Spending cuts: Reality of furloughs hits home

April 25, 2013: 11:53 AM ET
lax airport delays
So far, airport delays due to furloughs of air traffic controllers have mostly been centered around large airports in New York, Dallas, Chicago and Los Angeles (pictured above).
NEW YORK (CNNMoney)

Long delays at airports across the country have shown the public that the across-the-board spending cuts will have real world effects.

Predictably, lawmakers are expressing outrage at the situation -- which both they and President Obama opened the door to when they agreed to the so-called sequester in the first place and then failed to reach agreement on how to replace it.

Set to unfold over the next few months, the cuts are like a "slow motion train wreck," said Steve Bell, senior director of the economic policy project at the Bipartisan Policy Center. "The pain will increase and become more and more apparent to the general public."

With the exception of countrywide airport delays, the most noticeable effects may be more local than national. The annual Fleet Week in New York City has been canceled, which will reduce expected city revenues. Towns and cities where the Department of Defense is a major employer or supplier of contracts may take a hit as civilian workers are furloughed without pay and local sub-contractors see their workload reduced.

And unless Congress acts to repeal or replace them, the spending cuts' effects could continue well past fiscal year 2013, which ends Sept. 30.

That's because defense and domestic spending will be subject to even lower spending caps than they are this year.

There is one important difference, however.

The sequester that went into effect on March 1 for 2013 required agencies for the most part to make across-the-board cuts without discretion, in essence cutting funding for the best and most essential functions by the same amount as everything else.

For fiscal year 2014, which starts Oct. 1, agencies will have more flexibility in how they allocate funding.

That may mean some agencies can do more to protect their workforce from furloughs or layoffs -- and taxpayers from disrupted services. But some might not be able to entirely.

But right now, the officials who run federal agencies don't have any clarity about what their exact budgets will be next year. Nor may they get much before Oct. 1.

Federal furloughs mean flight delays

That's because the budget process in Congress is -- surprise! -- stymied. The House and Senate have passed their own 2014 budget proposals, but they're $91 billion apart in spending and qualitatively they're very different.

Technically the two chambers are supposed to reconcile their differences, but there's been no real movement in that direction.

So, Bell said, there's a very good chance Congress will do what it often does: resort to passing a stopgap funding bill known as a continuing resolution to get through the first few months of fiscal year 2014.

Problem is, should Congress extend 2013 spending levels temporarily, that means federal agencies may end up having to make further reductions at some point next year so that their overall spending doesn't violate 2014 spending caps.

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