Right-wing media have recently trivialized or dismissed the potential effects of a federal government shutdown. However, a shutdown could disrupt the economy and many businesses, cause hundreds of thousands of workers to be furloughed, and disrupt numerous public services.
Right-Wing Media Trivialize, Dismiss Potential Effects Of A Shutdown
Wash. Times: If The Government Shuts Down, “Washington Residents And Commuters With Private-Sector Jobs Will Enjoy A Smooth, Traffic-Free Ride In To Work Monday Morning.” In an April 7 editorial, The Washington Times wrote that the estimated 800,000 workers who would be furloughed because of a shutdown “will have no choice but to enjoy some time off.” The Times further wrote that “Washington residents and commuters with private-sector jobs will enjoy a smooth, traffic-free ride in to work Monday morning.” From the Times:
Mostly, this shutdown will affect 800,000 bureaucrats whose jobs aren't related to the safety, security and proper functioning of the government. They will have no choice but to enjoy some time off. Federal workers' unions ensured that conscientious employees would never be allowed to work on a voluntary basis during a shutdown. Ethics rules also prevent most from taking a temporary job in the meantime. The District Department of Employment Services, which handles unemployment claims, promised to announce by Friday afternoon details about how nonessential federal workers might obtain unemployment benefits during the shutdown. Washington residents and commuters with private-sector jobs will enjoy a smooth, traffic-free ride in to work Monday morning.
It's unfortunate that tourists in the nation's capital won't be able to visit the White House as long as President Obama holds out against trimming a paltry $61 billion from the 2011 budget. It's not clear how many of the affected museum and park visitors would be interested in paying their $6,100 share of the disputed funds to keep things open. Perhaps a shutdown will help some Americans realize that Big Government doesn't come cheaply. More importantly, they may realize that doing without a handful of nonessential services may be a better idea than continuing to add to a near $14.3 trillion debt. [The Washington Times, 4/7/11]
IBD: Shutdown Could Be “Enlightening ... People Will Start Catching On That The Country Can Do Without [Bureaucracy].” In an April 7 editorial, Investor's Business Daily wrote that "[a]n indefinite ceasing of nonessential federal activities can be an enlightening event for the public." IBD further wrote: “Let enough time pass without these bloated bureaucracies engaging in their daily waste of the hard-earned money of others and people will start catching on that the country can do without them -- do better without them, in fact.” From IBD:
An indefinite ceasing of nonessential federal activities can be an enlightening event for the public. As Fox News' John Stossel pointed out this week, most Americans won't notice that the departments of labor, commerce and agriculture aren't there anymore -- and, as Stossel quipped, “those who would notice shouldn't be getting those handouts anyway.”
Considering the devastation that has ravaged the housing sector in the past several years, the disappearance of the Department of Housing and Urban Development should be cheered by the millions of Americans who had their lives turned upside down by intrusive housing policies largely set in motion by Clinton HUD secretary, now New York Gov. Andrew Cuomo.
Let enough time pass without these bloated bureaucracies engaging in their daily waste of the hard-earned money of others and people will start catching on that the country can do without them -- do better without them, in fact. [Investor's Business Daily, 4/7/11]
Carlson: “The Public Needs To Be Let In On A Little Secret: We Can Survive” A Government Shutdown. On the March 2 edition of Fox News' Fox & Friends, co-host Gretchen Carlson noted some services that would be affected by a government shutdown and stated: “They've done a study to show that the public needs to be let in on a little secret: We can survive when the government shuts down for a short period of time. We can survive.” She continued: “And that, I think, would raise a lot of questions about whether or not there's bloating in the federal government.” [Fox News, Fox & Friends, 3/2/11]
Doocy: Shutdown Could Make Americans Realize “They Don't Really Need That Gigantic A Mechanism.” Later on the March 2 edition of Fox & Friends, co-host Steve Doocy said to House Majority Leader Eric Cantor (R-VA) that “some Democrats worry that if there was a shutdown that barely affected the everyday lives of a lot of people, that would reinforce your argument on the conservative side that a lot of government is wasteful, and they don't really need that gigantic a mechanism.” [Fox & Friends, 3/2/11]
Varney And Crowley Insist Voters Would Love A Government Shutdown. From the February 17 edition of Fox Business Network's Varney & Co.:
STUARY VARNEY (host): I'm sorry, I've got one more point, and I must raise it. The conventional wisdom is that if you shut the government down like Newt Gingrich did back in the 90s, you lose politically. I'm saying that's nonsense. I think you could shut the government down right now and voters would love you.
