U.S. agencies prepare for looming fiscal cliff

WASHINGTON — Federal agencies are sharpening their plans for forced spending cuts starting Jan. 2 if the Obama administration and Congress cannot agree on a deficit reduction strategy in the coming days.

Some agencies envision furloughs for federal workers, while others are mapping out how to slow hiring and outside contracting and put programs on hold if the across-the-board reductions known as a sequester kick in, affecting millions of Americans.

With 25 days before $1 trillion in cuts over 10 years are set to start, the White House sent word this week to civilian and defense agencies to prepare for the worst to happen.

But the White House may be leading from behind. For months, some managers have been quietly preparing worst-case plans, having grown painfully familiar with budget uncertainty after a near-government shutdown last year and numerous stopgap budgets.

From the federal courts to the National Park Service, agencies have been sweating the logistics on how to shrink their day-to-day operations.

The court system, which faces a $555 million loss next year under an 8.2 percent cut mandated for civilian agencies, is preparing to close some district courts one day a week, impose employee furloughs of up to four weeks and reduce the hours of security officers who guard courthouses.

“We’ve all developed this master plan that nobody hopes we’ll have to enact,” said David Sellers, spokesman for the administrative office of the federal courts. A committee of court officials from across the country has met for a year to decide where the system would absorb the cuts, balancing furloughs with delayed trials.

“They’ve taken it very seriously and methodically,” Sellers said.

The Nuclear Regulatory Commission assured employees in November that no furloughs or layoffs are planned. Instead, to save money, outside contracts would be stretched out or stopped. The National Park Service has slowed some hiring for the tourist season, a strategy that advocates and former park officials said would have to continue in January.

The Defense Department is likely to impose an immediate hiring freeze on its civilian workforce, said a spokeswoman, Army Lt. Col. Elizabeth Robbins. Furloughs, rather than layoffs, would begin within a few weeks, she said.

And unions that represent federal workers are dusting off their manuals on when to call for bargaining with management over unpaid furloughs, which would probably be forced on thousands of employees.

“Nobody knows what’s going to happen with the fiscal cliff,” said Danette Woo, special park uses coordinator at the Mojave National Preserve in San Bernardino County, Calif. “What happens is totally out of our control, but it affects our ability to get our job done.”

Park managers have prepared a “budget constraint” plan that calls for layoffs of seasonal employees and program cuts, Woo said. Like other agencies, the Park Service in recent months has slowed hiring, travel and training.

At the NRC, “the agency has certainly worked under the assumption that sequestration is a very real possibility,” spokesman Scott Burnell said. “We’ve put the work into understanding how we would go about continuing to operate.”

The Office of Management and Budget asked agencies in an internal memo this week for more detailed analysis of their financial operations than was in a 394-page report the White House provided to Congress in September.

That report listed more than 1,200 agencies and federal programs that would lose anywhere from 8.2 percent (domestic) to 9.4 percent (military) of their budgets. About $2.5 billion would be excised from the National Institutes of Health and $555 million from nutrition-aid programs for low-income women, infants and children, for example.

Administration officials called this week’s notice “technical” planning given that agencies are living under a temporary budget based on funding at last year’s spending levels. They reiterated the White House’s optimism that Democrats and Republicans will reach a deal.

“This action should not be read … as a change in the administration’s commitment to reach an agreement and avoid sequestration,” said Jay Carney, the White House press secretary. The budget office “is simply ensuring that the administration is prepared” to order the spending cuts.

Under a law Congress passed last year to force its own hand in reducing the deficit, the federal budget would shrink indiscriminately by $108 billion starting in January and continue on that scale for eight years — divided between civilian and defense agencies.

Economists warn that the cuts could push the country back into recession.

Managers say they have learned from the spending and tax fights that have left them lurching from one stop-gap budget to the next in the past two years – and a near shutdown of the government in 2011. Meanwhile, anxious employees say uncertainty over the latest showdown is doing its own damage.

Until this week, agencies had no formal word from the budget office beyond a two-page memo in July. That missive instructed them to “continue normal spending and operations since more than five months remain for Congress to act.”

Lt. Gen. Jeffrey Talley, chief of the Army Reserve, reflected the this-isn’t-really-going-to-happen strategy when he said in November, “I’m not … worrying about sequestration … because Defense Secretary Leon Panetta has told the departments, ‘Do not plan for it.’”

But nervous employees say they are in the dark about what might happen, and some are downright cynical.

“They cry wolf every time,” said Mike Granger, a computer programmer for the Navy at the Patuxent River Naval Air Station in Maryland. “It always ends up being resolved. So I just ignore it.”

The sequester dates to the Gramm-Rudman-Hollings law, a deficit-reduction strategy Congress passed during the Reagan administration to force a balanced budget as the federal debt ballooned.

Five of these automatic cuts were triggered from 1986 to 1990, when Congress and the White House failed to reach spending targets. Four were automatically rescinded or substantially reduced by a budget agreement or later law. Only the first, in 1986, resulted in $11.7 billion in cuts.

Today, federal employees and contractors find themselves confronting the many what-ifs and gaming out the possibilities.

One line of thinking is optimistic: Congress will agree to tax increases and targeted spending cuts before its Christmas recess, and there will be no sequester. Or there will be, but with only some cuts. Or, if there is no deal by then, there will be soon thereafter. Another act of Congress would be required to undo the trigger.

“There’s just a lot of waiting and monitoring,” said Gary Somerset, spokesman for the Government Printing Office, where a task force has produced a list of cuts.

Administration officials point out that a sequester would not look like a government shutdown, which resulted from failed budget talks in 1995 and 1996, and came close to happening again last year.

Federal employees would still go to work — at least in the beginning, they say. The government would not cease to function. Furloughs would be weeks if not months down the road, because the cuts could be delayed until later in the fiscal year. The Budget Control Act of 2011 requires the reductions to take effect across the board, but it does not say they must start in the first month or two.

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