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As the August 2nd debt-ceiling deadline nears, leaders in the local business community and federal agencies are grappling with possible short and long term impacts. We examine how uncertainty and dysfunction in official Washington could reverberate in Maryland, Virginia and the District.
- Jim Dinegar President and CEO, Greater Washington Board of Trade
- Tom Fox Vice President for Leadership and Innovation, Partnership for Public Service
MR. KOJO NNAMDIFrom WAMU 88.5, at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. After a weekend of political brinkmanship, the White House and Congress apparently found a way to avoid national default, an agreement that calls for more than $2.4 trillion in spending cuts over the next decade and a two-step increase in the debt ceiling.
MR. KOJO NNAMDILater in the broadcast, we get a unique view from Congress and find out how Hill staffers are dealing with an avalanche of calls and emails, but first, the local impact of this messy national debate. No matter how the debt ceiling standoff ultimately wraps up, this much is certain: Change is coming to the Washington area. Most federal agencies are in a holding pattern, unsure how trillion-dollar cuts will end up affecting their work.
MR. KOJO NNAMDIThe region's private contractors and small businesses are also dealing with their own uncertainty. Joining us in studio to discuss this is Jim Dinegar, president and CEO of the Greater Washington Board of Trade. Jim Dinegar, good to see you again.
MR. JIM DINEGARIt's nice to see you, Kojo.
NNAMDIAlso with us in studio is Tom Fox, vice president for Leadership and Innovation with the Partnership for Public Service. He writes "The Federal Coach" column in The Washington Post. Tom Fox, thank you for joining us.
MR. TOM FOXThank you.
NNAMDIYou, too, can join the conversation. Call us at 800-433-8850. Are you a federal worker or someone who works with the federal government as a contractor? Do you work for a business with more indirect ties to the federal government? Our number is 800-433-8850. You can go to our website, kojoshow.org, join the conversation there. Or send us a tweet, @kojoshow.
NNAMDIAs of right now, it appears that we do indeed have a deal to avert a national default. But after months of political brinkmanship, the only certainty in debates about government debt and spending has, it would appear, been uncertainty. Tom, of course, for workers in the federal government, the future is still something of a mystery. How is all this turmoil affecting federal employees?
FOXWell, I think they don't know where to start in terms of really planning for the future, both in terms of their personal lives, as well as their programmatic work within their federal agencies. And it seems as though one shoe has just been dropping after another. It started with the pay freeze back in the fall. Then you had the budget impasse in the spring.
FOXAnd now, we thought that with the resolution of the debt, there would be some clarity, but, really, we've only got the broadest outlines of what a proposal will look like. And now, it's not going to be until Thanksgiving and then, I think, December 23 are the deadlines for actually putting a plan together. It doesn't seem like a very happy holiday.
NNAMDISo they're not waiting for the other shoe to drop. They're waiting for several other shoes to drop...
NNAMDI...which, I guess, is a much more difficult situation. Jim Dinegar, a few months ago, Washington only narrowly avoided a federal government shutdown as leaders argued over the 2011 budget. You say that a debt default, if it happened, would have hurt ten times as badly in the local economy. Can you, please, explain?
DINEGARWell, it really is a ripple effect as it relates to the contracts and the projects that are being led out now. So there's a delay being on -- put on them, based on whether or not the decision gets reached sometime soon. Well, that's the big business. In addition to that, as Tom mentioned, there are a lot of federal workers (word?) during the down economy have always been safe with their job.
DINEGARAnd now, this level of uncertainty puts a real chill in the air as it relates to going out to the mall, to make the major purchases. I won't say they're hoarding cash, but they're managing their money very carefully now, as they always have, just spending even less. On top of all of that, then you have the entirety of the issue of the billions and trillions that are being considered as cuts. And that hit will be an outsized hit to the greater Washington.
NNAMDICompared to most parts of the country, this region has weathered the economic storm of the so-called great recession relatively well in large part because of the steadying influence of the federal government, but that all seems to be up in the air right now. The board of trade's most recent survey of business owners actually found widespread pessimism about the future. And this national debate about the debt limit cannot have helped.
DINEGARNo. It hasn't helped at all, Kojo, and I will say that that uncertainty is just not good for business. Business prides itself on making predictable decisions. And with the federal government, world's biggest customer, uncertain right now, some of those decisions -- many of those decisions are being delayed. In addition, when you have the bigger businesses outside of government -- Hilton Corporation's headquartered here.
