The Labor & Employment Blog is a forum for practitioners and Bloomberg BNA editors to share ideas, raise issues, and network with colleagues.
Wednesday, September 26, 2012
by Louis C. LaBrecque
Is it accurate to call it a "lame duck" session of Congress if that's when the work will get done?
The House and Senate before adjourning until after the November elections passed a six-month continuing resolution that will fund the federal government until the end of March. But it will be up to federal lawmakers in the remaining days of the 112th Congress to avoid sequestration--automatic across-the-board cuts to federal agencies of almost $110 billion annually over nine years, agreed to as a compromise to resolve a 2011 dispute between Republicans and Democrats over raising the federal debt limit. An Aerospace Industries Association report issued in July estimated that a total of 617,449 federal agency jobs would be lost if sequestration were to be implemented as scheduled beginning Jan. 2, 2013, in the absence of an alternative deficit reduction plan from Congress.
There are a variety of approaches that Congress could take to sequestration, from the straightforward (repealing the law establishing it) to the dramatic (allowing it to take full effect or coming up with an alternative deficit plan) to the squishy (delaying sequestration or using budgetary maneuvers to implement a short-term version without the most serious effects on federal agencies and contractors). Squishy has a good chance of winning the day, since it would allow members of Congress to avoid both the embarrassment of repeal and the deleterious effects of full implementation.
Another tricky area will be the tax cuts approved by Congress and signed into law by former President Bush in 2001 and 2003, which now are scheduled to expire at the end of 2012. President Obama has called for a one-year extension of the tax cuts for those earning under $250,000, but most Republicans in Congress want to keep the tax cuts for everybody. That, along with the federal debt limit, which likely will need to be lifted again before the end of 2012, also will keep members of Congress busy.
Then there's the U.S. Postal Service, which defaulted Aug. 1 on a $5.5 billion retiree health prefunding payment to the federal government and likely will default within days on a $5.6 billion payment due no later than Sept. 30. Although a comprehensive postal overhaul is not likely this season, Congress may approve some sort of temporary fix in response to USPS's increasingly desperate financial condition. Such a fix could include statutory permission to postpone upcoming payments to the government--such as a $1.3 billion payment due in mid-October to the federal workers' compensation system--that the Postal Service likely is not going to make anyway.
Stay tuned for further updates. The next few months may be a time of maximum peril for federal employees' pay and benefits, precisely because many members of Congress will be seeking cost savings that can be implemented relatively easily so that they can finish up the year and leave town.
In other public sector news:
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