Glossary

Sequestration

Automatic, across-the-board cuts to federal spending triggered when budget limits or deficit targets are not met.

Also called: automatic spending cuts, budget sequester

Sequestration is a budget mechanism that cancels spending automatically when Congress fails to meet a legal target. The cuts are applied across the board to affected programs by a set percentage, so lawmakers do not need to choose specific reductions.

The mechanism was created in the Gramm-Rudman-Hollings Act of 1985. Its best-known use came after the Budget Control Act of 2011, which set discretionary spending caps and created a committee to find deficit reductions; when the committee failed, automatic cuts began in 2013 and were split between defense and nondefense accounts. Many programs are exempt, including Social Security and Medicaid, and cuts to Medicare are limited to a small percentage of payments.

The threat of automatic cuts was designed to force a bipartisan deal, since neither party wanted the result. Defense hawks, and others, criticized the cuts as indiscriminate and said they harmed military readiness, while fiscal conservatives viewed them as one of the few effective restraints on spending. Congress has repeatedly modified or delayed the cuts. A related rule, PAYGO, also triggers sequestration if new laws add to the deficit. See also discretionary spending.

Last reviewed November 8, 2026

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Related terms

Discretionary spending Federal spending that Congress sets each year through appropriations bills, including defense, transportation and many domestic agencies. PAYGO A budget rule requiring that new mandatory spending or tax cuts be offset by spending cuts or tax increases. Balanced budget amendment A proposed constitutional amendment requiring the federal government to balance its budget, usually with exceptions for emergencies. Budget deficit The amount by which federal spending exceeds revenue in a given year, financed by borrowing. Mandatory spending Federal spending set by permanent law rather than annual appropriations, including Social Security, Medicare and Medicaid.