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‘Don’t Be Afraid…It’s Only Fiscal Year ‘13!’

  • Published
  • By Maj. Christine Millard
  • 90th Comptroller Squadron commander
They're calling it a perfect storm in the budget world. This fiscal year, we're facing significant fiscal issues predicted to have far-reaching impacts to our government spending. These include effects of the Budget Control Act of 2011 and potential sequestration, a 6-month continuing resolution, prior year cuts in budgetary areas and personnel, expiration of the Bush Tax Cuts, and we're projected to hit the debt ceiling again mid-year. All this in an election year and a fiscal year numbered 13. Are there any triskaidekaphobians out there?

Since this is Halloween week, I thought it would be fitting to comment on the ghoulish economic times we are facing. The details of this budgetary nightmare are already starting to churn together. We started Fiscal Year 2013 under a six-month continuing resolution. This authority imposes restrictions on government spending to include funding limits and restrictions on implementing new programs. A continuing resolution is meant to fund government operations in limited capacity until Congress can come to an agreement on a new fiscal year's funding. Even with a limitation on funding levels, a continuing resolution can actually result in increased spending and contract inefficiencies as we pay contractors only part of what we owe them, forcing them to increase prices for the financial risk we are placing on them. This scenario sends a shiver down the spines of our resource managers.

Contract costs are not the only concern for the FY13 budget year. This year we're really starting to feel the effects of the Budget Control Act of 2011, specifically in the area of potential sequestration. The BCA required a $1.2 trillion reduction in the federal deficit. In effect, a Joint Select Committee on Deficit Reduction was established to figure out an implementation solution on how to chop the head off $1.2 trillion in federal spending. As part of the charter for this committee, an automatic budget reduction, called sequestration, was set to kick in on Jan. 2, 2013, if the committee did not come up with a workable plan. Well, the committee failed, so sequestration is now looming over our heads and budgets like a big funding guillotine.

Sequestration was not the only result of the BCA. Upon signing, the BCA immediately increased the debt ceiling by $900 billion. At the current rate of spending, we're projected to again hit the debt ceiling in FY13. This could cause the government to wander around without direction like an angry spirit seeking its final resting place and possibly result in government shutdown. We can expect to revisit the same frightening scenarios multiple times in FY13.

The other financial apparition in FY13 is the untimely death of the Bush tax cuts which will expire in December 2012. These tax cuts impact individual income tax, estate taxes, and business taxes. In addition, this is a key election year with pending outcomes in the office of the President as well as Congress. The budget spirits are getting restless, lock up your checkbooks now!

Do we really need to be worried or is all the talk of doom and gloom really just Casper the Friendly Ghost having some fun? This is not the only financial crisis our country has experienced. As a matter of fact, the cyclical nature of our economy has guaranteed a downturn periodically. And various financial events leading to these downturns have stemmed financial panics throughout our history. Some of the most famous include the Panic of 1893 based on the effects of financing and building railroads, the Bankers' Panic of 1907 following a huge drop in the New York Stock Exchange, the economic events leading up to the Great Depression, and much more recently, the financial crisis of 2007/2008 attributed to events in the housing market . In some of these cases, Americans withdrew money from their banks in such volumes to contribute to further economic decline and even lost confidence in the economic future of the U.S.

This loss of confidence was not necessarily a means to an end, though. Stressful economic times have led to positive changes in our economic system. For example, the Federal Reserve Act which created our Federal Reserve System was implemented as a result of financial panics. This system gave economists more flexibility to adjust interest rates and potentially soften the effects of future economic problems. And for FY13, the Department of Defense's "Strategic Guidance and the Defense Budget Priorities and Choices," both issued January 2012, talk about strategic changes based on a tighter fiscal environment which will result in a smaller, leaner joint force, but one which will remain "agile, flexible, ready, innovative, and technologically advanced." Basically, we're using forced budgetary constraints to capitalize on the quality of our professionals and technology to ultimately get more buying power out of our dollars without cutting away at the muscle and bone of our warfighting capability.

So as we head into this fall time of year here at F. E. Warren Air Force Base with its proud history of haunted buildings, with longer nighttime hours, and piles of newly-fallen leaves making our tree branches look like pointy witches' fingers, and with this Halloween week's festive jack-o-lanterns and trick-or-treat activities, those with a fear of the number 13 in general can divert their worries toward other Halloween phobias. Our country has historically faced many past economic challenges head on, and this perfect storm will be overcome, just the same. To reassure you, the DoD leadership has even issued a guidance memo on FY13 Joint Committee sequestration, dated Sept. 25, 2012, which tells us to continue normal spending and operations. Basically, we need not put additional fear in the perfect storm and its effects on the economic condition of FY13. We shouldn't be terrorized by the budgetary challenges of FY13...however, if you see a headless George Washington dollar bill floating towards you in the night, I'd run for cover! Boo! Happy Halloween!