A political deal struck in the summer of 2011 could wreak some havoc on the economy this year unless feuding lawmakers in Washington can agree on a compromise by Friday.
And San Clemente -- with its proximity to Camp Pendleton and pending federally funded road work and beach replenishment -- could take a hard hit, city business and government leaders say.
The sequester, as it's called, would mandate significant cuts to the federal budget, and few -- if any -- government agencies would be immune. Defense and domestic spending would be evenly slashed.
Jan Refsdal, president of San Clemente defense contractor and race car designer Swift Engineering, said his business has sputtered and stalled simply because of the potential of sequestration. Less than two years ago, Swift spent $3 million to increase its capacity by 600 percent to produce military drones and aimed to expand its workforce by 75 positions.
Instead, "our business is off 30 percent from where it should be because of sequestration and our government's inability to come to terms on a budget deal," Refsdal said.
Still, he was confident the contracts would start flowing again. The whole problem is a crisis manufactured by warring political factions rather than part of a fundamental economic downturn, he said.
Lynn Wood, director of the San Clemente Chamber of Commerce, said the large number of Camp Pendleton civilian and military employees living in San Clemente could be squeezed by defense cuts, which would hurt local businesses -- especially service businesses.
"Funding cuts always affect the local economy," she said. "Services you would have done -- say you get your hair done or your nails done -- those are considered luxuries and those are the first to go."
Other possible effects are unclear.
There's no way to tell if funding for the La Pata extension project to connect arterial roads in San Clemente with the rest of Orange County could be on the chopping block, or whether the planned massive beach sand replenishment project would be compromised, said San Clemente City Manager George Scarborough.
"In short, no one really knows at this time what impact the sequestration will have on transportation or the Corps projects," he said in an email. "That’s because Congress has not passed any fiscal year 2013 spending bill and the President has not put forth his fiscal year 2014 budget. Without specific budgetary proposals, we don’t know how La Pata or the beach sand project might be affected."
Scarborough has conferred with Marlowe & Associates, the city's contracted Washington D.C. lobbying firm. But even the lobbyists are in the dark.
"Most other agencies are considering a 2.5-percent, across-the-board cut in funding, but no specifics yet on how that would occur, and the agencies have discretion as to how the cuts are implemented," Scarborough said. "For example, the Dept. of Transportation could cut all of its funding from personnel and leave highway funding alone."
Orange County has more than 20,000 federal employees and retirees, according to Eye on Washington, and their fate could include furloughs or worse. Media reports include warnings on delays in air travel and tax refunds.
Civilians employed by the Department of Defense face the possibility of furloughs.
“The possibility exists for a 22-day furlough of federal employees,” said Brian O’Rourke, spokesman for Navy Region Southwest.
On Sunday, the Obama administration released a report for each state detailing the effects of the sequester’s budget cuts, and Republicans have accused the president of using scare tactics for political gain.
The seven-page report for California paints a grim picture for education, environmental protections, the military, law enforcement, child care, public health and government services. The report is attached to this article in the PDF section.
The nation has been through this drill before. The sequester was set to begin on Jan. 1, 2013, if lawmakers weren’t able to reduce the budget deficit. That deadline came and went, but they were able to agree on postponing the sequester for two months. That time is running out.