With the 2012 Presidential Election now behind us, a host of key issues affecting federal employees nationwide are once again front and center. Following is a post-election primer presenting a snapshot of five key issue areas for Feds during President Obama’s second term.
To watch the President’s acceptance speech, click here.
1) Sequestration & Fiscal Cliff. The U.S. Government is plodding perilously close to falling off the so-called Fiscal Cliff. This disaster would mean draconian automatic spending cuts affecting every federal agency. Moreover, sequestration also includes the real possibility of mandatory furloughs for Feds if the President of the United States (POTUS) and Congress fail to reach a deal – not to mention many other potential calamitous consequences for the fragile U.S. economy and the global economy. But according to the New York Times:
“In language and timing, the leaders of Congress’s two chambers left the unmistakable impression that they want a deal at least large enough to avert the worst economic impacts of a sudden rise in tax rates that would affect virtually every American family, working or not.”
Also see:
Wall Street Journal – “CBO: Fiscal Cliff Could Trigger Recession”
CBS News – “Boehner: We’ll work with Obama to avert fiscal cliff”
Federal Times – “Report downplays effects of sequestration”
2) Pay & Benefits. Perhaps nothing is more near and dear to the pocketbooks and wallets of Feds than their personal pay and benefits. Yet due to the looming U.S. budget deficit and the daunting national debt, the Administration and Congress are eyeing such sensitive issues as:
Another federal pay freeze, more hikes to pension/retirement contributions, additional buyouts and early retirement options…and let’s not forget about the ominous Retirement Tsunami.
GovExec.com reports in its Pay and Benefits column: “The Obama administration and lawmakers from both parties generally favor increasing the amount government workers contribute to their pensions. Federal employee unions, including the American Federation of Government Employees and the National Treasury Employees Union, are poised to do battle to protect retirement benefits and pay as the lame-duck session gets under way and the new Congress convenes in January 2013.”
Also see:
Washington Post – “Federal employees know what to expect with Obama”
Government Executive – “Protecting federal pay and benefits remains top priority for union”
3) Status of Federal Agencies. First, the President and Congress must approve funding for FY 2013 agency appropriations, or at least extend the latest Continuing Resolution temporarily funding the federal government – which is set to expire March 27, 2013.
Other key issues potentially impacting agencies government-wide include: more spending cuts, more stringent funding limits for conferences and travel, streamlining duplicative programs, merging overlapping jurisdictions, and consolidating entire agencies or subcomponents. During the campaign, the President broached the idea of merging similar programs and offices related to commerce and trade via a new Secretary of Business.
Then, there’s the question of how newly appointed Cabinet secretaries and agency heads will lead the federal bureaucracy – and the potential impact on agency priorities, programs, personnel, and employee moral.
Also see:
National Journal – “Who Might Serve in a Second Obama Administration?”
Federal News Radio – “Feds should expect minor tweaks in Obama’s second term”
Washington Post – “Employee groups happy but say threat of cuts remains”
4) Management Agenda. The President’s Management Agenda and related issues will affect every agency to a large extent, in addition to the massive community of federal contractors. The question is whether the President’s re-election provides a mandate to govern? Items of interest include Open Government and increased transparency, pay-for-performance, hiring reform, strategic outsourcing, acquisition and procurement, e-Gov, performance and accountability standards, as well as labor-management relations generally.
Also see:
AP – “With Congress litte changed, and both sides claiming mandates, Obama renews agenda”
Government Executive – “Obama’s victory gives management reformers breathing room”
5) IT Advancements. The adoption of new and cutting edge advancements in information technology – or lack thereof – can help or hinder the popular concept of “doing more with less.” At stake is the growing influence of CIOs, plus specific agency IT budgets and mission critical programs – such as cyber-security, cloud computing and Big Data. Emerging issues include Bring-Your-Own-Device (BYOD), Geographic Information System (GIS), new gov apps, as well as enhancing the use of mobile and digital platforms — such as social media — for more effective customer service and engagement. The White House recently issued a Digital Government Strategy.
