Change or Progress

Today's guest blogger, Peter Cappelli

It’s a worldwide trend that has been under way for nearly a decade: Responsibility for talent management is shifting from HR to frontline executives. The transition is driven partly by cost cutting—head counts in HR departments fell sharply during the Great Recession—but it is also fueled by the recognition that many aspects of talent management are best handled by day-to-day managers.

In a 2005 Australian study, 70% of respondents said that line managers had taken over many HR tasks in their firms during the previous five years. In a 2013 survey of UK companies, senior executives reported playing a much bigger role than HR departments in setting employees’ development goals. In the United States, 45% of the HR departments surveyed plan to restructure before the end of 2013, in part to reflect this trend.

More importantly, research by CEB shows that when line managers, rather than HR, are responsible for recruiting, performance management, and retention, companies are 29% more successful at those tasks.

Rousing Drowsy

The Future of Human Capital Management in the USA Do you think our competition have to deal with things like this?  OMG there is no end to the ways in which the courts can make it challenging for an employer.

Sidney Riddle was a manufacturing engineer for Hubbell Lighting Inc. (HLI) in Virginia. In 2010, Riddle was diagnosed with fibromyalgia, which caused him to sleep poorly and grow tired at work. Riddle admits that he fell asleep at his work station "on one or two occasions." In 2012, Riddle requested time off under the Family and Medical Leave Act (FMLA) due to his condition. HLI approved Riddle for FMLA leave provided he "call in [or] notify his supervisor." However, HLI terminated Riddle a few days later after he was caught sleeping at work. Riddle then sued HLI under the FMLA and the Americans with Disabilities Act (ADA). According to Riddle, HLI should have considered his nap to be FMLA leave. Moreover, HLI should have accommodated his disability by waking him up when he fell asleep. The Court rejected Riddle's FMLA claim. "In an FMLA case, whether the employer had notice of the employee's intention to take leave is a question of critical importance," the Court explained. "Riddle's complaint omits to mention, however, that he attempted to [call in or notify his supervisor before he fell asleep]. Without more, Riddle has not stated an FMLA claim." Still, the Court allowed his ADA case to proceed to trial. "Here, Riddle alleges that he had disabling fibromyalgia (which prevented him from sleeping), that HLI knew about his condition, and that he could satisfactorily perform his job if HLI would accommodate him by waking him up when [he] fell asleep," the Court wrote. "He further alleges that he requested such accommodation and HLI refused to provide it." "Construing Riddle's allegations in the light most favorable to him, he has stated a claim for failure to accommodate under the ADA," the Court ruled. [Riddle v. Hubbell Lighting (USDC WDVA 2013) no. 7:12cv00488] From Michael Salisbury, Principal of the Human Resource Alliance (HRA) at www.hralliance.biz

Better Wellness Programs

Employers have tried several strategies to control health care costs. For example they have; reduced expensive plan options, shifted costs to employees, and reduced the number of employees eligible for benefits. However, many companies have experienced negative reactions to these strategies and worse; the cost of health care continues to climb.  As a result, employers appear to be turning toward wellness programs to promote a healthy workforce, hoping that this effort will improve productivity and contain health care expenses.

 However, “Wellness” is an often used, yet little understood term. For example, is wellness the same as health? Probably not. The definition of “health” as contained in the constitution of the World Health Organization is broad and culturally neutral. They define it as, “The state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” What this definition reflects is the state of an individual but the description fails to consider any individual commitment to healthy behavior, which is so crucial to wellness.

 HRA uses the following definition to describe a wellness programs: “Those activities embraced and practiced on a regular basis by an individual that will prevent, mitigate or correct problem health conditions, which would otherwise contribute to lost productivity and/or costly medical care”.

We believe that conditions such as: heart disease, distress, drug abuse, obesity, hypertension, and the loss of health due to tobacco use, can be prevented and even corrected. However, the individual who is experiencing a health risk must take the appropriate actions to overcome their unhealthy state. Therefore, a wellness program that simply makes things available (e.g. discount gym memberships) is not a relevant course of action. Furthermore, a wellness program that primarily appeals to people who would otherwise be healthy is also not relevant.

