Managing Under the Specter of Sequestration

A lot of people don’t really believe a budget sequester will happen. The hope is that, similar to government’s near shutdowns in 2011, Congress and the White House will find a way to avert massive across-the-board spending cuts before they take effect in January 2013. But plenty of federal managers and employees are worried there won’t be a Hollywood ending this time, and as of early fall, leaders weren’t providing much guidance on planning for the budget Armageddon.

There’s been a lot of public hand-wringing over potential cuts to government activities ranging from air traffic control to food safety inspection—and the thousands of federal jobs at stake if the budget ax falls. Office of Management and Budget guidance to agencies, however, has been scant and the official line so far has been: Keep doing what you would normally be doing because sequestration probably isn’t going to happen. 

OMB released a congressionally mandated report in September that was heavy on numbers but light on analysis. The only sure thing was the automatic governmentwide cuts would total about $1.2 trillion, be spread evenly from fiscal 2013 through fiscal 2021, and would be divided equally between defense and nondefense spending. The first round of cuts, scheduled to begin on Jan. 2, 2013, would total about $109 billion in fiscal 2013 and would be especially painful because agencies would have only nine months to enact them. 

In response to pressure over how to deal with the looming threat of sequestration, the Labor Department issued a memorandum in July concluding that it was neither necessary nor appropriate for federal contractors to provide pre-sequestration layoff notices to employees, stating that the 1988 Worker Adjustment and Retraining Notification Act doesn’t require such notices because it wasn’t clear a sequester actually would happen, or exactly what impact it would have. OMB reiterated Labor’s advice in September, saying agencies would cover contractors’ liability and litigation costs related to such notices if they follow Labor’s guidelines. “In reaching this conclusion, DOL explained that giving notice in these circumstances would waste states’ resources in undertaking employment assistance activities where none are needed and create unnecessary anxiety and uncertainty for workers,” OMB Controller Danny Werfel and Joseph Jordan, head of the Office of Federal Procurement Policy, wrote to agency financial and procurement officials.

People already are anxious precisely because they aren’t receiving any information, according to federal workers and observers Government Executive talked to about sequestration. As of early October, more than 90 percent of respondents in an informal online Government Executive poll said their agency had not issued any guidance on sequestration; 67 percent expressed concern over being furloughed. Interestingly, 62 percent of poll participants reported they had not asked their boss about sequestration planning.

There’s a little bit of the procrastinator in everyone, but most people find that level of uncertainty pretty stressful, particularly when it relates to their job security. It’s also a difficult environment for managers who want to reassure their employees but find themselves just as much in the dark about the repercussions of sequestration. “Employees are very concerned about it, and I think managers are concerned as well,” says Greg Gilman, an enforcement attorney with the Securities and Exchange Commission in Boston and president of National Treasury Employees Union chapter 293. “I don’t think it’s something SEC management wants to do.” 

No one wants to do it, and no one really wants to talk about how to confront it, either. So, was the Obama administration’s reluctance to discuss planning for sequestration a public relations gambit (ignore it and it will go away), or was everyone really clueless?

“I think figuring out how to do this is far more complicated than people realize,” says Scott Lilly, a senior fellow with expertise in federal budget policy at the Center for American Progress. “And I think it’s something that they are going to have work on right up until the last minute in order to have a sense of a way to do it.” Lilly says to the best of his recollection, there is no precedent for such a large-scale sequestration. 

Senior administration officials have said they cannot estimate the number of job losses or furloughs that could result from the spending cuts. Sequestration likely would lead to widespread furloughs across government, but who would be affected and for how long were unknown in mid-October. It’s unclear how federal managers can effectively manage in such an uncertain environment, Lilly says. “I think the first thing is that members of Congress need to understand the kinds of problems they are creating in agencies and what that is likely to do to critical services,” adds Lilly, who worked on Capitol Hill for 31 years.

Robert Hale, the Defense Department’s budget chief, acknowledged during a Government Executive event this fall that Defense had yet to do detailed planning for a potential sequestration. “We don’t have a specific timetable,” he added, “but I’m mindful that we’re going to have to figure one out fairly soon.” There were some reports of agency managers quietly planning for different scenarios in the event of sequestration—in particular, how to handle furloughs. But it’s difficult to get people to admit to such behind-the-scenes brainstorming sessions in the current political environment. 

So where does that leave federal managers? In uncertain times, it’s better to err on the side of over-communication, says Willow Jacobson, an associate professor of public administration and government at the University of North Carolina- Chapel Hill. 

“Silence is a very scary thing for employees, and what we do is fill in the meaning when we don’t know the meaning,” says Jacobson, adding the stories people conjure in the absence of information often can be worse than the reality. She is cognizant of the conundrum federal managers find themselves in, given the politics of the situation and government culture in general: “They are walking a fine line between what they can share and can’t share.” Employees also should be aware of the tough position their bosses are in, says Jacobson.

Even a congressional deal to avert the cuts, or at least push back the January deadline, wouldn’t solve the problem of uncertainty for the more than 2 million federal employees who find themselves constantly at the mercy of budget brinksmanship. “It’s the enormous price we pay for living in a society that has such a huge ideological divide, and that divide is centered on the role of government,” says Lilly. “Until this country gets its act together, then federal employees will suffer disproportionately.”