The legacy of the 2011 debt ceiling fight is the biggest issue the next president will face on day one

AP

Five years ago, President Barack Obama signed into law what Todd Harrison, the director of defense budget analysis at the Center for Strategic and International Studies, says will be the biggest challenge for the incoming administration: the Budget Control Act of 2011.

In short, after taking the highest office in the land, the 45th President of the United States will have less than 300 days to strike a budget deal with Congress or see America's defense funds slashed.

Here's what you need to know about the BCA and America's arms budget:

What is the Budget Control Act?

Obama signed the Budget Control Act, which "is a resurrection of a much older law, known as Gramm-Rudman-Hollings," into law on August 2, 2011, Harrison writes.

The BCA placed budget caps on the federal government for a decade (ending in fiscal year 2021).

And while nobody spends money on defense like the U-S of A, the BCA takes roughly $1 trillion (over a period of 10 years) away from what the president had requested for the defense budget.

Source: What Has the Budget Control Act of 2011 Meant for Defense, Budget Control Act of 2011

Why was the Budget Control Act enacted?

Oh, where to start ...

In early 2011, while federal spending was sky-high and revenues were declining, America's deficit was projected to peak at $1.5 trillion.

And while the deficit didn't get quite that high, then Speaker John Boehner's Republican-controlled House of Representatives refused to increase the debt ceiling, and Democrats didn't want to agree to dollar-for-dollar cuts in spending.

This triggered a fiscal standoff and the BCA, which basically pressured both parties to reach a broader budget deal.

Reuters

But a congressional supercommittee (a few members of which are in the above picture) was created and given special one-time authority to propose a deficit-reduction package.

However, in November 2011, the bipartisan joint committee was also unable to reach an agreement — and the automatic, across-the-board spending caps in the BCA went into effect.

Source: What Has the Budget Control Act of 2011 Meant for Defense

The path for sequestration

Those automatic spending caps, which applied to outlays on domestic agencies and initiatives as well as the military, were implemented in a process called "sequestration."

"Budget caps set the level of the budget, and sequestration is the enforcement mechanism," Harrison wrote.

"To better understand how sequestration works, imagine if you had to cut your personal budget by a certain percentage. If given the flexibility to choose how these cuts are allocated, you would probably cut back on nonessential things, like going out to dinner or buying the latest cell phone.

"But under sequestration rules, you would be forced to cut each item in your budget by the same percentage — even things like rent payments and insurance premiums. That kind of cutting can create a lot of problems and end up costing more in the long run."

"Sequestration has been a disaster for the military," former Secretary of Defense Robert Gates told Business Insider.

"It is the worst kind of budget cutting because it basically cuts everything at the same percentage, so you're cutting the most important things you do at the same rate that you're cutting the dumbest things that you do," Gates said.

Source: What Has the Budget Control Act of 2011 Meant for Defense