The President signed the Budget Control Act of 2011 (BCA; P.L. 112-25 ) on August 2, 2011. The new law contains multiple interrelated components, several of which establish procedures that will affect the consideration of subsequent legislation. This report begins with a brief overview of the essential features of the Budget Control Act, taking a broad view of the connections between its different components and introducing readers to some fundamental concepts and terminology. The subsequent sections of this report provide more detailed information on each component of the BCA, with the goal of providing information to assist Members and staff as they apply these new procedures. (The appendices contain tools for those quickly seeking specific information: a list of short answers to "frequently asked questions" and tables identifying the various dates for action in relation to the bill to be proposed by the Joint Select Committee on Deficit Reduction and the resolutions disapproving the debt limit increase.) The explanations of the procedures established in the BCA are based on a reading of the new law and an understanding of how similar procedures operated in the past. Some elements of the Budget Control Act of 2011, like all laws, will be subject to interpretation. Ultimately it is the House and Senate that will decide on the specific operation of the legislative procedures. For advice on the implementation of these procedures, congressional Members and staff will be best advised to consult with the Parliamentarian of their chamber. If an automatic spending reduction process is triggered, its actual execution will depend in large part on the interpretations and actions of the Office of Management and Budget (OMB), which might also need to be consulted regarding specific elements of that process. The Budget Control Act is the result of negotiations between the President and Congress held in response to the federal government having nearly reached its borrowing capacity. The BCA authorized debt limit increases up to at least $2.1 trillion dollars (and up to $2.4 trillion under certain conditions) in three installments. The first installment of $400 billion already occurred when the President submitted a certification, pursuant to the act, that the debt was within $100 billion of its limit. Congress can prevent each of the next two installments if it passes a joint resolution disapproving the increase to the debt limit and overrides an expected presidential veto, although this full sequence of actions is widely considered to be unlikely. The initial passage of a resolution disapproving a debt limit increase requires majority support in each chamber; BCA procedures prevent a Senate filibuster that otherwise could delay or prevent its coming to a vote. Presumably, however, the President will veto the disapproval resolution because the Treasury will have advised him that further borrowing is required to meet existing commitments. To override a Presidential veto requires the support of two-thirds of both chambers. Ultimately, therefore, the support of two-thirds of each chamber might be necessary to prevent a debt limit increase. The House and Senate might consider a resolution disapproving the next increase of $500 billion to the debt limit sometime in September, which is when the deadline set by the BCA for enacting such a resolution occurs. The debt is next predicted to be within $100 billion of its limit in early 2012, when the President would submit another certification and Congress might consider another disapproval resolution. Reaching agreement on the debt ceiling increase contained in the BCA depended in part on enacting procedures designed to reduce future federal spending. The BCA therefore also established caps on the amount of money that could be spent through the annual appropriations process for the next 10 years, which the Congressional Budget Office estimates will reduce federal spending by $917 billion. The caps established by the BCA may also be adjusted for certain purposes, including, for example, for the costs of the "Global War on Terrorism." The adjustable caps are not placed on specific accounts or even on each of the appropriations bills; instead they are broad caps on the total amount of discretionary spending. For the first two fiscal years, the caps are on two categories of spending: security and nonsecurity. For the other years, one limit on all discretionary spending is created. Decisions about how these caps will affect specific agencies or programs will be made by Congress and the President through the regular appropriations process. Discretionary spending limits are not unique; in current practice, the appropriators generally operate under caps set by Congress in a budget resolution or in another form. But those caps are enforced in the House and Senate, and the House and Senate can each waive them unilaterally. The caps established by the BCA, in contrast, cannot be waived by a single chamber. If the caps are exceeded, the BCA provides for a sequestration process: an automatic, largely across-the-board cancellation of budgetary resources. Another part of the BCA agreement to increase the debt ceiling was the creation of a Joint Select Committee on Deficit Reduction, instructed to develop legislation to reduce the federal deficit by at least another $1.5 trillion over the 10-year period