According to NextGov.com, “The greatest pressure on federal IT during the second term will be demonstrating that cloud computing, big data analysis and other initiatives can produce the cost savings they promised for government. Some pressure for cost cutting also will come from the fact that technology initiatives begun during Obama’s first years in office are now well under way.”
Also see:
Government Executive – “Technology Hand-Off”
GovLoop – “The Digital Government Strategy Timeline – An Infographic”
NextGov – “Obama win means continued technology focus at the Pentagon”
*** QUESTIONS ***
Which of these key topics matter most to you and your agency?
What other major policy areas are you paying close attention to as a Fed?
DBG
* Note: All views and opinions expressed herein are those of the author only.
IMO Interesting Commentary from Slate’s moneybox blog:
REMINDER: The “Fiscal Cliff” Is Nothing Like a Cliff
Metaphors are dangerous, and nothing illustrates that better than the concept of a “fiscal cliff” and worry about going over it.
A salient fact about non-metaphorical cliffs is that falling over them is generally irreversible. If the cliff is high enough that falling off of it would kill you, then if you fall off you’re going to die and that’s the end of it. The “fiscal cliff” by contrast isn’t like that at all.
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Thanks for sharing your thoughts, Henry. However, I respectfully beg to differ.
I think “fiscal cliff” is an appropriate and effective metaphor because falling off it would surely plunge our economy back into recession, if not worse. Moreover, no one really knows what could happen after that,as it could result in an unprecedented national and global economic crisis. One may well equate going off the fiscal cliff to the death of the U.S. economy, and perhaps the global economy by extension.
Generally, I find that most metaphors serve a good purpose by getting people’s attention who might otherwise NOT be paying attention to a serious or criticaly important issue. It’s often a way to break through the clutter in terms that relate to the average person.
For example, a farmer isolated in the heartland may have no idea what the heck “sequestration” would mean for him, his family and the business of successfully farming the crops. Yet the metaphor of falling off a cliff is something most regular people can visualize and understand. They know it’s bad and harmful. They don’t want to go there, and for good reason — whether it results in serious injury or something worse.
Thus, I would argue that “fiscal cliff” is a good example of an effective metaphor to use in this instance. Remember that metaphors are not meant to be taken literally at face vaule. But they do convey a potent message if used properly depending on the extent of the situation.
I suggest checking out the latest report on the “fiscal cliff” issued by the non-partisan Congressional Budget Office (CBO). There’s also a related news article in the Wall Street Journal, which states:
“The fiscal cliff would drive the U.S. economy back into recession next year and result in a jump in the jobless rate to 9.1% by the end of 2013, a new report from the Congressional Budget Office said…Barring congressional action, federal income, dividend and capital-gains tax rates will increase on Jan. 1., 2013, and the estate tax will revert to a higher rate while applying to smaller estates. Meanwhile $110 billion in cuts to federal spending on defense and other domestic programs will take place as an initial down payment for $1 trillion in cuts that are required through the next decade under last year’s deficit deal.”
If you disagree with the term “fiscal cliff” then how would you suggest communicating such a dire and dismal situation in concise and easily understandable terms that almost everyone could relate to? I don’t think “fiscal hill” — for example — would carry the same sense of urgency. But that’s just my take.
Thanks again, Henry, for sharing your thoughts on this topic. I look forward to your reply.
