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Would furloughs slow recession recovery?
Thursday - 1/31/2013, 2:00am EST
The looming possibility of a 22-day government furlough from April to September has a lot of feds up in arms. Scared too. A 20 percent pay cut will do that.
But lots of politicians, private citizens and communities have a major stake in this childish, but deadly serious, game of political chicken. At worst it could slam the stock market and cut revenue for struggling state and local governments.
Furloughing people one day per week (the plan in Defense and many other agencies) would probably make it impossible for most of them (depending on state laws) to collect unemployment benefits. Some people can live with the loss of one day's pay per week. For others it would be a major hardship and the ripple effect of belt-tightening would be hard on many communities. That's especially true for the metro Washington area, which has weathered the recession better than most places because of the large number of federal workers, military personnel, contractors and others in service to the federal family. It would also have an impact on many smaller towns, in Texas, South Carolina, Alabama, Utah, California, Kentucky, Nebraska, Colorado, Pennsylvania, Maryland, Virginia, Ohio, West Virginia, Illinois and Massachusetts that have large numbers of civilian feds and military personnel at Army, Air Force and Navy bases.
In fact, hundreds of communities in most states would lose valuable tax revenue that would quickly trickle down to all parts of the local economy. In many parts of the country, Defense and the IRS are major, if not primary, local employers that drive the local economic engine.
The situation is even more grim because in past shutdowns — like the 1995-96 event — Congress voted to compensate employees for the time they were furloughed through no fault of their own. This time, given the mood of Congress, a furlough may be just that. It could easily be a true furlough: Time off that will never be reimbursed.
Much of the media has covered the possibility of furloughs and shutdowns as if it were a sports event: Democrats vs. Republicans. White House vs. House GOP. We haven't.
It may be another Washington "game" to some commentators, but this is true hardball for feds.
While it's an exaggeration to say that government workers are in a total panic mode or that work has come to a standstill (come on!), it is true that people are worried and getting more so each day Congress dawdles. Some comments:
- "Anyone care to guess where that money will ultimately be removed from the economy? If you guessed disposable income, retirement contributions (TSP) and charitable contributions (CFC), you would be correct. Who will be hurt as a result of this policy? The local economies, the employees themselves and anyone relying on charity. Expect significantly longer delays in getting anything out of the federal service (because the workload won't decrease) while the rate of retirements will go up (those who were hanging on, waiting to get a better high-three/high-five will give up and go. This assertion ignores the decreased payments in taxes, the impact on leave (sick and annual and people already in a "use-or-lose" status.) Roll in comp time and it's going to get ugly, really fast." — Just Me
- "My wife and I have listened to your reports on Federal News Radio and WTOP for years with great interest. Now we need your help. My wife has been a federal employee for over 25 years in a variety of agencies. Currently, she is a civilian DOD employee at Ft. Meade. She has been told that she and all civilian DOD employees will be furloughed one day a week starting 3/1. That's a 20 percent pay cut.
"We are slashing our household budget and our daughter's college savings plan to the bone. This money is gone from the local economy. You know the number of local civilian DoD employees. Imagine the impact on the local economy.
"Why is this not bigger news? What can we do to spread the word? We have written our senators and representative. Do you have any information to share on possible outcomes?" — Tim H.
So what's the latest?
On yesterday's Your Turn radio show we got both inside- and outside-observer reports. Pat Niehaus, president of the Federal Managers Association, outlined the impact of furloughs and told what her front-line members are doing to prepare for it. Federal Times senior writers Sean Reilly and Stephen Losey looked at furloughs, sequestration from a reporter's perspective. To listen to the show, click here.