This is meant to accompany the post below on the revenue increases set to occur if we go over the fiscal cliff. This is a very quick look at the decreases in spending that are also set to occur.
According to the Washington Post, there are four types of cuts set to occur.
1 - The first are those related to the sequester, which are automatic spending cuts mandated by the Budget Control Act passed in the summer of 2011. They are designed to cut $1.2 trillion dollars during the next 8 years in discretionary spending, both domestic and defense. As written, it cuts over $100 billion from next year's budget. This was part of a deal to allow the debt ceiling to be raised last year, and it automatically kicks in unless a separate deal can be made.
2 - Overall discretionary spending is to be capped.
3 - The "doc fix" will be allowed to end. In 1997 Congress passed a law - the Medicare Sustainable Growth Rate - which attempted to limit spending on Medicare. The increase in the amount doctors would be provided when they see Medicare patients would not exceed GDP. But medical costs have exceeded GDP, so the doc fix has prevented this from occurring. Ending the fix means reimbursements are reduced.
4 - Unemployment insurance will not be extended. It has been set at 99 weeks due to the slow recovery since 2008's financial crash.
As with the revenue side - more detail as it becomes relevant. Notice that there is nothing in the existing dispute about non-discretionary spending like Social Security and Medicare. It's non-discretionary after all and would require separate legislation to change.
