Report confirms feds would feel the effects of sequestration

By Charles S. Clark and Kellie Lunney

September 14, 2012

Using language protesting Republican budget tactics, the Office of Management and Budget on Friday released a congressionally mandated report detailing the impact of across-the-board budget cuts looming in January 2013 and provided a set of numbers that would affect nearly every agency and most of the federal workforce.

The 400-page report on sequestration provides what senior administration officials call highly preliminary estimates of the potential effects cuts would have on more than 1,200 budget accounts and “makes clear that sequestration would have a devastating impact on important defense and nondefense programs.”

A senior Obama administration official could not estimate how many job losses or agency furloughs would occur if governmentwide spending cuts are triggered, but said federal employees would feel the effects of sequestration: “Clearly, if a sequester would occur, this would have a significant impact on the federal workforce.”

President Obama has said he will exempt military personnel from the effects of sequestration. Veterans benefits also are protected.

Released a week later than required under the 2012 Sequester Transparency Act that President Obama signed in August, the report lays out percentages and dollar figures on cuts that would kick in on Jan. 2, 2013, under the 2011 Budget Control Act unless Congress lets agencies off the hook by agreeing to a new budget deal.

Sequestration would impose cuts of 9.4 percent in nonexempt defense discretionary funding and 8.2 percent in nonexempt, nondefense discretionary funding. A 2 percent cut would hit Medicare providers, 7.6 percent would affect other nonexempt nondefense mandatory programs, and 10 percent would be applied to nonexempt defense mandatory programs, according to the report. Cuts in the range of 7.6 percent to 8.2 percent would affect everything from the Capitol Police to the Merit Systems Protection Board to the States Interagency Council on Homelessness.

The report designates agencies that are exempt (mostly those with intergovernmental missions) and mentions specific agencies whose missions would be dramatically hampered by sequestration, including those involved with border protection, food safety, emergency response and air travel.

“The administration does not support the across-the-board cuts detailed in this report,” a senior administration official said in a conference call with reporters. “We believe they should never be implemented. Bipartisan majorities in both the House and Senate voted for the threat of sequestration to force Congress to act. It was intended to drive both to compromise. While the effort last year failed, there is still time to act.”

OMB officials called sequestration a “blunt and indiscriminate instrument.” The report noted, “while the Department of Defense would be able to shift funds to ensure warfighting and critical military readiness capabilities were not degraded, sequestration would result in a reduction in readiness of many nondeployed units, delays in investments in new equipment and facilities, cutbacks in equipment repairs, declines in military research and development efforts, and reductions in base services for military families. On the nondefense side, sequestration would undermine investments vital to economic growth; threaten the safety and security of the American people; and cause severe harm to programs that benefit the middle-class, seniors and children.”

Senate Minority Leader Mitch McConnell, R-Ky., said, “the release today of a report detailing across-the-board budget cuts -- including the cuts to national security that the president demanded during last year’s budget negotiations -- highlights the crippling effect these reductions will have on our nation’s security and underscores the urgent need for the president to work with congressional Republicans to replace these destructive cuts. Although the sequestration report lacks detail, it makes glaringly clear that those programs most closely related to combat readiness of the force will be severely cut. And while the report claims that the president has offered ‘balanced and comprehensive deficit reduction’ solutions, his plan was so unserious that it was rejected by every single member of Congress.”

The report calls Republican efforts to work around sequestration irresponsible. “Instead of working to enact a balanced deficit reduction package to avoid the threat of sequestration, some members of Congress are focusing on unbalanced solutions that rely solely on spending cuts or try to alter only part of the sequestration,” it said.

The senior official said last year’s Budget Control Act “was celebrated by Republicans as major victory over the White House, but now that the rubber is hitting the road, they’re backing off,” he said. “The only thing standing in the way is the continued refusal of Congress, more by the Republicans, to accept a balanced package,” he added. “The administration will compromise on spending cuts and entitlement reforms, but there’s no compromise on revenues from them. Without compromise, this report is a window into what the future might be like.”

Because the White House does not want across-the-board cuts to take effect, it instructed agencies in July to continue with normal budgeting, the senior official said. He stressed that the administration had no discretion in designing the across-the-board-cuts and the exempt programs were determined by a legal interpretation.

Asked why the report was late, the official said, “we only had 30 days to perform a very detailed analysis and number and a lot of legal work to produce a thorough report as fast as we could.”

Sequestration offers some protection to federal benefits, but it also could result in layoffs or furloughs at some agencies. For example, federal employees' pensions and health care both are protected under sequestration, but if a worker is laid off as a result of cuts stemming from sequestration, then the government's contributions to retirement and health care would cease.

Also, furloughed workers are not guaranteed back pay; Congress decides whether to give retroactive pay. Massive across-the-board spending cuts also would adversely affect government contractors, many of whom are located in the Washington area.

Federal employee unions said the report makes clear sequestration’s potentially devastating impact. Colleen Kelley, president of the National Treasury Employees Union, said with agencies already struggling with insufficient resources, “people could soon go to the government offices and find longer waits and shorter hours, while out-of-work federal employees will only add to the long unemployment lines and the burden on local communities and state governments.”

J. David Cox, newly installed president of the American Federation of Government Employees, issued a statement saying the report shows the impact on “every government program and service . . . These cuts would mean hiring freezes, furloughs and staffing reductions at the Border Patrol, Bureau of Prisons, Transportation Security Administration and other agencies that keep America safe . . . . As lawmakers work toward a plan to avert sequestration, we urge them to resist calls to exploit the crisis by making cuts to Social Security, Medicare or federal retirement.”

Industry groups were looking for more information. Marion C. Blakey, president and CEO of the Aerospace Industries Association, said, “while OMB said it would issue additional guidance as needed in the months ahead, industry needs additional details to make long-term business decisions today. From complex contractual issues to investment in personnel and training, facilities, materials and R&D, the closer we get to the sequester date without these details, the harder the fall will be.”


By Charles S. Clark and Kellie Lunney

September 14, 2012

http://www.govexec.com/management/2012/09/report-confirms-feds-would-feel-sequestration/58130/