Tax deal done, sequestration delayed

January 2, 2013

Both chambers of Congress approved a fiscal-cliff deal to avert tax hikes on all except the wealthiest Americans, but their plan postponed decisions about spending cuts that would deeply affect the federal workforce.

The legislation, which President Obama supports but had not signed as of Tuesday night, would delay across-the-board budget reductions known as sequestration for two months, setting up likely fights in Congress over the federal debt ceiling over the same period. 

The fiscal-cliff deal would offset half the cost of a delayed sequestration with cuts to discretionary spending split evenly between defense and non-defense programs. The other half would come by way of new revenue raised through voluntary transfers of traditional IRAs to Roth IRAs. 

Federal labor-union leaders criticized the plan, largely because of the expected cuts to agency funding that would pay for the sequester delay.

“These cuts will impact federal agencies and their ability to provide services to the American public including food and drug safety, border security, nuclear regulation, and much more,” said National Treasury Employees Union president Colleen M. Kelley  in a statement Tuesday. 

“The proposed fiscal cliff solution is a bad deal for federal employees,” said National Federation of Federal Employees president William R. Dougan on Tuesday. “The most important federal workforce issue of our generation – sequestration – continues to hang over the head of federal employees throughout government.”

The AFGE on Tuesday called on the Office of Management and Budget to reduce spending on salaries for top executives for federal contractors before looking at unpaid furloughs or other cuts to agency programs.  

The fiscal-cliff deal would also re-impose a pay freeze on members of Congress through 2013. Obama signed an order lifting the hold earlier this week. 

For more Federal Eye, visit PostPolitics and The Fed Page.

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Josh Hicks covers Maryland politics and government. He previously anchored the Post’s Federal Eye blog, focusing on federal accountability and workforce issues.
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