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Sequestration Fixes Could Still Hurt Feds? What Are They?

Sequestration carries the threat of widespread furloughs of many federal employees, but the alternatives could amount to a case of pick your poison for those same feds.

Eric Yoder is a staff writer at the Washington Post. He told Chris Dorobek on the DorobekINSIDER program that, “many of the alternatives are the same things that were discussed last year and even earlier during the Super Committee, all of the alternatives would hit feds in their pocket books.”

Retirement Changes

“With the federal government the money is in retirement and health insurance. The main idea that’s been under consideration for several years would be to raise what federal employees have to pay in towards their defined benefits program. At the same time the government contribution would be reduced by an equal amount which means government outlays would be reduced,” said Yoder.

Pay Freezes

“The House has voted many times, as recently as a few weeks ago, to continue to keep salary rates at the same level at least through the end of the year. Through a long chain of events, feds are actually due for a raise in April, unless Congress steps in to stop it, and they are considering doing just that. It’s not much of a raise only .5%, but for employees it’s an important symbolic raise because it would restore what has been the standard practice of the last few years of at least some annual raise being paid,” said Yoder.

Retire Before 62

“Part of the FERS system if people retire before the age of 62, they are not eligible for social security so a payment is made that duplicates what they would have earned under social security until social security actually starts. Many proposals have been kicked around over that for years. Including one that says we will end this for people who are hired after a certain date. There have also been proposals saying that we will end this for anybody not retired by some certain date. This could play out many different ways. One way would hurt current employee, one way wouldn’t,” said Yoder.

Prediction for the Future?

“Sequestration has always been a moving target, but it won’t go away anytime soon. The only thing that would propel Congress to action would be if the country really started to feel the impact, and some of the more visible areas like Veterans Care are exempt from the sequester. With sequestration you are going to see a delayed effect because in many cases you will see nothing happening at least until April or later. So it will take a long time for the effects to build for the average person to say ‘i’ve been counting on this service and the waiting lines are longer and the services is less helpful then it was in the past,'” said Yoder.

Public’s Response?

“The lack of public outcry is scary for feds because this is just step one of the sequester. You have to remember that under the law that created all of this there are similar cuts for the next 9 years. Now whether that will happen or not is speculation, but if it’s not going to happen it will require the same sort of agreement that the leaders have not been able to reach in the last few years,” said Yoder.

Days/Weeks Ahead?

“Even though feds won’t be off the job for awhile, agencies are already cutting back on things like service contracts. For example you say see them close shop early during the day. Or hours would be limited if you call the social security office for example, national parks may not open on-time for the summer season. All around the country you will see the effects at DoD bases. They will be deferring maintenance on ships and hardware that they have to keep up and those things will have to be put on the shelf and that translates to jobs not just for feds but also for the private sector,” said Yoder.

March 27th Deadline?

“The next big deadline is coming up at the end of the month when Congress has to extend the Continuing Resolution. There is a slim chance that they will deal with some of these issues within the context of that bill and possibly give agencies a little more flexibility to move money around so that they don’t feel the same kind of pain it looks like they are going to feel under the sequester,” said Yoder.

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Janina Rey Echols Harrison

I find it amazing that people don’t say, “Hey, we had a surplus a while back. Something was working then, let’s go back to that!”

Scott Kearby

I am sure that the wise, prudent, and hardworking folks in the legislative branch will most certainly pass some comprehensive and well thought-out bill that makes all the problems go away. They are real pros when it comes to writing great bills that make things better, and there are few better money managers!

— nicht!