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OMB Tells Federal Agencies to Prepare for Potentially Deep Cutbacks

Ingram Publishing/Thinkstock(WASHINGTON) -- It's not just the Pentagon that will go under the knife if automatic spending cuts known as sequestration go through on March 1, barring action by Congress.

The Office of Management and Budget, which assists President Obama in preparing the federal budget, has put federal agencies on alert, warning them that they could be dealt huge job cuts if $85 billion in spending reductions are enacted.

OMB Deputy Director for Management Jeffrey Zients issued a memo to government offices that they need to get ready for the worst, which might come in the form of layoffs, hiring freezes and job furloughs.

Unless the White House and Congress can reach some kind of compromise, the OMB says that federal agencies might suffer budget reductions of up to 10 percent.

The Department of Defense as well as the Department of Agriculture and NASA were pre-warned about the impending cuts last month.

On top of sequestration, there also looms the March 27 expiration date of a stopgap measure to keep funding agencies.  If it isn't renewed, the federal government could start shutting down.

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