With so much of the Washington DC economy wrapped around work for the U.S. federal government, it is no surprise there is a chill in the air, even for a brisk February. President Obama is asking Congress to stave off "sequester", but many are bitterly resigned to the across-the-board budget cuts that seem inevitable. After 18 months of uncertainty (well, mostly) over an administration change, many were ready to get back to work on valued contracting opportunities such as Eagle II and others.
Defense contractors are pulling an "ostrich" move -- seemingly in total denial about the impending tsunami.
The sequester is a package of automatic spending cuts that were part of the Budget Control Act, which was passed in August of 2011. The cuts, projected to total $1.2 trillion, are scheduled to begin in 2013 and end in 2021, evenly divided over the nine-year period. The cuts are also evenly split between defense spending, with war spending exempt, and discretionary domestic spending, which exempts most spending on entitlements like Social Security and Medicaid. The total cuts for 2013 will be $109 billion, according to a White House report.
Austerity hasn't helped other governments deal with the economic downturn, particularly in my adopted homeland of the Republic of Ireland. In fact, such measures may be more than a bitter pill -- they may in fact retard growth overall.