February 11, 2013
Sequestration “is the most unpopular thing in Washington since the Dallas Cowboys,” said Association of American Universities President Hunter Rawlings, speaking at a Monday briefing for a new coalition of 3,500 organizations calling for an immediate end to the threat of automatic spending cuts.
President Obama, Speaker John Boehner and Majority Leader Harry Reid “all hate sequestration, and they created it,” said Rawlings, a professor of the classics who added that he never envisioned himself standing alongside the chief executive officer of a major defense contractor demanding “a balanced approach” to Washington’s budget stalemate.
Also Monday, the American Federation of Government Employees devoted much of its legislative conference to planning to counter the threat of sequestration, which will kick in on March 1 if lawmakers can't agree on an alternative.
The diverse coalition, which sent Congress and President Obama a 72-page letter, is “bringing defense and non-defense communities together for the first time under one big tent,” said Emily Holubowich, executive director of the Coalition for Health Funding and spokesperson for NDD United. “We all rise and fall together, defense and nondefense.” She warned that federal spending would be cut to its lowest levels since the Eisenhower administration and said the threat of sequestration has already prompted layoffs of 46,000 healthcare professionals around the country.
Aerospace Industries Association President and CEO Marion C. Blakey, whose member firms joined the coalition and also sent their own letter to Congress, called sequestration “a poison pill that now threatens to have a toxic effect on national security. It will tank our economy,” she said. Her association used the event at the National Press Building to re-release a controversial eight-month-old study by Prof. Stephen Fuller of George Mason University concluding that sequestration budget cuts would cost 1.05 million jobs from spending reductions at domestic agencies and 1.09 million jobs from Pentagon spending.
“No one can say we weren’t forewarned about the consequences,” Blakey said. “But we’re realistic enough to know that our voice alone won’t end it, and our choruses of voices is slowly gathering steam.” She said Republicans in Congress who oppose what many call a “balanced approach” that includes new revenues are listening, but that an eventual bipartisan compromise will also have to include entitlement reforms.
Wes Bush, chief executive officer and president of Northrop Grumman, implored political leaders to consider the harm from a sequestration in the context of the broader U.S. economic model in which the private sector, the government and nonprofits all play a role. “What is central is the investment by the government in national security and education for innovation,” he said.
“Even without sequestration, the country is slowly backing away from long-term investments that make it the global leader,” Bush said. As currently structured, sequestration takes far too big a chunk out of the 8 percent of gross domestic product represented by discretionary spending, he said. “We have long called for balanced approach” to a solution. “You can’t pull one lever—everything must be on the table. Kicking the can down the road is not free—it’s already having impact.”
Peter McPherson, president of the Association of Public and Land-Grant Universities and a former deputy secretary at the Treasury Department, stressed that a “pennywise and pound-foolish” sequestration would reduce by $10 billion a year federal investment in basic research—“the primary driver of the economy for generations.” Federal funding, which accounts for 60 percent of basic research, he added, helped produce the Internet and the global positioning system and large- scale interoperating circuits. He warned that competitors such as China may step into the breach.
In the long run, Congress must produce a “big deal,” McPherson said, but the immediate problem is only three weeks away.
Rawlings, whose academic and corporate colleagues have formed a Task Force on American Innovation, held up his iPhone and credited many of its components to the past work of such agencies as the National Science Foundation, the National Institutes of Health and the Energy Department. Because of sequestration, “agencies are already holding back,” he said, noting that the University of California just reported a 20 percent drop in research awards.
Across town, AFGE leaders AFGE told some 1,500 gathered union members to prepare for a Capitol Hill rally on Tuesday with three goals, as summarized by national president J. David Cox Sr. He exhorted members to “Stop the sequester now, shove it to the contractors and bargain like all get-out.” The union has been critical of the Obama administration for warning of possible furloughs but proposing no cuts to services contractors.
Throughout the union’s morning legislative conference, AFGE leaders reported on unsatisfying updates from the Office of Management and Budget on planning for sequestration. Locals from around the country are to “challenge the implementation” by keeping an eye out for unfair labor practices and reporting them to the national office, said acting field services leader Peter Winch. If a furlough goes on for more than 22 days, it is a reduction in force, he said. “Don’t volunteer to work without pay, but don’t refuse an order either.”
To press its case for avoiding furloughs by reducing outside contracting, AFGE commissioned a study by Charles Tiefer, a professor at the University of Baltimore Law School who served on the Wartime Contracting Commission reviewing work in Iraq and Afghanistan. At the union’ conference, he released a paper titled “Reducing Spending on Service Contracts in Order to Comply with Sequestration” designed to “demystify the process” in the wake of only vague guidance offered by OMB.
Service contracting accounts for $250 billion in annual spending by the Defense Department, and $100 billion by civilian agencies, but costs 1.8 times as much as federal employees, he said.
Though contractor lawyers insist that contracts are “sacrosanct and ironclad,” Tiefer estimated that 70 percent to 90 percent of the $85 billion mandated under sequestration for fiscal 2013 could be implemented by reopening contracts using four legal tools: Pauses of task orders, partial terminations for convenience; deductive change orders’ and reduction by bilateral modifications.”
Contract officers and Congress resist using such tools, Tiefer added, because of “strong lobbying” and pressure by such “persuasive” groups as the Professional Services Council.
In response to Tiefer’s report, PSC Executive Vice President and Counsel Alan Chvotkin released a statement saying, “Far from being safe or appropriate, obtaining 70 to 90 percent of the sequestration cuts from the hundreds of thousands federal contractor employees would cripple the government and devastate the economy. Indeed, many PSC members have already reported the actions Mr. Tiefer outlined in his 'guidance’ and are feeling the results in the forms of lost revenue and forced layoffs -- not furloughs, but layoffs -- of valued staff.”
Chvotkin added that the AFGE-commissioned report “fails to address the consequences of agencies taking those actions -- including the potential for increasing agency costs under certain scenarios.”
February 11, 2013