The shutdown: what’s it all about, Alfie?

The Thinker by Rodin

Congress is threatening to send me back to work tomorrow. As of this writing (about 4PM ET) the final votes have not been taken but the thinking is that the Senate will approve the proposed “compromise”. House Republicans, bruised and bloodied, will allow Democrats and its few moderate Republicans to pass the bill. The real majority in the House, which is curiously not the Republican Party but Democrats and some moderate leaning Republicans, will finally wield its power, weak though it is. Government will reopen, the trash will be picked up off the National Mall and tourists and homeless people will start urinating inside the public restrooms on the mall, instead of outside of it.

And people like me will go back to work and try to pretend the whole two-week nightmare didn’t happen. I know it happened though. I got my final paycheck through the end of September. It was 43% smaller than the last one. Basically I was paid for six days of work instead of ten (we are paid biweekly). It seems likely that I will get back pay, although the Senate has not approved the bill yet. If there are winners in this debacle, I may be one of the few. I did not have a vacation per se, as it was full of nervousness, just with the cushion of a decent cash reserve. I never stopped working, but it was just not for the feds. Instead I mostly painted. I actually could use one more day as I did not quite finish restaining our deck (rails to come later). I was quite productive, just not for the mission of the United States. As part of my retirement mission: mission accomplished! Many of the chores I would have to do anyhow before we relocate in retirement are now done and two years ahead of schedule.

Mostly though this shutdown screwed lots of people. For most federal employees it was mostly a lot of time at home and trying to swallow their anxiety. For many federal contractors, it meant furloughs for the duration of the shutdown, and zero likelihood of being repaid. For the support people who service federal buildings, the janitors and cafeteria workers, for example: it’s a disaster with no income and no prospect that their employer will pay them for circumstances beyond their control. They tend to live paycheck to paycheck and their paychecks are paltry. For the economy as a whole, this is going to hurt, perhaps through a temporary rise in unemployment and loss of gross domestic product. The uncertainty caused by this shutdown will be quantified at some point and the number will be in the billions of dollars. Less tax revenues will increase the deficit. Less expenditure will affect retail sales.

The stakeholder that matters most is you, the taxpayer. Maybe you weren’t inconvenienced at an airport security line, but for the most part you could not enter a national park. You may discover yourself in the emergency room in a few weeks poisoned by meat you consumed that was unsafe because meat inspectors were furloughed. Certain people trying to close on house sales could not because their papers were not in order. The Center for Disease Control may be behind the eight ball if a new infectious disease breaks out as most of them were furloughed. Don’t assume the government saved money by “closing”. Federal employees like me will be paid retroactively but even if we were not, the actual costs would still be higher than not closing the government.

In reality, government is like a vast machine. It costs serious money to shut it down and serious money to start it up again. To use one example, many servers (computers used to serve information) were shut down. Servers usually work great provided you don’t turn them off. Some percent of these servers will not come back up, and will require parts and service calls. A lot of them will come up but won’t actually work properly. I expect when I turn my government computer on, it will complain because the antivirus software is more than two weeks out of date. I’m sure there will be other issues too. Computer woes will dominate most of my day tomorrow when I shuffle back into the office.

There will be lots of this plus also restarting the human processes. There will be more than two weeks of email to sift through and all sorts of conversations about how our priorities will shift that will take time and tax productivity. I was supposed to have all my employees’ performance evaluations done by the end of October. That’s probably not going to happen. My guess is that our productivity will be fifty percent less than usual for several weeks. Some of our planned work for the year is going to slip. You will get less governing for your tax dollars.

This of course was part of the calculus of Tea Party Republicans. They want less government. True believers as they are, they were willing to die on their swords for the cause, except of course for a few loudmouths like Senator Ted Cruz (R-TX) who has reluctantly decided not to filibuster this last minute “compromise”. He’s having a hell of a first term, having won the antipathy of every senator except possibly Mike Lee (R-UT), who also has agreed to suspend his craziness. You have to wonder why they did, because breaching the debt limit and creating a massive recession is a great way to shake up Washington. Maybe in a fit of sanity they realized they would be marked men when NRA members whose investment portfolios would be halved in value because we breached the debt limit put them in the crosshairs.

The sad reality, which was easy to predict but that Republicans probably won’t admit, is that they lost badly. Obamacare was not stopped, as I predicted. The debt limit was not breached, although rating firms may downgrade our credit worthiness anyhow for all this pointless brinkmanship. The sequester remains but now it appears that agencies will have more discretion on how it will be implemented, plus both sides agree to have talks about getting rid of it altogether. The government could shut down again in January and the debt limit may be breached again in February as well. It’s more likely though that this will be handled more sanely, considering how badly it went for Republicans this time around. The only “concession” I see is a fig leaf one: people getting subsidies for Obamacare are subject to a more stringent audit, but auditing was already in the law. The agreement is basically a tacit surrender by Republicans. What is worse, it they have tarnished their brand. Less than a quarter of the country now “like” Republicans. They are likely to lose the House in 2014.

