Federal Workers Spared from Cuts, For Now

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By on January 2, 2013 in Current Events, Pay & Benefits with 12 Comments

With the fiscal cliff deal passed in Congress this week, federal employees who were bracing for furloughs have been let off of the hook for now. However, the agreement only covers the next two months, opening the door for possible furloughs unless sequestration and spending are addressed soon.

The agreement set aside $24 billion to prevent automatic spending cuts that were scheduled to kick in this week that could have led to furloughs or RIFs. The new deadline for sequestration is now set for early March unless Congress comes up with another agreement prior to that time.

Agencies had been planning to give furlough notices to federal employees this week had no agreement been reached. DoD put plans to notify as many as 800,000 employees on hold for now, however, a Pentagon spokesman said furloughs would be even harder to implement in March because of how the agency’s fiscal calendar works. Since the fiscal year ends in October, the agency would have even less time to implement mandatory budget cuts, potentially putting even more workers at risk.

Two key problems with the potential to impact federal workers still remain unaddressed.

One is the threat of sequestration which will reduce agency funding by over $1 trillion over the next decade, creating the possibility that agencies will be forced to make cuts to stay on budget, potentially leading to furloughs, RIF’s, hiring freezes, or other negative impacts for federal workers.

A second is the debt ceiling – the government is continuing to run up against its borrowing limit, so unless the debt ceiling is raised or spending is reduced, this could potentially lead to furloughs for the federal workforce. The National Federation of Federal Employees described the situation this way:

Were Congress not to approve the essential increase in the nation’s borrowing limit, the government would be forced to operate on the amount of money it takes in through taxes, which represents roughly 60% of expenditures. This means that Congress would have to prioritize its spending to pay past-due bills it already incurred with less than 2/3rd’s of the necessary funding. In brief, this means federal employees across government would see furloughs, particularly at agencies where the workforce constitutes a large portion of the budget.

Federal employee unions called the agreement reached in Congress for the fiscal cliff a “bad deal” for federal workers since these problems still remain unaddressed.

William R. Dougan, National President of the National Federation of Federal Employees, said, “The most important federal workforce issue of our generation – sequestration – continues to hang over the head of federal employees throughout government. Furthermore, the failure to address the nation’s borrowing limit will likely lead to another prolonged political standoff, leaving federal workers uncertain of whether they will have a job to come back to for a third time in two years.”

NTEU President Colleen M. Kelley said, “Congress can still take action to avoid the devastating impact of the indiscriminate cuts and I urge lawmakers to do so. Federal employees have just ended a very difficult year in which they faced potential government shutdowns and constant attacks on their pay and benefits, and a pay freeze extending more than two years.”

Despite these challenges, the fiscal cliff agreement has left the 0.5% pay increase set to take effect in March intact, although the House did pass a measure to block the pay increase, however it is unlikely that it will get through the Senate.

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.