WILL CONGRESS TERMINATE FEDERAL SEQUESTRATION?

         

It is clear to me that sequestration and furloughs should end immediately for several reasons. 

1.     The FY 2013 deficit will be much lower than projected.  The April federal budget numbers are in and the federal revenue collected in April 2013 was $407B, which was a substantial increase of 28% compared to April 2012.  As a result, the revised deficit for 2013 should be about $200B less than the original forecast.  Since sequestration was projected to save $85B, it appears that tax collections this year have more than made up the required savings of sequestration. 

Below is a table of federal revenue and expenses for Fiscal Year (FY) 2013 from October, 2012 through April, 2013 in billions of dollars:

	FY 2012	FY 2013	$ Change	% Change
Revenue	1,383	1,603	220	15.9%
Expenses	2,103	2,092	(11)	-0.5%
Deficit	(720)	(489)	231	-32.1%

 

2.     Government furloughs will affect service to the public and could cause security risks.  We saw the impacts that temporary furloughs of Air Traffic Controllers had on air travel.  Meanwhile, many military leaders are concerned that sequestration will limit military training exercises and reduce military effectiveness.

 

3.     Furloughs could affect the national economy and GDP with hundreds of thousands of civilians facing a cut in pay.  In addition, some local economies that are closely tied to government spending could be severely impacted by furloughs.   

4.     Many federal government agencies have completely curtailed training, which I believe will have long-term impacts on government efficiency.  As a former government official, I have seen first-hand the benefits of training on an employee’s effectiveness, morale, and dedication to government service.  Conversely, I have seen negative impacts when training is eliminated.  In an ever-changing world, untrained employees will fall behind the technical and marketable skills required for an effective workforce.  Some agencies already have problems with huge backlogs and some are using 20^th century processes.

What about FY 2014?  Well, the stock market is at an all-time high which should drive additional tax revenues upward.  As investors sell stocks at large gains or receive dividends in 2013, incomes and federal taxes will grow considerably.  Meanwhile, the federal government is certainly headed for another Continuing Resolution (CR).  In addition, the FY 2014 CR could be longer than normal when you consider that President’s Obama’s budget was delivered to Congress two months later than required and the House and the Senate have a $91B difference in the spending gap.  Congress has rarely appropriated federal budgets by September 30^th under normal conditions and FY 2013 and FY 2014 are far from normal.