Home > Government & Politics > Slashing the Budget – Washington Style

Slashing the Budget – Washington Style

On June 8, 2010, the Washington Post ran the following article– “Obama Orders Agencies to Slash Budgets”

The headline looks good if you believe that federal spending is out of control and needs to be curtailed.  However, like most political stories, you have to delve into the details.  Headlines often capture political spin, which rarely reflects what’s actually happening.

Apparently the White House has directed federal agencies to trim at least 5 percent from their budgets, by identifying programs that don’t contribute to the agencies’ mission or the White House agenda.  Keep in mind that in this context, the White House is generally referring to agencies that deal with discretionary spending (i.e., Social Security, Medicare and Defense are off limits). Discretionary spending constitutes about 35% of all federal spending; thus, 65% of the spending is not affected.

According to the article, this is the first time a President has asked Cabinet Members to identify programs to be terminated.  Usually agency heads are asked to justify expansion or retention of programs.  Kudos to President Obama for trying a different approach.

Now… the rest of the story.  To give the agencies an incentive to volunteer programs to cut, the President wants to allow the agency to keep half of the savings they identify and spend it on programs that are more effective (or further the President’s agenda, I suppose).  If you spend half of the “savings,” then you really have only cut spending by 2.5%.  While it may be headed in the right direction, I don’t think a 2.5% spending cut justifies a budget slashing headline.

Reporter, Lori Montgomery wrote that “the new directive is the latest in the series of initiatives, legislative proposals and veto threats in recent weeks aimed at demonstrating that Obama is minding every penny.”  You may recall that President Obama’s 2010 budget already increased discretionary spending by 7%. Cutting the budget after you already increased it, doesn’t strike me as proof that you are a spending hawk.

By my math… if you increase spending by 7%, cut it by 5%, but then give 2.5% back for more spending… you’re still spending 4.5% more than the prior year.  That may qualify as a spending cut in the world of Washington, but not in the rest of the world.  That must be… Slashing the Budget – Washington Style.

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