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US: OMB Sets Out Plans For Large-Scale Staff Cuts And Govt Reorganisation - BBG

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Bloomberg reporting that the White House Office of Management and Budget has directed federal government agencies "to drastically reduce the size of the US government" laying out a two-phase reform framework. The first phase would cover cuts to staffing, with proposals due March 13. The second phase would cover organisational overhaul, with proposals due April 14. The memo states that mass layoffs would occur in June - three months after first-phase plans are submitted to the OMB. 

  • Notably, the deadline for the first-phase proposals comes a day before Congress must legislate a spending package to avert a government shutdown. Polymarket notes there is a 50% implied probability of a shutdown in 2025, with the elevated risk reflecting Democrats' public statements hinting that they could use the shutdown as leverage to oppose the OMB's and Elon Musk's hardline federal government reform programme. The memo is likely to fortify the Democrat position and nudge Congress closer to a shutdown.
  • Bloomberg notes: "The memo didn’t provide any specific targets for job cuts, but said the “starting point” for the plans should be workers deemed non-essential during a government shutdown." That definition could be applied to roughly 40% of federal workers traditionally furloughed during a government shutdown.
  • OMB Director Russell Vought said in the memo: “The federal government is costly, inefficient, and deeply in debt. At the same time, it is not producing results for the American public. The American people registered their verdict on the bloated, corrupt federal bureaucracy... by voting for President Trump...”
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Bloomberg reporting that the White House Office of Management and Budget has directed federal government agencies "to drastically reduce the size of the US government" laying out a two-phase reform framework. The first phase would cover cuts to staffing, with proposals due March 13. The second phase would cover organisational overhaul, with proposals due April 14. The memo states that mass layoffs would occur in June - three months after first-phase plans are submitted to the OMB. 

  • Notably, the deadline for the first-phase proposals comes a day before Congress must legislate a spending package to avert a government shutdown. Polymarket notes there is a 50% implied probability of a shutdown in 2025, with the elevated risk reflecting Democrats' public statements hinting that they could use the shutdown as leverage to oppose the OMB's and Elon Musk's hardline federal government reform programme. The memo is likely to fortify the Democrat position and nudge Congress closer to a shutdown.
  • Bloomberg notes: "The memo didn’t provide any specific targets for job cuts, but said the “starting point” for the plans should be workers deemed non-essential during a government shutdown." That definition could be applied to roughly 40% of federal workers traditionally furloughed during a government shutdown.
  • OMB Director Russell Vought said in the memo: “The federal government is costly, inefficient, and deeply in debt. At the same time, it is not producing results for the American public. The American people registered their verdict on the bloated, corrupt federal bureaucracy... by voting for President Trump...”