The order came on April 3. President Trump signed the sequestration directive the same day the Office of Management and Budget delivered its FY2027 report to Congress. The mechanism is automatic. It has been since 2013.
OMB estimates $1.54 trillion in mandatory budgetary resources across 260 individual accounts will face reductions. The calculus is prescribed by the Balanced Budget and Emergency Deficit Control Act. Defense accounts take an 8.3 percent cut. Medicare and certain health programs are capped at 2 percent. Other nondefense accounts absorb 5.7 percent.
The total reduction: $38.24 billion. Defense loses $2.93 billion. Medicare and health programs lose $27.37 billion. Other nondefense accounts lose $7.93 billion. Most cuts begin October 1, 2026. Medicare reductions wait until April 1, 2027.
The defense side
Nearly all defense sequestrable resources sit in one account: the Department of Defense’s Concurrent Receipt Accrual Payments to the Military Retirement Fund. That account holds $34.41 billion. Ten other DOD accounts, two Health and Human Services accounts, and two Labor accounts make up the rest. Unobligated balances carried over from prior years add another $317 million across seven accounts.
Health programs
Medicare spending subject to the 2 percent limit reaches $1.368 trillion. Most of it flows through Parts A through D benefit payments. Community and migrant health centers contribute $1.05 billion. Indian Health Services adds $50 million.
Nondefense breadth
The other nondefense category spans 239 accounts across 44 departments and agencies. The legislative and judicial branches are not exempt. Administrative expenses across 48 nondefense accounts face the same 5.7 percent reduction — $4.51 billion in total.
Student loans operate under a special rule. Origination fees for Federal Direct Loans rise by 5.7 percent. OMB projects $51 million in savings.
What this signals
OMB Director Russell T. Vought noted that budgetary resources from the 2025 reconciliation law — Public Law 119-21 — will be “largely unaffected.” Around three-quarters of total mandatory spending is exempt by statute. The broader stakes are structural. Congress designed this automatic pilot. The President merely engages it.
The order is now in effect.
