Is a Sequester Tipping Point Coming?

Sequestration may cancel some July 4 celebrations. Sequestration may cancel some July 4 celebrations. Mary Altaffer/AP file photo

When $85 billion in broad spending cuts went into effect in March the world didn't end. Kids weren't kicked out of school en masse, hundreds of thousands weren't laid off, the economy didn't tank. Sequestration was overhyped and the deluge never came. But it may begin to pour this summer.

The across-the-board reductions may gain more visibility this summer largely as big defense cuts go into effect. Starting in early July, the Defense Department will begin 11-day furloughs for hundreds of thousands of its civilian employees nationwide, and the local reports are rolling in.

In Wyoming, more than 400 people will be affected, according to The Billings Gazette. In Montana, more than 500 at Malmstrom Air Force Base will see furloughs, according to The Great Falls Tribune. And nearly five times as many will be affected in Minnesota, according to The Minneapolis StarTribune.

Starting July 1, [Air Reserve electrician Dustin] Hawkins will be among more than 2,400 federal Department of Defense employees in Minnesota forced to work a reduced, four-day week for several months. Those furloughs will be spread across 63 sites statewide, but Duluth's 148th Fighter Wing, Camp Ripley in Little Falls and St. Paul's 133rd Airlift Wing — the units with the highest concentration of federal employees — face the brunt of the cutbacks.

Some federal furloughs have already begun, but the onslaught of Defense Department furloughs—roughly 680,000 civilian employees in total—will take a more noticeable toll. Under the heading "it's just the beginning," Bank of America economists wrote in a recent analyst note that the effects on government-worker income seem to be coming.

We expect aggregate government-worker income to decline in May given that furloughs started in late May. The first day of government wide furloughs was on May 24, when roughly 115,000 federal workers, or 5% of the total federal work force, stayed home without pay. However, with the majority of the furloughs not kicking in until the beginning of July, including the Pentagon's 680,000 furloughs beginning July 8, the real income shock will not show up until the July personal income and outlay report on Aug. 30.

Other economists have said that the furloughs will begin to affect growth this quarter. And the effects of sequestration won't be manifested in furloughs alone. Even nongovernment employees will feel the effects as July Fourth celebrations are canceled in several states.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download

When you download a report, your information may be shared with the underwriters of that document.