Yes this is very kind of them. A preemptive strike of 5% to shut up at least the wishy-washy critics.
HOWEVER, for a few years now, and forever into the foreseeable future, we've been and we are still on course to borrow and spend 40% more than we take in as taxes and fees.
So it is nice that the WH expects department heads to cut 5% and make plans for cutting 10%. That still leaves 30-35% more to go, which is not achievable without eliminating entire useless departments and agencies, of which we have way too many, plus making revisions in pension, Social Security and Medicare / Medicaid payouts, such as means testing, eliminating double-dipping, etc.
And don't forget to implement severe regulatory reforms to seriously reduce administrative and compliance costs both in the public and private sector; tort reform, such as loser pays, to greatly reduce malpractice and other professional liability insurance costs; and tax reform, such as a simple retail sales tax to replace all taxes and fees; to eliminate social engineering via the tax code, and further reduce the burden on both producers and consumers, including compliance and collection costs.
The budgetary / fiscal formula is very simple.
1. Make the worst case assumptions, not the best case assumptions -- the economy will NOT improve, unemployment will NOT decrease, tax receipts will NOT increase. Also, Congress will NOT authorize raising the debt limit, the Fed will NOT print more money out of thin air, we will NOT be able to service more debt anyway.
2. Adjust federal outlays accordingly.
3. Reduce the tax rates, declare a payroll tax moratorium, whatever, to get the economy going again. If initially the revenues fall, again adjust federal outlays accordingly, combined with limited borrowing under the existing debt ceiling.
4. When things DO improve, use the surplus to PAY DOWN THE DEBT.
5. After you've paid off the debt, and you are still running a surplus, then build up an emergency reserve.
6. if you are still running a surplus, then issue tax rebates and bonus checks to the welfare recipients. Whatever.
7. if you are still running a surplus, reduce the tax rates further. Watch the economy boom like a booster rocket.
Do these things, assuming you want to do what's right for the country.
Do the opposite, or just continue on the present course, if you want to overload and destroy it.
This is not a pipe dream. It is simple economics. Steps 1-3 have been tried and proven in the administrations of Harding and Coolidge, Truman, Kennedy, Reagan, and to a limited extent even under Clinton and Bush 43. The counter-examples, the spectacular failures and the needlessly extended suffering they caused are also in the history books, in the administrations of Wilson, Hoover and FDR, Johnson, Carter, Bush 43 and now most definitely and most dangerously, Obama. The lesson could not be clearer. Maybe this time we can expand the implementation of the plan to include steps 4-7 also. I won't hold my breath...