Agencies set up plans to manage cuts if Congress, Obama fail to reach deficit deal

December 7, 2012

Federal agencies are sharpening their plans to carry out drastic, automatic spending cuts starting Jan. 2 if the Obama administration and Congress cannot agree on a deficit reduction strategy in the coming days.

Some agencies envision furloughs for federal workers, while others are mapping out a course to slow hiring and outside contracting and put programs on hold if the across-the-board reductions known as a sequester kick in. For millions of Americans, the “fiscal cliff” would mean immediate tax hikes, but for federal employees it also signals big adjustments as their agencies absorb deep spending cuts — set by law at $1 trillion over 10 years.

The public would quickly feel the effects, from weaker drug interdiction efforts to less energy assistance for low-income families.

The Office of Management and Budget asked civilian and defense agencies this week for detailed what-if lists of what they would cut. But many managers have been quietly preparing worst-case plans for months, having grown painfully familiar with uncertainty after a near-government shutdown last year and a slew of stopgap budgets.

The federal courts, for example, would close some district courts one day a week, impose furloughs of up to four weeks and reduce the hours of security guards. The system would face a $555 million loss next year under an 8.2 percent cut to domestic agencies.

“We’ve all developed this master plan that nobody hopes we’ll have to enact,” said David Sellers, spokesman for the administrative office of the federal courts. A judicial committee began meeting shortly after the Budget Control Act was enacted in 2011 to decide where to cut, balancing furloughs with delayed trials.

“They’ve taken it very seriously and methodically,” Sellers said.

The Nuclear Regulatory Commission assured employees in November that no furloughs or layoffs are planned. Instead, to save money, outside contracts would be stretched out or stopped. The National Park Service has slowed some hiring for the tourist season, a strategy that advocates and former park officials said would have to continue in January.

The Defense Department is likely to impose an immediate hiring freeze on its civilian workforce, said a spokeswoman, Army Lt. Col. Elizabeth Robbins. Some furlough notices, rather than layoffs, would begin within a few weeks, she said.

And public employee unions are dusting off their manuals on when to call for bargaining with management over unpaid furloughs, which would probably be forced on thousands of employees.

“Nobody knows what’s going to happen with the fiscal cliff,” said Danette Woo, special park uses coordinator at the Mojave National Preserve in San Bernardino County, Calif. “What happens is totally out of our control, but it affects our ability to get our job done.”

Park managers have prepared a “budget constraint” plan that calls for layoffs of seasonal employees and program cuts, Woo said. Like other agencies, the Park Service in recent months has slowed hiring, travel and training.

At the NRC, “the agency has certainly worked under the assumption that sequestration is a very real possibility,” spokesman Scott Burnell said.

A sequester was made real in a 394-page report the White House provided to Congress in September, listing more than 1,200 agencies and programs that would lose 8.2 percent (domestic) and 9.4 percent (military) of their budgets. About $2.5 billion would be excised from the National Institutes of Health and $555 million from nutrition-aid programs for low-income women, infants and children, for example.

Administration officials called this week’s notice “technical” planning given that agencies are living under a temporary budget funded at last year’s levels. They reiterated the White House’s optimism that Democrats and Republicans will reach a deal.

“This action should not be read . . . as a change in the administration’s commitment to reach an agreement and avoid sequestration,” said Jay Carney, the White House press secretary. The budget office “is simply ensuring that the administration is prepared” to order the spending cuts.

Under the 2011 law, the federal budget would shrink $108 billion starting in January and continue on that scale — divided between civilian and defense agencies.

Economists warn that the cuts could push the country back into recession.

Managers say they have learned from the spending and tax fights that left them lurching from one stopgap budget to the next in the past two years — and a near shutdown of the government in 2011.

Until this week, agencies had no formal word from the budget office beyond a two-page memo in July. It instructed them to “continue normal spending and operations since more than five months remain for Congress to act.”

Lt. Gen. Jeffrey W. Talley, chief of the Army Reserve, reflected the this-isn’t-really-going-to-
happen strategy when he told reporters in November, “I’m not . . . worrying about sequestration . . . because [Defense] Secretary [Leon E.] Panetta has told the departments, ‘Do not plan for it.’ ”

But nervous employees say they are in the dark about what might happen, and some are downright cynical.

“They cry wolf every time,” said Mike Granger, a Navy computer programmer at the Patuxent River Naval Air Station. “It always ends up being resolved. So I just ignore it.”

The sequester dates to the Gramm-Rudman-Hollings law, passed during the Reagan administration to force a balanced budget as the federal debt ballooned.

Five of these automatic cuts were triggered from 1986 to 1990. Four were automatically rescinded or substantially reduced by a budget agreement or later law. Only the first, in 1986, resulted in $11.7 billion in cuts.

Today, federal employees and contractors find themselves confronting the many what-ifs and gaming out the possibilities.

One line of thinking is optimistic: Congress will agree to tax increases and targeted spending cuts before its Christmas recess, and there will be no sequester. Or there will be, but with only some cuts. Or, if there is no deal by then, there will be soon thereafter. Another act of Congress would be required to undo the trigger.

“There’s just a lot of waiting and monitoring,” said Gary Somerset, spokesman for the Government Printing Office, where a task force has produced a list of cuts.

Administration officials point out that a sequester would not look like a government shutdown, which resulted in 1995 and 1996 from failed budget talks and came close to happening again last year.

Federal employees would still go to work — at least in the beginning. The government would not cease to function. Furloughs would be weeks, if not months, down the road, because the cuts could be delayed until later in the fiscal year. A sequester requires reductions to take effect across the board, but it does not say they must start in the first month or two.

Still, budget experts note that January is three months into the fiscal year. That means the cuts must be compressed into nine months, which equates to reductions of 10 or 11 percent.

As the deadline nears, logistical issues loom. Managers face wrenching decisions about which employees they would furlough. A furlough of more than 30 calendar days, or 22 discontinuous work days, is considered a reduction in force. That would require the government to pay severance and allow employees to cash out their unused sick leave and vacation. It also becomes a mandatory subject of bargaining to determine who goes first.

For rank-and-file employees, uncertainty and a lack of communication from managers is doing its own damage.

“We have persistently asked the agency, ‘What are the plans? Can you tell us the plans?’ ” said Carolyn Federoff, a Boston-based attorney for the Department of Housing and Urban Development and an official with the American Federation of Government Employees.

“They say, ‘Don’t worry about this, this is not going to be a problem,’ ” Federoff said. “Truthfully, we have to be concerned.”

Steve Vogel and Alice Crites contributed to this report.

Lisa Rein covers the federal workforce and issues that concern the management of government.
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