To be meaningful and of value, HRA sponsors wellness programs that target those conditions that are driving cost, are preventable and can respond positively to healthy behaviors.  Furthermore, we believe that an organization’s wellness program must take into account a host of company related factors in addition to the employee, including:

1.    The employee’s dependents

2.    The organization’s  insurance plan

3.    Company strategy, goals, objectives, policies and practices

4.    The firm’s accident prevention program

5.    Workers compensation practices and policies

6.    Absence management efforts

7.    Attendance policies

8.    The ERP program

9.    EE productivity measurements and incentives

10.  The cause for turnover at the company

11.  Recruitment challenges for the enterprise

12.  The degree of presenteeisim within the firm

13.  The firm’s commitment and involvement in the community as a corporate citizen

14.  The level of employee engagement

15.  A firm’s internal  practices regarding;  gain sharing, benchmarking, communication, progress reports, accountability, reinforcement and recognition practices

16.  The level of participation by the local health care community (doctors, heath care facilities, sources of education and information)

17.  Financial incentives, support programs, sponsorship or champions, and community collaboration.

18.  And possibly, even an extension of the wellness program and its objectives into the  contingent work force (temps, contractors, consultants, vendor staff)

Is a wellness program the answer to a vexing problem faced by both employees and employers? A comprehensive survey conducted by ADP and the results of numerous other investigations suggests that traditional wellness programs fall short of a panacea.

 

The Office of Disease Prevention and Health Promotion7, defines a comprehensive work site health promotion program as having five key elements.  Among a nationally representative sample of employers, only 6.9% reported that they had all five of these key elements in place.

 ADP’s survey2, finds that the wellness programs offered in midsized companies include an average of five programs or interventions and in large companies the average is six. Of these initiatives, Employee Assistance Programs (EAPs) are the most common component of a wellness program followed by health promotional materials and the practice of providing access to a nurse as the fifth most popular program.

 Furthermore, results from the same ADP survey state that only one-quarter of midsized companies and slightly more than one-fifth of large companies actually measure the ROI of their wellness programs.

The only conclusion that we can draw from this data is that the vast majority of wellness programs, no matter how well intended they may be, miss the mark. Sadly, the focus is on making an effort rather than striving for achievement or being accountable for the results.

 As a further illustration of our concern over traditional wellness programs, let me draw your attention to Biometric screenings, which most wellness programs encourage. The assumption is that such screenings will find illness at an early stage thereby saving both money and lives. However, a $40 biometric screen will find at best, one avoidable heart attack in every 4,000 people …at a cost of $160,000. Add in, company wellness incentives and the cost of time off from work to perform the test and you've now have created a very expensive and ineffective heart attack prevention screening experience.

Given the questionable practices, the absence of an ROI, the fuzzy focus on what wellness means, the tendency to focus on initiatives that promote healthy life style activities as opposed to results, all suggest that wellness offerings only appear to be of value to employers seeking to address problems associated with employee health, the rising cost of health care, workforce morale, staff productivity, employee retention and the attraction of talent.

2.The ADP Research Institute conducted the ADP HR / Benefits Pulse Survey on Wellness in October 2011.

7. Linnan L, Bowling M, Childress J, et al. Results of the 2004 national work site health promotion survey. Am J Public Health.2008;98(8):1503-1509.

If you would like to learn more about how to create and implement an effective wellness program for the benefit of employees and your organization, reach out to HRA by phone (818) 970 0730 or email us at hralliance@att.net.

 

 

From Michael Salisbury, Principal of the Human Resource Alliance (HRA) at www.hralliance.biz

 

Not Qualified For Obamacare's Subsidies? Just Lie

 

 

The following is an edited article from Forbes written by

Avik Roy, Contributor

If you thought the delay in the employer mandate was bad news for Obamacare, just wait. On Friday, Sarah Kliff and Sandhya Somashekhar of the Washington Post discovered that the Obama administration had buried in the Federal Register the announcement that the government won’t be able to verify whether or not applicants for Obamacare’s insurance exchange subsidies are actually qualified for the aid, in the 16 states that are setting up their own exchanges. Instead, until at least 2015, these states will be able to “accept the applicant’s attestation [regarding eligibility] without further verification.”

Without employer mandate, Feds to rely on applicant ‘attestations’

If you’ve been following the latest news around Obamacare, you know that on Tuesday evening, just before the Independence Day holiday, the White House announced that it would be delaying the implementation of the health law’s employer mandate—requiring all firms with more than 50 employees to provide health coverage to their workers—until 2015.

