Agencies get two-month reprieve on sequestration


At10:57p.m.onNewYearsDay--nearly23hoursafterthegovernmenttechnicallywentoverthe"fiscalcliff"--theHouseofRepresentativesvoted257-167topostponesequestrationandavertincometaxhikesforallbutthehighest-paidAmericans.
Thevote,whichsenttoPresidentObamaabillpassedbytheSenateintheearlyhoursofJan.1,providesagencieswithatwo-monthreprievefromtheacross-the-boardcutsrequiredundertheBudgetControlAct.AccordingtoafactsheetreleasedbytheWhiteHouse,thatpostponementisbeingoffsetby$12billioninnewtaxrevenue,and$12billionin"spendingcutswhicharedividedequallybetweendefenseandnondefense."
Themainfocusoftheagreement,however,wastoreinstatetaxcutsthatexpiredattheendof2012.Incometaxrateswillnowclimbonlyfortaxpayerswithincomesgreaterthan$400,000forindividualsor$450,000forfamilies,andthebillincludesapermanentfixfortheAlternativeMinimumTax.Yetfederalemployees--likeallU.S.wageearners--willseeanimmediatedecreaseintheirpaychecks,asthepayrolltaxholidaythathadbeeninplacesince2009wasnotextended.Thismeansworkerswillpayanadditional2percentonwagesupto$110,100--ahitof$2,202forthoseearningintosixfigures,or$1,000foratypicalU.S.familyearning$50,000ayear.
Obama,speakingfromtheWhiteHouseafewminutesafterthebillpassed,confirmedthathewouldimmediatelysignitintolaw."Ithinkweallrecognizethatthislawisjustonestep,"thepresidentsaid,alludingtothebudgetdecisionsthatweredeferredinordertogetadealbeforethe112thCongressconcluded."We'regoingtohavealotofworktodoin2013."
Thepresidentdidnotdirectlymentionsequestrationoritsimpactonagencies,andthelegislationdoesnotspecifywherethe$12billionindiscretionarycutsaretobemade.Hedid,however,statethat"wecan'tsimplycutourwaytoprosperity....Thedeficitneedstobereducedinawaythat'sbalanced."
HouseSpeakerJohnBoehner(R-Ohio),whocededfiscalcliffnegotiationstoObamaandtheSenateshortlybeforeChristmas,saidaftertheHousevotethathisRepublicancaucuswill"holdthepresidentaccountableforthe'balanced'approachhepromised,meaningsignificantspendingcutsandreformstotheentitlementprogramsthataredrivingourcountrydeeperanddeeperintodebt."
WilliamR.Dougan,presidentoftheNationalFederationofFederalEmployees,calledtheJan.1dealabadoneforfeds."Themostimportantfederalworkforceissueofourgeneration--sequestration--continuestohangovertheheadoffederalemployeesthroughoutgovernment,"Dougansaid."Furthermore,thefailuretoaddressthenation'sborrowinglimitwilllikelyleadtoanotherprolongedpoliticalstandoff,leavingfederalworkersuncertainofwhethertheywillhaveajobtocomebacktoforathirdtimeintwoyears."
AmericanFederationofGovernmentEmployeesNationalPresidentJ.DavidCoxSr.,meanwhile,saidhismembers"areveryconcernedabouttheuseofadditionalagencyfundingcutsinordertopayforthedelayofthesequester."
"Howagencieswillachievetheseamountsisnotclearinthelanguageofthebill,"Coxnoted."Beforetheylookanyfurtheratunpaidfurloughsorothercutstocriticalagencyprograms,OMBshouldsharplyreducetheamounttaxpayersprovidetofederalcontractorsforexcessivesalariesfortheirtopexecutives."
ThestopgapagreementmeansCongressnowhasuntilMarch1toavertthecutsof8-10percentthatsequestrationwouldimposeonmostagencies.DefenseSecretaryLeonPanettahadwarnedthatsuchcutscouldforcefurloughsforupto800,000civilianDODemployees,andnon-defenseagencieshavemadesimilarlydireprojections.
Italsomeansthat2012'slongrun-uptothe"fiscalcliff"isnowreplacedwithaseriesofcriticalbudgetarydeadlinesinearly2013.InadditionoftheMarch1sequestrationthreat,thefederalgovernmenthititsborrowinglimitonDec.31,andwillfaceanothershutdownifthedebtceilingisnotraisedbylateFebruary.(Obama,inhisJan.1remarks,vowedagainnottonegotiateoverthedebtlimit,sayingCongresshasanobligationtopayforspendingitpreviouslylegislated.)AndthecontinuingresolutionthatcurrentlyfundsagenciesexpiresonMarch27--leavinglittletimeforCongresstoappropriatemoneyfortheremainderofFiscal2013.
Sen.TomCarper(D-Del.),whowillbethenewchairmanoftheSenateHomelandSecurityandGovernmentalAffairsCommittee,andwhovotedagainstthedealbecausehefeltitwasaninadequatestopgap,releasedastatementcallingforrenewedcommitmenttoagrandbargain:"Myhopeisthat...thenexttimethere'saseriousefforttoputtogetherabudgetdeal,bothsideswillstayatthetableandseizetheopportunitytomakethehardchoicesweknowhavetobemade."


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