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State of the Union: Budget freeze is cut for some agencies

President Obama announced a three-year partial spending freeze Wednesday night in his State of the Union address, but also promised that many agencies and departments will see their budgets continue to grow.

The exact details of the freeze won't be public until Feb. 1, when Obama releases his fiscal 2011 budget proposal. But Obama announced the broad outlines of the plan, which will exempt the majority of discretionary spending from the freeze.

Rob Nabors, deputy director of the Office of Management and Budget, said earlier this week that the freeze won't affect the Defense, State, Homeland Security and Veterans Affairs departments. The freeze covers $447 billion in federal spending — about one-sixth of the budget.

And within the affected departments, the freeze will not be uniform. Some departments will continue to grow: Obama singled out the Education Department, which will see a budget increase over the next few years. That means other agencies will see their budgets shrink.

"It's not an across-the-board cut," Nabors said. "We have honored the president's commitment and gone line-by-line through the budget, trying to find those programs that aren't working, aren't achieving their mission."

In a conference call Wednesday afternoon with reporters, White House press secretary Robert Gibbs acknowledged that the freeze — expected to save $250 billion over the next 10 years — will not make a major impact in the federal deficit, which ran to $1.2 trillion last year.

"We have a deficit in Washington not just in dollars but in trust," Gibbs said.

Obama's speech did not include many other initiatives that directly affect federal employees — new pay plans, for example, or talk of staffing levels. The president announced plans for a salary freeze for roughly 3,000 political appointees; he also plans to freeze bonuses for roughly 1,200 appointees.

Experts say the spending freeze is unlikely to have a significant impact on resources at most agencies. But John Palguta, vice president for policy at the nonprofit Partnership for Public Service, said it could lead to some cuts in staffing and training.

"There's a psychological impact," he said. "As soon as you tell federal agencies their budgets are frozen, they go into worst-case planning mode. They stop paying for training. They say, ‘Let's see how many jobs we can get away with not filling.' ''

Palguta said federal managers should also be concerned about one big unknown: pay increases. Agencies with frozen budgets might still have to accommodate federal pay raises over the next three years — which means they'll have to find cuts in other areas.

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President Obama delivers his first State of the Union address Jan. 27 at the Capitol. Vice President Biden is seated behind Obama.

President Obama delivers his first State of the Union address Jan. 27 at the Capitol. Vice President Biden is seated behind Obama. (MANDEL NGAN / AGENCE FRANCE-PRESSE)

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