Yesterday the deadline to reach an agreement on deficit reduction passed. The Congressional Deficit Committee announced that they were unable to reach an agreement. As a result, this set into motion $1.2 trillion in automatic spending cuts over the next decade if Congress does not act by 2013 on the deficit.
The impact to education is likely to be hard. The U.S. Department of Education’s budget would be reduced by $3.54 billion in 2013. In addition $134 million for non-Pell Grant financial aid programs will likely be lost.
While the Pell Grant is exempt from cuts in the current fiscal year they remain at risk. The overall spending caps that will be enacted by Congress will place constraints on the federal budget and make it difficult to maintain support for current funding levels.
Congress still has a year to decide how to apply the $1.2 trillion in cuts – to be split evenly between defense and nondefense spending. In the meantime it is possible that Congress could reach a long-term agreement on deficit reduction or change how the mandated cuts are enacted. Though President Obama has vowed to veto any legislation that would eliminate the automatic cuts.
The budget conversation will now shift back to the congressional appropriation committees to decide on several budget bills and enact 2013 spending caps.