Obama Directs Agencies to Reduce FY 2013 Budgets

August 19, 2011

Though we are still in the midst of fiscal year 2011, President Obama, apparently in an effort to get ahead of the power curve, has instructed agencies to submit fiscal year 2013 budget requests that are at least 10% below current levels.  The instructions are contained in an Office and of Management & Budget (OMB) memorandum.  The memorandum was signed by OMB Director Jacob Lew and dated August 17th, 2011.

Agencies must submit budget requests that reflect a 5% reduction from Fiscal Year 2011 levels.  In addition, agencies must identify additional items that can be eliminated that would result in at least a 10% reduction.  Mr. Lew stated in the memorandum that submitting the budgets in this manner provides the information the President will need to finalize the overall budget in accordance with the new spending targets. The OMB memorandum also contains some budget reduction rules the agencies must follow:

  • No across the board reductions
  • No reductions in mandatory spending
  • No reclassification of programs from discretionary to mandatory
  • No new user fees can be proposed to offset existing spending

Agencies are allowed to propose such actions, but they must be included as separate suggestions to be considered as alternatives to the reductions set forth in the formal budget request.