A Focused Approach To Saving Money in the Federal Budget: Lessons from the DoD


A Focused Approach To Saving Money in the Federal Budget: Lessons from the DoD

Thursday, June 9th, 2011 - 14:26
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The nation’s looming financial crisis, fueled by trillion-dollar plus annual federal budget deficits, has compelled all U.S. government departments and agencies to adopt cost-reduction campaigns and efficiency initiatives.

Moreover, pressure to increase the savings targets is growing. The Department of Defense (DoD) provides an instructive example in this area.

U.S. Secretary of Defense Robert Gates announced in August 2010 that he would find $101.9 billion dollars in defense budget efficiency savings, resulting in real growth of one percent annually from FY2012–2016. The military departments would retain these savings and reinvest them in modernization and force structure. On January 6, 2011, Gates announced that the Office of Management and Budget (OMB) had reduced DoD’s FY2012–2016 budget by $78 billion and claimed that DoD had found $154 billion in savings over the Future Years Defense Program (FYDP). Of the $100 billion in savings found by the department, Secretary Gates withheld $28 billion to pay for “higher than expected operating costs” (health care, pay and housing allowances, and base support), which left the services only $70 billion (not $100 billion) to reinvest. DoD-wide efficiencies and freezes in civilian positions and salaries were supposed to
generate another $54 billion in savings, still short of the OMB cut of $78 billion.

Listen to Mr. Green's interview on Federal News Radio regarding this piece.

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