OMB to Congress: Sequestration impact 'real,' but furloughs not immediate

Thursday - 2/14/2013, 5:50pm EST

"In Depth" with Francis Rose

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Obama administration officials are painting a bleak picture of how federal agencies would fare under sequestration, the automatic budget cuts slated to go into effect in two weeks.

However, Danny Werfel, controller of the Office of Management and Budget, told the Senate Appropriations Committee that furloughs of federal civilian employees would not be immediate if the sequestration deadline comes.

"The furloughs, themselves, would probably happen along a continuum — not exactly March 1," Werfel said. "But, there will be impacts on March 1, including employee uncertainty [and] spending reductions as well."

The committee heard testimony from several Obama administration officials about the consequences of the cuts.

The Defense Department, for instance, said it would have to furlough civilian employees for up to 22 working days over six months, while 15,000 air traffic controllers would be laid off for more than two weeks. There would be the equivalent of 5,000 fewer border patrol agents and 1,000 fewer FBI agents, according to the secretaries of Homeland Security, Housing and Urban Development, and Education.

But even if the cuts go into effect at the beginning of the month, agencies will still be finalizing negotiations with federal-employee unions, Werfel said, and furlough notices would be sent out sometime later. Generally, agencies are required to give employees 30 days' notice of furloughs.

Werfel: Many negative impacts

During the hearing, Sen. Barbara Mikulski (D-Md.), the committee chair, sought to demystify exactly how the cuts would be implemented — and when.

"Do all the lights go out in federal buildings?" Mikulski asked. "Do furloughs trigger? So we tell the NIH researcher, the welder in the shipyard, the person managing the weather satellite, the border patrol guard: Don't show up every Monday now until Congress acts?"

"It will be multidimensional in its negative impacts," Werfel said.

While furlough planning and negotiations with unions are currently underway, that will intensify if an actual sequestration order is issued, Werfel said. "Then it becomes law, and that becomes an important, symbolic moment."

Federal contractors will also begin to learn how their businesses will be affected, Werfel said — including whether contracts will be modified or terminated, altogether. "They'll start getting an understanding of where our agencies won't be investing in contracts," he said.

Ashton Carter, the deputy defense secretary, said the cost of doing business with contractors would actually increase if sequestration hits.

"So, at the very time we're trying to be parsimonious with the taxpayer's dollar — that's what this whole hearing is about — we're wasting it by forcing our industry to behave in an economically inefficient way," he told the committee.

Senator demands specifics

Mikulski seemed unsatisfied with the vagaries of Werfel's response and demanded more specifics.

"It's complicated," Werfel said, adding that some aspects of government operations would more immediately feel the impacts of sequestration.

In any case, on March 1, the government will likely still be in the process of notifying employees how sequestration will affect them, Werfel said.

"It's different than a government shutdown," Werfel said. During traditional shutdowns, agencies are barred from incurring further spending obligations, so federal buildings do, in fact, close.

"But I do not think it would be prudent at all to assume that because the lights don't shut out across the government on March 1 that we can go across that precipice and then pull back later," Werfel said. "I think it becomes extraordinarily problematic and serious — some of these economic consequences — once we hit March 1. Because then it's real."

(The Associated Press contributed to this report)

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