OMB Report to the Congress on the BBEDCA 251A Sequestration for Fiscal Year 2027
Office of Management and Budget
This document outlines the mandatory federal budget reductions, known as sequestration, for Fiscal Year 2027 under the Balanced Budget and Emergency Deficit Control Act of 1985.
It dictates a total spending reduction of $38.236 billion across various federal agencies, targeting non-exempt direct spending resources.
The cuts mandate an 8.3% reduction for non-exempt defense programs, a 5.7% reduction for non-exempt nondefense programs, and a limited 2.0% reduction for Medicare and certain other health programs.
For the average citizen, the most direct impact will be felt in healthcare and education.
Medicare providers will see a 2% reduction in their payments from the federal government, totaling over $27 billion in cuts to the program's resources.
Additionally, the order requires federal student loan fees to be automatically increased by the same uniform percentage applied to nondefense reductions, directly impacting the borrowing costs for students.
Consumers and local communities will also experience downstream effects as federal agencies adjust to the 5.7% budget cuts.
Reductions will affect a wide array of operational areas, including agricultural subsidies, conservation funds, and domestic assistance programs.
Notably, the Director of the Office of Management and Budget confirmed that critical funding and tax credits established by the Working Families Tax Cuts Act remain largely exempt and unaffected by these mandatory cuts.