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I, and several others at the time, said “wait a minute.” According to the law, you aren’t eligible for Obamacare’s subsidies if your employer has offered you what the government considers “affordable” coverage. But if employers are no longer going to report whether or not they’ve offered “affordable” coverage, how can the government verify whether or not workers are eligible for subsidies?

Now we know the answer. The government is going with what Kliff and Somashekhar call “the honor system.” “We have concluded that the…proposed rule is not feasible for implementation for the first year of operations,” say the Centers for Medicare and Medicaid Services. “The exchange may accept the applicant’s attestation regarding enrollment in an eligible employer-sponsored plan…without further verification, instead of following the procedure in §155.320(d)(3)(iii).”

And it’s not just there. The feds will also allow people to gain means-tested subsidized coverage on the exchanges without having to…test their means. “For income verification, for the first year of operations, we are providing Exchanges with temporarily expanded discretion to accept an attestation of projected annual household income without further verification.”

Presumably, since the IRS knows your income, it could claw back these excess subsidies afterwards, if it chooses to. But the IRS’ record of impartiality is, shall we say, contested. And people who don’t file tax returns—such as those with incomes below the poverty line—would probably not be subject to that enforcement mechanism. That’s a route to enhanced benefits for poor residents of states that don’t expand Medicaid.

Subsidize first, ask questions later?

The goal here is plain as day. The Obama administration is laser-focused on making sure that enough Americans enroll onto Obamacare-subsidized health insurance platforms, because if they do, it will be politically impossible for Republicans to repeal Obamacare in the future.

Politics ain’t beanbag, they say. But deliberately encouraging tens of billions of dollars of waste, fraud, and abuse in order to achieve a political objective is profoundly immoral. It’s a breach of faith with the hard-working taxpayers whose paychecks are being harnessed to a cause many of them don’t support.

A key ramification of this announcement is what it means for uninsured people who were slated for Obamacare’s Medicaid expansion, who live in states that don’t expand Medicaid. Effectively, states no longer need to expand Medicaid, because this newly Medicaid-eligible population can now sign up for the exchanges, at no cost to the state, and know that their incomes won’t be verified by the IRS (because their incomes are too low to file tax returns).

That is to say, if your income is at 90 percent of the federal poverty level, and you live in Texas, where the state isn’t expanding Medicaid, all you have to do is write on the form that your income is actually 105 percent of FPL, and magically, you qualify for the exchange. I could easily envision certain activist groups signing people up for coverage this way. The upshot is that it could dramatically increase exchange subsidy spending, but also lower pressure for the Medicaid expansion.

Fast, accurate income verification presents a particularly serious difficulty. For one thing, ObamaCare requires subsidies to be based on family income, not individual income. So the process will have to include multiple family income streams, which means the government will have to check spousal salaries when determining eligibility. Tax returns are the most obvious verification method, but tax returns reveal only what someone made last year. They don’t reflect the mid-year shifts that ObamaCare was intended to address, such as job losses that mean people can no longer obtain insurance through their employers and are newly eligible for subsidies. Yet states will have to create systems to account for such changes. “States are supposed to have data systems in place that can figure out this person’s income and if they’re qualified for federal subsidies and then apply that federal subsidy quickly to the plan of their choosing,” [James] Capretta says. “That is a monumental undertaking. I don’t think anyone has any earthly idea how this is going to happen.”

Sharon Begley of Reuters quotes a number of experts who say that “the IRS will have a hard time policing that sort of conduct” [misrepresenting one's eligibility for exchange subsidies]:

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 “The shift of employees to the exchanges could cost (the government) a boatload,” said Nicholas Bagley, a law professor at the University of Michigan. “Some people who are ineligible for subsidies, because their employer offers affordable insurance, may attempt to get subsidies on the exchanges. The IRS will have a hard time policing that sort of conduct.”

States running their own Obamacare exchanges are scrambling to figure out how to deal with the delay in the employer-reporting requirement.

California, said spokeswoman Anne Gonzales, “was planning to tap into information from large employers to verify employee health coverage. The exchange is currently evaluating how the delay in implementation of the large employer mandate will impact enrollment and verification.”

