MS. REBECCA SHEIR
Welcome to "Metro Connection." I’m Rebecca Sheir and here in the United States we have a pretty big red-letter day coming up. It doesn't involve costumes or candles or cake, though it does involve giving gifts, to the IRS. We're talking about tax day, which is heading our way on April 15. And so on today's show we're going to explore the ever-so-apropos topic of debt.
UNIDENTIFIED MAN 1
Debt definitely affects my life.
UNIDENTIFIED MAN 2
That grows with age, I think, you know.
UNIDENTIFIED MAN 3
Twenty-thousand. It's an annoying expense.
UNIDENTIFIED WOMAN 1
My biggest debt is that I help my daughter get through college and, you know, you realize that you're the one that's in debt instead of your child.
UNIDENTIFIED MAN 4
Even when you're thinking about retirement, you don't know the debt until you retire.
Debt, as these Washingtonians suggest, can be an inevitable part of life. So over the next hour we'll hear about all sorts of debt.
From college loans...
UNIDENTIFIED WOMAN 2
You're going to be paying these loans for the rest of your life. Do you understand that?
...to home mortgages.
MS. MARGARITA GARCIA
I didn't know how to say that sentence. We left behind on the payments.
We'll also hear about debts of a more personal nature.
MR. CLIFF BRODY
If I had shot the boy, I would have never been happy with myself.
But to start things off today, "Metro Connection" is a Washington-based radio show, right. And given our location and our theme this week, it's pretty hard for us to get too far without mentioning the "S" word.
That's right. The sequester has been all over the news lately. It's basically the government's attempt to deal with the national debt, which, by the way, skyrocketed when the recession kicked in. Today the national debt stands at nearly $17 trillion dollars. So we've got the sequester, these across-the-board government agencies spending cuts, totally $1.2 trillion over 10 years. This first year the cuts are about $85 billion. And back in February, President Obama warned that if these cuts went into effect--
PRESIDENT BARACK OBAMA
The result could be a huge blow to middle-class families and our economy as a whole.
Well, as of March 1, the cuts did indeed begin, and granted, many agencies and people are feeling it. But some experts say the sequester's impact isn't quite as noticeable to the average citizen, as had been predicted. So I recently headed to George Mason University--
--to visit one of those experts.
MR. STEPHEN FULLER
Rebecca, hi. Good to see you.
Good to meet you.
Should we sit at the table here?
Sure. That would be great.
A guy by the name of Stephen Fuller.
I'm a professor, public policy, and director of the Center For Regional Analysis at George Mason University.
Fuller produced a report last year saying the sequester would result in more than 2 million lost jobs by the end of 2013. Then, last month, he reduced the number of lost jobs to about 1.5 million. And one of the reasons for the decrease, he says, is because, as he puts it, a little more rationality crept in to Congress.
They've allowed agencies more flexibility in how they accommodate this. And so the consequences of it are being moderated slightly because of agency management and not layoffs. There are going to be some--
What? Like furloughs, things like that?
Furloughs, there we go. Okay. So we're not firing federal workers. It's interesting that we have about 45,000 fewer federal jobs in the United States today than we did a year ago. So the federal workforce is getting smaller. In the Washington area, it's down about 9,000 jobs, and that's a very small percentage, based on in Washington, we have 375,000 federal workers, so it isn't like they're all going away, but they are slowly going away. And they're going away in a rather interesting way, through retirements.
So does that mean then the agencies aren't back-filling those jobs?
Most agencies are facing a hiring freeze. And so slowly, through attrition, the federal agencies have built up some money in the bank. They haven't been paying as much payroll this year as they thought. And so now they're told to cut back their payroll, and they already have. So some agencies, in fact, aren't doing furloughs and not doing layoffs.
Okay. But despite all of this, sequester is still very real, right. I mean the cuts are happening. The Department of Defense is feeling it, federal contract workers.
I think it's important not to diminish the impacts that this will have on the federal workforce. They're going to feel this. The federal contractor base in the Washington area is probably 500,000 federal contract workers. They're feeling it. This creates great anxiety, uncertainty, and it affects their spending patterns. We're all feeling it to an extent. It's just like when unemployment goes up because of a recession. Even if you're not threatened with unemployment, you're a little more cautious with your spending.
And so the reality of the sequester, even though it may not be as burdensome as had been advertised and we won't see many of the results until next year. Next year we'll be able to look back and say we lost jobs because of spending reductions last year. And in 2015 we'll look back and we'll be able to say we lost jobs because of spending reductions in 2014. It's going to have an impact here. The outcome, however, will be positive for the economy. Once we get through this, almost like a hangover, that you had a really good party and now we're suffering and we'll learn some lessons. The private sector will be much stronger. The economy is growing. I mean, that's really quite the interesting outcome, I think. A learning lesson here is that we added 41,000 jobs in the Washington area in January, compared to a year ago.
And none of them were federal and none of them were federal contractors. And so there's part of an economy here that isn't federal and it's actually performing pretty well. And this is probably a pretty good message for the future, that the economy needs to diversify. We still have this federal base. It's a really good base. It's well-paid and productive. And our economy will be a better economy, more opportunities, more different kinds of job types, and probably more sustainable and balanced as we move forward. And so the next recession that comes through here, we'll have a better balance--or the next federal cut-back. We've been through this before and we've always survived.
Well, Stephen Fuller, thank you so much for taking the time to talk with me.
It's a pleasure to be with you.
Stephen Fuller directs the Center for Regional Analysis at George Mason University. And we want to know how has the sequester been affecting you. Send us an email. Our address is email@example.com.
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