OMB report outlines impact of possible federal cuts

With fewer than 100 days remaining before automatic cuts to the federal budget are scheduled to take effect, the Office of Management and Budget has released a lengthy report detailing the spending cuts that would occur.

The 394-page report enumerates the dollar amounts that would be cut from each of approximately 1,200 federal accounts – many of which fund programs administered at the state and local level – under the terms of the 2011 Budget Control Act.

According to the report, mandatory defense spending would be cut by 10 percent, and discretionary defense spending would be cut by 9.4 percent. Mandatory non-defense spending would be cut by 7.6 percent, and discretionary non-defense spending would be cut by 8.2 percent.

All programs within a category would be cut by the same percentage unless a program is specifically exempted by the Budget Control Act.

Entitlement programs in the category of mandatory non-defense spending, including Social Security, Medicaid, and the Children’s Health Insurance Program, would be exempt from cuts under the terms of the legislation, while cuts to Medicare would be limited to 2 percent.

With just days left before the expiration of the federal fiscal 2012 budget, Congress passed a six-month continuing resolution to fund the federal government at similar levels, with a .6 percent increase applied to most accounts. With the 2012 federal fiscal year ending on Sept. 30, the six-month budget averted a government shutdown.

The short-term budget, however, precludes federal, state and local agencies that use federal funds from entering into long-term contracts or making long-term plans with any certainty. This uncertainty is compounded by the lack of a resolution in Congress as to whether the sequestration process will begin on Jan. 1 as scheduled, or whether an alternative plan for deficit reduction will be enacted in its place.

There is widespread concern that the budget cuts mandated by the Budget Control Act would have a highly detrimental affect across numerous programmatic areas.

Congress is in recess through the month of October, which is normal practice in an election year, leaving any resolution of these crucial fiscal questions until the final days of the congressional session.