OMB Requests Budget Reduction Plans

On Tuesday, White House Office of Management and Budget Director Peter Orszag announced that the White House is requesting all nonsecurity federal agencies (all those other than the Department of Defense and the Department of Homeland Security) submit plans to reduce their discretionary spending (all spending subject to the Congressional appropriations process) by 5 percent for the fiscal year 2012 budget request. Citing President Obama’s determination to freeze federal nondefense spending over the next three years, Orszag noted that some cuts will have to be made to make room for “inevitable new needs and priorities.”

<p>To fulfill this plan, the U.S. Department of Education (ED) would have to cut spending by $3.6 billion from its fiscal year 2011 discretionary budget as laid out in President Obama’s budget request of $72.9 billion (which accounts for Congress’ rejection of Obama’s plan to fund Pell Grant completely through mandatory streams). Orszag stressed that the budget plans laid out by agencies will not necessarily result in cuts at the same levels. He said it would provide a framework within which the administration may make cuts or increases based on priorities.</p>    <p>In its 2011 budget request, the Obama Administration has laid out a number of programs it believes can be consolidated or terminated. However, even with these terminations and consolidations, the Obama proposal would increase ED’s discretionary budget by $9.1 billion from fiscal year 2010 levels. This increase includes more discretionary funding for Pell Grants, Obama’s proposed program consolidations (which would lead to a <a href="../../../../../../node/27181">net increase in spending</a>), and the administration’s proposed program terminations.</p>    <p>This leaves ED with a lot of cutting to do, and without a clear roadmap of where cuts might come from given the priorities laid out Obama administration’s 2011 budget request. If ED were to simply cut the programs terminated in the Obama budget request its total savings would be $123 million, a far cry from the $3.2 million called for under Orszag’s announcement, leaving the Department far short of its goal. ED will have to look beyond the administration’s proposed terminations to find the savings Orszag has requested.</p>    <p>The Obama administration has framed this as an opportunity to increase efficiency in federal spending. But in the past, efforts to do just that have met with strong resistance in Congress, where lawmakers are hesitant to terminate programs that send money for education to their home states and districts. In the past, Congress rejected many similar proposed terminations under pressure from their constituents and peers.</p>    <p>With states and school districts already struggling to make ends meet, we at <i>Ed Money Watch</i> are eager to see where ED’s cuts will come from and who is likely to be most affected.</p><!--break-->