Republicans, you asked for it, you got it. Faster than you can shake a fist, a smaller government will soon exist. State and local governments across the nation will be seeing record layoffs, while on the national level, the federal government will announce its 2012 budget of proposed cuts and layoffs for the next fiscal year as well. Hang on to your hats people, a sh*t storm is coming.
July 1st is the start of the fiscal year for most states. Expect to hear an astonishing number of teachers being laid off this summer. States will be slashing funds for education, social services and local government offices while further downsizing their worker payrolls.
State and local governments are estimated to trim up to 110,000 jobs in the third quarter, according to IH Global Insight.
A grimmer forecast by UBS Investment Research, estimates 450,000 people receiving pink slips in fiscal 2012, a huge jump from 300,000 jobs cut this year. According to the UBS report, the jump is due to the Federal Stimulus Program ending while Medicaid costs continue to spiral out of control.
The billions of dollars states received from the Federal Stimulus Plan were primarily for education, and Medicaid, the state-federal health program for the poor and disabled.
The deficits that states and municipalities will need to deal with will increase to $155 billion in fiscal 2012 from about $108 billion in the current fiscal year, according to UBS economist, Maury Harris.
And this was before the fallout from the mortgage meltdown. States are now seeing a drop in property tax assessments, a major funding source for many municipalities.
While states are grappling over their own budget deficits, the federal government has a $14 trillion problem of its own – how to raise the debt ceiling by the August 2 deadline or risk the nation’s credit rating being downgraded.
This much is clear: The U.S. needs to raise the debt ceiling. But how the federal budget will be restructured to raise the $14 trillion cap remains uncertain.
Right now, various federal agencies are bracing for dramatic budget cuts from 12 percent to as high as 20 percent. This will be accomplished through furloughs, employee buyouts, and various other cuts.
House lawmakers are informing agencies that 2012 budgets and beyond will be much smaller than at any time in the previous decade. The proposed bills currently being discussed recommend huge cuts and employee reductions. The Department of Health and Human Services (DHHS) for example, has 10 departments with about 88,000 employees, and potentially will cut anywhere from 13,000 –17,500 workers.
The Transportation Security Administration (TSA) has 40,000 airport screeners, and may be trimming as many as 8,000 jobs.
Even The Internal Revenue Service (IRS) is expecting to shed as many as 8,000 workers. How will the government shake down taxpayers to pay their taxes?
Other agencies such as The Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is looking to shed 500-700 employees, The Agriculture Department is targeting 544 positions, and the Government Printing Office will be scaling back 330 jobs.
Employee buyouts, officially called Voluntary Separation Incentive Payment, are being offered to employees in various agencies including those just mentioned, as well as The Center For Disease Control (CDC), Federal Trade Commission (FTC), The U.S. Postal Service, Social Security Administration and more. Employees will be offered up to $25,000 cash, before deductions, if they choose to retire. Agencies might also consider furlough days as a way to stay within their budget.
Denise Wells, the deputy assistant secretary for human resources and chief human capital officer at the Department of Health and Human Services, is advising other agencies to look for cuts today that will come to fruition in 2015 because that is how long it will take for the cuts to have an effect.
Wells is recommending that agencies put their programs in one of four categories:
• High priority, high performing
• High priority, low performing
• Low priority, high performing
• Low priority, low performing
She says that by agencies identifying where cuts can be made, at least they will have better control of the process instead of waiting for Congress to decide what to cut. However, she and others realize cutting certain programs may face some resistance on Capitol Hill.
So while government agencies are downsizing to work more efficiently with less funding, lawmakers in Congress are wrangling over the components of 2012 fiscal budget.
Republicans are willing to raise government revenues, but not by increasing taxes. Democrats would accept reductions in Medicare spending, but not cutting benefits.
Vice-president Joe Biden, who is heading the talks between the group of six senators, should be commended for raising the maturity level of the negotiations. He has the difficult task of negotiating the budget between Republicans, who are adamantly protecting their anti-tax credentials for 2012, and Democrats, who are campaigning aggressively against the House GOP plan to remake Medicare.Good luck Vice-president Biden. Personally, I don’t see how revenues can increase without raising taxes. And where it should be raised is with the top one percent of taxpayers – the small minority who continue to enjoy the Bush tax breaks as their own personal gravy train. It is over a decade now, and the train just keeps chugging along.
Multimillionaires receiving the most generous tax breaks are draining the wealth of this country at the expense of the majority of taxpayers. Warren Buffet agrees his taxes should be raised. So where is everyone else? Oh yes, right, most multimillionaires and corporations are too busy draining people’s pockets.
© June 24, 2011 Reiko Eoh