2012 IT spending poised to survive aggressive cuts

IT spending is alive and well in fiscal 2012 budget proposals and forecasts, despite talks about deep cuts and canceled programs, an Input expert said March 10.

Deniece Peterson, manager of industry analysis at Input, said IT companies shouldn't panic about the coming federal spending cuts, even though the Obama administration and Congress each have proposed large decreases in overall spending. IT funding is insulated from the cuts because of its importance to agency operations. It also helps agencies save money by streamlining work and improving output, she said during a webinar hosted by the market research firm about the fiscal 2012 budget proposal.

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Peterson said her slogan for 2012 IT spending was “IT: Still Kickin’.”

President Barack Obama requested $77.1 billion in IT spending for fiscal 2012, down from $79.5 billion requested for fiscal 2011. Congress has yet to pass a 2011 budget.

There's an ongoing debate on Capitol Hill and with the administration over fiscal 2011 funding and cuts, tied also to the national debt crisis. Those debates are overshadowing the president’s budget proposal. Peterson said Republicans in Congress still will point to the president’s proposal as being light on reductions to the deficit. As a result, fiscal conservatives' cuts in fiscal 2011 and 2012 spending translate into aggressive, short-term actions.

The Government Accountability Office offered some ideas on places to cut in a recent report. GAO said the government could save billions of dollars a year by ending duplicative programs or those that overlap in their work. The report identifies 34 areas of potential duplication and fragmentation, such as job training and domestic food assistance, and 47 other areas where officials could reap savings or increase revenues, in areas such as federal contracting policies.

Those programs would be the low-hanging fruit of deficit reduction, Peterson said. On the other hand, joint programs or interagency collaboration may keep a program from meeting its end.

House Republicans have taken an approach of cutting programs, rather than setting caps on spending. Peterson suggested one scenario could be that the Senate agrees to additional cuts that may differ from the House’s proposal and effectively change the focus of the debate from how much money to cut to what programs to cut.

Looking at the year ahead, the outcome of the fiscal 2011 spending debate will set the tone for fiscal 2012, which, she said, presents similar deficit issues.