Omnibus deal not end of agencies' budget worries

Friday - 12/16/2011, 10:37am EST

Steve Bell, senior director, Bipartisan Policy Center's Economic Policy Project

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By Jolie Lee
@jleewfed
Federal News Radio

After seven short-term spending bills and three threats of a government shutdown this calendar year, Congress is ready to pass a spending deal with a Friday midnight deadline.

But today's expected passage of an omnibus spending bill for fiscal year 2012, which started Oct. 1, is not the end of federal managers' budget worries.

"I don't think anyone should feel very comfortable or easy about things because I think next year will be devoted to a great extent to undoing the automatic across-the-board cuts that will happen to agency budgets starting in January 2013," said Steve Bell, a senior director for the Bipartisan Policy Center's Economic Policy Project, in a Friday morning interview with The Federal Drive with Tom Temin and Amy Morris.

The deficit reduction supercommittee failed to reach a deal in November to cut the deficit by at least $1.2 trillion over the next 10 years. Its failure triggered the automatic cuts — also called sequestration — with half of the cuts to civilian agencies and half to the Defense Department.

Bell said agency managers should expect a 6 to 8 percent budget reduction should sequestration take effect in Jan. 2013. And should it take effect, the process will be an "extremely abrupt event," he said.

"I think it'll keep agency managers on their toes," Bell said.

After the supercommittee failed to reach a deficit reduction deal, President Obama said he expected the Congress to come up with a way to cut $1.2 trillion over the next 10 years, "one way or another." The President vowed to veto any plan that attempted to undo the cuts.

What adds to the budget complication is Jan. 2013 corresponds with the expiration of the Bush tax cuts — what will become a political bargaining chip in budget negotiations.

"The expiration of the Bush tax cuts, in whole or part, has been looming out there in the background for a long, long time as an essential election year dilemma," Bell said.

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