Of course, a good deal of the information Americans send the IRS, such as the value of the household goods they donated to the Salvation Army, already relies on the honor system.

“Obviously the government has made the decision that they’re willing to live with that,” said Kendra Roberson, a healthcare lawyer at law firm Covington & Burling LLP, referring to an honor system for these aspects of the 2010 Patient Protection and Affordable Care Act.

The honor system may force the government to leave even more money on the table. The law imposes a penalty of $95, or 1 percent of household income, on people who fail to obtain coverage. But those whose employer-sponsored policy is unaffordable – defined as more than 9.5 percent of household income for purposes of penalty assessment – do not have to pay the penalty even if they do not buy insurance.

To check whether someone is truly exempt, the IRS has to know whether the employer offers coverage and at what price.

“If the IRS doesn’t have information about the plans large employers offer, it will be very hard to verify that. It will be an honor system,” said Michigan’s Bagley. “It could cost the government some money” if individuals elude the penalty through error or dishonesty.

It’s worth noting that this regulatory change applies to states that set up their own exchanges, not to the (mostly Republican-controlled) states that did not. In other words, the states that did what the Obama administration wanted them to do—set up their own exchanges—are the ones getting hosed here.

Obama Care - Prepare or Beware

How amazing,!!! I post this blog and Obama backs off on the implementation date. Coincidence ?     (I don't think so)

Are you tired of hearing about the onerous provisions of the new health care regulations but still struggling to figure out the organization’s strategy in response to Obama Care. If so, let me provide you with some insight.

As you know, a significant impact of the new health law will be felt in 2014. If that means your firm must have insurance coverage you need to begin the process in October of 2013 to satisfy the open enrollment restrictions. So, by any stretch of the imagination, you don’t have much time to get your act together. However, if your firm will have 50 qualified employees in 2014, you have three basic options:

1.      Comply with the law and provide the appropriate insurance coverage for the employees and their child dependents. If you do not offer such insurance now and your firm employs 100 full time employees, it is expected that your company will need to increase sales by $5,000,000 to achieve the same level of profit in 2014 as compared to 2013.

2.      Do not comply with the law and face penalties The penalty in most cases is $2,000 a year for every full time employee minus 30. You do the math.

3.      Do not comply, do not provide insurance and do not pay any penalties Yes this is a possibility and highly probable. HRA has constructed a series of strategies that will protect employers from the onerous cost impositions associated with Obama Care.

Now that you know the options, I encourage you to contract with HRA to assess the various alternatives that apply to your firm based on the organizations risk tolerance, financial situation and business priorities. We have uncovered several strategies that can save companies tens of thousands of dollars each year.

For example, one of our clients in the bio tech industry, exhibit two interesting characteristics. A) They employ a young work force, and B) they pay employees very good wages. As a result, HRA constructed a rather attractive health care plan. Due to the high cost of the available insurance premium, most employees declined to participate in the plan since they did not feel they needed health care coverage and the financial penalty associating with declining coverage was insignificant to them. As a result, the cost of supplying insurance as an employee benefit was low and the firm will avoid any penalties.

Whichever option you choose, HRA will guide the transition and protect you from penalties. HRA will:

• Research and identify the alternatives associated with each option
• Assess the pros and cons of each alternative including costs, savings and risks
• Recommend the best course of action based on your business priorities
• Assist with implementing and managing your decision
• Provide support, guidance and answer questions

HRA’s fee to evaluate the business alternatives is 20% of the avoided cost in health premiums for a year. As a result, the savings could be as high as 80% of your cost in health premiums for a year or up to a 500% ROI). But wait, as they say in the commercial, it gets even better:

•        If you choose to offer insurance and allow us to broker the new insurance plan, HRA’s fee will be discontinued.

•        If you choose to risk penalties, our fee will qualify for a credit up to the amount of any penalties that exceed our forecast.

Therefore, our offer includes virtually no risk, only the upside knowing that your business has examined the alternatives and has made good business decision in light of the new law. Furthermore, HRA will be available to assist with the ongoing administrative burdens associated with these regulations as well as any human capital management need that arises.

In summary:

•        HRA will explain your options

            •        HRA will save you money
            •        HRA will reduce your administrative burdens
            •        HRA will address legal and regulatory compliance concerns
            •        HRA will determine if your organization qualifies for health care tax credits  
            •        HRA offers an attractive ROI
            •        HRA becomes your human capital management partner
            •        HRA offers peace of mind and will work with your trusted advisors (CPAs, Attorneys, etc.)

