Debt ceiling debate renews fears for feds

Federal employees could soon be facing furloughs or holds on their salaries and benefits if the debt ceiling debate is not resolved before the Aug. 2 deadline, experts said.

Feds faced a similar problem a few months ago when the government nearly shut down because lawmakers couldn’t agree on funding for this fiscal year.

In the debt ceiling battle, the consequences of not reaching a resolution are more worrisome because they are unknown, said John Palguta, vice president for policy at the Partnership for Public Service. 

“We have never gone through a situation where the government has literally run out of money,” Palguta said. “What happens will depend on the decisions the president will have to make.”


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The "scary thing," he said, is that those decisions will have to be made on a day-to-day basis and will likely include halting programs or services that the government can’t afford.

According to a recent analysis from a public policy group, if the debt ceiling is not raised before the Aug. 2 deadline, the government would be unable to meet a wide range of spending obligations that include federal salaries and benefits.

The analysis released June 28 by the Bipartisan Policy Center said after that date the Treasury Department would begin to prioritize payments to stay under the debt limit. 

For instance, the Treasury Department could exhaust all August income by paying only six items – interest on existing debt, Medicare, Medicaid, Social Security, unemployment insurance and defense contracts – and have no money left to pay for others things such as veterans’ benefits, tax refunds, military active duty pay and federal salaries and benefits, the group said.

Colleen Kelley, president of the National Treasury Employees Union, reminded members of Congress in letters sent last month that feds just went through the anxiety of a shutdown.

“Now, they face threats of pay cuts and pension decreases, as well as another threat of furloughs because Congress hasn’t passed legislation to increase the debt ceiling in order to pay the bills for spending that has already occurred,” she wrote.

Palguta advised that federal managers should start conversations with their employees about debt limit negotiations.

He said managers should acknowledge that this is unchartered territory for the government, and they should reassure employees that they will share information on how failing to raise the debt ceiling would impact their agency or program as soon as they have that information.

About the Author

Alyah Khan is a staff writer covering IT policy.

Reader comments

Thu, Jul 28, 2011

Oh yes, there should be written into law a stipulation that reads, "In the event of a governmnet shutdown or fiscal crisis of any kind, the first wages to be denied will be those of elected federal officials and political appointees."

Tue, Jul 26, 2011

It wasn't that long ago that the benefit of being a fed wasn't the pay, but the stability. That is gone now. As soon as I can, I'm leaving federal service. I entered it at a pay-cut to serve my country and know that I didn't have to worry about layoffs, but now...layoffs and furloughs are common. No incentive to be a fed anymore.

Wed, Jul 20, 2011 A Concerned Fed Peon

I see SO much WASTE at the EPA lab where I work everyday it's incredible. The IG has been there numerous times over the last few years...there is IN YOUR FACE PROOF of all kinds of gross mismanagement, waste, fraud and abuse (retaliation) yet NO manager has been canned. The IG is a USELESS cover up entity. Years ago there was a wood lathe purchased and an air handling unit specifically installed to get rid of the saw dust...there was NEVER any real justification for it's purchase either. The cost taxpayers about a quarter of a million dollars....it was used for personal usage. Chess pieces were turned on this thing. The manager that purchased it got his hand caught in it while playing around on government time back in Summer of 2004 and was hauled off to the local ER. EPA "management" at higher levels stood back and let this happen too. They threatened employees who openly questioned what this thing was for too. The latest nonsense involved the same manager too. This time his little buddies were making motorcycle parts from government purchased materials as well as an expensive water cutting device, ON work time and selling them on EBay!!! The IG was tipped off and then purchased one of these parts. Why the hell this nonsense is STILL going on years later should raise eyebrows in Congress...but it won't...We are also still using old software (DOS 3.3) on test equipment that run tests for compliance on NEW vehicles....PLEASE someone with some functioning brain cells tell us, HOW can you test new non-production 2013 and beyond vehicles for proper reduced emissions with software bases on 1980's technology??? That explains why the lab can only run a test on only 1 out of 20 engines that come in there...huh??? What is all the so-called "lab modernization millions" being spent on??? I could go on and on about equipment being bought on purchase cards and disappearing too. I'd also like to know WHY we are hiring 11 additional NEW management positions???? WHY?????

Tue, Jul 19, 2011 Lou

Noticed the only threats of cuts were to those who paid into the system. If the budget must be cut - and it does, why not cut out payments for benefits to those who never paid a single dime into that system. This would eliminate a huge cost of paying for enormous retirement benefits for anyone who has served so much as a single day in Congress, as well as their medical/dental benefits which come at 100% paid, no co-pays, no ceiling, etc. Congress would NEVER do to themselves what they do to YOU. As for the president, that office can recommend and even attempt to control, but Congress has the first and final say in ALL spending ............... As for tax rates, I'm 100% for taxing purchases. (It was said "If you want to stand in the one place in MD where you can see the most new cars for the coming year, stand in front of the main welfare office in September/October.") This way, whether you're a millionaire or someone on welfare who just happens to have enough to buy a new high priced auto for cash, you pay the high taxes. Those who don't buy, don't pay. Real simple and fair for everyone.

Tue, Jul 19, 2011

"Let's start taxing everyone equally (rich and poor alike) " << Incredible and tragic that some have been so well and truly duped that they actually believe that the better off don't already pay MORE taxes than the poor. The politics of class warfare are so easy to perpetrate on the unthinking and uneducated (for which we have the NEA to thank I guess). Go ahead - raise taxes on those who provide the jobs. Enjoy your furlough, 'cause it'll be a permanent one!

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