It’s too early to say whether the Republican Party suffered a fatal wound from this. Gerrymandered districts will be a reality through the next census but it is likely that Tea Party influence will quickly wane now. What is likely to replace them are not moderate Republicans, but sane conservatives.

Hopefully one lesson they will learn is that shutting down the government is counterproductive. Obama, and by inference all future presidents, will no longer negotiate under threat of shutdown or default. Power will have to be wielded the constitutional way again. We will remain the United States of America. The South’s new attempt at open rebellion has failed.

Furlough Diary, Day 13

The Thinker by Rodin

I’m running out of places inside my house to paint and patch. The lower level is now completely repainted. I finished that project last week when I repainted the back of one door that I had neglected in the spring. The walls consisting of our master bedroom closets and vanity have been repainted. The master bedroom itself still looks good enough where it doesn’t seem worth my effort. Last time I painted it, it involved bringing in the ladder I use to get to the roof to paint the room’s vaulted ceilings, a tedious process that I will be glad to leave to the next owners. Last year we had a contractor paint the vaulted ceilings in our living room and hallways, so that’s all done.

So I’m been reduced to painting parts of the kitchen. The planter box that extends over the kitchen sink and out into the yard needed a new coat of semigloss, as did the door to the pantry which still had its original coat of paint. There are a few more doors that need painting but that’s it, aside from my daughter’s bedroom. She is occupying it, so I’ll paint it when she moves out. It’s an odd feeling to be virtually caught up on painting chores, likely for the first time in my life. All this is thanks to dysfunction in Congress.

Which means if this continues, and it looks likely at least for a few more days, outdoor chores will be next on my agenda. Four days of often-unrelenting rain from a Nor’easter has kept me indoors with the paintbrush. Staining the deck again, a chore I have ignored for years, is obviously next up when the weather decides to cooperate. According to the non-furloughed staff at the National Weather Service, we should finally see the sun tomorrow.

Painting has kept me too busy to feel cabin fever set in, but even thirteen days later it still feels unnatural to be home so much. I wisely brought home my plant at the office before leaving on October 1st. I found comfort going to the office most days and find that I miss that routine, not to mention the excellent view of the Shenandoah Mountains on clear days. Except for one trip to Starbucks, I have had no coffee. I keep my coffeemaker at work, and I routinely have two cups of decaf at my desk with lunch. My diet has changed since the furlough. I am less likely to have a salad with lunch, simply because my house has no salad bar, unlike the cafeteria at work. Aside from the cat who usually just wants to be fed, my companion is now WAMU, the public radio station in Washington D.C. that has mostly NPR public affairs content. My portable radio tuned to WAMU follows me as I move from room to room with my paintbrush. It’s a welcome distraction but of course it is mostly shutdown politics and I rarely learn anything new. But unlike my employer at the moment, at least it is something of a new constant in my life. The Diane Rehm Show, the Kojo Nnamdi Show, Talk of the Nation and of course Morning Edition and All Things Considered now follow me through the course of my day. This week will be a trial because it’s membership week. I give the station money every year but I simply cannot deal with the drivel that is membership week. Which means it will be WSCP (C-SPAN radio) next week, when I can tolerate that or, more likely, the sounds of silence.

I am not panicking over money but sometimes I feel like I should proceed with more financial caution. We are going through a cash flow challenge of sorts, which means I will probably have to start drawing from savings soon. My wife is more than gainfully employed, but she is subcontracting, and only gets paid once a month. This means all expenses are paid from my checking account, which consists of my last paycheck plus a few hundred dollars. And boy the expenses have been coming in! A lot of these are routine expenses but there continues to be large numbers of copays, mostly related to my wife and her accident in April, as we continue to chase down the cause of her seizure. There are initial consult fees, test fees, fees to tell you what the test said, random statements in the mail demanding more money, etc. Since October 1st, there has been about $350 in copays and more in prescription medications. Arguably all are necessary.

My next paycheck will be about half of my regular amount, for whatever period is covered through September 30 and that will be it for me until the furlough is over. It looks like we will be paid for the furloughed time. The bill is currently stalled in the Senate, basically on their back burner, but likely to get approved at some point. Still, there are no guarantees. Like Mr. Spock I am trying to stay logical. It makes all the sense in the world to keep hitting the Lowes for paint and other home improvement supplies, even with no money coming in. I keep an account for home improvements, so these expenses will come out of this account, but for the short term it just makes the balance in my checkbook creep toward zero.