If you have any interest in exploring your options under Obama Care or need assistance with any HR related issue, we encourage you to reach out to HRA at 818 970 0730 or via email at hralliance@att.net

 

We also encourage you to visit our web site at www.hralliance.biz for more information on our range of HR related services, solutions, and savings.

 

From Michael Salisbury, Principal of the Human Resource Alliance (HRA)

Why your firm may have trouble attracting or keeping talent

There is a war on over human talent but you would not know it if you spoke to most executives. With unemployment hovering just above 7% there should be plenty of people to choose from, just happy to have a job.  Wait a minute, isn’t that what they said when unemployment was nearly 12%? So the number of people out of work and seeking jobs has dropped 40% and still it should be no problem to find good people. Just run an ad on Craig ‘s List and the resumes will pour in.

 

This may be true, but the avalanche of resumes won’t represent the quality or level of employees that you’re looking for. Oh, by the way, it gets worse. The ugly truth is that most organizations have no idea how to even identify quality personnel. Don’t believe me, keep reading.

 

To begin with, does your firm even know what a quality applicant would look like? Sure you may have a job description and you may have even put together a list of qualifications but does this information lead you to a highly qualified candidate. I doubt it. In fact, I can guarantee that your firm has done absolutely nothing to correlate and validate any of these qualifications to high potential hires. Heck, I would be shocked if the contents of your performance review assessments reflected even half of these qualifications.  Try to keep up with me. If the competencies required for the position are not reflected in your performance review criteria, then how meaningful can they be?

 

However, I will pick an easy illustration such as, good communication skills. Maybe, just maybe, this is one of the few mandated new hire capabilities that is also assessed during the employee’s annual evaluation. But how do you know if the person has good communication skills? Why does this matter for this particular job? How do you evaluate candidates for this competency and what is the relationship between your assessment of the individual when hired and now during their performance review?

 

I bet you cannot even recall how you evaluated them as a candidate. Even if you can, I suspect, their on the job communication performance is different than what you expected.  And if there is a difference between your ability to accurately evaluate a person’s basic communication skills, what other costly mistakes and misjudgments have you made about the candidates you interviewed?  

 

If the people you employ are performing less than you expected, are you beginning to wonder what happened to the people you hired?  Maybe you should wonder what you are doing wrong because you’re the one making the purchasing decisions, you are making the offer, your the one deciding who is best qualified, or are you?

 

Chances are both you and your organization are not qualified to hire or keep top talent. So you get what you deserve. Why do I say this, how presumptuous of me, what evidence do I have to offer, explain yourself you say…… That is just what I am about to do.

 

We have hinted that you cannot even describe or recognize what top talent looks like. Now, we request that you take another look at the job description, the basis for the job postings used to attract candidates. How much are the posting about the work to be done, verses what the new hire will gain from assuming the assignment. If you’re trying to attract quality people why not place a quality posting? List what makes your company the employer of choice, what is in it for them, why your organization, this assignment and the career opportunities associated with the job opening reflect the best career move for potential candidates. Evaluate the firm’s qualifications as an employer, both the good and the not so good. Make sure your job posting communicates the true competitive advantages your enterprise has to offer to top candidates.

 

Now that you have revamped your job postings and the organization is beginning to attract top talent what is it like to be an applicant for a job at your place of business? If you’re like most enterprises, you treat job seekers like homeless people lined up for a soup kitchen hand out. They wait in line for an opportunity and you feel their lucky to be considered.

 

What about the ones who make it past the initial resume screening process? Are you going to have someone in HR arranging a telephone interview? How exciting and rewarding for the outstanding applicant. They get to speak to someone who has only a glimmer of what the job entails, no idea what success in the assignment looks like, and is ignorant of the value there would be for them to join the firm.

 

Now the hard part begins. HR discovers an outstanding candidate who has taken the bait. So they contact the hiring manger to arrange an interview. The hiring manager, when they submitted the job requisition emphasized how urgent it was to fill the position. Therefore, the recruiter is excited to call and inform the hiring manager that a highly qualified prospect is ready to meet with them.

