If Congress fails to act before March 1 automatic cuts of about $85 billion will be imposed on the remainder of fiscal 2013 split evenly between defense and non-defense programs, but because the date has been pushed back by two months the percentage reduction to all non-exempt budgetary accounts many programs the effective cuts would be closer to 9 percent for non-Defense programs and 13 percent for Defense programs when compared to what agencies would spend during this period under normal circumstances – or a 12 month period, OMB has told the Senate Appropriations Committee.
OMB controller Danny Werfel repeated that budget cuts of that size will have significant repercussions regardless of how they are implemented even though they wouldn’t have to take immediate effect and could be phased in throughout the rest of the current fiscal year.
Werfel noted that agencies and OMB have been planning for months to determine how to operate under a potential sequestration and operating according to guiding principles such as identifying operational challenges, reviewing grants and contracts to find savings, identifying the most appropriate means of reducing civilian workforce costs, and taking into consideration funding flexibilities, including the availability of reprogramming and transfer authority.
Committee chair Barbara Mikulski, D-Md., warned however that cuts would be guided in part by what agencies have not already spent. "A five percent cut this late into the fiscal year often translates into a double whammy for our agencies because fixed costs like rent and utilities can’t be cut," said Mikulski in opening remarks, adding, "The big cuts will be to salaries, which means furloughs, layoffs, and services not delivered to the American public."
