How the Sequester Will Affect Consumers and Business
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The Fiscal Times
February 8, 2013

During the budget standoff between President Bill Clinton and congressional Republican leaders back in 1995 and 1996, widespread layoffs of federal workers played havoc with the federal bureaucracy and posed serious hardship and inconvenience for millions of taxpayers across the country. Furloughs of as many as 800,000 federal employees temporarily shut down large swaths of the federal bureaucracy and delivered a serious blow to the economy.

The most visible signs of that government crisis were the closing  of the Washington Monument and 368 National Park sites around the country. But the impact of the furloughs was far more serious than that:

Health and welfare services for military veterans were curtailed; the Centers for Disease Control and Prevention stopped disease surveillance; new clinical research patients were not accepted at the National Institutes of Health;  toxic waste clean-up work at 609 sites was halted; the U.S. Border Patrol put off hiring 400 new agents, and 200,000 applications for U.S. passports went unanswered.

“There was a miscalculation politically that government would be shut down, employees would be furloughed,” and life would go on, recalled John Palguta, vice president for policy at  the Partnership for Government Service and a former federal personnel executive. “But there were a whole plethora of things where people really did care about the services that government provided beyond basic emergency and national defense sort of things. And finally Congress pretty much decided that this was not a winning proposition.”

As President Obama and Republican congressional leaders clash this week over whether to allow  $85 billion of across the board cuts in defense and domestic spending to take hold beginning  March 1, government workers and taxpayers across the country are again facing the specter of widespread government furloughs that could once again disrupt the economy and the lives of millions of Americans. 

For sure, there is disagreement over whether massive temporary layoffs and tough government belt-tightening is a good or bad thing in the midst of a shaky economic recovery. After months of fretting over the national security and economic implications of tough, across the board spending cuts and layoffs, many Republicans came to the conclusion that these automatic cuts or sequestration may be the best answer for enforcing fiscal constraint and bringing the trillion dollar annual deficit down.

If the answer turns out to be at least a month or two of deep, automatic cuts in defense and domestic spending, then widespread furloughs will be the government’s main response.  In effect, a furlough is the federal government’s personnel weapon of choice in coping with major budget crises like the looming sequestration or even rarer government shutdowns.

An administrative furlough is a carefully planned strategy for weathering fiscal crises by temporarily placing targeted workers on unpaid leave after issuing 30-day notices. A furlough is considered to be an alternative to layoff, according to management experts.  When an employer furloughs  employees, it requires them to work fewer hours or to take a certain amount of unpaid time off.  Generally, the management theory is to have the majority of employees share some hardship as opposed to a few employees losing their jobs completely.
Unlike a reduction in force or RIF, federal officials can pick and choose who to furlough– and for how long. And they don’t have to be concerned about honoring seniority or military service, or having to provide fired workers with severance pay or other benefits that add to the government’s overall costs. 

“A reduction in force is not a useful management tool as a cost-saving mechanism in the short term,” Palguta said. “A federal manager may have some great young employees who are doing five times the work of anybody else, but they’re the newest employees, they have the least tenure, they’re not veterans. So you have to separate them.”

Acting White House Budget Director Jeffrey Zients warned in a Jan. 4 memorandum that federal agencies this time will likely need to furlough “hundreds of thousands of employees” while reducing services – such as food inspections, air travel safety, prison security, border patrol and other “mission-critical” activities.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.