Yes things are tough all over, and if the sequester lasts, many more will lose their jobs, in and out of government. This effects far more people than just those working directly for the government. Many companies depend on government contracts for all or part of their business. Somebody provides all those paperclips and ink...
How bad do you think it will be once the government collapses under the weight of its own debt? Cutting 2 cents out of every dollar spent/borrowed/printed is not end of the world stuff. The government has never stopped growing, and it won’t this time either.