Trying to read the tealeaves across the Potomac River continues to be something of a black art. When or if I get to go back to work is unclear. Some days it looks promising and other days less so. The only obvious thing is that Republicans are getting seriously pummeled on the shutdown. I started out skeptical that the shutdown would mean that Democrats would retake the House in elections next year. Now I think it is more likely than not, despite the gerrymandered districts that heavily favor Republican incumbents. Some part of me is rooting for the shutdown to continue if it makes this outcome all the more probable. Even Republicans, or at least the sane ones still around, are figuring out they need to cut their losses. When groups like the U.S. Chamber of Commerce declares it will support Republican moderates and campaign against Tea Party affiliated candidates, you know something has changed.

What the country needs the most are not necessarily more Democrats, although they are certainly preferable to Republicans, but more moderates. The long-term consequence of this shutdown may be the return of moderates of both political stripes. This shutdown is likely to validate the thesis that a country cannot be governed with extremes on both sides holding power. We need more Mark Warners and (yes, hard to hear me say this) Chris Christies so that they can keep either extreme from getting too far away from the sensible center. We need pragmatists. We need horse traders for politicians again. God help us, we need the earmark. We are starting to see the value of the earmark, which is not so much to put plums in Congressional districts but as the oil that imperfectly moves the gears of government. If these are outcomes of the shutdown, I will welcome then.

In the meantime, I have not yet exhausted my list of home improvement chores, so I will continue to work on them doggedly while the shutdown lasts.

Furlough Diary, Day 8

The Thinker by Rodin

Things are “curiouser and curiouser”, as Alice put it. However, Wonderland is a lot less baffling than Washington, D.C. in the midst of a massive government shutdown. I keep expecting things to make sense but in really there is no sense in all this. It feels a lot more like Catch 22 than Alice in Wonderland.

There really is no point to the government shutdown. Republicans have already tacitly conceded that the shutdown has not stopped Obamacare. The health insurance exchanges are online, albeit sporadically given the overwhelming demand and the apparently poor job of software engineering by the contractor for the federal exchange. You would think that since their tactics obviously didn’t work they might concede reality, get over their snit and reopen the government. After all, Senate Democrats have already conceded to Republicans on the size of the continuing resolution, a cut from last year’s Spartan levels.

But, no, that would mean a loss of face, which is way more important than leaving much of the federal government shut down. House Republicans won’t allow a simple up or down vote to be taken on funding the government, although the votes are there to reopen the government. However, the House did vote 408-0 to pay federal workers like me, retroactively of course, for sitting at home. It’s reasonable to ask, “Gosh, if you are going to eventually pay us anyhow, why not send us back to work?” That way at least national parks would reopen and people desperately needing to get into NIH cancer trials might get the opportunity.  But no, that’s can’t happen because you see if we are actually ordered to do something productive then Republicans can’t make people’s lives miserable, and you can’t prove the government is shut down unless people’s lives are miserable. Take out the misery and the whole thing becomes pointless.

In my case, what this amounts to is I am getting an IOU not just to stay home, but also to actively not work. It was made very clear to me when I left work a week ago: I was not to do anything resembling government work, under penalty of law. I’m forbidden from even turning on my government furnished laptop computer, or logging into my government GMail account from my personal computer. Which means I am making excellent money, more than $60/hour plus benefits, to mostly paint my house. Yesterday it was our upstairs bathroom, which needed touching up before our house goes on the market in a couple of years. It actually required totally repainting the room when the paint I purchased turned out to be glossier than what was actually on it. I figure if this goes on long enough, I’ll run out of chores to do around the house. I still have a list that includes cleaning and re-staining the deck, painting part of our master bedroom, washing all our windows, mulching the garden and removing the last of the weeds from it as well. Then I will start on the next set of non-house chores: getting the car inspected and taken in for a tune up. It used to be these were hassles but now I can do them at a time that suits me and eventually get paid obscenely for the privilege. Plus I can sleep in late, although I seem to be up by 8 AM anyhow. For this I can thank our dysfunctional Congress.

Defense Secretary Hagel has decided that most of his employees are essential after all, and called them back in to work. No phone call has arrived from my chain of command. I assume our systems are running okay, but obviously I can’t find out. I do know that when this hullaballoo is over I’ll be just one more civil servant trying to make the chaos stacking up in the office into something orderly and attainable again. All our yearly plans will have to be rethought and re-scoped, at additional time and expense, of course. In all our project plans, there was no place for a task called “government shutdown” but clearly something will have to give: scope, time or cost. Not even a government shutdown can change these facts of life.

The real crime here is the loss of governance. Nowhere in our constitution is there a Hastert Rule, which says only items that a majority of the House’s Republicans agree to vote on will get voted on. This rule, if you think about it, is more insidious than the filibuster. The filibuster is a way to ensure the minority gets heard. The Hastert Rule allows no opportunity for the minority in the House to have any say on what comes before the House. It becomes even more like Catch 22 when you consider that many Republicans are totally okay with breaching the debt ceiling, in fact they are eager to see it happen. It’s not such a big deal, they say. Simply use cash coming in to pay off our foreign creditors. Everyone else can wait. My goodness, what kind of glue are they sniffing? If just one social security payment is late because of this, the Republican Party is done: dead as a doornail in the 2014 elections. It’s amazing they can be so totally clueless about the obvious. It just goes to show the danger of ideology because it can overrule any common sense whatsoever. The real “hostage taking” that President Obama referred to today will be the Republican Party. It has already being held hostage by the Tea Party. It’s like that scene from Blazing Saddles where the sheriff points a gun at his own head.

