Agencies should plan for 10 percent budget cuts, OMB says

Agency directors should identify cuts but also preserve investments in jobs, growth

Federal agencies must plan for cutting up to 10 percent of their budgets in fiscal 2013, according to new instructions from the White House.

Federal financial officers have been told to submit agency budgets for the next fiscal year that are 5 percent lower than the current level, along with an additional 5 percent of suggested cuts.

“Your overall agency request for 2013 should be at least 5 percent below your 2011 enacted discretionary appropriation,” Jacob Lew, director of the Office of Management and Budget, wrote Aug. 17 in a memo to department and agency directors.

John Gage, president of the American Federation of Government Employees, warned that the cuts would mean more job losees. Read related story here.

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“Your 2013 budget submission should also identify additional discretionary funding reductions that would bring your request to a level that is at least 10 percent below your 2011 enacted discretionary appropriation,” Lew added.

“I know this will be a difficult year, but it will also offer an opportunity to make the hard decisions to invest where we can get the most done and pare back in other areas,” Lew wrote.

An agency’s plans for 5 and 10 percent reductions should be itemized rather than across-the-board reductions, Lew added. They shouldn't include any proposals to reduce mandatory spending, reclassify discretionary spending to mandatory or enact new user fees. Such proposals may be submitted separately, he added.

The budget cuts are necessary under the Budget Control Act of 2011 approved by Congress and President Barack Obama as part of the legislation to raise the U.S. debt limit. The new law sets a target of $2.4 trillion in deficit reduction over the next 10 years.

The president’s goals are to “cut waste and reorder priorities” to achieve the deficit reduction goals, while also investing in areas critical to job creation and economic growth, Lew wrote.

To support Obama's goals, agency heads should identify programs that offer the best opportunities to enhance economic growth, the memo said.

“Finding the savings to support these investments will be difficult, but it is possible if budgets cut or eliminate low-priority and ineffective programs while consolidating duplicative ones; improve program efficiency by driving down operational and administrative costs; and support fundamental program reforms that generate the best outcomes per dollar spent,” Lew wrote.

The memo asked that federal agency directors deal with the following:

  • Identify spending critical for positive economic growth.
  • Identify cost-saving efforts to improve operational efficiency with program integration, reorganizations, and realignment of resources (such as IT, facilities and staff) to improve service delivery to the public.
  • Explain how your agency will acquire and use data to improve policy and operational decisions.
  • Identify duplicative programs suggested by the Government Accountability Office and other agencies.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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Reader comments

Tue, Aug 23, 2011 Satish Iyer Ames IA

If these budget cuts are anything like conventional cost accounting, which cut costs upfront, thereby increasing short-term profits (in this case, the cost savings), the same projects will end up costing more in the long term for the obvious reason that we'll have to play catch-up with technologies and business models.

If every agency goes back to their own silos and, crunch their own numbers, without knowing what their fellow agencies are doing, it will be an un-imaginative and reactionary response to a problem that’s too complex and deep-rooted to be treated so casually.

Only an inter-agency collaborative effort can develop a monetary plan that will allow multiple federal agencies to reap value from:
1> Economies of scale, span, scope and speed
2> A shared resource pool
3> A transparent and simplified circulation of money.

OMB needs to be the champion of this initiative. OMB should stop looking at itself solely as the issuer and Enforcer of Federal Directives to enabler and facilitator of innovative ideas across the federal government.

Mon, Aug 22, 2011

Reduce the number of Senators and Representatives? How about just have a 12-member 'super congress' to make policy decisions. Or, better yet, just one dictator? Less isn't necessarily better by definition.

Fri, Aug 19, 2011 John United States

Some of the travel is necessary, particularly when the other party isn't federal. Otherwise I agree. Some agencies are already up to their necks in PS&B and so cutting anything by 10% and preserving jobs is impossible. Most often the agencies "discover" new discretionary spending with some one leaves and their PS&B is not used to hire a replacement.

Fri, Aug 19, 2011

although an amendment to the constitution is required, reduce senators to one per state, have house of representatives to 1 to max 3 per state and eliminate travel at taxpayer expense. Have the government benefits equivalent to the private sector. Require a balanced budget every 2 years.I guess all of that is too radical.

Fri, Aug 19, 2011 Ann OH

Not only does the travel need to stop, President and Mrs. Obama need to STOP their travel except to Camp David. They don't need to travel to all these exautic places -- these are austere times and the President and Mrs. Obama also need to tighten their belts and not fragrantly rub the noses of the United States citizens in it. We have to live within our financial means and everyone in Washington DC should also be required to do the same -- that includes the President and Mrs. Obama. It seems they are always traveling somewhere -- at the United States citizens and taxpayers expense. They need to be more frugal!

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