 

Unfortunately, for everyone involved, the hiring manager has suddenly become distracted by another urgent business demand and cannot meet with the applicant until possibly sometime in the future. Additionally, needs have changed and the job requirements are now altered so the recruiting profile needs to be adjusted. What do you communicate to the previously considered outstanding candidate? If they are lucky, your HR department sends them a “Dear John” post card. Something the former candidate will enjoy sharing with other outstanding performers within their professional and personal network.

 

Finally, in spite of all the difficulties, a series of face to face interviews is scheduled.  Of course there is no interview plan except maybe a schedule identifying when each person is going to speak to the candidate. Unfortunately, there has been no effort to convene the interview panel in advance to discuss the assignment, the qualifications, the questions that each will ask, or how the interviewers will compare notes on their impressions of the applicant.

 

However, it does not matter since almost everyone likes the candidate. The lone objection appears to be based on the fact that the candidate was not able to answer some silly question about the competitive landscape and they could not remember their previous supervisor’s name. Funny, because none of the references supplied by the candidate, appear to be former bosses. No matter, it is important to fill the position soon and besides the candidate did seem to know a lot about their prospective employer and they came across as such a nice person. The kind everyone should enjoy working with. Well that wraps up the new hire assessment process. Next, the offer and acceptance.

 

Now the fun part. Unknown to the HR department, the candidate mentioned a desire to earn somewhere in the range between x and y dollars with one of the interviewers.  Despite what was said, the response the candidate heard was that that they could earn up to y dollars. Therefore, when an offer of x dollars was presented, the candidate pointed out that they were led to believe that the salary would be y dollars. And furthermore, they are being reasonable because they were expecting an increase for the good work they were doing at their current employer. So, under the circumstances, the demand for y dollars was fair. Of course the truth was they had been let go by their previous employer. However since the candidate was collecting a severance allowance they felt that they were on the former employer’s payroll, which is the same as being employed, isn’t it?

 

So you tell me, did the firm hire a high potential employee? Did the firm do a good job of investing in the recruiting process? Does this case study seem oddly familiar? If so, what should be done at your company to ensure that high quality personnel are hired, or does it really matter?

 

Wait, were not done. We have not even covered the on-barding process. However, my phone is ringing, so I have to go. It’s that pesky supervisor calling me again to help him fire someone who is not going to pass the probationary period and he wants to replace them with someone who can do the work. And the beat goes on….

 

From: Michael L. Salisbury at

www.hralliance.biz

Sequestration what is it

Today we veer off the cliff.... oh sorry that was a few weeks ago. Let's start over again. A friend of mine, his real name is Jack, who is a financial advisor, sent me the following article. I was compelled to respond and thought I would share my thoughts with you gentle reader.  

Forgive some of the formatting. Ever since sequestration has affected our lives, my ability to format correctly via this medium as been compromised. You will just have to make due and have hope that some special interest group will take pity on us all and fight for our right to obtain govenment subsidiezed formating services at no cost to you or me.