All work in government is essential because Congress authorized it. It’s just that a lot of the work does not seem essential when you did not vote for the law. The work I do involves planning projects that take years to move from idea to implementation. It means lots of requirements, prototypes of system changes, vetting with user groups, detailed project plans, project tracking and oversight and lots of levels of testing. Declare this work nonessential and you make government less effective. In my case, the impact is that our scientific data is less likely to be shared, or shared as quickly as it could be. It could impact interdisciplinary studies needed to understand the impact of human activities on our climate.

I doubt it’s more important for me to sit at home and paint walls instead. However, if this is how you want to stop government from governing, it is effective, just much more costly than letting government do its business. If Congress wants to tell us this work is no longer essential, it can pass a law and we’ll stop.

Meanwhile, I’ll keep painting. The money is great!

Furlough Diary, Day 3

The Thinker by Rodin

Our bathtub is looking real nice after its caulking yesterday. With time to spare and prohibited from even touching a government-owned device, this currently “non-excepted” i.e. furloughed federal employee has time to play Tooltime Tim. Unfortunately, I’m not terribly skilled at home improvement, given how I messed up my last three attempts to caulk our bathtub. It always comes out looking amateurish. Thanks to being furloughed, I had time to approach this problem in a more systematic way, which meant the innovation of going to YouTube and finding a video to see how professionals do it. Of course! I should have used masking tape! My new caulking now looks professionally done.

We’re not supposed to be doing any government business because the government doesn’t want to compensate us for it when no money is appropriated. Most federal employees I know simply don’t have an off switch. We are vested our work. Yeah, I know that goes against the stereotype of a federal employee as a lazy, unmotivated, obese grade C student. The truth is just the opposite. While I cannot do any work, I can, as a taxpayer, check the web sites I managed (well used to manage) to make sure they are still up. They are, probably thanks to Greg, the one “excepted” employee still at work, just forty-two elect in an agency with over 8000 employees. There are no employees in the field to calibrate any of the gauges reporting our real-time information, so it’s mostly running on autopilot, as is most of the “non-essential” federal government, despite that this data is needed for flood forecasting and all sorts of public safety needs. Maybe if it were our job to kill people instead of help save them then we would be excepted.

It’s a strange business being furloughed. It’s sort of like living in limbo. In past furloughs we were retroactively paid, but that is less likely this time with our ornery congress critters, who already forced many of us to take unpaid furloughs during the spring and summer, and are probably not in a mood to compensate us for their inability to simply do their jobs. While prohibited from doing actual work under penalty of law (but it’s hard to see how it can be enforced, with the enforcers likely furloughed as well), being furloughed also means you can be recalled at any time and if called in you must report. Which means looking for other work to fill the gap is not really an option, unless it is work that you can quit it at a moment’s notice.

Do you know any employers with these kinds of options? I don’t. I think panhandling qualifies, as long as you carry your cell phone with you so your boss can reach you. Moreover, if you feel so fed up with the whole furlough situation that you just decide to quit, well, good luck with that. The HR department is non-essential too, which means they are also furloughed.

Lincoln freed the slaves, but apparently an exception was left for furloughed federal employees who really cannot find employment elsewhere and thus cannot earn a living. Ironically, I have found a way to earn some money while furloughed. I have a small business as an IT consultant that I do on evenings and weekends. I can now do this work during the day and feel guiltless about it, providing I have some work to do. I do have some. One client wants to hire me to do some changes to their user interface, but is busy with a product release, thus I don’t have a good set of requirements to start work. My wife’s boss may give me some programming work, which is fine although I don’t know Python (I’m sure I can pick it up) but I can only do it if I can drop the work at a moment’s notice when and if I am called back to work. It looks like it’s going to be a long wait.

It’s a shame because I have plenty of time during the day which means while furloughed I could get this consulting work done immediately. Instead I am caulking the bathtub. And installing a new toilet seat. And buying cat food, hitting the BJs and the Wegmans. And blogging. In general, I am tackling all the chores I would do before we hope to put the house on the market in 2015. So there will be more caulking, painting, cleaning the deck and pulling weeds in the days, weeks and maybe even months ahead.

What is missing for me is the sense of dread I felt in 1995 and 1996, the last time federal employees were furloughed. Granted if this extends long enough, my feelings may morph to concern and then panic. I don’t feel the need to tighten my financial belts at the moment. We will keep spending as we always have and really I have no idea how to turn it off. How do I tell my wife not to go see the specialist she needs to see? How do I tell the credit union I don’t think it’s advisable for me to make my mortgage payment for a while that I am contractually required to make? Fortunately, my wife brings in some income and we have enough in savings to tie us over.

