In the sequestration plan, roughly $109 billion of cuts would be implemented every year from fiscal year 2013 to FY 2021. Defense spending would take the biggest hits with cuts of 9.4 percent. Nondefense spending would be reduced by 8.2 percent, most entitlement programs by 7.6 percent and Medicare by 2 percent.
Two percent of Medicare's budget ($554.3 billion) is roughly $11.08 billion. Medicare providers — ranging from hospitals and physician practices to home health agencies and hospices — would see reductions in their payments, but Medicare beneficiaries would not lose any of their benefits. Over the next 10 years, Medicare providers stand to lose upwards of $120 billion.
In addition to the Medicare cuts, the National Institutes of Health would also have to "halt or curtail scientific research, including needed research into cancer and childhood diseases," according to the OMB's report.
President Barack Obama and the OMB said the sequestration process is a "blunt and indiscriminate instrument," and the reductions could be "destructive" to the country's social programs, national security and other governmental functions. President Obama has called on Congress to "act responsibly" and put forward a new proposal.
"[Sequestration] is not the responsible way for our nation to achieve deficit reduction," according to the OMB's report. "The President has already presented two proposals for balanced and comprehensive deficit reduction. It is time for Congress to act. Members of Congress should work together to produce a balanced plan that achieves at least the level of deficit reduction agreed to in the BCA that the President can sign to avoid sequestration. The administration stands ready to work with Congress to get the job done."