DBG
Clearly, going over the so called fiscal cliff will be painful, if not in the first week or month, certainly within the year. The same could be said for undergoing chemo therapy. No one in their right mind would endure it unless they were suffering from a deadly cancer which could kill them. Policy makers recognized the cancerous potential of our fiscal imbalances over 40 years ago. Rather than put the nation through any real fiscal pain, they enacted the Budget Impoundment and Control Act, which eliminated the President’s authority to restrict spending and created the CBO along with the current budget process to develop a long term response. Similar crises arose in 1985 which produced the initial sequestration legislation, 1990 when we got the first $1 in immediate tax increases for $3 in eventual spending cuts that were never enacted, and again in 1993 which led to undoing the successful 1986 tax reforms as well as claiming a “peace dividend” which hollowed out our military as well as easily evaded spending caps. In 1999, 2000 & 2001, accounting gimmicks actually succeeded in producing a cash surplus (essentially the govt. set artificially low payment rates for Medicare, driving large numbers of health providers out of business and leading to the so called doc fix problem). Policy makers than fought over tax reform, taking five years to enact four separate bills that still did not include all of what had started as a single proposal. And at the same time began blowing money out the door like water for two wars, increased funding for any agency head who could spell security correctly in budget justifications, a prescription drug bill and ultimately repeated rounds of stimulus. Meanwhile, the fiscal imbalances grew like cancer. The treatment has always been the same: increased spending and/or tax cuts in the short term to ease the pain combined with solemn commitments to eventual long term fiscal restraint which never actually gets enacted. And that is probably what will happen again. After a great deal of posturing between Republicans in the House, Democrats in the Senate and the President, everyone will come together, enact some sort of ineffective millionaires tax, promise to limit discretionary spending next year (or the year after), appoint yet another entitlement reform commission and borrow the money to kick the can further down the road. The fiscal cancer has probably already metastasized beyond cure anyway so there is no real point in enduring the chemo like suffering of the fiscal cliff or other meaningful cures. The financial disease may indeed destroy the nation, but not for at least 20-30 years, by which time the current generation of policy makers will be retired and the Millenials will have one more gift from the boomers.
There is nothing more important than resolving the fiscal cliff (sequestration). All of the other four issues pale in comparison. With good management, we can resolve the other issues, but none of them will get done if we need to deal with 10% cuts in budgets.
TERRY: as usual, you make an excellent point. If sequestration does occur that would certainly pale in comparison to some of the other issues confronting Feds. However, I remain optimistic that our elected leaders in Washington will reach some sort of agreement to avert this fiscal catastrophe – whether it’s kicking the can down the road and/or using accounting gimmicks, as Peter suggests, or something more serious and substantive.
Either way, I believe there’s no way the President and Congress will allow this ticking time bomb to go off. Let’s recall that the Founding Fathers created divided government for good reason. Our political leaders need to stop acting like a bunch of school kids fighting in a sandbox and start behaving like the serious lawmakers we elected to boldly lead America in challenging times through constructive compromise.
PETER: thank you for your always astute and keen comments. Your participation and point of view greatly enhance this discussion and shed light on the historical context of our nation’s budget woes. The depth and breadth of your analysis is impressive.
I would just point out the every Administration uses “accounting gimmicks” to put the best spin on their budget and economic outlook. That’s why we have CBO to counter balance any erroneous or politically influenced data from OMB and Congress. This situation is not confined to any particular political party and never has been.
I especially like your point about the Millennials. However, I still have confidence that our generation we will make some substantial progress in slashing the U.S. budget deficit and chipping away at national debt prior to passing along America’s troubling financial balance sheets to the younger generations. If not, then shame on us.
HENRY: Thanks again for sharing the Slate article. Like I always say, diverse views only add value to these discussions. By considering viewpoints other than our own, we expand our scope of knowledge and understanding on a macro level, rather than being stuck in a micro bubble.
DBG
David — I would need to double check but as I recall, most of the accounting gimmicks used leading up to the surpluses actually came from Congress, not the administration. Staff at the time used to say there were three parties in Congress, Republicans, Democrats and Appropriators. The appropriators at the time knew just how to define, redifine and move accounts to get under the spending caps without actually reducing spending. The administration never actually objected to any of these gimmicks and produced a few of their own but in general it was the Appropriations Committees that generated most of the creativity.
But it was the 1997 Medicare Reform act that took things to a whole new level. Every health care provider and health policy analyst who looked at the proposed payment levels said they were too low for providers to stay in business but Congress enacted the legislation anyway in hopes providers would find more efficient ways to operate. Payments were cut, reducing expenditures at about the same time the stock market bubble was generating increased capital gains tax revenue and, wow, we had a cash surplus. We never had a true surplus and when Congress was backed into enacting annual “Doc Fix” bills (part of the fiscal cliff now), any savings from the 1997 legislation completely evaporated.
Thanks, Peter, for shedding more historical light on this topic.
Personally, I think there’s enough blame to go around. Our budget/debt/deficit mess has not just been confined to the U.S. Congress, aka the appropriators. As you note, “The administration never actually objected…” — which, in my view, makes the various Presidents from both parties leading accomplices to the current dire situation.
