Budget austerity is coming -- what should you do?

The next few federal budgets are certain to be smaller then they once were. The proper response for agencies might be surprising.

Talk about a grim budget forecast. The sky really could be falling this time.

The worst-case scenario has been in the works for months now as the two political parties remain at loggerheads over how to reduce the federal deficit. Nothing new here: The Republican approach is to cut spending drastically, with few or no increases in taxes. The Democratic strategy is to balance modest cuts with some tax hikes, particularly on the highest income earners.

The difference now is the Nov. 23 deadline imposed on the Joint Select Committee on Deficit Reduction, more commonly called the supercommittee. If that group fails to deliver a plan for $1.2 trillion in cuts or if Congress fails to pass its recommendations, draconian, automatic cuts could augur an even worse fate for agencies.

No matter who prevails in Congress, however, the prospects are good that agencies will have less money and fewer resources in the near future than they’ve had in the recent past — and many agency leaders would say even recent budgets have been too constrained for comfort.

But just how much do agencies spend? No one is sure. For IT in particular, the Government Accountability Office has found that agencies define it and report it in different ways, making the number assumed to be the government’s annual IT expense — about $79 billion — suspect, according to Federal Computer Week reporter Camille Tuutti.

Taking an austere approach to budgeting would be a big mistake, writes Matt Nesto at Yahoo! Finance, citing Barton Biggs, founder and managing partner of New York-based hedge fund Traxis Partners. Instead, Biggs touts what he calls the grand bargain: raising the retirement age to 70, raising taxes on the top 1 percent of earners and cutting military spending to no more than 2.5 percent of the gross domestic product, about half of what it is currently.

Budget reductions have been in the air all year. When President Barack Obama released his fiscal 2012 budget proposal in February, it contained $1.1 trillion in spending cuts and tax increases in the next decade. Almost half of the savings would come through a five-year freeze on discretionary spending, which could hamstring agencies’ efforts to do anything more than their minimal missions.

However, an analysis in The Economist suggests that the proposed budget — with all its cuts to programs, reductions in agency spending, freezes on civil servant salaries and increases in taxes — would fall far short of the promised deficit reductions, so agencies would have suffered through lean times with little positive return.

“Cuts now look certain; the only question is their magnitude," the unbylined Economist analysis reads. "Paul Ryan, the Republican budget committee chairman, called it ‘refreshing [that] we are debating how much to cut spending, not how much to increase spending.’ Still, the scale of cuts Republicans now want would undo a sizable portion of the stimulus of last year’s tax deal, setting back the recovery. For that reason, as well as others, Democrats are unlikely to go along.”

The bottom line for agency leaders is that they should be prepared for the sky to fall. It’s almost certain that the next budget, and probably several more after that, is going to provide far fewer dollars. We still don’t know what will be cut and by how much, but it's a safe bet that agencies are going to have less to work with.

So what are leaders to do? One possibility is to embrace the advice Army Chief of Staff Gen. Raymond Odierno recently gave for his branch of the military and apply it governmentwide. In short, don’t dust off the old “do more with less” cliché. Instead, Odierno told the Army Times, “as we move ahead under significant budget restrictions, we'll have to do less with less.”

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.