T - 1 Month to Sequester

[Deleted]

What do you think? Is it going to happen? Is it wrong that I would be ok with a few furlough days?

www.nytimes.com/2013/02/01/us/politics/extension-of-debt-limit-clears-congress.html?nl=todaysheadlines&emc=edit_th_20130201&_r=0

WASHINGTON — The Senate gave final approval on Thursday to legislation
suspending the statutory debt ceiling until May, officially turning
Congress’s attention to the next budget showdown: $1 trillion in
across-the-board military and domestic spending cuts set to begin on
March 1.

The 64-to-34 vote ended for now a clash that had threatened the full
faith and credit of the United States government. But the next budget
fight is just four weeks away. House Republican leaders insist that the
across-the-board cuts, known as sequestration, are coming, even as
senators in both parties scramble for short- and long-term remedies.

Senate Democratic leaders hope to present legislation next week at a
party retreat that would mix revenues and spending cuts to replace the
first three months of indiscriminate cuts while longer-term negotiations
continue.

Senator Tom Coburn, Republican of Oklahoma, is assembling his own
proposal to replace the across-the-board cuts with the elimination of
duplicative efforts in the federal government in areas like the
promotion of environmentally friendly construction, science and
technology education, and work force training.

Senator Carl Levin, Democrat of Michigan and chairman of the Armed
Services Committee, has drafted more ambitious legislation to raise
nearly $200 billion for sequester replacement by closing off a variety
of offshore tax shelters, ending preferential tax treatment for many
private equity and hedge fund managers, and taxing the exercise of stock
options more heavily.

“The fiscal situation is grave enough, the threat of sequestration is so
serious in terms of its impact on our domestic priorities and on our
security, that I believe that if we can get this in front of the
Congress, because it will have huge public support, it will pass,” Mr.
Levin said in an interview.

But even the architects of such efforts are pessimistic that they have time to win passage.

“I think sequester’s going to happen,” Mr. Coburn said. “I think people want it to happen.”

Yet the economic recovery remains weak, and unemployment high. This
week, Washington got one of the first signs of how the sequester might
play out in the economy, when government figures showed that the economy
had contracted in the final three months of 2012, largely a result of a
22 percent drop in military spending.

Economists cautioned that they did not expect such a precipitous decline
to continue in the coming quarters. Moreover, the drop came after a
surge in military spending in the third quarter, as offices rushed to
spend money obligated to the 2012 fiscal year.

Still, the automatic cuts have the potential to derail the recovery.
Macroeconomic Advisers, a forecasting firm in St. Louis, estimated that
if the sequester came into full effect starting in March, it would knock
0.7 percentage points from economic growth in 2013, dropping it to 1.9
percent. Economists say hundreds of thousands of jobs could be lost, if
not more.

With half of the sequester hitting military spending, the worst effects
would be felt by the Pentagon and military contractors. Congress already
cut half a trillion dollars from military spending in the 2011 Budget
Control Act, and the sequester would cut a further half-trillion.

Defense companies have been engaged in an extensive behind-the-scenes
effort to sway lawmakers, and they have warned that the cuts might lead
to serious job losses, while also threatening the country’s security.
“We’re sounding a full-throated alarm about this,” said Marion Blakey,
the president of the Aerospace Industries Association, a lobbying group.
“It was never intended to take place. It is terribly bad public policy.
And it would have a very negative effect on our economy.”

Concerns about the sequester cast a shadow over corporate earnings
season in January. Many businesses said they expected Congress to delay
or reduce the cuts, but warned of a bleak outlook if they took full
effect. “While we recognize that both parties are strongly opposed to
allowing sequestration to happen, we remain deeply concerned that
sequestration could occur as the default outcome if negotiations fail,”
Marillyn A. Hewson, the chief executive of Lockheed Martin, told
investors in January. “Sequestration not only puts at risk our defense
industrial base, it also harms military readiness.”

But with just four weeks to go, the search for any replacement for the
across-the-board cuts seems to be stumbling out of the gate.

Senator Barbara Mikulski, Democrat of Maryland and chairwoman of the
Senate Appropriations Committee, said Thursday that she would try to
enlist the White House to help stop her own leadership’s three-month
bill. She wants any legislation to last at least a year. 

“I hope the White House is not colluding with the 90-day reprieve,” she said. “This is like appeals on death row.”

Mr. Levin’s tax bill effectively pits the defense industry against other
heavyweights, especially high-tech companies like Hewlett-Packard,
Microsoft and Facebook, all of which are singled out by the Levin bill
as abusers of the tax code. Dan Stohr, a spokesman for the Aerospace
Industries Association, said military contractors were not going to be
drawn into that fight.

With the price of failure so high, Mr. Levin and Mr. Coburn said this
week that their longstanding quests to cull the tax code of egregious
loopholes and cut overlapping government programs could finally succeed.
Mr. Levin pointed to two cases in particular. Microsoft develops
software in the United States, sells intellectual property rights to
subsidiaries in low-tax jurisdictions offshore, then shifts the bulk of
its profits from product sales to those tax havens by paying its own
subsidiaries royalties. Hewlett-Packard, like many companies, pays no
taxes on overseas profits until they are brought back to the United
States, but it has been able to keep cash flowing home through a series
of tax-free loans from its offshore subsidiaries to its California
headquarters.

