Is March the Armageddon for federal budgets? Sequestration, CR, 2014 and more

March may go down as one of the worst months ever for federal budgeting. Take a look:
  1. Sequestration goes into effect on March 1st. 1.2 trillion in across the board cuts.
  2. Continuing Resolution expires on March 27th.
  3. In order for a budget to be passed by April 15th the House and Senate need to begin debate in the middle of March.
  4. President will submit his 2014 budget in March.
"I've never seen anything this crazy. And i've never been so confused about what might happen and how it might happen and when it might happen and i've been following the budget for 35 years," said Stan Collender. Collender is the National Director of Financial Communications at Qorvis. He told Chris Dorobek on the DorobekINSIDER program that right now everyone from agencies to contractors are holding back on spending because they are unsure of the fiscal future. "Everyone is holding their breath and their dollars. This budget confusion is restraining the economy in the Washington area and anywhere else there is a substantial number of federal workers and contractors. We expect this hold out to continue at least through the end of March," said Collendar. Economic Woes:
  • On one hand you have corporations that are sitting on hoards of cash and are unable or unwilling to invest it
  • Consumers are spending their money for many of the same reasons
  • Trade isn't helping because the Euro-Zone is not in great shape
  • State and local governments continue to cut
"So in the midst of all of this the only positive input to the GDP is the federal government. And last December it looked like a lot of government agencies were holding back because they were worried about the sequester. So they weren't hiring. They weren't letting in new contracts. As a result austerity came in way too early and way before the economy could handle it," said Collendar. Bottom Line: No Sequester is the answer? "The alternative to the sequester shouldn't be, what else can we cut, or how else can we reduce. Right now given the state of the economy we should be talking about not having the sequester at all. We should cancel it completely and say we'll catch up later, not when the economy is so fagile," said Collendar. Running the Gov. without a Budget? "This budget issue makes it impossible to plan for agencies. If you are a manager of a program you are basically living day to day. You can't try anything new. You are just trying to get through the continuing resolution. It's a silly way to run a railroad let alone a government," said Collendar. Budget and the Numbers "As much as you can reduce the budget debate to numbers, it really isn't rational or data driven. It's all about politics. A lot of people on both sides say 'i'm not going to give in and compromise.' Decisions are now less about fiscal policy and more about getting re-elected," said Collendar. Will there really be a Sequester? "I see the sequester going into effect on March 1st. The only real question is how long it will last. My guess is a minimum of two weeks because they will probably try to work out a solution that is tied with a final continuing resolution. If they can't get an agreement it is entirely possible that on March 28th the sequester will be in effect and the government will also shutdown. I would expect a government shutdown to be short though it would have an effect on everyones psyche," said Collendar. What makes the sequestration so bad? "The real problem is that it is a terrible way to make cuts. The cuts have to be across the board at the program, project and activity level. No priorities are allowed. You can't decide one program is more important than another. You can't be strategic. It also doesn't give any credence for government managers to manage," said Collendar.
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