What Happens If We Fall Off the Fiscal Cliff?

Ah this “Fiscal Cliff” looming before us! It threatens economic communities, worldwide yet our legislators still find themselves at a stalemate because of campaign promises. So what should we expect in 2013, if we take this dive?

Although agencies don’t intend to start employee furloughs on or immediately after January 2nd, don’t think this option won’t be exercised, and not to far in the very near future! According to a December 20th email from the Office of Management and Budget (OMB), “Agencies will have to consider furloughs and other personnel actions if they are forced to operate on tight budgets throughout the rest of the fiscal year as a result of sequestration.”

GovExec reporter, Kellie Lumney, says that “automatic, governmentwide cuts will total about $1.2 trillion, spread evenly from fiscal 2013 through fiscal 2021, and …. divided equally between defense and nondefense spending … sequestration would impose cuts of 9.4 percent in nonexempt defense discretionary funding and 8.2 percent in nonexempt, nondefense discretionary funding.” Even still, “The White House has exempted the entire Veterans Affairs Department from sequestration, in addition to some other programs and benefits.”

In a memo issued by OMB earlier this year, their guidance included a minimum in agency spending cuts such as:

  • 10% reduction on Information Technology;
  • Consolidation of Programs and elimination of overlapping functions between Agencies;
  • An overall 5% cut in spending; and
  • Cuts to lower-priority mission-related programs and investments in areas that are “critical to economic growth and job creation (to include eduction, innovation, infrastructure, and research and development”.

What does this guidance mean to your Agency and how will this impact your employer and ultimately, your employment?

According to OMB, it means that agencies first will have to examine other cost-cutting measures but, should these measures fail, agencies will have resort to furloughs or layoffs. Even still, if furloughs prove necessary, you’ll still receive ample warning if you’re an affected employee; you’ll receive the requisite advance notice before a furlough or other personnel action occurs. In addition, scheduled personnel actions (e.g., WGI’s, promotions, reassignments, transfers, etc.) would also be cancelled and all of this will continue should a deficit reduction agreement not be reached that restores agency funding.

Do you know where your employer fits into this scenerio should we take that dive over the Fiscal Cliff?

Related articles:

To RIF or Not to RIF: What’s Over the Edge of This Fiscal Cliff?

Scared of Sequestration? Get to Work!

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Martha Austin

Fiscal Cliff or no, times in government service are changing. With budgets getting tighter, benefits are going away and some of the previous “perks” of government service are fading out. As we approach this new era, the responsibility now falls to each of us, as individuals, to take care of ourselves. Meaning, choose the job that is just SO DARN MUCH FUN that we would happily do it for free. Think of your job just like your clothing…it must meet 3 criteria…Does it fit? Does it flatter? Do you LOVE IT? If the answer to any of those is “no.” It is time to engineer the fun back into your service. For more tips, visit http://www.consciousleadershipblueprint.com.

Raymond Clark

Good advice Martha! As I hope many of you have, I’ve been preparing for this since last year. Squirelling away money in case furlough comes. I expect it will given what I’ve seen. I do watch Congress and politics for a living. It will happen. So, prepare. Furlough certainly is preferable to RIFs. RIFs will still happen, but it will be a lot less with furloughs.

Peter Sperry

I’ve noticed uncounted economists who couldn’t find their way from Rayburn to Canon making confident predictions about how Congress will react to going over the cliff. Meanwhile, actual Hill staff have been very silent. My guess is we go over, stay over, gridlock continues and all of this becomes the major issue for the 2014 midterms. Treasury has added the debt ceiling to the pile as of Monday and the current Continuing Resolution expires in 90 days.

There is an old Chinese curse: “May you live in interesting times”. We are about to.

Martha Austin

Raymond, thanks for the tip that my website is blocked by DoD. I’ll get my web guy to check into that for me because I suspect that there is something in there that is conflicting with their server. Thanks again…