The House approved The Budget Control Act of 2011 (S.365), a deficit reduction/debt ceiling increase package that will reduce the budget deficit by more than $2 trillion over the next 10 years. Approval of the legislation (269-161) followed weeks of prolonged negotiations that were concluded late on July 31.

The Senate approved the legislation on Aug. 2 by a bipartisan vote of 74-26, and then President Obama signed the bill into law just hours later, saying it would reduce the deficit and avert a default that would have devastated the economy.

The bill would save about $917 billion, including interest costs, over 10 years by placing statutory caps on annually appropriated discretionary spending. It would allow the debt ceiling to be raised by $900 billion in two steps if Congress does not have a two-thirds majority in opposition. It also would require Congress to vote on a balanced budget amendment to the US Constitution between Oct. 1 and Dec. 31. It establishes a 12-member, bipartisan Joint Congressional Committee tasked with reporting legislation that would reduce the deficit by at least $1.5 trillion from 2012-21. The legislation would include further spending reductions, entitlement reform and possibly tax reform.

If the House and Senate approve the plan under an expedited process that prohibits amendments and it reduces the deficit by at least $1.2 trillion, the President would be authorized to further raise the debt ceiling by an equivalent amount up to $1.5 trillion. If the Joint Committee is unable to recommend a plan or Congress fails to approve its plan to generate at least $1.2 trillion in 10-year savings, automatic spending cuts (known as sequestration) would go into effect. To give the Joint Committee an incentive to reach agreement on a plan, sequestration would apply 50 percent to defense and 50 percent to non-defense programs.

Republican leaders said they are confident none of their members appointed to serve on the Joint Committee would agree to a plan that includes tax increases, effectively taking the “tax reform” portion of the Committee's charge off of the table. The legislation places extraordinary authority in the hands of the Joint Congressional Committee and could accelerate development of new farm law. The Committee must be appointed within 14 days of enactment, must meet within 45 days and must produce a plan by Nov. 23. If the Committee produces a plan, the House and Senate must consider the plan without amendment by Dec. 23.

Congressional committees, including the agriculture committees, may submit detailed recommendations to the Joint Committee by Oct. 14. If the agriculture committees conclude that providing the Joint Committee with proposed “fair share” savings and legislation to achieve those savings is more desirable than allowing the Joint Committee to develop a plan without guidance from the agriculture committees, they will have to develop those recommendations before Oct. 14. If the Joint Committee fails to act or the House and Senate fail to approve a plan, then sequestration is triggered.

The legislation includes a complex formula that will be used to determine how much each agriculture program will be reduced under a sequestration order -- and a number of programs are exempt. The sequestration procedure is similar to the reductions carried out under the Gramm-Rudman-Hollings statute.