The White House Office of Management and Budget (OMB) has released guidance to federal agencies for the preparation for their FY14 budget submissions. The OMB memo conveys the president's commitment to developing a Fiscal Year 2014 budget that is at or below the ceiling set by the Budget Control Act of 2011 (BCA), which contained roughly $4 trillion in deficit reduction over the FY12-21 period. The BCA achieves these reductions largely through across-the-board reductions in federal spending. While President Obama accepts the overall reduction in spending, his budget office has instructed agencies to assume that cuts will not be administered in an across-the-board fashion, but instead as a result of prioritizing agency activities. In the memo, OMB asked federal agency heads to assume a 5% reduction in FY14 below the amount budgeted for FY13. However, the memo indicates that certain agencies and activities will be treated more favorably; "The 2014 Budget must continue to cut lower-priority spending in order to create room for the effective investments in areas critical to economic growth and job creation, including education, innovation, infrastructure, and research and development."
The numbers contained in the FY14 President's Budget Request will largely depend on the results of the FY13 appropriations process now taking place on Capitol Hill and the presidential election in November. However, federal agencies must begin preparing budget submissions well in advance in order for the president (whoever he is) to be prepared to release a request in early February. If control of the White House changes, expect the new president to instruct agencies to rework much of the FY14 budget request with new guidelines and priorities.