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White House orders agencies to cut their budgets

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WASHINGTON (AP) — It’s a microcosm of the budget battling that has

consumed Congress all year: The Obama administration wants federal

agencies to save money while Republicans push for additional

savings to take a substantial bite out of the government’s towering

pile of IOUs.

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White House budget chief Jacob Lew has ordered agency heads to

submit spending plans for the upcoming budget at least 5 percent

below this year’s levels. He also wants them to propose ways to

trim a total of at least 10 percent of their spending.

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Michael Steel, a spokesman for House Speaker John Boehner, R-Ohio,

said Thursday that Lew’s directive was a good way to start finding

spending cuts that are required under the recent debt-ceiling

agreement between the two sides.

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“But the White House must get serious about real structural reform

of our entitlement programs if we’re going to get our debt under

control to help our economy grow and create jobs,” Steel said,

referring to huge and fast-growing benefit programs like Social

Security and Medicare that help drive annual deficits

skyward.

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Lew’s letter did not rule out, or even address, the possibility of

finding savings from benefit programs. But Steel’s remark pointed

directly at the major fault line that has blocked a sweeping

debt-cutting deal between the two parties: Democrats have resisted

paring benefits from Social Security, Medicare and Medicaid, while

Republicans have refused to consider tax increases.

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The Obama administration has asked agencies in years past to

propose similar savings. But Lew’s order comes just two weeks after

Obama and congressional Republicans ended an epic debt ceiling

battle that has left both sides eager to demonstrate a willingness

to trim red ink ahead of a fierce autumn battle over the economy

and the debt and just as the 2012 presidential and congressional

elections approach.

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By requesting two sets of potential savings from agencies, Lew is

moving toward fulfilling the debt-ceiling deal, which created a

series of annual spending targets and would save tens of billions

of dollars a year.

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“By providing budgets pegged to these two scenarios, you will

provide the president with the information to make the tough

choices necessary to meet the hard spending targets in place and

the needs of the nation,” Lew wrote to agency heads.

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The American Federation of Government Employees, which represents

more than 625,000 federal workers and employees of the District of

Columbia, also jumped into the fray.

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In a written statement, national president John Gage said the cuts

“mean just one thing: more job destruction in the midst of a jobs

crisis.” He said that with millions of Americans already unemployed

or too discouraged to seek work, “why on earth would the

administration be trying to dig an even deeper hole?”

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The spending that Lew ordered federal agencies to trim will consume

more than $1 trillion of this year’s $3.8 trillion federal budget.

The rest of the budget covers benefit programs and interest

payments on the government’s $14.3 trillion debt.

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Lew’s letter suggests that savings can be found by eliminating

unneeded programs and making agencies more efficient. It also

invites agency heads to propose initiatives that would spark

economic growth.

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“Finding the savings to support these investments will be

difficult, but it is possible,” Lew wrote.

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In a White House blog on Thursday, Lew said his request for savings

was designed to help the administration make decisions about living

within overall spending limits. He said it did not mean every

agency will necessarily see budget cuts.

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Republicans say tax and spending cuts are needed to blow life back

into the flagging economy and create jobs. Obama plans to unveil a

jobs proposal next month mixing tax reductions, construction

initiatives and deficit reduction.

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When Congress returns from its summer recess in September, also

generating political heat will be the special bipartisan panel of

12 lawmakers that the debt-ceiling agreement created to try to

craft a compromise $1.5 trillion, 10-year debt reduction

package.

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As another part of the debt-cutting deal, the two sides agreed to a

separate $900 billion in 10-year savings from agency budgets. The

details of those cuts will have to be worked out every year, but

they will be evenly divided between national security and domestic

programs.

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Earlier this year, Obama and Congress also battled down to the wire

over spending cuts and came within hours of forcing a partial

government shutdown. In the end, they agreed to pare agency

spending by $38 billion.

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Lew asked agency chiefs for the two spending scenarios as the

administration plans for the 2013 budget year, which begins in

October 2012. That budget will be released early next

year.

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