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Government Shutdown Averted — But What’s the Effect of $38 Billion Spending Cut on Federal Agencies?

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Photo: Jack Moore

The White House and Congress reached a deal late Friday night, coming down to the wire to together pass a spending bill covering the rest of the fiscal year and averting a government shutdown.

That outcome was a bit of a surprise as beltway doomsayers had predicted since the middle of last week that the government grinding to a halt was a likely outcome.

But as the Friday-night high-fives have quieted and the relief from potentially furloughed federal employees and contractors sets in, it’s important to note that the shutdown was called off because of a series of compromises from administration and congressional leaders on spending amounting to some $38 billion —  the largest single spending cut in U.S. history.

Federal agencies and the contractors they do business with have grown accustomed to limping on under continuing resolutions, a short-term funding measure for when partisan gridlock gets the better of Congress before a budget can be voted on.

But the latest funding fracas, which ended Friday night with the largest cut in year-to-year spending ever will have a continuing impact on agencies.

“Some of the cuts we agreed to will be painful,” President Barack Obama said. “Programs people rely on will be cut back. Needed infrastructure projects will be delayed. And I would not have made these cuts in better circumstances.”

Details about where exactly cuts will cuts from and how federal agencies will fare will likely come Monday, Federal Times reports, when a spending bill covering the rest of the fiscal year is filed late that day.

However, a White House blog post from Communications Director Dan Pfeiffer does describe proposed area for cuts.

For example, the deal strikes $13 billion in funding for programs for the Labor, Education and Health and Human Services Departments, as well as more than $1 billion to be cut across nondefense agencies, “forcing everyone to tighten their belt,” Pfeiffer wrote.

Perhaps surprisingly, the White House also identified $18 billion in cuts that Pentagon leadership have “deemed unnecessary.”

Foreign aid is a likely victim of the budget axe — the State Department’s foreign operations will see an $8 billion cut.

“These significant cuts to the State Department and foreign assistance will mean we will not meet some of the ambitious goals set for the nation in the president’s budget,” Pfeiffer acknowledged.

Cuts to earmarked transportation programs and farm subsidies also make up a bulk of the proposed reductions.

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