Budget Brief 12-02
February 17, 2012

On February 13, 2012, the president released his proposed fiscal year (FY) 2013 budget. It shares much in common with earlier budget requests, including proposals to consolidate funding into fewer grant programs (sometimes with less total funding than the replaced programs provided) and replace existing formula grant programs with competitive grants.

More importantly, the budget includes both tax and spending recommendations that would avert the budget sequestration process mandated by the Budget Control Act of 2011 (BCA, P.L. 112-25). Absent congressional approval of some such measures, the BCA calls for an across-the-board sequester of FY 2013 spending beginning in January 2013. Many observers believe that with the president’s signal that he would prefer to avoid a sequester, serious negotiations to do so will likely occur during a lame duck session of Congress, convened after the November 2012 elections.

The FY 2013 budget also calls for policies included in the president’s “American Jobs Act of 2011,” which was unveiled in September 2011. These proposals are described in FFIS Budget Brief 11-14.

Overall, the FY 2013 budget would provide a 2.7% funding increase for the major discretionary programs reported by FFIS on Table 1. This increase is somewhat misleading, as various consolidation proposals—such as the one for homeland security grants—would replace smaller programs not listed on the table with one large program that is listed.

The mandatory programs included on Table 1 are estimated to increase 7% in FY 2013. The increase is driven by child nutrition programs (+8.5%), child care (+17.1%), the Children’s Health Insurance Program (CHIP, +16.1%), and Medicaid vendor payments (+7.5%). Table 1 also estimates the potential impact of the BCA sequester on major programs, should lawmakers fail to adopt policies to replace the sequester provisions of the law.

The details of the various spending proposals are described in the following sections.