So my concern is not so much for me but for those much further down the federal civil service ladder, not to mention the huge array of contractors and businesses dependent on federal spending. Many of these GS-5 through GS-12 employees are living at the margins. It may not be popular to hear it but they generally earn considerably less than those in the private sector doing equivalent jobs. They work for the government in part because they like their work, are excited about their missions and in part because of the benefits, which are pretty good, particularly if they make it to retirement. But they are getting squeezed and they have been kicked around a lot already. Many were furloughed for days and weeks earlier in this year due to sequestration.  There have been no cost of living raises for over three years, but their rents have gone up. And then there is the morale problem, kicked around by a Congress that treats them with contempt. These employees are simply scared, living paycheck-to-paycheck, convenient piñatas for mostly men in Congress with no sense of empathy to smash at.

Many of them are professionals in the best sense of the world. This includes people like my brother, a NOAA meteorologist, who is chomping at the bit to go back to work. He knows his research has a real world impact. He cannot work, at least not legally. I suspect a fair number of my employees, particularly those doing software development, are still busy at home coding away on their personal computers, wholly uncompensated, waiting for the day when they will get paid again and can do their small part to make our troubled world a better place.

If only Congress would let us.

A not so little Little Rock, Arkansas

The Thinker by Rodin

Sequester madness is abating a little bit. There will be no furloughs in my agency, at least through the end of the fiscal year. I am not sure exactly how we are really saving any money. At least here within the water community, a lot of it is probably coming from funding fewer stream gauges. This is not a good thing from a science perspective. The fewer bodies of water that you monitor, the less rich your data set is and the chancier it becomes to draw inferences based on the data, like whether flash floods will occur. Doubtless contracts are being canceled or suspended as well, and maintenance is being deferred. Almost all of this is a false saving. If you don’t pay for maintenance, the cost of future maintenance becomes more expensive. But Congress seems to be saying “meh”. They are happy to leave it to some future Congress to act as genuine stewards. As for us employees, who haven’t seen a cost of living increase in three years, no furlough is welcome news. We’ve been pinching our pennies for years while the cost of living has steadily gone up. This direct attack on standard of living was scary, unnerving and pointlessly cruel.

Small cracks are emerging in the general travel prohibition. All it takes is a waiver from senior management. In general they are niggardly in handing them out. For someone like me used to traveling on someone else’s dime, it’s been a surreal six months close to home. Eventually we were granted a travel waiver, so here I am on the outskirts of Little Rock, Arkansas in hundred degree heat which is surprisingly bearable.

We are definitely not living it up. We spend nights at an upscale Holiday Inn. Getting to work means just walking across the grass to our building next door. There we are holed up in a conference room while the heat and humidity steadily builds outside. Lunch is usually at a Jason’s Deli down the road. Dinner of course varies from a nearby steakhouse to a restaurant in downtown Little Rock, where I found myself tonight. It’s a short ride. The heat may be high but after a day in a typically overly air conditioned conference room the heat feels kind of nice.

Little Rock has not lived up to my preconceptions. In a state where the governor gets only $30,000 a year (at least when Bill Clinton was governor) I expected Little Rock to be small, sleepy and prototypically southern. It’s not that way at all. It’s not a huge city but no one would call it small. And it is hardly sleepy. The traffic may not resemble Boston’s traffic but it is brisk during rush hour. In fact, Little Rock is imitating its northern cousin cities. A streetcar goes through the downtown. There is a long river walk along both sides of the Arkansas River. On this summer evening a band was playing in a small amphitheater along the south side of the river. Fans spraying mists of water tried to keep the audience cool. Further down the sidewalk were fountains that children were happily jumping through.

The population seems more than a bit metrosexual, much more trim in general than most cities in the South, with a preponderance of younger and athletic people. The bums smell as bad as bums anywhere, but panhandle more politely and seem oddly disproportionately white. The Arkansas River impresses, not so much for girth but for its swiftly flowing waters, at least today, coursing so quickly it is as if they could not wait to end up in the Gulf of Mexico. In general, despite the June heat Little Rock seems happy and reasonably healthy.

There is no question that it is the center of culture in Arkansas, such as it has. Arkansas is largely a rural state so Little Rock has become its cosmopolitan center. It sports the status symbols of a big city: a reasonably impressive convention center, a four-star Marriott where the porters are lined up in the driveway awaiting guests, a capitol dome (of modest size), restaurants where you can get craft beers and a general dearth of billboards, something rather exceptional for the south which generally turns its nose up at zoning laws.

