Good Reasons to Avoid a Government Shutdown


Good Reasons to Avoid a Government Shutdown

Blog Post

By No Labels
1/11/2017

Good Reasons to Avoid a Government Shutdown

If Congress fails to pass a spending bill in the next 9 days, the government will halt many of its basic operations, from issuing passports and visas to making small-business loans. Such shutdowns are often threatened by politicians looking to force action on a particular policy.

Right now, many in Congress want to include a long-term solution to DACA—the Obama-era program that protects from deportation 800,000 undocumented immigrants who were brought to America as children—as well as the construction of a new border wall, as part of the broader government funding bill.

If Congress can’t get to yes on these immigration issues, it could lead to another government shutdown that is both messy and destructive. There have been 18 shutdowns in the last 30 years, many of which were short. But in 1996, a record was set at 21 days. In 2013, the government shut down for 16 days. These shutdowns cost tens of thousands of jobs and billions of dollars.

Congress and President Trump are currently at an impasse over immigration legislation that many lawmakers want to tie to a government spending bill, and the deadline for passage is Jan. 19. As negotiations continue, here’s what you need to know.

Shutdowns are insanely expensive.

A government shutdown can stall federal revenue, increase interest on unpaid federal bills, and slow travel and tourism. It can also disrupt federal contracting, halt lending and slow consumer spending. A report by Standard & Poor’s last year estimated a shutdown will cost roughly $6.5 billion a week. The 16-day shutdown in 2013 cost roughly $24 billion, according the S&P estimates. That means, in round numbers, a shutdown costs the country about $1 billion a day.

Shutdowns halt government services.

Essential government operations remain active, such as national security functions, the issuance of social security and Medicare checks, and the U.S. mail, according to Bloomberg. But a shutdown can halt many other services that directly impact people and businesses. For example, national parks and monuments can close. Visas and passport approvals can halt. Mortgages dependent on federal support and permits of all kinds can be delayed, along with small business loans and the supply of government data that many companies rely upon. How services are impacted is determined by the administration, and can be affected by the length of the shutdown.

Shutdowns disrupt families.

A shutdown can trigger a furlough of federal employees. In the 2013 shutdown, roughly 850,000 federal employees were furloughed at its peak, or about 40 percent of the workforce, according to Bloomberg. These employees eventually received back pay, but it is not easy for many families to go without a paycheck, even if it is just two or three weeks. As a Standard & Poor’s report explained, “with each day the shutdown drags on, federal workers may start to pull back on household spending, at restaurants, childcare, or retail stores because of worries that they won’t get paid anytime soon.”

Shutdowns eliminate jobs.

The 2013 shutdown cost roughly 120,000 private sector jobs and 6.6 million days of lost work, according to an Obama administration report. A shutdown can halt work by federal contractors, who stop getting paid. In turn, they reduce their workforce. In a survey by the National Association of Government Contractors in 2013, 29 percent said they delayed hiring and 58 percent said it would have a negative impact on their business, according to a report by Standard & Poor’s. “As contractors delay projects, reverberations will be felt throughout the spending chain,” the report said. “This will likely have a ripple effect that spreads through to the economy more broadly.”

Shutdowns can be avoided

Congress can avoid a shutdown by simply passing a stopgap bill, called a “continuing resolution (CR),” that freezes funding at the previous year’s levels and provides more time to negotiate a long-term spending agreement. Lawmakers do it regularly. Congress has averaged at least 5 continuing resolutions per year since 1999, according to a General Accounting Office report. In the last four decades, Congress managed just four years without one. Unless lawmakers in both parties and the president can agree on immigration — and they are talking openly — another delay is likely next week. Without one or the other, the government will shut down.







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