Congress passed a six-month spending bill that President Obama signed on Oct. 1, 2012. The continuing resolution will fund the government through March 27, 2013, providing a 0.6% increase in spending for most federal programs and agencies. This will keep the federal government operating until the next Congress is in session, including senators and representatives voted into office in the General Election on Nov. 6, 2012.
Congress is now on its pre-election break. It is expected to reconvene after the election to consider several issues relating to the budget, including expiring tax breaks and automatic across-the-board budget reductions (known as sequestration) scheduled for January 2013. These reductions under the Budget Control Act of 2011 would cut about $110 billion from the federal budget if Congress fails to enact a plan before then to reduce the national debt by $1.2 trillion.
On Sept. 14, 2012, the Obama Administration released a report prepared by the non-partisan Office of Management and Budget (PDF, 394 pages) that outlines spending cuts that will occur if Congress fails to reach a deficit reduction deal by the end of 2012. This includes a 2% decrease in Medicare payments to providers, and an almost 8.2 percent decrease in non-defense, non-exempt discretionary funding.