White House Has Options For Mitigating Impact Of Sequestration

According to a recent report by OMB Watch, the White House has the ability to manage immediate effects of sequestration. By delaying the impact of sequestration, the White House will give the new Congress time to strike a deal with the administration regarding budget cuts.

To counteract the effects of sequestration, the Office of Management and Budget (OMB) can utilize its power of apportionment to accelerate spending for programs in early 2013. Additionally, some programs have what are known as “carryover funds,” where savings roll over from year to year. Since carryover funds are not affected by sequestration, this money can help ease the impact for some programs.

Because military personnel are exempt from sequestration, Congress has granted special authority to some agencies to protect civilian personnel. This ruling allows certain agencies to accelerate spending in an effort to prevent further civilian personnel layoffs. Finally, since only existing contracts will be largely unaffected by sequestration, new contracts should not be announced until later in 2013. In the same vein, the announcement of new federal grants should be delayed as well.

Delaying the negative effects of sequestration will take the pressure off the lame-duck Congress to find a solution to the problem of sequestration. Furthermore, delaying the impact of sequestration will allow Congress to wait until the Bush tax cuts expire before attempting to negotiate a deal for avoiding sequestration. Once the Bush tax cuts expire, Congress will be able to propose a plan that both avoids sequestration and lowers the tax rate, as opposed to raising it.

Kimberly Suttle, Research Analyst