I would note that I worked at OMB as a Schedule C political appointee during the Clinton-Gore Administration. This was before I became a career civil servant and registered Independent. Despite what some folks may personally think about the former President, he does deserve major credit for turning a large inherited U.S. budget deficit into a budget surplus in the political wink of an eye.
This historical feat during his first term seems even more miraculous today considering all the political dysfunction that has consumed Washington. As Bill Clinton has said repeatedly during the 2012 campaign – and as he and his OMB directors at the time (Leon Panetta and Alice Rivlin) knew full well — it all comes down to one simple thing: honest arithmetic.
It’s not about budget or accounting gimmicks, “cooking the books” or intellectual dishonesty to score fleeting political points. Rather, it is merely plain math, as well as the willingness and political fortitude to compromise with the other party for the best interest of America and future generations.
It’s a crying shame that President Clinton’s predecessors in the White House – and future Congresses – have lost sight of this ideal and replaced it with intransigence, for which we are all the losers.
Wall Street Journal — BREAKING NEWS — article and video: Obama, Boehner Open to Budget Bargain
EXCERPTS
“Mr. Obama, in his first statement on the fiscal cliff since winning re-election Tuesday, said any deal must include tax increases on ‘the wealthy.’ He also called on the House to immediately pass a Senate bill that would extend the Bush-era tax cuts on household income under $200,000 a year for individuals and below $250,000 for couples. Despite his urging for a bipartisan deal, Mr. Obama intends to force Republicans to defend their opposition to Democrats’ bill in the Senate that extends those cuts. He will continue to press his case in coming weeks, administration officials said.
“If we’re serious about reducing the deficit, we have to combine spending cuts with revenue, and that means asking the wealthiest Americans to pay a little more in taxes,” Mr. Obama said in the East Room of the White House. “I’m not wedded to every detail of my plan. I’m open to compromise,” he added. “But I refuse to accept any approach that isn’t balanced.…And on Tuesday night, we found out that the majority of Americans agree with my approach.”
Mr. Obama also signaled that a deal would include changes to entitlement programs such as Medicare and Medicaid, but he didn’t mention Social Security. The president didn’t specifically mention raising tax rates on households earning more than $250,000 a year, as he did throughout his re-election campaign. Mr. Obama’s remarks came after Mr. Boehner said Friday he is open to a deal that raises tax revenue but not rates, leaving open the possibility for a compromise that includes limiting or eliminating tax deductions or other tax breaks for those families.
White House press secretary Jay Carney, responding to questions after the president spoke, said Mr. Obama would veto any legislation that extends the Bush-era tax cuts for the top 2% of American income earners. At the same time, he didn’t rule out extending the rates if they were linked to raising revenue from wealthy people by eliminating deductions.
Mr. Boehner responded to the president’s statement by accepting the invitation to the White House meeting. He reiterated his opposition to the Senate bill that would extend middle-income rates while allowing top rates to rise. He said he maintained a measure of hope that a wide-ranging deal was possible.”
END
THE FISCAL CLIFF – A VIEW FROM THE TOP
ANOTHER Opinion From CNN Fortune blog
The fiscal cliff may be overblown
November 9, 2012: 10:32 AM ET
The U.S. isn’t headed off the fiscal cliff or any other make-believe economic chasms, at least not anytime soon. Congress set this time bomb in motion and it will disarm it before it explodes.
By Cyrus Sanati
Go ahead. Jump.
FORTUNE — The markets have taken a beating since President Obama trounced Mitt Romney in Tuesday’s election. The Dow is down 3% in the last two trading sessions and looks to be headed further south on Friday. While it is true that the markets historically take a dive after an incumbent president wins reelection, this latest drop has many on Wall Street on edge. Forget the weak corporate earnings, the freak hurricane that hit the East Coast and renewed troubles in Europe – no, this is all because of one thing: the looming fiscal cliff. Or that is what we are to believe.
