By John Fritze, The Baltimore Sun
8:01 PM EST, March 3, 2013
Days after the Obama administration threatened widespread furloughs of government employees, one of Maryland's largest federal agencies, the Social Security Administration, said it might shoulder across-the-board spending cuts without sending any of its full-time employees home.
And the federal funding cuts that U.S. education officials say would have the most immediate impact on public schools nationwide would trim only about $440,000 from Maryland districts — less than 1 percent of the combined operating budgets of the systems that receive it.
After weeks of dire warnings about the economic impact of the $85 billion in cuts known as the sequester, the White House and Democrats in Congress now face another pressing task: Convincing the public that the alarms they sounded were justified and the pain they cautioned against is real — or will be.
The time to make that case is short. The bill that funds the federal government expires later this month. Lawmakers have until March 27 to agree on an extension before the government shuts down.
Some Republicans want to lock in sequestration-level funding through September as part of that deal. Democrats do not.
The problem for Democrats, analysts say, is that the worst effects of sequestration will not likely hit until a month after the deadline.
"If nothing terrible happens — at least not yet — from [the Republican] point of view I think it's a very big win," said Don Kettl, dean of the school of public policy at the University of Maryland, College Park. "The very real impacts we're not going to know or see until — at the earliest — the middle part of April."
President Barack Obama says he intends to rely on pressure from a public that he believes won't stand for longer lines at airports, fewer public safety grants and millions less for hospitals. Sequestration officially began late Friday night.
Just how quickly and intensely the effects are felt in states such as Maryland — where 20 percent of the economy is tied to federal spending — will play heavily into the national debate over whether sequestration is replaced or is here to stay. So far neither the public nor the financial markets appears to be shaken.
A small number of federal agencies have begun to distribute furlough notices. The Internal Revenue Service advised employees that they could face five to seven furlough days this summer, after the tax season. The Justice Department alerted employees at U.S. attorney's offices that they could be sent home for up to 14 days without pay beginning in April.
The Maryland U.S. Attorney's Office has 142 full-time employees, down from 161 at full strength.
The Pentagon has warned it will furlough 46,000 civilian employees in Maryland to absorb $354 million in cuts. The Department of Defense reiterated that position in a letter to Gov. Martin O'Malley on Friday.
But the plans for several federal agencies based in Maryland are less certain. Acting Social Security Commissioner Carolyn Colvin told employees last week that "we are hopeful the funds available to us will allow us to operate without furloughs." The Woodlawn-based agency employs 11,800 people in the state.
Sen. Ben Cardin said some agencies might be able to shoulder the cuts without furloughs, but many others will not. He said he expects that the U.S. Department of Transportation, for instance, will have to make changes that would delay flights — that the threats are not just hyperbole.
Uniformed military personnel, who are exempted from furloughs, will be paid. But Cardin said they might not receive the same level of training.
"There's going to be people raising some real questions about what's going on," the Maryland Democrat said in an interview.
He acknowledged that lawmakers opposed to sequestration "might have problems getting everyone's attention" immediately. But he predicted that "after a couple more weeks" the problems would be more pronounced.
"People are going to get hurt," Cardin said.
Sequestration is the result of the messy 2011 agreement to raise the nation's debt ceiling. The cuts were designed to be so painful that they would force Republicans and Democrats to craft a deficit-reduction deal to avoid them.
That never happened.
For Maryland, the stakes are particularly high. The state is home to more than 314,000 federal employees, according to Census figures. The Maryland Department of Business and Economic Development estimates the number who work for federal contractors at an additional 171,000. The federal government awarded about $27 billion in contracts to Maryland businesses in the 2012 fiscal year.
Some of those contractors have said their biggest concern is the uncertainty over what Congress will do. Rogers Wells, a vice president for FLIR Systems Inc., said he is worried about work slowing down.
The Oregon-based company, which operates a 100-employee plant in Elkridge, makes thermal imaging and other sensing devices for the Pentagon and the Department of Homeland Security.
"In this period of uncertainty, we just need to make sure that we're financially responsible and that we don't overextend ourselves," Wells said at an event last week with O'Malley.
But despite the budget cuts the plant continues to hire.
For weeks it appeared the best chance to address sequestration would come at the end of March, when the government's current stop-gap budget runs out of money. Schools, businesses and federal agencies indicated they could continue to operate without significant changes during March in the hope that cuts would be reversed or mitigated in April.
But Republicans who control the House of Representatives, many of whom were elected on the promise of reducing budget deficits that have grown to $1 trillion annually, have warmed to the idea of locking the sequester in as part of the next budget.
Rep. Andy Harris, Maryland's only Republican in Congress, said he supports that position, along with giving the president more flexibility on where defense cuts should fall.
The Cockeysville lawmaker said he is concerned the administration will chose to make the reductions as painful as possible to score political points.
"It all depends on how the president implements the cuts," Harris said in an interview. "If he chooses to cut teachers … instead of cutting free cell phones, then we're going to have problems."
The Obama administration has said the law leaves little room to prioritize where to cut. With few exceptions, reductions must be distributed evenly across funds and federal programs.
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