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Sequester deadline day is here, but the effects won't be instantaneous

It’s Friday, March 1, and that means the federal government has crossed the much-hyped and dreaded deadline for the fiscal reductions known as the “sequester.”

The members of Congress who for voted for the Budget Control Act – and the budget cuts contained within – and President Barack Obama who signed it into law on Aug. 2, 2011, may not have believed the day would arrive, but now it has.

But today is only the beginning of the beginning.

For one thing, Obama must sign an order formally starting the “sequester” or spending reductions, which according to a new estimate from the Congressional Budget Office, would amount to $42 billion in the current fiscal year.

And White House aides have indicated that the president is not likely to put pen to paper on that order until after he meets with congressional leaders, a meeting slated for Friday morning.

Once Obama signs the order to start the spending cuts, any furloughs of federal workers could not begin at least for another 30 days due to federal regulations and to collective bargaining agreements which the government has with the unions that represent roughly half of the federal workforce.

Alex Wong / Getty Images

House Minority Leader Rep. Nancy Pelosi speaks during a news conference Feb. 28, 2013 on Capitol Hill in Washington.

So the Border Patrol Agents in Arizona won’t suddenly vanish on Friday and the civilians who repair Navy ships won’t be ordered to immediately put down their tools.

As with many things the federal government does, there are multiple rules, regulatory hurdles, avenues for appeal and opportunities for litigation.

As Under Secretary of Defense Robert Hale, the Pentagon’s Chief Financial Officer, explained last week, “The bottom line is, furloughs would not actually start for DOD employees until late April.”

He explained, “There's a whole series of notifications. We started the first one today (Feb. 20), with the notification to Congress, along with a message by the secretary of defense to our civilian employees. That starts a 45-day clock ticking. Until that clock has run out, we cannot proceed with furloughs.”

Despite the fact that $85 million in sequester budget cuts are scheduled to take effect Friday, lawmakers still have not been able to arrive at a solution. NBC's Kelly O'Donnell reports

He added, “At some point in mid-March, we will send a notification to each employee who may be furloughed. That starts a 30-day clock, waiting period, before we can take any action. And then later on in April, we will send a decision to employees, and they have a one-week period, once we've made that decision, to appeal to the Merit Systems Protection Board.”  

The Merit Systems Protection Board is the independent agency which hears and decides complaints when a federal employee claims that he or she has been the victim of an unfair, punitive, or discriminatory personnel action. The board issued 7,585 decisions last year.

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In a memo sent Wednesday to Cabinet officers and the heads of federal agencies, Danny Werfel, the controller of the Office of Management and Budget, emphasized that agency heads “must allow employees’ exclusive representatives” – their unions – “to have pre-decisional involvement” in planned furloughs or other personnel actions “to the fullest extent practicable” and must bargain with the unions over the impact of furloughs. The head of each department or agency must comply with “any and all collective bargaining requirements.”

In his memo, Werfel did not flatly warn federal agency heads to not hire any new personnel, but he did say they should give “increased scrutiny” to hiring any new workers, as well to the money they spend on training programs, conferences, and travel.

Like Hale at the Pentagon, Secretary of Homeland Security Janet Napolitano emphasized in her briefing for reporters this week that the effects of the spending cuts – while they will be substantial – won’t be instantaneous.

“The impacts people are going to see – and they will build over the next several weeks; you won’t see them immediately like a shutdown, but it will accrue over the next few weeks,” she said. “Lines, procedures, wait times (at U.S. ports of entry and airports) are all going to get longer.”

She added, “It won’t be like a (government) shutdown, where it’s like turning off the light switch. But all I can say for folks is these are the effects that will accrue. Please don’t yell at the customs officer or the TSO (transportation security officer) officer because the lines are long. The lines over the next few weeks are going to start to lengthen in some dramatic ways in parts of the country.”

Just as the personnel decisions will take weeks to ripple their way through the federal workforce, so too will decisions on contracts for new ships, drones, and electronic gadgets.

“I don't anticipate that we will cancel many, if any contracts, because we'd incur substantial costs,” Hale told reporters last week.

He said that due to the spending cuts, the Pentagon might delay entering into new contracts, “but I wouldn't expect that we will terminate existing contracts.”

Seeking to reassure contractors, Hale said, “If you've got a contract with us, we're going to pay you ... . Even under sequestration and furloughs, we will find a time to keep our payments to our employers and the vendors on time.”

The slow grinding of the bureaucratic wheels does not mean that furloughs won’t hurt, if they occur.

A fact sheet issued by the American Federation of Government Employees, the largest federal union which representing 650,000 federal and D.C. government workers, spells out some of the possible pain:

•Up to 22 days out of work with no pay, equivalent to a 20 percent pay cut;

•Reduced contribution to workers’ retirement savings accounts;

•Reduced take-home pay due to the deduction of health insurance benefits at the full salary rate.

But as a recent report from the Congressional Research Service pointed out, the sequestration procedures provide for exemptions for many groups.

Among the categories which the law spares from the spending cuts are:

•Social Security benefits

•The Medicaid health insurance program for low-income people

•Payments to individuals in the form of refundable tax credits, such as the Earned Income Tax Credit for low-wage workers and the tax credits under the 2010 health care law to help people buy health insurance.

•Retirement benefits paid to retired federal workers

•Child Nutrition Programs, including the School Lunch and School Breakfast programs,

•The Supplemental Nutrition Assistance Program, formerly called “food stamps”

•Pell Grants for college students

•Unobligated cash balances, carried over from prior years, for nondefense programs

•Pay for military personnel.

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