Douglas Elmendorf testified on the 2013 federal budget and economic outlook. He predicted that economic growth would be slow during the year while unemployment would remain high, in part because of spending cuts that Congress would be forced to enact to avoid sequestration. Additionally, the CBO estimated that although the deficit would drop in 2013, it would rise back up to $1 trillion because of entitlement spending for an aging population.
“Sequestration,” a legal procedure in which every federal agency has the same percentage of its budget taken back in order to cut deficit spending, was agreed to in the Budget Control Act of 2011 and scheduled to happen on March 1, 2013.