Cuts in Mandatory Entitlement Programs Center of Budget Negotiations: As budget negotiators from both sides of the Hill come together to work out a two-year budget deal, determining how sequestration relief will be paid for remains a top priority. In working off President Barack Obama’s fiscal year 2016 budget request, $148 billion is needed for a two-year deal on sequestration relief, or $74 billion annually. The Democratic position is that the $74 billion should be split evenly between defense and non-defense spending, but this number could be negotiated at a lower rate.

It is expected that Republicans, in order to pay for the $38 billion in non-defense spending, will seek cuts to mandatory entitlement programs, particularly for hospitals and drug reimbursements. Considering the President’s budget called for $400 billion in proposed cuts to Medicare, determining $38 billion in cuts is not expected to be too arduous. Adjusting the Consumer Price Index (CPI) is not expected to be on the table in these negotiations.