The Economy & Federal Budget

What Veterans Need to Know Now About Sequestration.

As a result of the budget impasse and its lack of resolution last year, a mandatory round of $109 billion in cuts to the federal budget is scheduled take effect on January 2, 2013. If this happens, funding will be cut from government agencies and government contractors. This is an important topic to understand because when veterans transition out of the military, many end up working for defense and government contractors.

When an “automatic” form of spending gets cut from the federal budget it is called “sequestration.” If Congress does not act to prevent sequestration from happening, it could result in a significant loss of jobs and future economic opportunities for some veterans. Congress is not currently is session and it does not plan to vote on sequestration until after the election.

According to a study by George Mason University in DC, such an event could potentially cost government contractors 157,000 jobs. For other businesses connected to contractors, such as suppliers and government subcontractors, 956,000 positions are at risk of elimination. Certain geographic locations, (i.e., where there is a dependence upon government agencies and federal contracts), have the most to lose from economic havoc caused by sequestration.

If you work for or seek employment at a government facility, agency or a federal contractor; you should prepare and act accordingly.  First, it is recommended that you follow any and all developments related to Congressional sequestration on both national and local levels. You should also know all of the risks faced by the organization you have an employment relationship with or interest in joining.

Start by being aware of the percentage of business that is generated by government funding in the company, division or project where you work or seek employment. Next, understand the steps your employer is taking now on programs, projects and jobs. This will help you be proactive in the face of future uncertainty.

The average estimate of automatic reductions projected to hit is 8.8% across-the-board. However, your division could be eliminated or absorb a disproportionate share of the financial impact from the budget cutbacks. So have reliable information and realistically size up all of your employment risks.

You should also develop a contingency plan, which includes (un)employment benefits, future education needs, a possible job search and a rainy day fund to cover any future and ongoing finances you may need.

Make it a daily habit to be informed and aware of everything happening around you. Advanced planning and preparation will put you in the best position possible before any event beyond your control actually takes place. This will allow you to manage any outcomes or opportunities that come from the actions, or inactions, of Congress.

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