Furloughs vs. buyouts

In the news biz, the ability to walk and chew gum is a real plus.

You try to do several things at once. Be current (and ahead of the competition if possible), be relevant and be right.

If the story has “legs” you stick with it, but not to the point of stretching things. Or boring readers. Or making a pit bull out of a Chihuahua.

Over the past couple of months, the question for federal beat reporters is how often you can use the F-word without turning people off.


That’s F as in furlough. And since you are facing a possible 20 percent pay cut, once more (at least) into the breach.

If you run a company (or federal agency) and you must save money, fast, what are your options? Do you:

  • Encourage long-time employees to take regular and/or early retirement and give them a $25,000 adieu buyout to sweeten the parting, or
  • Cut everybody’s salary 20 percent for the next seven months by furloughing them one day a week from March through the end of this fiscal year, which ends Oct. 1

While the validity (or stupidity) of furloughs is debatable, the math isn’t. Cutting a multibillion dollar payroll by one-fifth saves a lot of money. A lot more than paying people to leave, and then going on the retirement rolls for life. Furloughs are in the forecast unless Congress and the White House reach agreement on spending/revenue priorities.

Politicians have postured so much — hyping then downplaying then again expanding the impact of furloughs — it is hard to know what’s happening and what will happen if the unthinkable — sequestration, which they designed and approved — actually takes place. Nobody seems to know the likely full outcome. (Will the stock market crash? Will we plunge back into recession? Will people lose their houses or take vacations this summer?) The only known quantity is that Republicans will blame Democrats and Democrats will blame Republicans for the mess. Oh, and take credit for the furloughs and sequestration if any good comes out of it. You may think it is February 2013 but to most on Capitol Hill and in the White House, we are fast approaching Election Day 2014.

There have been a small number of buyouts in recent years at the Internal Revenue Service, the Government Accountability Office and the departments of Defense, Education and Agriculture.

The U.S. Postal Service — which is trying to eliminate 38 of every 100 jobs — has been the buyout king. But its payments have been lower than those in other agencies, and some of the buyouts are paid over a two-year period. We’ve received lots of emails from workers who say they would happily pull the rip cord if offered a buyout. Example:

“Isn’t it really time for buyouts given the circumstances we now face? Any news on that front? Also, I have not heard anything specific from OPM regarding the “phased retirement” implementation. … Seems like implementation could also soften the impact of the proposed furloughs. Any news on that front?” — Jim of the IRS

As to buyouts, the problem is timing. Buyouts are most cost-efficient in the first few months of the fiscal year. In most cases, we’ve passed that tipping point.

As for phased retirements, that will be one of the topics we take up today when Federal Times editor Steve Watkins and senior writer Sean Reilly join me on our Your Turn radio show. They’ll also give us an update on sequestration and the likelihood of furloughs.

Listen if you can (1500 AM or online), and if you have questions email them to me at mcausey@federalnewsradio.com or call in during the show at (202) 465-3080. The show will be archived here.


Compiled by Jack Moore

The correct term to describe something that is diagonally across from another object is “catercorner.”

Americans (first in the South, go figure) began saying “catty-corner” in the 1880s. Over the years, the term has also morphed into “kitty-corner.”

(Source: Mental Floss)


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