Sequestration could bring big impact for Small Businesses

Posted Date: 
September 20, 2012

Vice-Chair Judy Stephenson introduced the committee and welcomed our speakers Al Wurglitz and Colleen Pleasant Kline from Miles & Stockbridge, PC. The speakers presented about the potential impact of federal sequestration on Small Businesses.

Mr. Wurglitz discussed the Congrssional issues that most effect the American economy including funding the federal government through a continuing resolution, extending the Bush tax cuts, raising the debt limit, and sequestration.

He spoke about the threat of sequestration, which are automated across the board budget cuts to the federal government unless Congress comes up with a "deal" to reduce the federal deficit by $1.5 Trillion. Sequestration would go into effect in January 2013. Currently, federal departments are preparing for these possible cuts.

The US Office of Management and Budget (OMB) indicated few details, but did say that, under sequestration, Defense cuts would be more than 9.4%, non-defense cuts of 8.2% for discretionary funding and 7.6% for mandatory spending other than Medicare (2% cuts).

Additionally, sequestration would require budget cuts over the next 10 years. Many different sectors will be impacted buy sequestration. For example, State and Local Governments will lose funding for Health Care, Education. and Child Care Services. Civilian agencies may lose more than 500,000 jobs. Defense agencies will have to trim, which will lead to contractors trimming overhead and a shrinking pool of suppliers.

Other impacts of sequestration could include real estate shrinkage, retail and service industry losses, and State and Local tax revenue dips, which would mean additional cuts at the State and Local level.

Mr. Wurglitz and Ms. Kline discussed strategies to prepare for sequestration for government contractors and non-government contractors.

Tagged in:

MCCC Strategic Partners