Understanding "Sequestration" If you like political drama, you're in luck. It seems like just yesterday the news was filled with references to the fiscal cliff. Now, coming to theaters everywhere, is "sequestration." Look for more political confrontation to unfold as sequestration gets under way. What exactly is sequestration? "Sequestration" refers to a series of automatic, across-the-board spending cuts to federal government agencies that are scheduled to take place in fiscal years 2013 through 2021. The cuts, totaling $1.2 trillion, will be split evenly between defense and domestic discretionary spending. The cuts are effective March 1. (The cuts were originally scheduled to take effect January 1 but were postponed to March 1 as part of the last-minute fiscal cliff deal reached on New Year's Day.) How did sequestration come into being? Sequestration was created from the August 2011 standoff over the U.S. debt ceiling. In conjunction with agreeing to raise the debt ceiling (which allowed the U.S. Treasury to pay its monetary obligations and avoid a default), Congress imposed approximately $2 trillion worth of spending cuts--$1 trillion that was spelled out in the debt ceiling bill (the Budget Control Act of 2011) and another approximately $1 trillion that would be implemented through sequestration--a broad, across-the-board series of default spending cuts that would take effect beginning in 2013. The idea was that sequestration would be a measure of last resort, and that Congress could act to replace the sequestration cuts with an equal amount of alternate spending reductions. Indeed, the Budget Control Act of 2011 created a deficit reduction "supercommittee" that was charged with reaching consensus on additional budget cuts that would avoid sequestration. The supercommittee failed, paving the way for sequestration to take effect. What's going to be cut? The automatic cuts are effective March 1, 2013. From 2013 through 2021, sequestration is scheduled to cut $1.2 trillion from government agencies, split evenly between defense and domestic programs. More than $500 billion is scheduled to be cut from the Defense Department and other national security agencies. The remaining cuts will affect a variety of domestic programs, including education, public safety, energy, national parks, food inspections, housing aid, transportation, and law enforcement. Social Security, Medicaid, and Medicare benefits are exempt from sequestration. Although cuts to Medicare provider payments are on the table, they can't exceed 2% of current payments. In 2013, the cuts will total $85 billion (sequestration originally called for approximately $109 billion in cuts this year, but the American Taxpayer Relief Act of 2012 reduced the required cuts by $24 billion). The Congressional Budget Office estimates that in 2013, funds for defense spending (other than spending for military personnel) will be cut by about 8%, and nondefense spending subject to automatic reductions will be cut by between 5% and 6%. (Source: Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 2013) You may have heard a great deal about what's going to happen as a result of the sequester, and much of it has likely been alarming. It's important to understand, though, that the government will not be shutting down. In fact, while it's hard to know exactly how things will play out as the cuts are implemented, most individuals are probably not going to notice a significant, immediate effect. Federal agencies will notify employees of possible furloughs, and the Defense Department will do the same with civilian employees, but those furloughs likely won't take effect for at least a month. In addition to potential layoffs and furloughs, individual agencies will begin announcing and implementing other cost-saving measures. Wait, there's more ... While it hasn't received the same level of attention as sequestration, there's another problem rapidly approaching--the government is running out of money again. Federal funding for the current fiscal year expires on March 27, 2013. Unless Congress authorizes additional funding, a partial government shutdown would result. In addition, a few months later, expect another debt ceiling debate. The federal government reached its $16.394 trillion debt ceiling limit at the end of 2012. Congress subsequently suspended the debt ceiling limit until May 19, 2013, and although the U.S. Treasury has some ability to continue operations beyond that date, at some point the debt ceiling debate will need to be addressed. Thus, it's conceivable that any short-term agreement on sequestration would include provisions that address these deadlines as well. Whether Congress addresses some or all of these issues over the coming weeks or months is anyone's guess. So stay tuned. And pass the popcorn. So Jack in response to your article here is what I see:  1. Add up all the people who directly and immediately benefit from the government’s largess (e.g. no budget, expanding debt, printing money, legislative pork riders, expanding debit ceiling, artificially low interest rates, expanded social programs, corporate welfare, oil subsidies, misc. special interests, equity investors, a strong military, etc. 2. Add up all the people who directly and immediately benefit from government austerity (increased unemployment, lower profits, less military preparedness, social costs associated with fewer government programs, transfer of legislated activities from the feds to the states, sale of GM stock at a significant loss to gain income, massive housing foreclosures, higher taxes,…) Oh sorry! I could not identify any segment of society that benefits directly and immediately from government austerity so all I could do was outline some of the impacts. If I have not made the point here are some more impacts you mentioned, “cuts will affect a variety of domestic programs, including education, public safety, energy, national parks, food inspections, housing aid, transportation, and law enforcement”. 3. Although I think it would be good if it did occur, I think your right, “the government will not be shutting down.” 4. And as you say, “as the cuts are implemented, most individuals are probably not going to notice a significant, immediate effect.” 5. I disagree that, “Whether Congress addresses some or all of these issues over the coming weeks or months is anyone's guess.  In fact, …. it's hard to know exactly how things will play out” 6. When you compare 1 vs. 2 above, unfortunately, there is no compelling reason not to have the government continue to operate out of control. It has been going on in California for decades. Furthermore, look at the city of Detroit. Do you see anyone being held accountable for the mess that city got itself into. Sadly no. 7. As long as our leaders are not held personally accountable, people continue to believe in a free lunch. The question then is, when is this bubble going to burst . If you think 2008 was bad, wait until 20XX. Just ask the Spanish or the Greeks. Can you believe that I am an optimist? From Mike Salisbury at www.hralliance.biz