Little Rock is also greener than I expected. The Ozarks are a short drive to the northwest. There are plentiful and lush trees and no sign of Spanish moss that I could see. The Arkansas River and its many tributaries provide plenty of fresh water. Consequently it feels more like North Carolina than Louisiana. At least in Little Rock the metrosexuals are moving in and everyone seems reasonably productive but chilled.

The Clintons have left a large imprint on the city. Its national airport is named for Bill and Hillary and of course President Clinton chose to leave his presidential library in the city. It’s a good tourist destination and quite impressive, or so I’ve heard. Since it closes at five p.m., I simply have had no time to visit it.

And Little Rock is growing. Out here in its western suburbs a huge new highway interchange is being built. And yet it is small enough where rush hour is bearable and getting to the airport is not a huge hassle. Coffee shops and Barnes & Nobles are easy to find. More upscale restaurant chains there are aplenty, but there are also quality local establishment.

Finding food I am supposed to eat on my crazy diet is a challenge. This is in part because when you are only eating certain vegetables and grilled proteins and you don’t have your own transportation you depend on the charity of others or you walk to dine. The hotel breakfast won’t do, so it is more packaged protein for breakfast instead. My powdered scrambled egg package won’t work as I don’t have a stove, so it is “Crispy Cereal” which is sort of like Rice Krispies, but not. Salads for lunch, another salad or grilled vegetables with dinner, and something grilled and about eight ounces for dinner without much in the way of garnishment. It will be good to be off this diet at some point, so eating off the land becomes less of a hassle and adventure.

Overall Little Rock is probably one of the jewels of the south, worthy of consideration if you like the climate. It was definitely worth the visit. I won’t be living here, but I can see where a true southerner could easily be captured by its modesty and charm.

The big squeeze

The Thinker by Rodin

Job growth in March was a measly 88,000 jobs. The unemployment rate dropped to 7.6 percent, but this was largely because many people stopped looking for work. The economy had been looking pretty promising earlier in the year, with steady job growth well in excess of 100,000 jobs a month.

Now we will likely be watching the effects of austerity for the rest of this year and probably next year as well. It won’t seem familiar to many of us who were not impacted by the Great Recession, but it will look familiar to those who live in Europe. Austerity has failed to rectify Europe’s economy although it has caused two recessions. Austerity in Great Britain looks like it is causing a third recession. Yet for some reason in the United States we seem to want to emulate European austerity. The predictable results are starting to be seen in the jobs numbers for March.

To the extent the United States has had job growth over the last few years, it has been due to not following austerity. And this should not be rocket science. What exactly is austerity? It is not living at your means; it is living below your means. The hope is that through frugality one will glean efficiency, competitiveness and an eventual rebound in wealth. Austerity does not mean driving a used car, it means driving a very used car until it falls apart on the side of the road. And after it falls apart, maybe it means not replacing it.

Austerity is being enacted through sequestration, which cuts certain areas of federal spending. It will lead to the furlough of federal workers like me, actual cuts in pay that will give me less to live on and will decrease my standard of living. Some federal workers may have their pay cut as much as twenty percent through the end of the fiscal year. In some sense though federal workers are relatively lucky. At least they will have some income. It’s the vast food chain that feeds off federal spending where the impact is likely to be much greater. I have watched a friend struggle in this climate and my heart goes out to her. It means periods of unemployment, stringing together temporary jobs, working out of town in temporary housing and in general dealing with a lot of stress and anxiety. She is one of many in this situation and with the new pointless austerity trend is for more of it, because of a law posits that austerity is a good idea. For her it means no health insurance and wondering how you are going to pay the mortgage.

But at least she is partially employed, and may get a full time job again one of these days that pays actual benefits. She has some employment. Many other federal contractors are simply unemployed and trying to figure out what to do about it. The bottom line is when you have less money you have less of it to spend. Austerity breeds more austerity. Austerity does not trickle down, it cascades down. None of this should be the least surprising. Any economist could have predicted this. We can now expect modest job growth at best and a cooling economy, which was barely warm, for the remainder of the year, assuming we do not progress into a recession.

To quote Pogo, “We have met the enemy, and he is us.” We are choosing austerity and we are choosing to punish ourselves because we can. And that’s what the big squeeze is all about in a nutshell: some small minority of politicians from heavily gerrymandered districts is making it so because they control a slim majority in the U.S. House of Representatives.

In Europe the same economies practicing the austerity are at least as badly off as they were before they were told to be austere. In Greece and Spain, for example, the unemployment rate exceeds 25%. The real cost of planned austerity though is not money but the trail of wounds and wreckage that it causes. It’s in the excess student indebtedness because states won’t subsidize tuitions as much. It’s in young adults who, if they are lucky, can still live at home and try to fend off feelings of hopelessness as they search for good jobs that largely aren’t there. It’s in lives put on hold, if you are lucky, or watching the quality of your life diminish. It’s in putting off fixes to your car for another month, even though the engine needs to be fixed. Austerity multiplies fiscal and personal pain.

