I don’t know about you but when I hear gnarly economic words like sequestration and furloughs I want to duck and cover. When politicans and political writers are using them, I return to my instinct because will what those folks yammer about that actually affect me?
Turns out, proposed furloughs from the sequester could affect me very soon. My husband Alex works for the Federal government in the Department of Defense, one of the many agencies that are staring down 22 days of furlough over the next 6 months. This amounts to a 20% pay cut over that time of our only permanent income.
So I face my fears of complicated economy stuff and search for understanding. Sequestration was a manufactured economic solution to budgetary problems eighteen months ago. Congress was unwilling to raise the debt ceiling without offsetting spending cuts, so they put off the problem by saying “if we don’t find a solution between now and then, we’ll make up the shortfall with across the board cuts on March 1, 2013.”
Well, March 1 is Friday. And guess who hasn’t found an answer to the sequester?
Should furloughs happen, our family will be one of hundreds of thousands that will go without some pay. Fortunately, we are financially stable enough that we don’t expect to go into debt or have to drastically change our lifestyle. But we’ll spend less, save less, and give less to charity. We’ll have less taxable income for 2013. The effect of thousands of families doing the same will affect our national economy, an economy that is finally showing signs of renewal after the 2008 recession.
The potential damage doesn’t stop with individuals. My husband’s job is to help the government buy electronic components from businesses small and large. If he works 20% less, these companies will have 20% less access to audits, information, and production orders that will keep their business objectives afloat. Furloughs will hurt an astounding number of sub-contractors from 10-employee family-run operations to multi-billion-dollar corporations who supply the Department of Defense with goods and services.
Realistically, the average citizen still might not notice these potential effects. Where is everyone going to see it? Transportation and food.
The TSA, FDA and FAA are all slated to experience cuts requiring furloughs of workers. These security screeners, air-traffic controllers and meat inspectors are required by law to uphold a certain level of critical oversight. If they are working 20% less, the oversight will be 20% slower or 20% weaker. No one wants 20% less security, so the likelihood becomes slowdowns. The result will be significantly increased wait times at airport security checkpoints, delayed or cancelled flights and a hike in the cost of meat products with potential shortages also a possibility.
I hate to be alarmist, but all of these potential results of furloughs add up to a potential dip back into a recession or at least slowing of the recession recovery. Many professional economists agree with my assessment.
In sum, furloughs stand to hurt individuals who work for the government, inhibit small and large businesses who subcontract with the government, delay any person who travels and eats in America, and slow down the US economy as a whole.
What can be done? Congress can make the whole thing go away with the wave of their legislative wand but that’s what got us into this mess in the first place. Putting off real budget discussions is never a good financial move.
What I want to see is a compromise to address budget issues while targeting cuts so that the impact on American society is lessened. The solution could even (gasp!) include raising taxes on persons and entities earning big profits while the middle class suffers. Proposals have been made from the left and the right but our political leaders are too concerned with losing face or constituents to come to an agreement.
But’s it’s time to stop politicizing the very real fate of the American economy. Tell your elected representatives to compromise now on a solution.