Federal Spending Is Due For An Automatic Cut

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Arjun Singh Contributor
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The federal government’s spending on defense and non-defense matters will be automatically cut by 1% at the start of 2024 unless Congress passes appropriations bills before the year ends.

Under the Fiscal Responsibility Act (FRA), legislation negotiated between President Joe Biden and House Speaker Kevin McCarthy in April, spending levels for both categories of expenditures will be cut by 1% on Jan. 1 should Congress fail to pass all 12 appropriations bills required to fund the government in Fiscal Year 2024. Given that Congress has not completely passed any appropriations bill, the cuts are set to be imposed by operation of law, with experts unclear on how the cuts will be distributed among programs. (RELATED: Congress Unlikely To Pass All Appropriations Bills Before Next Government Funding Deadline In 2024, Experts Say)

“The world is our oyster in terms of possibilities here. I don’t have any expectations, and I don’t think anyone really knows what is going to happen,” said Marc Goldwein, the senior vice president of the Committee for a Responsible Federal Budget, to The Hill on how the cuts would take effect.

In addition to their cuts of 1% for the current Fiscal Year, the FRA also imposed top-line budget limits for the Fiscal Year 2025. The automatic cuts, a process last undertaken in 2011 and known as “sequestration, have been opposed not only by left-wing Democrats, amid concerns about cuts to social spending, but also by Republicans, particularly given the imposition of cuts on defense spending.

At the time of the FRA’s passage, Republican Sen. Lindsey Graham of South Carolina called the bill a “total disgust,” “betrayal,” “catastrophe” and other epithets. He was joined by other Republicans in the Senate, such as Minority Leader Mitch McConnell.

The cuts imposed on Jan. 1 will only take effect on April 30, which will give Congress more time to negotiate an appropriations bill. It must pass all 12 appropriations bills, an omnibus spending bill or a continuing resolution before Jan. 19 to avert a partial government shutdown, with House Speaker Mike Johnson indicating that he will not consider the third option.

Johnson and Senate Majority Leader Chuck Schumer did not immediately respond to a request for comment.

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