Washington’s March Madness: Spending Fight Ahead Cut or cut deeper: Those are the options on the table in charting the future course of federal spending. President Obama has proposed relatively modest cuts in the 2012 budget, while Republicans are pushing drastic reductions that would roll back spending to 2008 levels, setting the stage for a long wrangle. “We’ve taken a scalpel to the discretionary budget rather than a machete,” the president said at a Feb. 15 news conference. Before Congress takes up the 2012 spending plan, it must decide what to do about the rest of 2011. A continuing resolution, which holds most spending to 2010 levels, expires March 4. The House had begun debate on 2011 spending at press time. Leaders of the House Republican majority are backing a plan to cut $61 billion in the remaining seven months of the fiscal year. The White House said President Obama would veto the bill if it contains such deep cuts. However, Republican leaders have said they will not force a government shutdown if debate over spending remains at an impasse. One option would be to pass another short-term continuing resolution. Defense Secretary Robert Gates has warned of a looming “crisis” if DOD is forced to continue operating under 2010 spending levels. The Obama budget for 2012 calls for a 10% reduction in spending on service contracts, according to Dan Gordon, chief of the Office of Federal Procurement Policy, especially spending on professional and management services. “This is an area that has grown disproportionately over the past decade, and we see significant potential for savings,” he said during a media conference call. The research firm Input estimates a 10% cut in those areas would mean $4 billion less in contract dollars. “While nothing is exempt, overall IT services are likely not the primary targets for the proposed 10% cut, however the four IT Support Services functions are clearly at risk,” Input analyst Deniece Peterson wrote on the company’s blog. “The majority of IT services, such as software development, design and consulting, and managed security services, have some staying power due to agencies’ technology priorities and human capital shortfalls.” The president’s budget would increase overall IT spending by 1.9%. Cloud computing and data center consolidation are two key elements of the administration’s drive to make government more cost-effective. Construction contracting would take a hit under the Obama budget. Cuts are proposed in housing and road construction as well as construction projects in wildlife refuges, national parks, public lands and tribal areas. Obama wants to impose a five-year freeze on non-security discretionary spending. Analysts say that category amounts to only 12% of the total federal budget. He proposed to terminate, eliminate or achieve savings in 211 programs. His budget calls for tax increases on wealthy individuals and an end to some business tax breaks, proposals that are red flags for most Republicans.