It amounts to a game of musical chairs except two chairs are being pulled with each round. In reality though it’s those who are in recession-proof jobs and who have sizable bank accounts that end up back in their chairs. Pain is distributed disproportionately to those not quite so fortunate or quite so prepared.

The multiplying effect is really the uncertainty. No one is quite sure how the sequestration will affect the economy, so they are hunkering down instead. They are not making investments, not hiring people and deferring spending just in case things go from bad to worse. You know you have a problem when Wal-mart is struggling with profitability. Between payroll tax increases, declining wages and poor job growth there is simply less for the least well off to spend, and Wal-mart, which is basically the retailer to the working class, thus has a hard time making profits. So they squeeze their employees some more, resulting in fewer employees, long checkout lines and empty shelves.

About all you can do is in good times to prepare for the bad times. The 401-K has proven a failure as a retirement system, but it is still a source of funds that in good times that I can put money too, and which can’t be taken away in the next round of austerity. And so I have been throwing as much money as I can into it, which includes now that I am over fifty special catch up contributions. The 16.3% of my income going into my 401-K means something else has got to give and that is our savings account, which needs a lot more money. Our daughter is on the cusp of a college graduation and it comes just in time. We really can’t afford to keep her in college much longer. The $1300 or so we pay for her room and board each month has to fatten our savings account instead. And like many Americans, I look for other sources of income: teaching and consulting. The latter has been reasonably good to me lately, even if it keeps me from blogging as often as I would like.

Like it or not we are all in the economy together. Our cheese is being moved and unless we have been hoarding cheese many of us are about to get caught in another pointless austerity experience. What it really will amount to will be more wealth moving toward the wealthy and our pockets will be picked clean.

My crystal ball on how the sequester will play out

The Thinker by Rodin

Lots of pundits are puzzling through the politics of the federal sequester that began March 1, trying to figure out how long it will last and what the end game will be. If it were simply a matter of exercising common sense, it would have never occurred in the first place. Neither party claims it wanted the sequester, so a one line law passed by both the House and the Senate repealing the sequester would have done the trick. But of course what parties say they want and what they actually do are two different things. The reality is that neither party nor the White House saw advantage in capitulation and Republicans simply refuse to compromise.

The sequester could be moot by March 26, which is when the current continuing resolution funding the government runs out. If no new resolution is passed, sequester will be the least of the government’s problems. It will simply shut down, except for whatever is considered to be emergency services. So federal employees worried about whether they will be furloughed one day a week will have bigger problems to worry about: total unemployment, at least until something is passed into law. The experience in 1996 didn’t go well for Republicans, so it is probably something they will not want to repeat. Time will tell.

The earliest impact of the sequester is going to be on constituencies that Republicans care the most about: defense and the massive military industrial complex that depends on defense spending. Federal employees may have thirty days to avoid furloughs, but defense contractors won’t be so lucky. This means that Republicans will endure most of the initial heat for blocking a resolution to the sequester. And the impact will fall most heavily in red states. Here in Virginia, our governor Bob McDonnell is already squealing, due to the huge defense contractor community both in the Washington suburbs and in the Hampton Roads area. The bright red state of Texas is also likely to be one of the first to get squeezed as well, as they also have their thumbs deep into the federal defense pie. They also host huge bases where much of the surrounding community has their livelihood dependent upon spending at these bases, such as Fort Hood.

Doubtless the military industrial complex is already frantically dialing their senators and legislators asking them to strike a deal. The only question is how long Republicans will choose to hold out against this squealing. And that depends on Republicans not affiliated with the Tea Party and whether they will bolt. If they find common ground with House Democrats, they would have a majority to end the sequester. This has been the tactic that Speaker Boehner has repeatedly used so far when he cannot convince his own party to take necessary action. What is unclear is whether enough pressure can be exerted to affect this change.

It’s more likely all parties will find a reason to drag it out through March 26. The question then becomes not the sequester, but what can pass a divided congress in the way of a continuing resolution to fund the government. What would normally happen is a split the difference bill between the House and the Senate. The Senate would probably not pass a continuing resolution that funds the government at the sequester rate through the end of the fiscal year without it being softened through tax increases. The House will probably not approve any resolution that increases taxes.

My bet is that in the end it will be the defense cuts that force the bargain and affect political compromise. The rationale from Republicans will go something like this: “We can no longer afford to jeopardize our nation’s security by these unilateral cuts to defense.” The compromise: ditch the defense cuts, but keep the non-discretionary cuts in place, but spread this pain over all discretionary spending. The deal will be in essence to cut the sequester in half, at least through the end of the fiscal year, and leave it in fiscal year 2014 to be figured out through the appropriation process. This way everyone sort of wins. Defense takes a smaller hit, but it will still be considered “manageable” by Republicans. Non-defense discretionary spending will be trimmed as well, but to the 2%-3% level vs. the 5%-6% for the year that has to be spread out through the end of fiscal year 2013 now.