DINEGARVolkswagen's corporate headquarters is here. Marriott Corporation and the rest, there really is a ripple effect as it relates to the overall economy. It's got people on the edge of their seats at a time when cash in August -- cash flow is usually thinner than most other times of the year.
NNAMDIAnd, in fact, the private side of the Washington economy is deeply enmeshed with the public sector. We have a whole bunch of industries that rely on contracts from the federal government. You also have a huge indirect relationship. Local governments and local businesses would take a huge hit, and government employees and contractors start losing work.
DINEGARSo there's a one-two hit coming up, and we're going to wait to see as to whether or not a deal really is reached. And we then achieve the Aug. 2 deadline. And if we miss it, we really have a mess on our hands. But even if there's a deal, it's trillions of dollars in cuts. And many of them would hit this area certainly harder than others.
DINEGARSo if we don't reach the deal by Aug. 2 and it affects the debt ceiling and it affects the Moody's and S&P and the rest, we're going to have a chill through the greater Washington region probably like no other, perhaps a downgrade for Maryland, Virginia, Arlington, Fairfax, Montgomery County. And that's really a problem. It will be more expensive for money. But if we do get a deal, still, the cuts will be significant in this region.
DINEGARAnd so this area is bracing for what I've likened to be one of the Big Ones as California has talked about the Big One.
NNAMDI800-433-8850 is the number to call. We're talking with Jim Dinegar. He's president and CEO of the Greater Washington Board of Trade, of the likely effects of the deal to raise the debt ceiling in the Washington area, whether or not it actually occurs. Tom Fox is vice president for Leadership and Innovation with the Partnership for Public Service. And he writes "The Federal Coach" column in The Washington Post.
NNAMDITom, not all government taxing and spending is created equal. When we talk about cutting the size and scope of government, there's clearly a lot of fat in the federal government, and some programs probably should be trimmed. But there are also parts of the federal government that conduct essential services. And many of those agencies, it's my understanding, were already under-resourced before the whole thing got started.
FOXThat's right. I think if there's going to be any optimism we take from the bad news we've experienced over the last week, the last several months, it's that -- by the fact that Congress is going to be focusing more over the course of the next few months, through Thanksgiving and then December timeframe. Hopefully, there could be a real honest strategic conversation about the long-term planning that could go into making smart cuts because there are some agencies, undoubtedly, that could cut without doing great harm to the country.
FOXBut for others, it will go straight to muscle and bone. And that's the type of thing that we want to avoid, that we've seen in the past, that does have long-term negative effects, not only for those agencies and their federal employees but, really, for the country.
NNAMDIWhat concerns are people raising in response to your columns? And how is that influencing what you write?
FOXWell, I think there's two things. Again, from a personal perspective, you know, as Jim had mentioned, folks are worried, and so they're being a little bit more cash conscious around major purchases and things like that. But federal employees and, I think, for many of the private contractors who work directly with government as well, there's a broader concern there about the ability for them to achieve their mission and their goals.
FOXThe folks in and around government are exceptionally mission driven. They're not in this simply for the paycheck but for the outcome that they can have to better the country. And, I think, as much as anything that's what they're worried about, how we're going to continue to achieve our goals in the absence of the resources we need.
NNAMDIHow has this uncertainty affected your workplace? You can call us at 800-433-8850, send us a tweet, @kojoshow, or email to email@example.com. There's a broader philosophical debate here about the proper role and size of government compared to the private sector. In this part of the country, Jim Dinegar, most people seem to believe that these are not mutually exclusive realms, that a vibrant public sector can support a vibrant private sector and vice versa.
DINEGARWell, absolutely. The private sector is a very strong partner with the public sector. The federal government here is big business around the world. But because we are where we are, and that's that proximity to power, you have a lot of the highly technical, highly complex tasks that have been done in partnership with contractors over the years. I'm with Tom.
DINEGARI have to say that these need to be strategic decisions, not done on the 11th hour, really, with a deadline looming over their heads. This is just not the way to make policy. And, unfortunately, we're going to have to tease through this over the next several weeks and months to figure out actually what's in there and see how harmful it's going to be.