In testimony in September to Mr. Levin’s Permanent Subcommittee on
Investigations, Microsoft and Hewlett-Packard executives said they were
following the letter of United States tax law, but also said that the
law was putting their companies at a disadvantage with competitors from
other countries. Mr. Levin conceded that that argument had been
persuasive with colleagues for years, as he sought to tighten tax
loopholes.

In lieu of a deal, Republican senators are drafting legislation at least
to give agencies the flexibility to make the cuts more selectively, Mr.
Coburn said.

“Necessity becomes the mother of invention,” he said. “We’ve got smart
people in these agencies. They will do what’s most important and least
expensive.”

[Deleted]

Feb 1, 2013 11:16:48 GMT -5 @totsintosa said:

Is it wrong that I would be ok with a few furlough days?

expensive.”

Yes!  We're paying 2 rents.  We can't afford to lose ANY income.

[aspentosh]

It'll be interesting. Our lab budget was already cut 26% and I don't think we could afford to lose any more.

[ssmjlm]

I heard that some navy commands are already furloughing 1/day week.

We've been told that they are requesting an exemption for our job series b/c of end of year and de-scoping. Ack not looking forward to those negotiations.

I wouldn't be surprised if there were some furloughs, but I'm not sure it will be across the board.

[ebeth]

I'm not concerned about it. I really don't think it's going to happen. More likely they'll hem and haw until the last possible second though. Or pass some kind of short term fix.

[simpsongal]

Huh, I didn't realize. Our CR goes through the end of March, so that date was sticking in my mind.

March 1st is a Saturday. I could see Congress failing, the sequester "taking effect" but Congress reaching a deal over the weekend.

[lishie]

I'm also in the camp that if my agency needed to furlough, which we shouldn't, I'd volunteer. We can afford for me to take a few unpaid days (and I'd love to be home a little more). I'd rather take them than someone who really needs the money.

The fact that it may come to this though angers me terribly.

[rubytue]

Actually March 1 is a Friday, but it will still probably be a weekend thing. Because the Congress of the past few years takes procrastination to a new level.

I wish we would hear SOMETHING. The same day DOD started releasing threats of furloughs, our head announced an all-hands meeting. we figured it was about the sequester and our planning. Nope. Just a really stupid "look at all your hard work and here is what we are doing this year." Thanks. At least I got a shout-out. Cause, you know, its great when the agency head is calling out your project by name. Great if you succeed, but taking over something that has failed for 20 years isn't much chance of success.

Oh, sorry. I digressed. I just want to know what this means for us. I wouldn't mind furlough as an excuse to take time off. But H has been "furloughed" for quite a bit lately, and its sucking.

[simpsongal]

Feb 1, 2013 11:43:38 GMT -5 rubytue said:

Actually March 1 is a Friday, but it will still probably be a weekend thing. Because the Congress of the past few years takes procrastination to a new level.

Oops, my bad.  My eyes have been really fuzzy lately.  I think I've been staring too intently at my computer for the past few days.

[Deleted]

I just checked and we have a CR through March 27. What is the difference in the dates? I'll admit that I'm not an expert in budget policy. Thanks!

[Deleted]

Feb 1, 2013 11:48:48 GMT -5 @totsintosa said:

I just checked and we have a CR through March 27. What is the difference in the dates? I'll admit that I'm not an expert in budget policy. Thanks!

The CR can't override the sequester from what I understand. 

[Deleted]

So March 1 is the date, regardless of the CR date? Thanks!

[rubytue]

This may be one advantage of working for a small agency. Our budget is so tiny, a 10% reduction is just a couple of contracts and some training TDYs.

But yeah, isn't DOD supposed to take a 30-50% cut or something huge?

[Deleted]

carrots, I really appreciate you sharing. There hasn't been a lot of sharing of contingency plans so it's tough to know what might be coming if the sequester actually occurs.

[ssmjlm]

Carrots, your info is a lot different than mine. But who knows day to day.

We just put out another 2 RPAs.

[Deleted]

Now you guys have crossed into Executive Branch acronyms and lingo that is over my Judicial Branch head.

[ssmjlm]

Feb 1, 2013 12:27:21 GMT -5 carrotsmakemefat said:

Feb 1, 2013 12:19:48 GMT -5 ssmjlm said:

Carrots, your info is a lot different than mine. But who knows day to day.

We just put out another 2 RPAs.

WHAT? Who is approving that? I really want to get into more detail on why this pisses me off, but I can't. Those positions better be mission essential.

I'm stepping away from this post now

I think because my series is trying to get exempted from the furlough.  Because we really can't afford to have any personnel out, they may make us all mission essential.


Tosa-RPA=request for personnel action, meaning we've put out three vacancy announcements in the last month, some just came out this week.

[niq]

Coburn is sort of an odd duck. No one in the leadership of either party has talked much about the sequester. Levin does because he's SACS chair so he cares about it more than most.

Lots of Democrats do want to cut the defense budget. The leadership is a bit more okay with the pre-sequester defense budget but they're still more skeptical than Republican leadership. I'd say it comes down to whether Republicans prefer low taxes or a big defense budget.

[MrsE]

DH & I both work for defense contractors. If sequestration happens, we are screwed. DH's budget was cut by 75% and my workload has increased significantly as we are not backfilling employees who have left my department.

[chia]

I think it's really agency specific, depending on how able the agency is able to adjust to the cut.
I'm pretty much counting on some sort of furlough.