Anyhow, that’s my crystal ball. We’ll see how this all works out, but one thing is certain: it won’t be easy or pretty.

Burning through the seed corn

The Thinker by Rodin

Debt ceiling. Fiscal cliff. Continuing resolutions. Sequestration. So many names but it’s all the same game: it’s Washington’s version of high stakes poker where no one gives an inch until the last minute and maybe not then. This time the game is the sequestration that begins March 1. The prevailing political wisdom is that no one will make a serious effort to stop it. It’s not until we close a few national parks and the lines extend for hours at TSA checkpoints that politicians may get serious and pass something, at least until the next politically designed crisis. That is due to kick in at the end of March when the latest continuing resolution expires.

The sequestration will mandate that all federal agencies including defense take a significant haircut, $1.2 trillion in cuts over ten years, half from defense, half from the rest of government. Social Security, Medicare and Medicaid are exempt. It’s the discretionary spending that is being cut and it is being cut because it is discretionary, as if it is nice to have spending, not necessary spending.

Quite the opposite is true. Most discretionary spending is really essential spending. Not spending on Social Security, Medicare and Medicaid is really nonessential spending. Of course to those who depend on these programs, they are certainly essential spending. In reality, government’s real value comes from discretionary spending. It includes all those services you take for granted but it turns out will really piss you off if canceled or even cut back. Agencies know what to do and will often find the most visible ways to influence Congress and choose to cut these first. It worked during the government shutdown in 1995. Americans get really pissy if they when they are already late for their flight have to wait in long lines to get through security, or their trip to Yellowstone gets canceled or shortened because the park is closed one day a week.

In reality, the threat of sequestration has already thrown a lot of chaos into the economy. Federal spending often sounds so abstract, but federal spending creates and sustains lots of jobs, most of them quite necessary. Defense contractors have already laid off people anticipating sequestration. Uncertainty usually adds to economic fears. That appears to be what is going on right now, and the United States risks going back into recession just because of all the pointless last minute brinkmanship in Washington.

These activities are burning through our seed corn, by which I mean we are hacking away at essential areas of government. Meat processing plants, for example, may have to close one day a week due to lack of federal inspectors. Weather forecast models may need to be turned off, resulting in forecasts with more uncertainty. Applications for new drugs will take longer to get approved, reducing market advantage and causing pointless suffering and maybe preventable deaths. This money does more than buy stuff and create jobs. It allows government to oversee and regulate. It enables an even playing field so competition can thrive. It makes our modern life possible.

The agency I work for is pondering what to do if, as required, it suddenly loses ten percent of its budget. As it is we work off continuing resolutions, so we have little certainty about how much money we will eventually get or how exactly we are supposed to spend it. Tightening the belt is all well and good, but try tightening your financial belt so that suddenly you had to live on ten percent less. If you knew that you would always have to live on ten percent less, you would probably make major financial decisions like move to cheaper housing, buy a used car, etc. But most discretionary spending is in reality fixed costs. The rent to GSA will not go down. The power company will not reduce rates. You can’t order employees to take a ten percent pay cut although with thirty days notice you can furlough them one day a week. What is typically done in these situations is that truly discretionary spending is cut: travel, training and long term investments like contributions to working capital funds and buying computer servers. This sometimes works in the short term, but it cannot be sustained in the long term and doing this is really counterproductive.

We recently got one of these politically inspired directives to cut travel by thirty percent compared to what we spent in 2010. Probably some political appointee figured that it doesn’t look good. In any case, travel is discretionary. In a pinch you can do without it, right? Watching what this is doing inside our agency, you only want to grimace. The effect is to introduce a lot of uncertainty and to cause project schedules to slip. Cutting travel in our case mostly means cutting travel for testing. This will mean that testers will test remotely. So much money is saved. Unfortunately, the real effect is that productivity drops substantially. Bring people together to test and they test collaboratively and more thoroughly and play off testing scenarios against each other. They are also not distracted by normal business because they are testing in their office. We have documented this many times, which is why we budget sufficient money for travel for testing purposes. The likely result will be inferior tests, which will result in an inferior and/or late product. Certainly many meetings can and are held on line. In fact, most of them are. We have tons of these conference calls and Webex meetings, so many that they often consume our calendars. Sometimes you really need to meet face to face to get work done on time and to an acceptable level of quality.

The effect of sequestration on the economy is already well documented: it causes negative GDP and if continued will probably trigger another recession as well as increased unemployment. Inside the government it will cause fear, chaos, uncertainty, hard feelings and most importantly slipped schedules and more inefficiency, not less.

It’s no way to run a railroad or a government. To work efficiently government must run off a plan. This is not a plan unless the plan is to create dysfunction, in which case it’s a great plan. It’s stupid and counterproductive and is degrading the ability of government to simply govern.