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Bill Hoagland: Sequestration Could Cause Furloughs, Affect GovCon Industry

Bill Hoagland

Bill Hoagland, vice president of public policy at CIGNA Corp., shared his insight on the impact of sequestration during Government Executive’s Excellence in Government conference in Washington last Thursday, reports Kellie Lunney for govexec.

Hoagland used to serve as the policy and budget adviser for former Republican Sens. Bill Frist of Tennessee and Pete Domenici of New Mexico.

He stated that federal agencies might have to furlough some of its personnel if the White House and Congress fail to reach a budget settlement before the year ends in order to suspend the process of sequestration in January 2013.

However, if furloughs must happen it is crucial that managers plan them intelligently in order to prevent permanent reduction in force, he added.

Hoagland adds that furloughs or layoffs are by-products of preserving federal benefits under sequestration.

Government contractors, especially those located in the Washington area, would also be affected by the enormous spending cuts, he said.

Hoagland explained he lacks confidence that Congress can create an alternative to the automatic spending cuts.

Congress will resume session next week. The remaining working days will be devoted to pass resolutions that will help keep the government functioning until March 2013.

Their next session will resume after the election on November 6. Only then can lawmakers tackle the effect of sequestration that can greatly impact the economy.

Sequestration was included in the 2011 Budget Control Act. It was placed as an alternative if the bipartisan supercommittee fails to create a deficit reduction plan.

The Automatic government wide cuts will remove $1.2 trillion from the federal budget. It will be taken equally from defense and non-defense expenses.

The White House is supposed to issue a comprehensive report this week on where among the federal agencies  the spending cuts will fall.

Officials have already coined the term “fiscal cliff” for the period between the end of 2011 and the start of 2013, due to tax cut expiration’s, sequestration, and the resumption of debates for the debt ceiling.

Jim Hearn, director for federal programs and budget process at the Senate Budget Committee, offered a more positive assessment of the situation. He said that our perspective will dictate whether the situation is helpful or not.

It may be a bad experience for current managers but it will be the start of creating a better future for later generations due to lesser government debt and long-term growth, he said.

Hearn added that personnel at Capitol Hill are concentrating on passing the stopgap spending measure in order to prevent a shutdown of government functions after September 30.

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