US Fiscal Policy: The sequestration process and its implications | Eurobank
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US Fiscal Policy: The sequestration process and its implications

• The automatic spending cuts under sequestration took effect at the beginning of March, amounting to $85bn cuts to budget authority in FY2013 and $109bn cuts through FY2014-2021.
• The bulk of sequestration concerns discretionary spending, with an “effective” reduction of 13% in defense and 9% in non-defense discretionary.
• Our baseline scenario suggests that the automatic spending cuts will finally remain in effect. Nevertheless, Congress could reformulate the cuts to provide government agencies with more flexibility in managing the budget cuts under the sequester.