What is "Sequestration"?
"Sequestration" or "the Sequester" refers to mandatory cuts to social programs and defense that are scheduled to begin on January 2, 2013 as a result of the failure of the Congressional "Supercommittee" to agree on a plan for $3.8 trillion in deficit reduction.
WEIGH IN ON THE SEQUESTER:
The 2011 Budget Control Act (S 365), which established the Supercommittee included the sequester provisions to provide an incentive for the Supercommittee to come to agreement, and to provide certainty that even without action by the Supercommittee, the deficit would be reduced. The mandatory cuts are divided evenly among defense and non-defense spending, at roughly $500 billion over ten years in both categories, with exceptions including Social Security; Veteran's Administration programs; refundable tax credits; low income programs including TANF, Pell grants and SSI; with special rules for Mediacre, student loans, and unemployment payments.
For details on the history of sequestration in legislation and exemptions in the Budget Control Act, see "Budget “Sequestration” and Selected Program Exemptions and Special Rules" from the nonpartisan Congressional Research Service.