted implemented deficit reduction through both direct budgetary restrictions and by forming a Congressional Joint Select Committee on Deficit Reduction (or Joint Committee) tasked with providing additional deficit reduction. Backup budgetary enforcement measures were installed and scheduled to take effect in the event that the Joint Committee did not reach a timely agreement. The primary method of direct deficit reduction imposed by the BCA was the installation of caps on discretionary spending from FY2012 through FY2021. The BCA also funded certain programs designed to reduce improper benefit payments and modified certain student loan programs. CBO estimated that these measures would reduce FY2012-FY2021 deficits by a combined $917 billion, with $756 billion of that reduction attributable to the discretionary spending caps, $156 billion due to reductions in debt servicing costs from the combined direct reduction measures, and $5 billion in savings from other measures. The Joint Committee was tasked with reaching an agreement on an additional $1.2 trillion to $1.5 trillion in deficit reduction over the FY2012-FY2021 period. Absent an agreement by January 2012, or with an agreement on deficit reduction lower than $1.2 trillion, the BCA created automatic enforcement measures to ensure an additional $1.2 trillion in deficit reduction was reached. These measures consisted of (1) lower caps on discretionary budget authority, implemented through separate restrictions on defense and nondefense activities, from FY2013 through FY2021; and (2) automatic reductions in mandatory spending from FY2013 through FY2021, with large exceptions for activities related to Social Security and Medicare. The CBO cost estimate for the budgetary effects of the automatic enforcement procedures is displayed in Table 1. The cost estimate reflects parity in the budget impact on defense and nondefense activities across both discretionary and mandatory spending categories. The automatic enforcement procedures were estimated to reduce defense and nondefense budget authority each by $492 billion between FY2013 and FY2021. (A further $216 billion in deficit reduction was to be obtained through reduced debt servicing costs.) Table I. Budgetary Effects of Automatic Enforcement Procedures in the BCA (FY2013-FY2021 budget authority, in billions of dollars) Discretionary Mandatory Total Defense -492 0 -492 Nondefense -322 -170 -492 Total -813 -171 -984 Source: Congressional Budget Office, Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act, September 12, 201 1. Notes: Table excludes budgetary effects of debt servicing costs. Columns and rows may not sum due to rounding. TNm -,,,t *rindp \.a Amennnt .4 te B CtA~ p There have been four major revisions to the deficit reduction measures imposed by the BCA: (1) the American Taxpayer Relief Act (ATRA; P.L. 112-240); (2) the Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67); (3) the Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74); and (4) the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123). (These laws included other budget modifications unrelated to the deficit reduction measures imposed by the BCA.) ATRA postponed the start of FY2013 discretionary and mandatory spending reductions, increased the discretionary defense and nondefense caps (allowing for greater spending) in that year, and reduced caps in FY2014 and FY2015. BBA 2013 increased discretionary caps in FY2014 and FY2015 and extended the automatic reductions to mandatory spending through FY2023. BBA 2015 increased discretionary caps in FY2016 and FY2017 and extended the automatic reductions to mandatory spending through FY2025. BBA 2018 increased discretionary caps in FY2018 and FY2019 and extended .O 'T gognpo 'pop\qm ggmm g , q 'S a X 11LULANJILiN,

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