The following is the Sept. 30, 2019 Congressional Research Service report, Defense Budget and the Budget Control Act: Frequently Asked Questions.
From the report
Enacted on August 2, 2011, the Budget Control Act of 2011 as amended (P.L. 112-25, P.L. 112 240, P.L. 113-67, P.L. 114-74, P.L. 115-123, and P.L. 116-37) sets limits on defense and nondefense discretionary spending. As part of an agreement to increase the statutory limit on public debt, the BCA aimed to reduce annual federal budget deficits by a total of at least $2.1 trillion from FY2012 through FY2021, with approximately half of the savings to come from defense.
The spending limits (or caps) apply separately to defense and nondefense discretionary budget authority. Budget authority is provided by law to a federal agency to obligate money for goods and services. The caps are enforced by a mechanism called sequestration. Sequestration automatically cancels previously enacted appropriations (a form of budget authority) by an amount necessary to reach prespecified levels. The defense spending limits apply to national defense (budget function 050) but not to funding designated for Overseas Contingency Operations (OCO) or as emergency requirements.
Some defense policymakers and officials argue the BCA spending restrictions impede the Department of Defense’s (DOD’s) ability to adequately resource military personnel and equipment for operations and other national security requirements. Others argue the limits are necessary to curb rising deficits and debt.
Congress has repeatedly amended the legislation to raise the spending limits with two-year budget agreements. Most recently, on August 2, 2019, President Donald Trump signed into law the Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37). The bill amended the BCA to increase defense discretionary spending caps by the largest amount to date—by $90.3 billion, to $666.5 billion in FY2020; and by $81.3 billion, to $671.5 billion in FY2021. BBA 2019 also specified nonbinding Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) defense funding targets of $71.5 billion for FY2020 and $69 billion for FY2021.
The annual federal budget deficit decreased from $1.1 trillion (6.7% of Gross Domestic Product) in FY2012 to $779 billion (3.9% of GDP) in FY2018, but is projected to increase to $1 trillion (4.5% of GDP) in FY2021. Meanwhile, federal debt held by the public has increased from $11.3 trillion (70.3% of GDP) in FY2012 to $15.7 trillion (77.8% of GDP) in FY2018, and is projected to further increase to $18.8 trillion (82.4% of GDP) in FY2021.
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