Sep 24, 2012

Lexy Kessler

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Could the Issue of Sequestration Clinch an Obama Win?

Sequestration, the $1.2 trillion in automatic federal spending cuts scheduled to take place on January 2, 2013 as part of the Budget Control Act of 2011, could be a significant issue for more than 2.1 million voters employed by government contractors.  If the cuts go into place as planned, these voters could ostensibly expect to lose their jobs right before or shortly after the holiday season.  A George Mason University study recently concluded that 1.1 million people working on Department of Defense-related spending contracts could lose their jobs, as well as 1.05 million jobs from nondefense-related contracts.

While both sides of the political spectrum agree that sequestration is a problem, they differ on how to solve the impending crisis, which could send the country back into a recession.  As one might expect, Republicans would like to see stronger cuts to social programs, while the left is aiming to raise taxes and reduce corporate subsidies in order to get closer to a workable budget.

Jill Aitoro of the Washington Business Journal noted an interesting fact regarding the timing of sequestration: “…lack of any clear guidance from the government on how the cuts will be implemented could also lead most defense companies to warn many of their employees about possible layoffs this fall, in compliance with the WARN Act, which requires companies to give 60 days’ notice before large firings.”  This means that, if no alternative deal is made, more than 2 million people could be warned of potential layoffs on November 2^nd, just days before the election. 

The interesting part of this equation, for the Obama Administration, is that President Obama is the only one of the two candidates in a position to use his power to prevent or delay sequestration.  If the President publicly demonstrates that he is making an effort to protect these jobs, he could be a very attractive option to voters and their families potentially affected by sequestration.  These actions could easily be a deciding factor for many voters.

Surprisingly, neither candidate has made sequestration part of the discussion of their platform so far, but may want to consider doing so in the coming weeks.  These cuts and job losses are particularly important in two key swing states, Virginia and Colorado.  The George Mason study indicates that nearly 450,000 people in the DC Metropolitan region would lose their jobs if the current plan goes into effect in January, 207,000 of which are in the state of Virginia alone. 

There are several potential alternatives that could be put into place to avoid sequestration, including a 1-2 year delay or a lame duck deal from Congress.  Whether a deal is made or the stalemate continues, one thing is for sure – voters working in the government contracting industry should be keeping a close eye on this issue.