Prof. Stephen Fuller of the Center for Regional Analysis says the sequester’s full impact won’t likely be felt until future years.
Back in February, President Obama warned that if the 10-year, $1.2 trillion sequester went in to effect, middle class families, as well as the economy as a whole, would take a huge hit.
As of March 1, those cuts did indeed go into effect, and granted, many agencies — and people — are feeling the effects. But some experts are saying the sequester's impact aren't necessarily as noticeable to "John Doe Citizen" as people had predicted.
One of those experts is Stephen Fuller, a professor of public policy and director for the Center For Regional Analysis at George Mason University.
These past few months, Fuller's name has been all over the news. He's the one who produced a report last year that predicted the sequester would result in more than 2 million lost jobs by the end of 2013. Then, last month, Fuller updated his report to predict the sequester would result in just about 1.5 million lost jobs this year.
One of the reasons, 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 [sequester]," he explains. "So the consequences of it are being moderated slightly because of agency management."
Federal freeze in effect
Fuller points to non-lay-off measures such as furloughs and says "we're not firing federal workers." But, he admits, we do "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 around 9,000 jobs, and that's a very small percentage, he says. "In Washington, we have 375,000 federal workers, so it isn't like they're all going away, but they are slowly going away."
They're going away in a rather interesting fashion, he adds: through retirements. And then agencies aren't back-filling the vacated positions.
"Most agencies are facing a hiring freeze," Fuller says. "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. So now they're told to cut back their payroll, and they already have."
But even though Fuller says some agencies aren't enacting furloughs or lay-offs, the sequester is still very real. The Department of Defense is feeling it, as are federal contract workers.
"I think it's important not to diminish the impacts that this will have on the federal workforce," he explains. "They're going to feel this."
Surviving the aftermath
The Washington area contains around 500,000 federal contract workers, says Fuller. "This creates great anxiety, uncertainty, and 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."
So the reality of the sequester, he says, is it may not be as burdensome as had been predicted right now, but we'll probably see significant results of it next year.
"Next year we'll be able to look back and say, 'We lost jobs because of spending reductions last year,'" Fuller says. "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, Fuller says.
"[It's] almost like a hangover," he explains. "You've 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."
Fuller says the D.C. area added 41,000 jobs in January compared to a year ago, and none of them were federal. So, he says, there's part of an economy here that isn't federal, and it's actually performing pretty well. And that, he adds, is probably a good message for the future.
"The economy needs to diversify," Fuller says. "We still have this federal base; it's a really good base. It's well-paid and productive."
But if we branch out and expand, he says, "our economy will be a better economy, [with] more opportunities. And [it will be] more sustainable and balanced as we move forward so the next recession that goes through here, or the next federal cutback, we'll have a better balance.
"We've been through this before," he goes on to say. "And we've always survived."
[Music: "The First Cut is the Deepest (Instrumental Cover)" by Gary Tesca Orchestra from Rhythm of my Heart]