MONICA CROWLEY (Fox News contributor): I think the American people would like to see the government shut down at least temporarily. And you know my evidence for this? November's election. November's election came around, voters gave Republicans control of the House, bigger numbers in the U.S. Senate. Why? They want gridlock, they want our politicians to stop “helping us.” Stop doing things, stop spending. [Fox Business, Varney & Co., 2/17/11]
But A Shutdown Could Hurt Many Businesses And Workers
NYT: “The Federal Government Is, After All, A Very Big Business, And Temporarily Pulling The Plug Would Disrupt Many Other Businesses.” In an April 7 article, The New York Times wrote that "[e]conomists are divided as to how much the shutdown would rattle the economy" but also noted that "[t]he federal government is, after all, a very big business, and temporarily pulling the plug would disrupt many other businesses." From the Times:
It's not just an estimated 800,000 federal employees who would feel the financial pinch of a government shutdown.
Among the people anxiously waiting to hear if Congress can reach a budget deal are front desk clerks at the Ahwahnee Hotel in Yosemite National Park, manufacturing executives whose companies supply goods to federal agencies, bank loan officers who make mortgages guaranteed by the Federal Housing Administration and Wall Street analysts who depend on a steady flow of government data.
The federal government is, after all, a very big business, and temporarily pulling the plug would disrupt many other businesses. [The New York Times, 4/7/11]
NYT: “At The National Parks, Many Of The Hotels And Restaurants Are Operated By Private Concerns That Will Most Likely Suspend Some Workers If The Parks Are Closed.” The Times further reported on April 7:
At the national parks, many of the hotels and restaurants are operated by private concerns that will most likely suspend some workers if the parks are closed. Without their weekly paychecks, those employees could tighten their belts, causing further fallout for grocery stores or other retailers who may see sales slow.
In Yosemite, for example, Delaware North Companies Parks and Resorts operates four hotels with 972 rooms and 13 restaurants. A company spokeswoman, Lisa Cesaro, said that if the shutdown continued beyond the weekend, all lodging and food operations would close, and workers would be forced to take vacation time or unpaid leave, right as peak season was starting. [The New York Times, 4/7/11]
NYT: "[S]hutdown Could Also Make It Harder For Lower-Income Families To Get Mortgage Loans." The Times further reported:
The shutdown could also make it harder for lower-income families to get mortgage loans because the Federal Housing Administration would suspend its guarantee program. The F.H.A. guaranteed about 21 percent of new mortgage loans in 2010, federal data shows.
Shaun Donovan, the housing secretary, said on Thursday that he feared some lenders would stop making new F.H.A. loans, or prevent closings by reneging on loan approvals. “This is the worst time that we could introduce that uncertainty into this fragile housing market,” Mr. Donovan told a Senate subcommittee.
Lenders do not need to obtain guarantees at the time a loan is made. Wells Fargo and Bank of America, by far the biggest F.H.A. lenders, said that they would continue to make the loans and simply wait to obtain guarantees -- at least as long as the shutdown remained fairly brief. But JPMorgan Chase said that it would not make new F.H.A. loans during a shutdown, although it emphasized that loans already approved would not be affected. [The New York Times, 4/7/11]
Wash. Post: If Furloughed Workers Don't Receive Back Pay, Economists Say Damage Of Shutdown “Would Be Compounded As Many Families Pulled Back On Spending.” The Washington Post reported on April 6:
The economic effects of a government shutdown could be significant in the Washington region and nationally if the impasse continues for several weeks, some economists said.
The impact would depend on the closure's duration and on whether furloughed federal employees were eventually paid for their time out of work, as they were after the last shutdown, 15 years ago. If the estimated 800,000 workers did not receive back pay, the damage would be compounded as many families pulled back on spending, economists said. [The Washington Post, 4/6/11]
Wash. Post: "[T]here Is No Guarantee That Furloughed Workers Will Receive Back Pay." The Post reported on April 6:
The 1995-96 shutdown appears to have had immediate but short-lived effects. An index of Washington's economic health maintained by the Center for Regional Analysis fell from 100 to 94. It came right back up after the shutdown, however, when government workers returned to work and received back pay.
This time, there is no guarantee that furloughed workers will receive back pay.
There are about 370,000 federal employees in the Washington area, though it is not known how many of them would be furloughed.
