Timothy Burke has a nice post on the problems of trying to make small budget changes in order to finesse a revenue contraction--the famed "wasteful spending" that politicians and CEOs are always promising to cut. These small changes are, in some ways, harder to implement than simply slashing a few big line items. There are free rider problems, and difficulties establishing a cost-benefit ratio.
Burke talks a lot about transparency, but he doesn't make quite explicit the related problem of monitoring costs. If you cut a department, it's easy to monitor--you no longer have that department. But if everyone's supposed to spend 1% less on everything, it requires a phenomenal amount of administrative overhead to design those changes, and then keep track of them. Transparency can help by effectively outsourcing some of the monitoring to the community. But you still need someone to, say, formulate a lightbulb policy, hear complaints about the lightbulb policy, and ensure that the lightbulb policy is being enforced.
An extreme example of this is a temp job I once worked where the company, which seemed to be on a fairly rapid downward spiral, had cut costs by rationing office supplies. The office manager had decreed that everyone got only one pen at a time. In order to get another pen from supplies, you had to bring her the empty one in trade.