The White House has directed federal departments and agencies to find ways to set their fiscal 2013 budget requests as much as 10 percent below current spending levels, while at the same time beefing up valued programs.
In an Aug. 17 memo, the Office of Management and Budget (OMB) said requests for discretionary appropriations for the fiscal year that begins Oct. 1, 2012, should be at least 5 percent below what departments and agencies received for fiscal 2011, unless they have been given specific direction otherwise.
And they should identify additional cuts that would put their requests 10 percent below the current level, said the memo, signed by OMB Director Jacob J. Lew .
Even a 5 percent cut in discretionary appropriations, if carried out across the government, would amount to significantly less than the amount presumed by the just-enacted debt limit deal ( PL 112-25 ), which established spending caps for each of the next 10 years.
At the same time, particular programs that deserve more money should be identified, Lew’s memo said. Paring less effective or duplicative programs should free resources for those considered to deliver the best results, OMB said.
“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’s memo said.
OMB did not say which agencies were exempt from the directive to find savings of up to 10 percent. However, the Pentagon is among those that are expected to be spared the deepest cuts.
The White House may be asking agencies to develop worst-case scenarios that would not necessarily be put into effect, said Joshua B. Gordon, policy director at the Concord Coalition, a budget watchdog group. And OMB may be hoping to identify deep cuts that, although painful, might be manageable.
“The negative from the agencies’ point of view is that you are sort of showing your cards,” Gordon said, noting that OMB might choose to put some of the more harsh proposals in place.
The new budget caps allow a total of $1.047 trillion for discretionary appropriations in fiscal 2013, excluding costs related to the wars in Iraq and Afghanistan. For the current year, that sum is about $1.050 trillion. A 5 percent cut from the current year would amount to more than $50 billion, but by indicating that some agencies will be exempt, Lew’s memo suggests that the aggregate cut will be less than that.
Lew, who previously headed OMB under President Bill Clinton, told agencies not to use well-known gimmicks or shortcuts to find savings. He said to avoid across-the-board reductions, and instead to concentrate on specific programs. He also advised against assuming changes in mandatory spending or the adoption of new user fees.
OMB is starting its planning for fiscal 2013 in the same difficult circumstances that it often faces. Congress has rarely in recent years finished its annual appropriations work on time, and this year is no exception. Fiscal 2012 begins Oct. 1, and Congress is unlikely to get much of its appropriations work done for some months beyond that date, with a December wrap-up seen as the most optimistic bet for completion.
A delay in completion of spending bills until after the start of the fiscal year requires OMB to build budgets using somewhat outdated information.
OMB has not announced a date for agencies to make their fiscal 2013 budget submissions. Once these requests are received by OMB, there will be several months of discussions between the White House and agencies before the administration prepares its budget request to Congress in early February.