OMB Directs Federal Agencies to Continue Normal Spending Despite Upcoming Sequester

Posted on: October 7th, 2012 by NADO Admin

On September 28, the White House Office of Management and Budget (OMB) issued a memo to all federal agencies directing them to plan for spending in FY2013 as if Congress will prevent or postpone the automatic, across-the-board cuts to federal spending (known as “sequestration”) scheduled to occur on January 2, 2013.

According to the memo, “Agencies should continue normal spending and operations” in early fiscal 2013, which officially began on October 1. This message came as part of a document OMB normally issues each year in late September detailing how federal agencies should operate under stopgap continuing resolutions (or “CRs”). However, this year is more complicated as the CR (H. J. Res. 117) signed into law by President Obama last week extends most federal operations for six months, a longer period than most CRs.

In a separate notice issued to agencies on the FY2013 CR, OMB also urged Congress to pass a “balanced package of deficit reduction” so that the automatic, across-the-board cuts built into last year’s debt-limit deal (P.L. 112-25) can be replaced with a more targeted approach to budget cutting. In mid-September, OMB released a report that projected sequester cuts of 9.4 percent to non-exempt defense discretionary spending and 8.2 percent to non-exempt domestic discretionary spending.

Unless Congress acts to avert or postpone the sequester before the January 2 deadline, OMB will need to trigger the actions needed to make $109 billion in cuts for the fiscal 2013 accounts of most federal programs. Both Republicans and Democrats have criticized this method for making cuts, and there have been calls from lawmakers and stakeholder groups across the political spectrum to prevent the sequester.

It remains unclear whether Congress will be able to reach a compromise on the sequester after the November elections. Republicans want to replace the cuts with alternative reductions, and the GOP-led House passed a budget resolution this year that included extensive cuts to domestic spending while eliminating the cuts to the Defense Department that would come under sequester. Democrats want an approach that would include higher tax revenues and alternative cuts to replace the sequester.

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