ending in FY2021. The legislation resulting from the joint committee recommendations can be considered under special procedures that prevent amendment and limit debate in both chambers. These procedures could have a significant impact in the Senate because they allow a simple majority to approve a bill without indefinite delay. Under regular Senate procedures, the support of 60 Senators is often necessary to advance the consideration of legislation. The joint committee, made up of an equal number of Democrats and Republicans from each chamber, has wide authority to develop a proposal to reduce the federal deficit. No specific policy restrictions or requirements are placed on the joint committee. Under the terms of the BCA it could recommend changes to revenue, spending, or both; it might even propose new budget enforcement mechanisms. For the proposal to be considered under the special, expedited procedures, however, it must be approved by the joint committee by November 23, 2011, and passed by both chambers by December 23, 2011. Given this timeline, perhaps the greatest indirect restriction on the content of the joint committee bill is that it must pass a House controlled by one party and a Senate controlled by another. Furthermore, if Congress and the President do not enact a joint committee bill reducing the deficit by at least $1.2 trillion over the period of FY2012 to FY2021, there are potentially undesirable consequences. The failure to enact such a bill into law by January 15, 2012, will trigger an automatic spending reduction process. This process, sometimes referred to as "the trigger," includes sequestration, or the cancellation of budgetary resources. What it could mean is that if a qualifying joint committee bill is not enacted by January 15, 2012, then on January 2, 2013, the spending authority of many federal departments and agencies will be reduced. The automatic process for deficit reduction involves several steps and calculations, and for details the reader is referred to the "Budget Goal Enforcement" section of the report below. Very generally, the spending reductions are to be made equally from defense spending and from all other spending (referred to as "nondefense spending"). The reductions required in each of these categories are then divided proportionally between discretionary spending and mandatory spending. The spending reductions are achieved for direct spending through sequestration each year (FY2013 to FY2021). For discretionary spending, the reductions are achieved through sequestration the first year (FY2013). For the other fiscal years (FY2014-FY2021), the discretionary spending reductions are achieved through a downward adjustment of statutory limits on discretionary spending divided into two new categories that reflect defense and nondefense spending. Importantly, some programs, including both Social Security and Medicaid, are exempt from sequestration, and any sequestration of Medicare spending is capped at 2%. The precise implications of the automatic spending reduction process cannot be assessed at this time. The amounts of spending reductions required each year cannot yet be known, as they depend in part on the extent, if any, by which the reductions in the joint committee bill fall short of the $1.2 trillion goal and in part on spending estimates to be calculated in the future by the Office of Management and Budget (OMB). Furthermore, beginning in FY2014, part of the spending reductions will be achieved through a downward adjustment of the statutory limits on discretionary spending, not by automatic across-the-board spending cuts. For discretionary spending, it will therefore be Congress and the President who later determine the manner in which reductions are made to each account through the annual appropriations process each year. This process presumably is intended to encourage agreement among policy makers on deficit reduction. During the negotiations over the BCA, it was widely reported that part of the reason to include both defense and domestic spending in the automatic spending reduction process was to encourage lawmakers to work to an agreement on deficit reduction based on an explicit determination of government budget priorities. Presumably, such an agreement would be preferred by lawmakers to a largely across-the-board cut, proportional to each category, as described here. Thus, many lawmakers presumably have an incentive to prevent the automatic spending reduction process by enacting a joint committee bill reducing the deficit by $1.2 trillion or more over FY2012-FY2021. Congress and the President could also modify or terminate the process by passing a law altering the BCA, perhaps as part of the deal reached by the joint committee or perhaps in another law enacted sometime in 2012—because sequestration and other automatic spending reduction actions will not take place until 2013. The BCA also states that the House and Senate must each vote on a balanced budget amendment to the Constitution between September 30 and December 31, 2011. In the Senate, to get to a direct passage vote on a constitutional amendment, it might be necessary to secure support from 60 Senators to begin consideration of such a proposal. Many factors, including expectations created by approval of the BCA, could potentially influence whether or not the Senate votes on a balanced budget amendment.