Federal Relations

June 9, 2010

OMB Seeking FY12 Agency Budget Cuts

Yesterday, the White Office of Management and Budget (OMB) issued two memoranda instructing non-security federal agencies to submit two separate plans for cutting both spending and low-priority programs in their FY12 budget submissions.

The first memorandum, from OMB Director Peter Orszag, requires each agency to submit an FY12 budget request that is five percent below the FY12 discretionary budget listed for the agency in the President’s FY11 budget request.  “This will allow the President’s Budget to accomplish an overall non-security discretionary freeze even while providing funding for new initiatives and any contingencies that arise over the coming months,” says the memorandum. 

The memorandum directs agencies not to cut programs across-the-board, but to eliminate low-priority programs and activities, redesign staffing and management processes, and “focus management attention on high-priority performance goals.”  It also directs agencies to review with OMB “savings opportunities in the full range of mandatory programs.”

The second memorandum, from Orszag and White House Chief of Staff Rahm Emanuel, directs the agencies to identify the programs and subprograms that “have the lowest impact on your agency’s mission and constitute at least fiver percent of your agency’s discretionary budget.”  This is designated as a separate effort from identifying agency budget cuts of five percent.