THE WHITE HOUSE

Office of the Press Secretary

OMB Communications Office

                             FACT SHEET:
                          0.38 percent cuts
                          January 10, 2000

History:

• Last fall, in the course of the appropriations process, the Congressional majority considered an across-the board cut of several percentage points, applying equally to all areas of government regardless of priority. The Administration made its opposition clear. Then, on October 28, the Congress passed a one percent across- the-board cut to all areas of government as part of the Labor-HHS-Education appropriations bill.
• The Administration successfully fought against this cut in the budget negotiations on two fronts: 1) reducing the size of the cut to 0.38 percent and 2) gaining the flexibility to implement it with Administration discretion to protect the highest priority areas of government, and to target savings from lower priority areas.

Administration Approach:

• The law stipulated that 0.38 percent in savings needed to come from each and every Department. However, within each department, it provided latitude to protect high-priority programs as long as the dollar figure amounting to 0.38 percent was achieved provided certain other conditions, described below, were met.
• OMB provided guidance regarding general principles the Agencies should use to identify cuts:
• The 0.38 cut must not be imposed across the board, but targeted to reflect areas of higher and lower priority;
• Reductions need to come from least critical funding;
• Reductions should be considered from funding that Congress enacted above the President's request;
• Wherever possible, no reductions in force from personnel.

        The law also imposed the condition  that no reduction in any
        single program could
        exceed 15% of its total.  In other words, the law did not
        permit an entire program to be eliminated in order to count
        toward the savings necessary for a given department.  At
        least 85% of the funding total for the program had to remain
        intact.

• Department of Defense: The law required that Department of Defense funding, like all other agencies, be cut by 0.38 percent, but exempted DoD's military personnel pay and benefit accounts. The law also required cuts be applied equally to all other DoD accounts.

Administration Actions to Achieve 0.38 percent Cut

Total Savings (amounting to 0.38 percent)= $2.356 billion

Savings from Congressional Earmarks = $478 million

Number of Earmarked Projects Targeted by Cut: 2, 372 projects

Savings from Salaries and Expenses = $192.5 million

Savings from Cuts to Programs = $1.7 billion

Examples of Programs Fully Protected by Administration

Military Recruiting and Readiness
New Classroom Teachers
Head Start
Women, Infants and Children (WIC) program Child Care and Development Block Grant
CDC Immunizations
CDC Infectious Disease
Family Planning
Ryan White
Clean Water Action Plan
Superfund
Lands Legacy
FBI agents
ATF Youth Gun Initiatives
FAA Air Traffic Controllers and all other safety functions Secret Service Salaries and Expenses

Departments with Largest Numbers of Earmarks:

Transportation: There were cuts to 584 earmarked projects, amounting

               to savings of $61 million, out of  total cuts to  DOT of
               $180 million.

Housing and Urban Development: There were cuts to 472 earmarked

     projects, amounting to, out of  total cuts to HUD of
     $91 million.

Environmental Protection Agency: There were cuts to 316 earmarked

     projects, amounting to savings of 23 million out of
     total cuts to EPA of $29 million.

The law stipulated that reductions to any single program area, including earmarked projects, could not exceed 15%. However, Administration cuts to earmarked projects generally were applied at a lower level, in the 7 percent to 8 percent range.