04/04/2013 12:50 pm ET Updated Jun 04, 2013

White House: Sequestration Cuts Harmful Unless Federal Agencies Are Flexible

By Gabriel Debenedetti

WASHINGTON, April 4 (Reuters) - The White House budget office on Thursday urged federal agencies to be flexible in implementing sharp budget cuts that went into effect March 1, while keeping their long-term goals in mind.

Agencies should avoid cuts that would harm needed upkeep or unduly disrupt programs "essential to support the long-term execution of the agency's mission," White House budget office controller Danny Werfel wrote in a memo.

The budget office has already counseled flexibility, but Werfel has now provided agencies more detailed guidance about how to minimize long-term effects of the $85 billion in across-the-board spending cuts.

The so-called sequestration budget cuts were designed to be so severe that Republicans and Democrats would be forced to reach agreement on a budget to avoid them, but they failed to agree and the cuts were set into effect on March 1.

Since then agencies have warned employees that they would see reduced working hours and that specific programs would be cut. However, the full extent of the budget restrictions has yet to be determined.

President Barack Obama is set to release his own budget proposal on April 10, nine days after the White House said 480 employees of its Office of Management and Budget are facing furloughs.

On Wednesday, an administration official said Obama planned to return five percent of his own pay in solidarity with government workers forced to take unpaid leave.

Agencies that find themselves with unspent funds should apply them to core functions that would not leave them short in future years, he said.

Initially, the White House warned that there would be little flexibility in avoiding the effects of the cuts. In February, Werfel said that no matter how agencies attempt to soften the blows, the disruptions would be harmful to their missions.

The memo also amplified an earlier order warning that discretionary bonuses should not handed out to employees unless they are legally required.

Other types of monetary awards to employees - such as recruitment and relocation incentives - should also be limited, and only used when central to the agency's mission, Werfel said.

Budgets for inspectors general, whose role is to keep agencies accountable, are also subject to sequestration cuts. How much those posts' funding should be cut is to be determined by agency heads, subject to final approval of the inspectors general, the memo said. (Reporting by Gabriel Debenedetti; editing by Jackie Frank)