Indeed, the fiscal cliff is about as real of a problem as the nation’s burgeoning national debt – it’s theoretically bad, but it isn’t bad enough for Washington to risk making the short term any more economically unpleasant than it has to be. After all, there will be elections for the House in just two short years, so neither side wants to go into that election cycle trying to defend why the government instituted growth killing spending cuts while allowing taxes to shoot up to address some arbitrary debt load that investors continue to fund for next to nothing.
Thursday, the nonpartisan Congressional Budget Office released its latest short and long-term economic forecasts for the country. Given all the hubbub over the fiscal cliff, the government bean counters so kindly presented two contrasting views of the economy – one in which the government drives off the fiscal cliff, which it must under current law, and one in which the government turns and just continues to drive on the edge of fiscal irresponsibility.
If the government gets caught up in partisan gridlock, all the Bush era tax cuts end on January 2nd – including those on capital gains and dividends (hence why the equity markets are in such a tizzy this week). Since the Congressional “super committee” failed to lay out at least $1 trillion in spending cuts over ten years as required under the Budget Control Act passed last summer, there will automatically be $600 billion in cuts to discretionary and mandatory spending and another $600 billion in defense-related spending (this is called the “sequester”). Together, the increase in taxes and the decrease in spending is what make up the dreaded fiscal cliff.
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Henry — Good article and it makes a valid point. With interests rates this low, it is difficult to argue against continued borrowing. So Congress and the President will, as I said, posture for awhile, and then kick the can down the road.
David – you and I seem to have slightly different memories of the 90s. I think we sould agree to disagree. I believe we both accept the broader premise that national policy makers since the late 60s have consistently embraced short term feel good policies which continue to make long term challenges much more difficult. Starting with Johnson’s reelection, Democrats have held the White House for 20 years, Republicans for 28. Democrats controlled both Houses of Congress for 28 years, Republicans controlled both Houses for 10 years and the parties have split control for 10. Democrats controlled both houses of Congress plus the White House for 12 years, Republicans for 4. Contrary to popular perception, there actually has been a great deal of bipartisan cooperation during this period. The most cynical, short sighted, politically motivated, long term counterproductive ideas of both parties have generally formed the foundation of these agreements. Everyone involved, particularly voters, are more than willing to bargain away their long term principles for short term gain.
Thank you again, Henry and Peter, for sharing your valuable and insightful perspectives. Your points are well made and well taken. As they saying goes, there are at least three sides to every story.
I think it’s also important for U.S. policymakers to step back and ponder the impact of the current U.S. economic situation in terms of ramifications on the global economy — especially our friends in Europe, where the EuroZone may soon be teetering on the brink of collapse again, to the world economy’s collective dismay.
Let’s just hope the U.S. markets can settle themselves down and rebound before the EuroZone crisis go from bad to worse — to potentially disastrous — as Greece, Spain, Italy and other countries risk economic collapse, which could create an even bigger and more dangerous Domino Effect for the world if the EuroZone bites the dust. The economic consequences would be unprecedented.
See The Guardian (UK), Reuters and similar news articles.
David – We certainly agree on Europe. Right now the 3 most critical public policy decisions which could impact our future are all being made outside the United States. 1. Will the 27 members of the EU plus remaining European holdouts coalesce into a more well defined “United States of Europe” or recede back to the fragmented continent which existed prior to WWII? 2. Will Chinese leaders be able to bring the same level of prosperity to their inner provinces as has been achieved along the coast or will they also face fragmentation, interprovincial rivalry and possibly even an east-west civil war? 3. Will Islamic culture modernize in ways that fully accept diverse religious views and alternative lifestyles in pluralistic societies or turn inward as semi-authoritarian theocratic republics? Resolution of these three questions will have more impact on the interconnected global economy and our long term prosperity than any decisions made in Washington for the next decade.
Superb points and questions, Peter! My answers are:
1) NO — but, hopefully, I’m wrong. I don’t think the EU will fragment to the extent of WWII days. However, the EU may lose some current members with collapsing economies, and thus need to reinvent itself.
2) NO. China is too vast in terms of the population’s size and provincial diversity, as well as general geography, to have the current wealth spread or trickle down without the collapse of the current communist regime — perhaps through another Tianamen Square mass popular uprising (albeit, this time successful with help from military defectors and with international support).
