Politics

Only 57 percent of federal vendors hurt by sequester

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Months after President Obama warned “the pain, though, will be real,” sequestration sob stories are back in the media.

According to Federal News Radio, Mary Beth Romani, a chief strategy officer for a consulting firm providing acquisition services to federal vendors likened the current climate to when “you’re at 36 weeks pregnant and you feel like the baby is never going to come.”

A Federal News Radio survey of 700 federal vendors found that 57 percent feel negatively impacted by sequestration. But given the doomsday sequester scenarios floated by the administration before the cuts were enacted, the results of sequestration have been relatively small.

Some respondents to the survey found fewer opportunities to contract with the federal government after the budget was tightened, but Romani told the news agency that “you know [the government] will be making these awards…[they] are obviously happening at a much different rate than in the past.”

Descriptions of federal contractor conditions may seem dire, but according to government market research firm Govini, the amount of money awarded by agencies is still at 69 percent of 2012 levels.

Recent reports have also suggested that the cuts have failed to be economically damaging. Just two weeks ago, ratings agency Moodys shifted the U.S. outlook from negative to stable, citing in part sequestration cuts’ aid in shrinking the debt-to-GDP ratio. But while minor cuts in the growth of federal spending as a result of sequestration may have helped, Moody’s cited “an economic growth trend that stands in stark contrast to the fiscal tightening and slowdown observed in other major global economies.”

While the Congressional Budget Office cited economic damage from the sequester last, conservative think tank the Heritage Foundation argued that the increased government debt and taxpayer money on the line that would result from canceling the cuts would damage the economy.

This is in line with the CBO’s own assesment. If sequester budget cuts were repealed, “that policy would lead to greater federal debt, which would eventually reduce the nation’s output and income below what would occur under current law,” the nonpartisan agency conceded in a letter to Maryland Democrat Rep. Chris van Hollen.

With the original cuts in the Budget Control Act and with sequestration’s extra stopgap, federal spending is still set to increase by 67 percent by 2023.

The sequester doesn’t affect entitlement spending, which is the major driver of the national debt.

Sequestration does not actually cut spending from this year to the next: federal outlays will increase by $15 billion this year. Although the budget is ever increasing, federal vendors still fear having to squeeze by on just a few extra billion this year.

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Tags : sequester
Sarah Hurtubise