White House asks agencies to propose budgets cuts

The White House has asked federal agencies to propose ways to cut spending by 10 percent or more for the upcoming budget, underscoring the political jockeying under way as President Barack Obama and Congress prepare for a fiery autumn clash over the economy and the debt.

In a letter released Thursday, White House budget chief Jacob Lew told agency heads to submit financial blueprints with spending for the 2013 budget at least 5 percent below this year's levels. He also asked them to present additional proposals that would trim spending by a total of at least 10 percent that year.

The White House has asked agencies in years past to propose similar savings. But Lew's letter comes just two weeks after Obama and congressional Republicans ended an epic debt ceiling battle that has left both sides eager to demonstrate a willingness to trim red ink, just as the 2012 presidential and congressional elections approach.

More narrowly, Lew's request for two sets of potential savings is aimed at living within the debt ceiling agreement the White House and Republicans worked out after a lengthy battle that consumed much of the spring and summer and drove the government to the brink of a potential default. Their deal created a series of spending targets and would save tens of billions of dollars a year.

"By providing budgets pegged to these two scenarios, you will provide the president with the information to make the tough choices necessary to meet the hard spending targets in place and the needs of the nation," Lew wrote.

A spokesman for House Speaker John Boehner, R-Ohio, said Lew's letter was a reasonable way to start addressing the agreed-upon spending limits.

"But the White House must get serious about real structural reform of our entitlement programs if we're going to get our debt under control to help our economy grow and create jobs," said the spokesman, Michael Steel, referring to huge and fast growing benefit programs like Social Security and Medicare that help drive annual deficits skyward.

The American Federation of Government Employees, which represents more than 625,000 federal workers and employees of the District of Columbia, heatedly criticized Lew's request.

In a written statement, national president John Gage said the cuts "mean just one thing: more job destruction in the midst of a jobs crisis." He said that with millions of Americans already unemployed or too discouraged to seek work, "why on earth would the administration be trying to dig an even deeper hole?"

The spending that Lew ordered federal agencies to trim will consume more than $1 trillion of this year's $3.8 trillion federal budget. The rest of the budget covers benefit programs and interest payments on the government's $14.3 trillion debt.

Lew's letter suggests that savings can be found by eliminating unneeded programs and making agencies more efficient. It also invites agency heads to propose initiatives that would spark economic growth.

"Finding the savings to support these investments will be difficult, but it is possible," Lew wrote.

In a White House blog on Thursday, Lew said his request for savings was designed to help the administration make decisions about living within overall spending limits. He said it did not mean every agency will necessarily see budget cuts.

Republicans say tax and spending cuts are needed to blow life back into the flagging economy and create jobs. Obama plans to unveil a jobs proposal next month mixing tax reductions, construction initiatives and deficit reduction.

When Congress returns from its summer recess in September, also generating political heat will be the special bipartisan panel of 12 lawmakers that the debt ceiling agreement created to try to craft a compromise $1.5 trillion, 10-year debt reduction package.

As another part of the debt-cutting deal, the two sides agreed to a separate $900 billion in 10-year savings from agency budgets. The details of those cuts will have to be worked out every year, but they will be evenly divided between national security and domestic programs.

Earlier this year, Obama and Congress also battled down to the wire over spending cuts and came within hours of forcing a partial government shutdown. In the end, they agreed to pare agency spending by $38 billion.

Lew asked agency chiefs for the two spending scenarios as the administration plans for the 2013 budget year, which begins in October 2012. That budget will be released early next year.