$5 billion budget-cut fix in works

Saturday, May 4, 2013

WASHINGTON - The White House budget office is recalculating how to apply automatic spending cuts for a handful of agencies, freeing up almost $4 billion for the Pentagon and another $1 billion or so for other agencies, including the Homeland Security Department and NASA.

Capitol Hill aides familiar with the White House changes said the administration has identified almost $5 billion in cuts that can be restored under its reading of the budget rules governing the across the-board cuts, known as sequestration.

The cuts had been set to shrink federal spending authority by $85 billion for the budget year through Sept. 30 and total $1.2 trillion over nine years. The Congressional Budget Office estimated that actual spending in fiscal 2013 could decrease by just $42 billion because of long term contracts, which spread spending over several years.

The new White House calculations differ from earlier ones because a partial-year funding bill was replaced in March with a more detailed measure. After administration number-crunchers redid their math, they were able to restore about $5 billion of the scheduled $85 billion in automatic sequestration cuts under a complicated, previously unused mechanism that dates from a 1985 budget law.

An administration official confirmed the calculations Friday but declined to comment further because the process is ongoing. The official and congressional aides spoke on condition of anonymity because they were not authorized to discuss the changes publicly.

Public pressure to find ways to lessen the effects of sequestration is on the rise as federal agencies warn that the mandatory cuts could mean cutbacks in services. Last week, Congress passed and President Barack Obama signed legislation giving the Federal Aviation Administration the ability to tap money in other accounts to avoid furloughs that were causing flight delays.

The cuts officially began in March after Congress and Obama could not reach an agreement on a broader budget deal. The automatic cuts had been imposed under a 2011 debt and budget pact. They require a 5 percent cut to domestic agency operating budgets and an 8 percent cut to the Pentagon.

Social Security was exempted, and cuts to Medicare were limited to a 2 percent cut to health-care providers. Safety-net programs such as Medicaid, food stamps and school lunches for the poor were exempted, too.

The cuts so far have failed to live up to the dire warnings issued earlier by agencies, in part because agency budget officers working with Congress have been permitted to transfer money between accounts. That allowed the Justice Department, for instance, to avoid furloughs.

Budget experts have warned that the grip of sequestration will grow tighter as weeks and months pass, leading to teacher layoffs, reduced funding for infrastructure and economic-development projects, and a host of other cuts across the budget.

Many liberal activists were infuriated when Congress last week swiftly moved to address problems with air-traffic control that led to widespread flight delays while leaving problems such as cuts to preschool for the poor and Meals on Wheels for the elderly unaddressed. Most lawmakers are frequent fliers.

At issue in the latest recalculation are accounts that were cut more deeply under a full-year funding bill enacted in March than they would have been under the across the-board cuts.

The recalculation surprised many people on Capitol Hill, but Republicans atop the budget committees did not criticize the move. Republicans such as Sen. John McCain of Arizona have sought to reverse cuts to the Pentagon - and it benefits the most from the new math.

The State Department said Friday that it would be able to avoid furloughing workers in part because of the new calculations.

Meanwhile, the Food and Drug Administration said Friday that it would not have to curtail inspections of food-processing plants. It had earlier warned that 2,100 plant inspections would have been canceled.

Front Section, Pages 4 on 05/04/2013