NNAMDITom, same question to you, the relationship, the interaction, sometimes the interdependency between the public and private sector in this region.
FOXIt's absolutely true. I think it's not only in this region, perhaps predominantly so, but all across the country. All you have to do is take an issue like homeland security. I mean, that's an area where the link between the public sector, the private sector, and even some not-for-profits, is arm and arm. And, you know, if you pull the thread in one place, the whole thing will unravel.
NNAMDIJim, how does the business community view these kinds of debates? We know that, as a rule, most business groups would prefer lower taxes at a national and local level. But we also know that certain government services are essential for businesses to thrive, especially when we talk about things like transportation infrastructure.
DINEGARWell, Kojo, there's a really strong growth in the public-private partnerships where you have private funds being put with government funds because a lot of governments don't have the funds into the future primarily for infrastructure projects, transportation, roads and bridges and more. So we're probably going to see a bit more of the business stepping up for those. There won't be taxes.
DINEGARBut there would be usage fees, the tolls and things like that, that people will have an option on. When you look at the process, I think that the business community is fed up with the way Congress has conducted itself over the past several years, primarily now with the proposed shutdown earlier this year and now this. This isn't the way to make policy.
DINEGARThe issues aside, the way it's being done has cast this uncertainty in the greater Washington region more than any other region around the country because we are so closely linked to the federal government.
NNAMDIAnd, Tom, during the previous administration, some people felt that the government had become too reliant on outsourcing. I have seen some articles talking about insourcing, the idea of government doing more services than it previously farmed out, or doing more of the services that it previously farmed out. Is that at all relevant to this conversation?
FOXI think it certainly is. I mean, it's not clear where the cost savings will really be derived. If it's outsourcing versus insourcing, certainly, I think there will be a move towards insourcing because the hard dollars that you spend out to a private contractor appear to be saved. But the bottom line is, you know, looking at the cost savings that Congress is laying out, it will be difficult for agencies to insource that work.
FOXIt's really going to be a matter of trying to do more with less, which never really works out.
DINEGARWell, and my concern on that, and I'm sure that Tom shares it, is that it will become less attractive to work for the federal government if they don't get past the threats of shutdowns and furloughs and shutdowns and furloughs. Who's going to want to put their career in the federal government with that kind of uncertainty?
DINEGARAnd so I think that the federal government is doing itself, by Congress right now, a real disservice by how it's treating its federal workforce. And that's going to come back to haunt it.
NNAMDIHere's Mark in Ellicott City, Md. Mark you're on the air. Go ahead, please.
MARKGood afternoon, Kojo.
NNAMDIGo ahead, Mark. Good afternoon.
MARKGood afternoon. And I just wanted to share an experience regarding the federal workforce that I had as a young engineer when I was working for the Department of the Army. I came in as a GS-9, and my officemate was a GS-13. And he would regularly boast in front of our supervisor, who is a GS-14, that he hasn't done any work in six months. And if he were in charge of our installation, he would be the first one he would fire.
MARKSo now, this is anecdotal. But I think it kind of speaks to the culture that's in the federal government now and will always be. It's not deficiency driven like the private sector. And losing a few jobs in the -- or some jobs in the federal sector may be painful for our area. But it may be a good thing, and I think it is for the economy overall.
MARKAnd we have been living in the Washington and Baltimore area in a kind of a bubble that's insulated us from the recession, and now maybe it's time for us to feel some pain with the rest of the country. And that's all -- pretty much all I had (unintelligible).
NNAMDITom -- thank you very much for your call, Mark. Tom Fox, I think Mark accurately nailed the stereotype of the federal worker.
FOXWell, I think -- you know, I think the other thing that Mark said, that we should focus on, is around efficiency and effectiveness. It's clear that we'll have fewer resources to operate our federal government in. But, as you said, Kojo, you know, it is a stereotype and, unfortunately, those sorts of anecdotes, while true, are also true in the private sector or the not-for-profit sector.
FOXYou know, we can't allow a few bad apples to ruin the bunch. And so, you know, as we look forward in terms of how we're going to effectively and efficiently handle these cuts, it will be important to have real performance-based conversations about the workforce, who really is performing the work, who is doing the best job and how we're going to make sure that we retain and reward those people throughout, you know, this set of issues.
FOXOr, as Jim said, we run the risk of losing the very best people, retaining the poorest performers and then being unable to attract and really recruit the best moving forward.
