Sequestration (Government Spending)

Sequestration is a procedural mechanism that triggers automatic spending cuts when an agency exceeds its allocated budget. Established by the Budget Control Act of 2011, it empowers the Office of Budget Management to determine if discretionary programs have surpassed budget limits. The Congressional Budget Office (CBO) plays a role in identifying these breaches. Each year, Congress must set statutory caps for sequestration to be activated. If these caps are not established, sequestration is not triggered. In essence, sequestration ensures fiscal discipline by enforcing budgetary limits.

What is the primary function of sequestration in budget management?

• To allocate additional funds to programs

• To automatically cut spending when budgets are exceeded

• To provide tax incentives

• To increase agency budgets

Under which act was the sequestration mechanism established?

• Fiscal Responsibility Act of 2012

• Federal Budget Act of 2005

• Budget Control Act of 2011

• Government Spending Act of 2010

Who is responsible for determining if discretionary programs have exceeded their budget limits?

• Office of Budget Management

• Department of Treasury

• Federal Reserve

• Congress

What role does the Congressional Budget Office play in sequestration?

• It enforces tax laws

• It determines if budget limits have been exceeded

• It allocates funds to agencies

• It sets the statutory caps

What must Congress establish each year to trigger sequestration?

• Spending incentives

• Budget increases

• Statutory caps

• New tax laws