White House Rescinds $4.9 Billion in 2013 Spending Cuts

The Obama administration is canceling $4.9 billion of the $85 billion in automatic U.S. spending cuts that took effect March 1, a move that restores some funds for defense and diplomacy, according to a White House official.

The decision came after the administration determined that, under rules governing the automatic reductions, it had cut too much from some budgetary accounts for the current fiscal year, said the official, who asked not to be identified.

About $3.7 billion will be restored to the Pentagon’s budget with another $700 million going to the State Department, said the official. The remainder would be dispersed across a number of programs at other agencies.

The change was made after the White House Office of Management and Budget completed recalculations based on legislation to fund government operations for the rest of fiscal 2013 that was signed by President Barack Obama on March 26.

Defense Secretary Chuck Hagel said he’s still reviewing options that may avert furloughs more than three months after the Pentagon said automatic budget cuts may require unpaid leave for as many as 750,000 civilian workers.

Based on the revisions from the budget office, the Pentagon now estimates that it will need to cut roughly $37 billion in the fiscal year that ends Sept. 30, down from about $41 billion that was previously projected.

Government Furloughs

The budget cuts have prompted furloughs of government workers at other agencies, including the Federal Aviation Administration, where reduced staffing by air-traffic controllers that started April 21 led to several days of flight-delays across the U.S.

After being flooded with complaints from constituents, Congress voted April 26 to give the FAA more flexibility in administering the cuts to its budget, a move that ended the need for air-traffic controller furloughs.

Democrats have said the automatic budget cuts would throw 70,000 children off the Head Start program, eliminate four million meals for seniors, take 600,000 people off a nutrition program for mothers and young children, and mean 125,000 fewer vouchers to help poor families pay for rental housing.

Before it's here, it's on the Bloomberg Terminal.