ORLANDO, FLORIDA / AGILITYPR.NEWS / January 11, 2024 / What Is the Current Status of the Fiscal Responsibility Act in Context of Fiscal Year 2024?

Call to Action: On June 3, President Biden signed into law the Fiscal Responsibility Act of 2023 (FRA, Public Law 118-5), which suspends the limit on federal debt through January 1, 2025, and makes a number of changes that affect federal spending and revenues.

Stat/ Fact: The act establishes caps on discretionary spending from Fiscal Years (FY) 2024 through 2025. Sets a FY24 defense limit of $868.349 billion and nondefense limit of $703.651 billion. Spending limits grow by 1% in FY25, $895.212 billion for defense and $710.688 billion for nondefense.

Analogy: For government institutions fiscal responsibility describes the ability to balance between government spending and tax. In fact, it would define the obligation of a state to maximize incomes by using their spending powers, while also ensuring that inflation does not spiral up.

Executive Summary:

Below is a snapshot of the Fiscal Responsibility Act (FRA) in the context of fiscal year 2024. Here's a summary of the key points for review:

1. Fiscal Responsibility Act (FRA): Enacted in June 2023, temporarily suspended the debt limit and established statutory discretionary spending limits for FY2024 and FY2025 for both defense and nondefense discretionary spending.
2. Provision on Continuing Resolutions (CRs): The FRA includes a provision incentivizing Congress to enact regular, full-year appropriations legislation instead of relying on short-term continuing resolutions (CRs).
3. Revised Spending Limits: If a CR is in effect on January 1, 2024, for any budget account, the discretionary spending limits for FY2024 are revised. These revisions involve a $4 billion reduction in overall spending, with a $33 billion increase in the original nondefense discretionary spending limit and a $37 billion decrease in the original defense discretionary spending limit.
4. Enforcement Date: The revised spending limits would be enforced on April 30, 2024, if a CR is still in effect. They will revert back to the original limits upon the enactment of full-year appropriations.
5. Sequestration: If discretionary appropriations exceed statutory limits for a fiscal year, a sequester is triggered, leading to across-the-board reductions in nonexempt spending. The Office of Management and Budget (OMB) determines whether sequestration is required and the amount needed.
6. Current Status: The government is operating under a short-term CR (P.L. 118-15, amended by P.L. 118-22) providing continuing appropriations through January 19, 2024, for four regular appropriations acts and through February 2, 2024, for the remaining eight.
7. Sequestration Concerns: Some Members and media reports suggest that adherence to spending limits could result in substantial reductions to current funding levels. The Congressional Budget Office (CBO) projects potential across-the-board reductions ranging from 5 percent to 9 percent for nondefense funding and zero to 1 percent for defense funding if funding levels provided through the current short-term CR were annualized over FY2024.
8. OMB Guidance: OMB issued guidance to agencies instructing them to continue normal operations and not attempt self-sequestration, as enforcement of spending limits will not occur until after the enactment of further FY2024 appropriations legislation.

Stay tuned. This summary provides an overview of the key elements and concerns regarding the Fiscal Responsibility Act in FY2024 and impact on the public interest

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