Economist: Workers' comp not likely to feel impact of sequestration

If you're nervous that the $85 billion in federal budget cuts that took effect this month might shake up the workers' comp system, don't be.

"In my opinion, the economic concern over sequestration is more hype than substance," said Harry Shuford, chief economist at NCCI.

As Shuford pointed out, "once the deadline passed and the president signed the order, we saw a dramatic scaling back in the rhetoric."

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Overall spending reductions from sequestration are "relatively modest," he says. Defense is the sector with the most to lose.

"Furloughed government employees typically are not covered by private workers' compensation," Shuford said. "Local businesses, however, will feel the sting of reduced spending because of the reduced spending power."

The spending reauthorization scheduled for the end of March is of more interest to Shuford. He noted news stories suggesting the Republican leadership in Congress has indicated it will try to avoid a government shutdown.

"So I'm hopeful that the Congress and the administration will pass a continuing resolution to keep things going until the fall and that they will use those months to develop a reasonable and rational budget plan for the next few years," Shuford said. "I am getting the sense that those of us outside D.C. are starting to ignore the budgetary machinations and are just trying to get on with our lives. Give a lot of credit to the rest of us -- the economy continues to grow modestly in spite of the disarray in our nation's capital."

Read more at the WorkersComp Forum homepage.

March 18, 2013

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