Congress returns to packed budget agenda, tight deadlines

Congress has much to do in very little time. Legislators return to session this week with a few short months to reach a budget resolution for the new fiscal year starting Oct. 1 and agree on how to avoid the automatic spending cuts of $1.2 trillion over the next decade that will be triggered Jan. 2, 2013, under the Budget Control Act debt limit deal.

On the budget resolution, the House has passed a fiscal 2013 budget plan proposed by Budget Committee Chairman Paul Ryan (R-Wis.) that would freeze federal employees’ pay through 2015, increase retirement contributions and cut the federal workforce by 10 percent through attrition. The Senate is unlikely to take up the resolution, however.

The likely scenario is more gridlock and more short-term spending measures until a new Congress takes over, according to interviews conducted by Federal News Radio with budget analysts and federal employee organizations.

“I think people underestimate the extent of work that the Congress is putting off every single day,” said Steve Bell, senior director of economic policy at the Bipartisan Policy Institute.

Between the budget resolution, appropriation bills and the debt ceiling deal, Congress has about three years worth of work “if it’s done right,” Bell added. The deadline is even tighter considering election season will put off any big decisions before November. Bell said he is skeptical of how much will be accomplished after the election in the lame-duck Congress.


“Certainly if the sequester goes into effect, all this happy talk that people have about it being turned off very quickly — by the new President, whomever is elected, and by the new Congress, whoever has control of the House and Senate — I think it’s just that. It’s just happy talk,” Bell said.

“I think people underestimate the extent of work that the Congress is putting off every single day.”

— Steve Bell, Bipartisan Policy Center

Beth Moten, legislative director of the American Federation of Government Employees, said the question of sequestration is still “very much up in the air.” The election will determine the “sort of mood members of Congress are in when they come back from that, whether they’re in a mood to work out a compromise or whether they have the big fight,” Moten said.

Bell described the challenge as a “human nature problem.”

“This isn’t a mechanical problem or an arithmetic problem,” he said. “This is real people with real emotions after really, really tough elections.”

One possibility is that Congress allows the sequester to go into effect Jan. 2, and then the new Congress takes up legislation to cancel sequestration early in 2013 “because you wouldn’t feel [sequestration] until the middle of the year,” said Julie Tagen, legislative director for the National Active and Retired Federal Employees Association, citing conversations she has had with legislators.

Robert Tobias, a professor in the Department of Public Administration and Policy at American University, said this scenario is a possibility. “It’s always an option for Congress to kick the can down the road,” he said. “That’s what they’ve been doing for several years now.”

What sequestration actually means for agencies is also unclear.

If the cuts do go into effect, the Office of Management and Budget will direct agencies to start planning for the cuts. Agencies “may base these planning numbers on appropriations, and look at that versus the full sequestration number,” Tagen said.

Tobias said workforce cuts would be inevitable at most agencies. The timing of the cuts at the beginning of January would come after one fiscal year has already passed. Tobias said, “By the time [the agencies] would be able to conduct a reduction in force, another [fiscal] quarter would have passed.” That means agencies would have to implement even more furloughs or reductions than they otherwise would have to do due to timing within the fiscal year.

Feds still targets for spending cuts, offsets

Federal employees’ pay and benefits have been targeted in both stand-alone legislation and as provisions in larger bills to offset costs.

“In some way, shape or form, I think the risk of something about pay or retirement or workforce reduction is viable for them [lawmakers targeting federal pay and benefits] to attach to anything they see moving. They sure do not seem to think that it has to be relevant to federal employees,” said Colleen Kelley, president of the National Treasury Employees Union.

“It’s a level of hostility and mean-spiritedness toward federal employees and federal employees’ unions that is unprecedented.”

— Beth Moten, AFGE

Compared with the Ryan budget, President Obama’s fiscal 2013 budget proposal ends the two-year federal pay freeze but increases feds’ retirement contributions by 1.2 percent phased in over three years.

A pay raise in 2013 is no guarantee, however. “Is it going to be even the pitiful 0.5 percent proposed in President Obama’s budget or is it going to be another freeze?” Moten said. “That will have to be determined by the appropriators.”

Proposed changes to federal pay and benefits show up in other bills as well. In February, Congress extended the payroll tax cut in a deal that increased future feds’ retirement contributions.

The overhaul of the highway bill (H.R.7) would have increased contributions by 1.5 percent over three years and changed the formula to calculate annuities from the highest three years of salary to the highest five years. Also, the contribution for these new employees would be 4 percent. However, these provisions were stalled last month as Congress passed a short-term bill to keep surface transportation programs funded for the next three months.

Legislators with many federal employee constituents are trying to defend feds’ benefits. Rep. Chris Van Hollen (D-Md.), the ranking member of the House Budget Committee, told Federal News Radio in February that the continued attacks on federal employees would have a negative impact on recruitment. Cutbacks on the workforce would also be felt on services, he said.

Federal unions and organizations have repeatedly made the argument in recent months that feds already made their sacrifice to the tune of $60 billion in savings from the two-year pay freeze and now another $15 billion via the payroll tax cut extension.

Moten predicted the attacks on feds would only continue. “The last year and a half has been unlike anything I’ve seen in the last 25 years of doing this,” she said. “It’s a level of hostility and mean- spiritedness toward federal employees and federal employees’ unions that is unprecedented.”

Preparing for the unknown

Without a tangible indication of what will happen with their budgets, agency managers must assume that the funding they have now is as good as it’s going to get.

“There’s a great deal of uncertainty, but I think there’s one thing that is certain – the budgets of federal agencies will at best be flat and probably be lower in 2013 than they were in 2012,” Tobias said.

“Federal leaders ought to be thinking about doing less with less.”

— Robert Tobias, American University

Some members of Congress assume federal employees aren’t working at their full capacity, “that there’s more productivity that can be squeezed out of the existing workforce,” Tobias said. “My belief is federal employees, federal agencies, for the most part, are behaving in a very efficient and effective way.”

Instead of doing more with less, Tobias said agency managers need to prepare to do less with less and prioritize which programs and initiatives to de-emphasize.

For example, the IRS has said the combination of an increasing workload with a smaller staff will harm services to the public. The agency said it is doing less audits, seeing more math errors and taking more time to process large refunds.

Tobias said managers should be doing what the IRS is — telling the public what is at stake should Congress further cut agency budgets.

“I would think agency leaders ought to be transparent about those decisions. … I think they should be telling the American public what the consequences are of the decisions that Congress makes, rather than trying to pretend that the cuts don’t make a difference in the services provided to the American taxpayers,” Tobias said.


Chart: Comparing 2013 budget proposals

Special Report: Managing Morale

Full 2013 budget coverage