Responses to fiscal stress: a comparative analysis

Abstract

The Budget Control Act of 2011 (BCA; Pub. L. No. 11225, 101, 125 Stat. 240) resulted from downward pressure on federal spending, as tax revenues decreased faster than expenditures and deficits became unsustainable. The BCAs discretionary spending caps mandate that the Department of Defense (DoD) cut $500 billion in outlays between fiscal years 20132022. These spending caps, temporarily delayed by the American Taxpayer Relief Act of 2012 (ATRA; Pub. L. No. 112240, 901, 126 Stat. 2313), were realized on March 1, 2013, when $37 billion was sequestered from DoDs current year budget. The discretionary spending caps and sequester resulted as a consequence of Congresss inability to stipulate $1.2 trillion in cuts over a 10-year period in accordance with the BCA. Challenged by financial retrenchment, the DoD must now make choices within the framework of a new fiscal reality and fewer resources. How do DoDs financial retrenchment choices compare to historical choices of other government, quasi-government, and publicly traded organizations encountering similar fiscal stress? This project creates a framework through examination of comparable government, quasi-government, and publicly traded organizations to conduct a comparative analysis of the DoDs financial retrenchment choices.