Home » AMERICAS » From Snowquesters to Pay Freezes: What the Frigid political climate in Washington means for the Economy

From Snowquesters to Pay Freezes: What the Frigid political climate in Washington means for the Economy

Residents of Washington D.C. and surrounding areas dubbed the over-blown winter storm that was due to hit the region this week the “Snowquester”, cheekily poking fun at the weird word being endlessly tossed around the nation’s capital. Days have passed since the March 1st deadline that saw major spending cuts, called sequestration, become a reality—what does this mean for the economy of the region, and of the country? Most say it is still too early to tell, but here are some of the areas where Americans will probably feel the heat from this political freezing-over.

Last week a series of automatic spending cuts went into effect after Congress and President Obama were unable to settle on a viable alternative. This is the dreaded Sequestration, a term usually reserved for the courts, which will see across-the-board cuts, affecting both defense and discretionary domestic spending.

First off, this was never really meant to happen. The sequestration was part of a 2011 congressional act on Budget Control that was meant to force the parties to the table in search of an answer to the looming debt crisis. Yet, here we are, almost a week after the March 1st deadline, and sequestration is officially in session.

On Wednesday March 6th, the House voted to extend the federal employee pay freeze, meaning that feds won’t be receiving their annual cost of living increase for the third time since 2010. However, in addition to those having to tighten their belts even further, many employees will actually find themselves furloughed.

A furlough refers to a temporary, unpaid, and forced leave of absence. Approximately 2 million[1] federal employees could be subjected to taking one day off of work per week for an undefined amount of time starting in late April (the government requires employees receive a 30-day notice, so we won’t be seeing any forced leave for another couple of weeks).

The nation’s capital and its surrounding areas, such as Maryland and Northern Virginia, is home to thousands of federal workers who are really going to feel the brunt of these cuts. This means a regional economic slowdown, especially due to the high number of private-sector contractors, in areas such as defense, who depend directly on the federal government for their business (take Lockheed Martin, pictured below)

lockheed martin

Another example is the D.C. Metro, the go-to transportation method for federal employees, which stands to lose about $12 million in revenue from decreased ridership due to forced leave and government cuts[2]. In a White House document outlining the impacts of the March 1st cuts, teachers and schools, as well as law enforcement–two areas that the city desperately needs funding for–will see important cuts to their respective budgets. Public health funding will also be impacted, meaning fewer resources to combat the spread of infectious diseases, drug addiction treatment and natural or biological disasters.

Maryland and Virginia paint the same picture. Education, work-study programs, military readiness and public safety are all areas that will be hit, and hit hard. The Commonwealth of Virginia stands to lose approximately $14 million in funding for primary and secondary education[3].

In a way, it is obvious that any region with such a high density of federal and fed-related activity will be badly hurt by such a sequestration, but the consequences don’t stop at the borders of the Greater Washington Area.

Nationwide, employees in fields such as border patrol and air-traffic control are receiving their furlough notices. Fewer air traffic controllers means reduced air traffic flow, and the TSA hiring freeze[4], means longer wait-lines at airports. The White House document mentioned above states that the FBI would see a reduction of more than 1,000 agents. Border Patrol on its end will have to reduce activity equivalent to 5,000 border agents and almost 3,000 customs agents. More than just meaning longer lines at airports and borders, this kind of reduction presents a threat to the nation’s security.

The sequestration is here to stay, but it is still early to see from where exactly the different federal agencies will be reducing their budgets. One thing is certain however, the money has been cut and consequences will ensue. Congress knew just how much was at stake prior to March 1st, but since no deal was effectively reached in time, we will have to ride this sequestration out to see just how much of an impact it will have on the region, and the country’s, economic health on the road to recovery since 2008.

Featured image credit to Aliyah Sadegh. 

[1] http://money.cnn.com/2013/02/17/news/economy/federal-worker-furloughs/

[2] http://www.myfoxdc.com/story/21429633/metro-gm-federal-sequestration-will-hurt#axzz2MozsliSb

[3] http://assets.bizjournals.com/washington/blog/fedbiz_daily/Virginia.pdf

[4] http://www.idahostatesman.com/2013/03/06/2480021/boise-air-traffic-controllers.html

About Alex Moon

Student of Political Science and International Development at McGill University. Alex is particularly interested in American politics, Trans-Atlantic relations, and Middle Eastern politics. He is considering a career in foreign service after his studies. So far his time at TPB has allowed him to learn a lot through his different roles. He has contributed as a writer, as the visual coordinator, as the director of logistics, and is now working as an editor. As an early member of the team, he hopes to continue to contribute in any way he can to the future success of the project

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  1. This whole situation just confirms what should have been been obvious to everyone for a long time: The government doesn’t care about the people it effects, it cares about the power it wields. The best compromise they came to was to make everyone suffer.

    • I agree. I was hopeful up until almost the last minute before the March 1st deadline, but as you said the fact that it came and went with no real resolution shows the extent to which Congress/Executive will continually put politics before real results.

      It’s disheartening really, especially as a lot of us students from DC look to go back there for summer employment, the prospects aren’t looking good for opps within the government.

      • I think this is as close as we get to a “real resolution” to addressing the much-needed cuts in government spending. The cuts amount to a very small percentage in the federal government’s ~3.5 trillion budget when you look at the bigger picture. Although small, they will surely sting several agencies. Several studies looking at GDP, growth and economy say this is far as it’s going to get – a sting. Don’t think this will result in a real blow to the nation.

        • I see what you’re saying, but I have to disagree. Maybe I see the effects are more weighted than they are due to strong ties to the District, but the point is these cuts were planned as Draconian on PURPOSE for the exact reason that it would motivate politicians on both sides of the isle to not let them go into effect. We have had no “real resolution” whatsoever, just complacency and partisanship that have allowed a ship to set sail that was never supposed to be built in the first place (if you catch my drift?..sorry).
          As for the concrete economic consequences, I do believe the Capitol region will be hit harder than the rest of the country, but that doesn’t mean the rest won’t feel anything. Though GDP may not fluctuate much in the grand scheme of things, this type of government inaction in the public sector can only serve to weaken the economy.
          It is not the most effective way to streamline a bloated federal sector, it is poorly thought-out and reeks of desperation in the 90th minute. Even if in 2 or 3 years, these events are seen as just a “sting” or a blip on a GDP growth chart, it is a strong indicator of the poor overall economic health of the nation.

  2. UPDATE:

    As stated Furlough notices have been rolling out to Customs and border protection agents as of March 7th. Dep of Defense employees also looking at 22 furlough days in the next 10 months..


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