NNAMDIJim Dinegar, being in the private sector in this environment -- by this environment, I mean in the Washington region where you are closer to larger numbers of federal employees than a lot of people in the private sector are around the country -- how do you deal with these ongoing perception expressed by Mark and the few others that the overwhelming majority of federal workers don't do much of anything?
DINEGARWell, unfortunately, the federal workforce doesn't have the ability to hire a great public relations firm to say how wonderful they are and how hard they work. But it does a real disservice to them to take that broad brush approach. The concern that the Board of Trade has with the current discussions is that the amount of uncertainty is really chilling in this region. And I'll go in two respects.
DINEGAROne, right now, there's supposedly a deal that's been reached, but no one knows what it's in it, what it's going to be, when this 12-member commission gets together, what they're going to decide for additional cuts of -- in the trillion of dollars. We're -- you know, we're almost used to talking about $700 billion for this bailout and $800 billion for this TARP fund. Right now, we're talking about trillion of dollars.
DINEGARNo one knows what programs are being included. The hit to the state and local budgets will be severe. Almost regardless of what's decided and, I think, when you look at the social safety net, when you look at where the rubber really meets the road with governments around the country, it's not just the federal government. This is going to be a hit on state and local governments. I don't think we've seen one like this ever.
NNAMDIGot to take a short break. If you have already called, stay on the line. We will get to your calls. The number is 800-433-8850. How has the uncertainty over raising the federal debt ceiling affected your workplace? 800-433-8850. Or go to our website, kojoshow.org. Join the conversation there. I'm Kojo Nnamdi.
NNAMDIWe're talking about the local impacts of the debt ceiling stand off with Jim Dinegar, president and CEO of the Greater Washington Board of Trade, and Tom Fox, vice president for Leadership and Innovation with the Partnership for Public Service. Tom also writes "The Federal Coach" column in the Washington Post. Right back to the telephone, here is Aaron in Washington, D.C. Aaron, you're on the air. Go ahead, please.
AARONI was just calling to comment again on what Mark is talking about, the fact that it's -- you know, you have a few employees, not a lot that just don't put in the time and the effort, and that competition breeds efficiency and that there's just no room -- not no room. We haven't built competition in the system.
AARONAnd so, if you built competition in the system, just as a given, you're not going to have -- you're going to cut a lot of the extra fat. And people say, well, you know, it's, like, 2 or 3 percent of the employees, but, in reality, those people that aren't doing -- pulling their fair share, slow down everything. And you see it a lot in smaller communities. Competition's everything because there's not -- there's not room for all the extra.
AARONAnd so I just think we need to make it part of the system. It's just not part of the system in D.C. It's not part of the Congress...
NNAMDIAaron, I'd like you to hold for a second while I talk to a couple of other people so you can have the opportunity to listen to what they have to say. And you should know that Tom, from times to time, does write a column on federal employees who are, well, bad. But here's a few of those to speak on their own behalf. First, Amy in Alexandria, Va. Amy, you're on the air. Go ahead, please.
AMYHi, Kojo. Been listening to this and had listened a while to a lot of people call in and have this misconception that federal workers don't produce anything and just are a drain on the system. I just want to let you know that I'm required to have an advanced degree for my position. And I worked hard to get that advanced degree, and I'm paying for it myself. My government position, I make one-third to one-half of what someone on the outside makes.
AMYI have a docket nurse rate that's astronomical. But I clear everything that I need to, and I do so in a professional manner. And my agency makes money. So I'm tired of people of saying that federal workers don't have any sort of motivation or don't have any sort of professionalism or just don't pull their own weight because that's just not true in a lot of cases. And I think that if people actually took a look into it, they might have a different perspective.
NNAMDIAmy, I am inferring from your call that the words, Patent and Trademark Office, means something to you.
AMYYes, it does.
NNAMDIThank you very much for your call, Amy. We move on to George in Arlington, Va. George, you are on the air. Go ahead, please.
GEORGEHey, Kojo. And, yeah, I just wanted to add something, like Amy said. You know, I worked for various government agencies for 20 years in the State Department as a foreign service officer. We don't get paid one hour of overtime. I just came back from (word?) Africa, helping out there, working weekends, 12, 14 hour days.
