The amended 1985 Balanced Budget and Emergency Deficit Control Act requires discretionary spending caps to be lowered by $91 billion in fiscal 2014 and the sequestration of $18 billion in direct spending, according to a letter (.pdf) to congress by Acting Official of Management and Budget Director Jeffrey Zients.These cuts assume sequestration will still be in effect for fiscal 2014.
The Senate approved a $3.7 trillion budget for the coming fiscal year March 23, its first in 4 years, days after it voted to reject a budget champtioned by House Budget Committee Chairman Rep. Paul Ryan (R-Wis.).
Rep. Paul Ryan's plan for the federal budget would for two years sharply cut spending, as a share of gross domestic product, then gradually draw it down further until the budget balances in 10 years.
An Office of Management and Budget report (.pdf) on how across-the-board cuts will impact individual agencies shows that FEMA will have about 5 percent of its budget subtracted from it. In raw dollars, the greatest amount comes from disaster relief, which will lose $928 million, with state and local programs set to lose $117 million, the second greatest amount.
The military wouldn't be able to intervene in problems that aren't clearly tied to U.S. interests and would be "deliberately less ready to undertake a long counterinsurgency war," says the proposal's author, Cindy Williams of the Massachusetts Institute of Technology's Security Studies Program. It would still, though, be fully able to win a major theater war and help an ally defend against an attack at the same time.
Budget uncertainties and scheduled cuts will cause the Army and Navy to reduce wages and spending by roughly $26 billion, which the services say will impact roughly 485,000 civilian personnel and private sector employees through furloughs, layoffs or jobs lost from decreased military investments and construction.
Speaking at a Brookings Institution forum on defense spending, DoD Comptroller Robert Hale said the $45 billion at risk in the March 1 fiscal cliff is about 9 percent of the Pentagon budget, versus 12 percent for the Jan. 1 cliff. On the other hand, if sequestration does go into effect March 1, he said, DoD has two fewer months to implement the cuts.
Other budget cutting plans beside sequestration can save more money than the automatic cuts set to come into effect Jan. 2, says the Congressional Research Service.President Obama's fiscal 2013 budget proposal would produce $2.2 trillion more in deficit reductions than what would be achieved by the Budget Control Act's sequester, says CRS.
The Defense Department must further reduce the cost and time it takes to develop and procure every product it buys and service it pays for, said Under Secretary of Defense Frank Kendall. DoD will increase the efficiency of its operations and remove burdensome regulation through an update to its Better Buying Power program, a set of guidelines for encouraging competition and reducing price in DoD contracts.
Falling off the fiscal cliff this January would likely push the nation into a recession--but there are long-term economic concerns if the government fails to address mounting debt, says the Congressional Budget Office. In a report (.pdf) published Nov. 8, CBO says that there are no easy decisions facing lawmakers but warns of economic woes in both the short term and long term if they take an all-or-nothing approach.