3) NO. There will not be any wave of Western modernization throughout the Mid-East region — at least not during our lifetime. Of course, Israel is the lone exception.
From Edweek Blog: Yes the slant is toward the Education portion of the budget but IMO should have some interest to perhaps help explain the impact of the Fiscal Cliff
Fiscal Cliff Cheat Sheet: 10 Frequently Asked Questions
Almost as soon as President Barack Obama was re-elected, the coming fiscal cliff took center stage. Lawmakers and the Obama administration are supposed to solve the problem in a planned “lame-duck” session of Congress, which starts today.
That means we can expect to hear the words “entitlements”, “revenue”, “loopholes”, and “sequestration” a whole lot for the next couple months. What does it all mean for you, as a teacher/principal/superintendent/policy person?
Here’s a breakdown of frequently asked questions:
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How can I get more information? There are a lot of great sources out there. Harkin’s staff put together this analysis (PDF File) of what the cuts would mean. The American Association of School Administrators has a sequestration tool kit. Edweek coverage here and here.
Thanks, Henry, for sharing another enlightening article about the Fiscal Cliff.
All this talk reminds of the movie Rocky III when challenger Clubber Lang (played by “Mr. T”) was asked about his prediction for the upcoming fight against Rocky —
“Prediction…PAIN,” Lang remarked with a grimacing stareinto the camera.
You can watch the video clips at http://www.youtube.com/watch?v=lSPNQ82Sq4E
Meanwhile, here’s an Associated Press (AP) article that sheds more light on the specific types of pain the Fiscal Cliff would entail: http://bigstory.ap.org/article/most-us-wont-be-able-escape-fiscal-cliff
According to the AP: “Everyone who pays income tax — and some who don’t —will feel it.
So will doctors who accept Medicare, people who get unemployment aid, defense contractors, air traffic controllers, national park rangers and companies that do research and development.
The package of tax increases and spending cuts known as the “fiscal cliff” takes effect in January unless Congress passes a budget deal by then. The economy would be hit so hard that it would likely sink into recession in the first half of 2013, economists say.
And no matter who you are, it will be all but impossible to avoid the pain.
Middle income families would have to pay an average of about $2,000 more next year, the nonpartisan Tax Policy Center has calculated.
Up to 3.4 million jobs would be lost, the Congressional Budget Office estimates. The unemployment rate would reach 9.1 percent from the current 7.9 percent. Stocks could plunge. The nonpartisan CBO estimates the total cost of the cliff in 2013 at $671 billion.
Collectively, the tax increases would be the steepest to hit Americans in 60 years when measured as a percentage of the economy.”
GovExec.com reports, “Cuts in federal pay and benefits are among deficit reduction possibilities“:
“Lawmakers have a range of options for cutting spending and increasing revenues to rein in the government’s current trillion-dollar deficit, CBO said. And those choices could include increasing health care costs for military retirees, decreasing the government’s contribution to the Federal Employees Health Benefits Program, capping increases in military basic pay and reducing the annual across-the-board pay raise for feds. CBO estimated those changes could reduce the deficit by a total of $38 billion in 2020. Of the options affecting feds included in the report, limiting the TRICARE benefit for military retirees and their dependents would save the most money, at approximately $14 billion in 2020, according to the nonpartisan CBO.
The estimated savings from those changes and from adjustments to other mandatory and discretionary programs governmentwide is a drop in the bucket, however, compared to the real source of Uncle Sam’s burgeoning budget problem: the escalating cost of entitlement programs like Medicare, Medicaid and Social Security.”
Federal Times reports: “Experts say pay reform appears unlikely soon”
“Despite statements from the Obama administration that it is looking at reforming the six-decade-old General Schedule pay system for federal employees, outside experts see little chance of big changes to the system soon. Critics charge the GS system is antiquated, is overly rigid for many of today’s agencies, fails to reflect market pay levels and is incapable of encouraging and rewarding high performance. Supporters argue the system is perceived by many employees as more equitable and less prone to discrimination than alternative performance-based pay systems. Republican and Democratic administrations have called for reforms to the GS system, but intense opposition to significant changes from federal unions and their allies in Congress has blunted reform efforts in the past.”