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Defense Secretary Leon Panetta listens to opening remarks prior to testifying on Capitol Hill in Washington, Wednesday, June 13, 2012, before the Senate Defense subcommittee hearing on the the Defense Department Defense Secretary Leon Panetta listens to opening remarks prior to testifying on Capitol Hill in Washington, Wednesday, June 13, 2012, before the Senate Defense subcommittee hearing on the the Defense Department's fiscal 2013 budget. (AP Photo/Jacquelyn Martin)  

White House details substantial ‘sequester’ cuts for defense, Medicare

The Office of Management and Budget has released a plan to deal with a potential budget “sequester” that would take billions from already-proposed budget cuts, substantially hitting the Department of Defense and Medicare.

According to the report issued Friday, Congress’ failure to reach a deal before January 2 would trigger an additional 2 percent cut in Medicare funding, or $11.085 billion. The program has recently come under fire from both Democrats and Republicans who say there will be cuts — as a result of Obamacare and vice presidential nominee Paul Ryan’s budget plan — even before taking the sequester into account.

OMB’s report explains that Medicare can only be cut by a maximum of 2 percent, and that the cuts will affect only providers, not beneficiaries.

Congress passed the Budget Control Act in the summer of 2011, forcing its own hand on reaching a budget agreement. But the budget sequestration clause in the law “was never meant to be implemented,” according to a July 31 memo from acting OMB Director Jeffrey Zients.

Cuts outlined in the report were based on 2012 appropriation levels. If the sequester goes into effect, an even larger amount of money could be taken according to budget levels set for 2013.

“The report gives us a window into what our future would be like,” a senior administration official told The Hill.

The Department of Defense could stand to lose an additional $500 billion, or 10 percent of its overall budget. Combined with already-proposed cuts, the Pentagon would be out $1 trillion if the sequester goes into effect.

The Office of Management and Budget was quick to note the administration does not support the cuts, stating that “cuts should never be implemented.”

The Pentagon stands to lose more than $3.5 billion used for operations and maintenance; the Army faces the must substantial cuts with more than $6.5 billion at risk.

“Sequestration would result in a reduction in readiness of many non-deployed units, delayed investments in new equipment and facilities, cutbacks in equipment repairs, declines in military research and development efforts, and reductions in base services for military families,” the report read.

Funding for programs in the Department of Veterans Affairs are exempt from cuts that could result from the budget sequester.

“On two separate occasions the President has put forward proposals to responsibly avoid these arbitrary cuts,” the report stated, citing his budget plan for 2013 and an income tax hike for American households with combined incomes of more than $250,000.

Despite efforts from both Republicans and Democrats, lawmakers on Capitol Hill have yet to reach a compromise to avoid $1.2 trillion in cuts overall. The OMB’s projections are only preliminary cuts, and provide Congress with a breakdown of exempt and non-exempt budget accounts.

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