Budget chief to agencies: Prepare for across-the-board spending cuts

January 15, 2013
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President Obama’s acting budget director told agency heads Monday to step up their efforts to prepare for $85 billion in automatic spending cuts on March 1 by planning for  furloughs, contract delays, hiring freezes, buyouts and other cost reductions.

The memorandum came on the same day the president warned Republicans in Congress against refusing to raise the country’s borrowing limit, raising the stakes in a fiscal confrontation that, if not resolved in weeks, could result in drastic budget cuts known as a sequester.

“Should Congress fail to act to avoid sequestration, there will be significant and harmful impact on a wide variety of government services and operations,” acting Budget Director Jeffrey D. Zients wrote in a three-page memo to heads of executive branch departments and agencies. 

Zients cited the across-the-board cuts of 8 to 10 percent that would take effect at most domestic and civilian military agencies if Congress and the White House cannot reach a deficit-reduction deal: “Hundreds of thousands of families will lose critical education and wellness services through Head Start and nutrition assistance programs. The Department of Defense will face deep cuts that will reduce readiness of non-deployed units, delay needed investments… and cut services for military families. And federal agencies will likely need to furlough hundreds of thousands of employees and reduce essential services such as food inspections, air travel safety, prison security, border patrols and other mission-critical activities.”

And so on. The potential cuts are well known to most federal employees and much of the public. Zients emphasized that agencies need to continue to prepare for them in much the same way they did in November and December, when a Jan. 2 deadline loomed for the sequester to take effect, only to be pushed back two months under a deal Congress and the White House reached in the early hours of 2013.

That agreement raised income taxes on the rich, extended unemployment insurance and took other measures, but delayed a decision on further deficit reduction until March, when the spending cuts are now set to take effect.. Agencies face further uncertainty when a stopgap budget funding the government expires on March 27.

The memo followed last week’s announcement by Defense Secretary Leon E. Panetta that the Pentagon leadership is freezing hiring, limiting maintenance work, delaying approval of some contracts and preparing for massive furloughs amid concerns that no deal will be reached to avert the spending cuts.

Zients told agency heads their plans “should reflect intensified efforts to prepare for operations under a potential sequestration.”

Lisa Rein covers the federal workforce and issues that concern the management of government.
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