Government Shutdown Continues to Loom

We narrowly avoided a government shutdown last week, and may well still face one at the end of this month. Some folks might think that a federal government shutdown won’t affect them. But such thinking fails to consider the full scope of would result if the government did shut down.

Our last government shutdown, in 2013, serves as real guide for what to expect if we face another one. Four years ago the House of Representatives (controlled by the Republicans) tried to use the budget process to eliminate funding for the Patient Protection and Affordable Care Act (ObamaCare). The Senate (controlled by the Democrats) and the President were unwilling to agree to that. Without new budget funds being passed by both chambers of Congress, most of the federal government had to shut down once the old funding legislation expired. The shutdown lasted 16 days and had a tremendous impact.

No pay

One of the obvious and most direct impacts of any shutdown is the fact that hundreds of thousands of federal employees will be furloughed, which means held out of work and not payed. The latest workforce analysis estimates the federal government employed over 2 million people in 2015. Exactly how many go out of work during a shutdown depends on how many are considered essential and how many agencies get separate funding approved by Congress before the shutdown occurs. During the 2013 shutdown an estimated 850,000 federal workers were furloughed and missed a combined 6.6 million work days. Consider how big an impact it would have if close to one million people suddenly stop getting paid with no idea on when work will start again. This will interfere with many families’ ability to pay for their mortgage, groceries, utility bills, tuition, and more.

And it isn’t just agency personnel who are affected. The federal government employs a vast number of contractors and grantees to assist with government offices and programs across almost every agency. That same workforce analysis estimated that the government had more than 5.2 million contract and grant employees in 2015. During the 2013 shutdown the government issued more than 10,000 stop-work orders for work and projects being done by contractors, and there were reports of numerous temporary layoffs by contractors. So there will likely be a significant number of private sector jobs also on hold.

Economic impacts

Beyond the hardship of families with federal employees and federal contractors, that missing pay has ripple effects out into the economy. When people aren’t getting paychecks and don’t know when the next one is coming, they understandably reduce their spending as much as possible—fewer holiday gifts, no movie tickets, cancelled travel, no dinners, and more. And that reduced spending impacts those businesses and their employees.

This impact on spending decisions can start even before the shutdown itself. Just the threat of an impending shutdown could influence spending patterns for federal employees and contractors. We are in the heavy retail period of the holiday season, a period of time that can decide if some retail companies are profitable or not for the whole year. Reduced spending by close to a million households could have a major impact on the bottom line for retail companies.

The Office of Management and Budget estimated that the 2013 shutdown, which occurred in the fall, cost the U.S. economy between $2 billion and $6 billion. An analysis by Standard & Poor’s projected the long-term impact to be a $24 billion loss to the U.S. economy.

National Parks, monuments, museums closed

The federal government oversees hundreds of national parks, monuments, memorials, museums, and historic sites across the country that on average handle more than 700,000 visitors each day. These include the Grand Canyon, the recently reduced Bears Ears and Grand Staircase Escalante, the Liberty Bell in Philadelphia, the Smithsonian, the National Zoo, and many other locations in almost every state. Closing these locations means disrupting many tourists’ plans but also means lost revenue from their spending.

In 2013 the National Park Service estimated that the 16-day closure meant almost $500 million in lost revenue. And that doesn’t include the potential loss to local businesses of an estimated $76 million—the amount spent in communities near these locations—because of fewer travelers or changed plans.

Veterans’ benefits

The government provides lots of benefits to veterans which would be disrupted in the event of a shutdown—processing disability claims, training, support services, and more. Many of these services are important to veterans and their families and time-sensitive. Asking veterans to wait after they have provided their service to the country seems a betrayal. And a government shutdown not only stops these services but can create large backlogs that will delay delivery of the benefits even when government offices reopen.

The 2013 shutdown slowed processing on veteran disability claims and closed services that helped veterans understand and access their benefits including call centers and hotlines. Veterans also lost access to vocational training, education counseling services, and workshops designed to help transition to civilian life and employment.

Helping vulnerable families

There are real concerns that a shutdown, especially a longer one, could threaten federal programs that support mothers, children, and families in need. Programs like Supplemental Nutrition Assistance Program (SNAP), often called food stamps, could be in danger of disruption from a shutdown. The program helps millions of poor families get enough food for their children. In 2013 SNAP was not affected because there were funds already allocated through the Recovery Act to sustain the program. But those funds are no longer available today, so a shutdown could threaten the program.

The Women, Infants and Children (WIC) program helps approximately 9 million mothers and families get nutritional food and health care. In 2013, states had enough money to operate the WIC program during the 16 days, but if the shutdown had lasted longer the states would have run out of money and been forced to halt the program. It is unclear how long states could operate during a new shutdown.

Head Start is a well-known federally funded preschool program that provides support, nutrition, and care to millions of under-privileged kids. During the 2013 shutdown, Head Start programs in various states had to close, until private philanthropists stepped in to provide the needed funds. How much a new shutdown would affect Head Start kids will depend on how much money states have on hand for the program when the shutdown starts and how long it lasts.

Food safety

The Food and Drug Administration (FDA) would almost certainly have to suspend most of the food safety inspections and enforcement programs during a shutdown. Of course that doesn’t mean the food stops getting produced, shipped, bought, and consumed—just that consumers can’t be as confident that the food is safe. During the 2013 shutdown the FDA reportedly halted many inspections and cut back on examination, sampling, and analysis of imported foods.

Medical Research

A federal shutdown will likely require that the National Institute of Health (NIH) and the Centers for Disease Control and Prevention (CDC) suspend many of their operations. During the 2013 shutdown nearly three-quarters of NIH staff and two-thirds of CDC staff were furloughed. Patients wouldn’t be able to enroll in clinical trials run by the NIH, and the CDC would have to discontinue tracking illness patterns such as flu, hepatitis, and Tuberculosis to direct prevention efforts and avoid larger outbreaks. Research grants into medical treatments and other scientific issues would be delayed. Applications to approve new drugs, generic drugs, and medical devices would also get put on hold. It is impossible to predict the exact impact on patients but even short delays could have serious health consequences for some.

Conclusion

Clearly the potential impacts of shutting down the federal government go far beyond federal workers being out of work for a while. It would affect people across the country—veterans, small business owners, families, tourists, patients, consumers. And the above list only covers some of the services that would be impacted; such services as passport processing, federal loans, small business supports, issuing new social security cards, and so much more would grind to a halt during a shutdown. Congress and the administration should make every effort to avoid a future shutdown or even the threat of a shutdown.