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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

OMB Issues Memo Advising Departments, Congress on Sequestration

August 3, 2012—Responding to Republican criticisms that the Office of Management and Budget (OMB) should be providing more detailed guidance on sequestration, Acting OMB Director Jeffrey Zients issued a July 31 memo indicating that the budget office will work with agencies, though the White House expects Congress to resolve sequestration through legislation.

The memo, directed to the heads of federal departments and agencies, pledges that OMB will engage in near-term and longer-term discussions with agencies about sequestration issues. It notes that “sequestrable amounts can only be calculated once FY 2013 funding levels are known” and that OMB will calculate final percentages “shortly before any sequestration order is issued.”

The memo also makes clear, however, the president’s expectation that Congress act to avoid sequestration. Urging lawmakers to reach an agreement repeatedly throughout the two-page document, it asserts that “sequestration is bad policy, was never meant to be implemented, and should be avoided through the enactment of bipartisan, balanced deficit legislation.”

Zients also points out that executive agencies’ “sequestration planning and implementation activities, once undertaken, will necessarily divert scarce resources from other important agency activities and priorities.” While departments are awaiting final calculations, the memo advises that “agencies should continue normal spending and operations since more than 5 months remain for Congress to act.”

Effective Jan. 2, 2013, the Budget Control Act (P.L. 112-25) requires $109 billion in automatic discretionary spending cuts in FY 2013 through sequestration because Congress failed to enact legislation with $1.2 trillion in deficit reduction by the specified deadline [see Washington Highlights, Dec. 2, 2011].

Unless Congress acts to prevent the sequester before January, most appropriated federal programs and agencies, including the National Institutes of Health (NIH), will be forced to implement immediate cuts of at least 8 percent in FY 2013, and Medicare payments to providers and plans will be cut by 2 percent [see Washington Highlights, Aug. 5, 2011].

Politicians in both parties have been requesting additional details from the administration about the impact and implementation of the looming cuts [see Washington Highlights, June 8].

Contact:

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525
Email: trasouli@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org