2013 Budget Guidance

Yesterday, I sent to the heads of Cabinet and federal agencies budget guidance for FY 2013. The guidance reflects the President’s desire to live within our means so that we can invest in job creation and economic growth now and in the long term, and the realities of the Budget Control Act that he signed into law earlier this month. This legislation set ceilings on total discretionary spending and a target of $2.4 trillion in total deficit reduction over the next decade.

In light of the tight limits on discretionary spending starting in 2012, we asked agencies for budget submissions that provide options to support the President's commitment to cut waste and re-order priorities to achieve deficit reduction while investing in those areas critical to job creation and economic growth. To meet this goal, we asked agencies to provide budgets based on two scenarios: a 5 percent cut and a 10 percent cut from the 2011 enacted discretionary level.

This does not mean that we will institute either a 5 percent or 10 percent cut in an individual agency’s budget or in all agency budgets. We asked agencies to provide these two options so that the President can have the information needed to make the tough choices necessary to meet the hard spending targets put in place by the Budget Control Act and to meet the needs of the Nation. We do not believe in making across-the-board cuts; rather, we believe that we should cut what is wasteful or not essential and invest in what is critical to long-term growth and other priorities. Thus, some agency budgets will decrease (and some more than others), some will stay flat, and some may increase (and, again, some more than others) – and the same goes for programs within agencies.

And as we look for savings, we also will be looking for opportunities where we can "double down" on investments that spur economic growth and job creation. Finding the savings to support these investments will be difficult, but it is possible if agencies cut or eliminate low-priority and ineffective programs while consolidating duplicative ones; improve program efficiency by driving down operational and administrative costs; and support fundamental program reforms that generate the best outcomes per dollar spent.

In sum, budgeting under these tight discretionary caps will be difficult, but it also will offer each agency an opportunity to identify the areas where we can get the most done to help our economy and our Nation.

Jack Lew is the Director of the Office of Management and Budget.