GEORGEAnd, you know, the people there don't -- the officers don't get paid one hour in a 20 or 30-year career for overtime that I know of. I just think it's nonsense. I have five brothers and sisters work in the private sector, and they all work hard as well. And I just think these are the kind of impossible stories you hear out there, as the truck stops or whatever, that these federal workers are all sitting around with their feet on the desk and not pulling' their weight. It's just not.
NNAMDIGeorge, thank you very much for your call. I think we can move on from that issue for the time being. Today, we hear a lot more about social entrepreneurship and private businesses that seek to have a positive impact on local communities. We also know that government agencies are interested in recruiting leaders who have experience in the private arena and vice versa. Are public and private starting to blur even more, Jim?
DINEGARWell, I'm not sure if it's going to blur. There's a good partnership underway, and it really has to do with support of the communities, not just the local communities here in Greater Washington, but around the country and around the world. You heard from one caller who was over in Africa. There are world situations that are very difficult, very complex. And the United States is typically the primary to lend its assistance and lend its support.
DINEGARAnd when you look at the -- I'll pick, right now, on the federal workforce. When you look at the tsunami, when you look at Haiti, when you look at Katrina, the federal workforce did the most, really, in terms of contributions. Now, they weren't Walmart or Target, and so they don't get that focus. It's because it's spread out through the different agencies.
DINEGARBut I will tell you that there is not a more caring workforce in the country than the federal workforce. And my concern in this entire battle right now is that the reputation of working for the federal government is going to be put at risk, partly because of the bashing from the 535 up on Capitol Hill and partly because of the uncertainty associated with going to work for the federal government.
DINEGARBut it can be a remarkably rewarding career and a very effective way to make the most of your skills.
FOXYeah. No, I totally agree. I don't know that the lines will blur. But, I think, what is blurring is the set of skills required to succeed and achieve your goals. And so there is the move towards social entrepreneurship in the privates sector. But you're seeing more and more of it in the public sector as well because there's a recognition that to achieve these extraordinary public goals that, you know, federal agencies and sometimes private businesses are setting out for themselves, you will need those entrepreneurial skills.
FOXYou'll need to be innovative, creative. You'll really need to understand how to partner and collaborate across silos, both within your organization and across sectors. And so, I think, that's -- that piece is blurring.
NNAMDIIn November 2010, President Obama announced a two-year wage freeze for federal employees. At the time, that seemed like a standalone story. But now, looking back, it seems like a sort of harbinger of things to come. The mission of government, however, seems to be morphing. And, in many ways, we may need to ask for more from our government, regardless of how this shakes out. We have a population that's getting older.
NNAMDIWe have infrastructure needs that have to be addressed. How do we resolve the, on the one hand, conflict between our greater needs and, on the other hand, our demand for lesser government spending?
FOXWell, I think that's a great point. And we've not had that conversation for the longest time. And that's why we're in the position we're in today, is that, we've tried to have our cake and eat it too. And I think -- again, if I'm going to retain any hope within the context of the current conversation, it's that, in the coming months, we will have an honest dialogue about what are the priorities and where will we invest as a country recognizing that our needs are quite broad.
NNAMDIJim Dinegar, we hear this consistent drum beat of bad news about the economy and how dysfunctional Washington is. Is that going to end up hurting the health of both the public and private sector?
DINEGARI think it's hurting the reputation of the United States. I think, right now, in a way that we're not used to at all, we're being laughed at around the world when China is asking us in pretty strong terms about getting our House in order. That really is a concern. You know, we've all been concerned about Greece. We've all looked at Italy and Portugal and Spain and their economies.
DINEGARBut, right now, the world is looking at the United States, saying, get your act together. That will not help. It will not help on economic development. It will not help on bolstering the reputation of the wonderful country. And so I'm very concerned, long haul, about what this does mean for the United States.
NNAMDIJim Dinegar is president and CEO of the Greater Washington Board of Trade. Jim, thank you for joining us.
DINEGARThank you very much.
NNAMDITom Fox is vice president for Leadership and Innovation with the Partnership for Public Service. He writes "The Federal Coach" column in The Washington Post. Tom, thank you for joining us.
FOXThank you, Kojo.
NNAMDIWe're going to take a short break. When we come back, what this has all meant for congressional staffers these past few weeks. I'm Kojo Nnamdi.
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