“I don't think the chances of federal workers' reimbursement are very high right now,” said Rep. James P. Moran (D-Va.), who scheduled an emergency town meeting for Thursday in Alexandria. “This is different from what it was in '95. Then I thought it was the worst it was ever going to get. Many of those in the [Republican] majority have no intention of reimbursing workers.” [The Washington Post, 4/6/11]
Economists: Prolonged Shutdown Could Have “Meaningful” Effect On Economy
Zandi: Economic Effect Of Prolonged Shutdown “Would Be Meaningful.” On March 2, Politico reported:
“If it is a short government shutdown on par with 1995, the fallout would probably be modest,” said Mark Zandi, chief economist at Moody's Analytics. “There will be some economic impact, but it would be quickly made up down the road. But if it were more than a couple of weeks -- if it dragged on for a month -- that would be meaningful, especially in terms of sentiment. People are still very much on edge right now.” [Politico, 3/2/11]
Wash. Post: If Shutdown Is Prolonged, “It Will Have Negative Consequences On The Economy And Not All Of The Losses Will Be Recovered.” In the April 6 Post article, Stephen Fuller, director of the Center for Regional Analysis, stated that if the shutdown is “shorter than a week, the economic impact is no worse than a snowstorm,” but "[i]f it lasts longer, it will have negative consequences on the economy and not all of the losses will be recovered." [The Washington Post, 4/6/11]
AEI's Swagel: Shutdown “Would Be A Disruption That I Think Would Set Back Our Recovery.” In a February 28 ABC News article, Phillip Swagel, former assistant Treasury secretary and now a visiting scholar at the American Enterprise Institute, said that a shutdown “would be a disruption that I think would set back our recovery.” From the ABC News article:
But a government shutdown could hurt consumer confidence and further roil already volatile financial markets. Some experts say it could even set back economic recovery, especially if prolonged.
The financial and economic impact is likely to be much greater. Stock markets could take a hit, and people are likely to tighten their pocketbooks even further amid increased anxiety.
A shutdown “would matter tremendously but not for the reason of people not getting back their checks issued,” said Phillip Swagel, former assistant Treasury secretary and now a visiting scholar at the American Enterprise Institute. “It impacts consumer spending, business investment. If there's no confidence, people will stop spending, businesses will stop hiring. We have an economy that's fine but it's still pretty fragile. It would be a disruption that I think would set back our recovery.”
Consumer confidence is important because it shows how much faith Americans have in their government.
“It would just show Americans that our government isn't really equipped to come to agreements and really handle the challenges facing the country,” Swagel added. [ABC News, 2/28/11]
Goldman Sachs Report: “A Shutdown Lasting More Than A Week Could Be Meaningful.” ABC News further reported that a recent Goldman Sachs report “estimated that while the potential for a shutdown does not present a major risk, for each week the federal government is closed, federal spending would reduce by around $8 billion, and could reduce real GDP growth by as much as 0.8 percentage point at an annualized rate in the quarter it occurred.” The Goldman Sachs report further stated that a “shutdown lasting more than a week could be meaningful.” [ABC News, 2/28/11, 2/23/11]
Bloomberg: “The Housing Market Could Be Hampered Even Further By A Shutdown.” Bloomberg Businessweek reported that "[t]he housing market could be hampered even further by a shutdown" and noted that in 1995-96, “the government closed the Federal Housing Administration, which insures mortgages, delaying 10,000 home loans that totaled $800 million.” From Bloomberg Businessweek:
The housing market could be hampered even further by a shutdown. In 1995 and 1996, the government closed the Federal Housing Administration, which insures mortgages, delaying 10,000 home loans that totaled $800 million.
The FHA's importance has grown significantly since private mortgage insurers were slammed in the subprime mortgage crisis. The FHA insured about 13 percent of the value of single-family home purchases in the past year, double its market share during the 1995 fiscal year. An FHA spokesman declined to comment on how a shutdown would affect the agency. [Bloomberg Businessweek, 2/24/11]
OMB: 1995-96 Shutdowns Cost Economy About $1.4 Billion. On February 22, Slate reported that the Office of Management and Budget (OMB) estimated that the 1995-1996 government shutdowns -- which lasted for a combined 27 days -- “cost the economy about $1.4 billion.” [Slate, 2/22/11]
Shutdown Could Disrupt Some Social Security, Tax Services
Shutdown Could Cause Some Delays In Social Security Payments. As U.S. News noted: “If the government shuts down, Social Security payments would probably still go out, but there could be delays and new claims may be not be processed. In the 1995 government shutdown, Social Security eventually recalled more employees to help with the backlog of new applications as the stoppage dragged on.” [U.S. News and World Report, 2/25/11]
U.S. News: “If The IRS Is Forced To Scale Down To A Skeleton Crew, Tax Refunds Could Be Delayed.” U.S. News further reported:
Unlike the 1995 shutdown, this standoff is happening just as Americans are beginning to file their tax returns. If the IRS is forced to scale down to a skeleton crew, tax refunds could be delayed, and the IRS won't be able to help if filers need advice. But just because the IRS is stalled doesn't mean that you won't face a penalty if you fail to file before the April 18 deadline. [U.S. News and World Report, 2/25/11]
Additionally, Washington, D.C., “Would Be Hit Hard” By A Shutdown
Wash. Post: D.C. “Would Be Hit Hard,” “Face $1.5 Million To $5.5 Million In Losses Per Week.” The Washington Post reported that Washington, D.C., “considered in a shutdown to be a federal agency, would face $1.5 million to $5.5 million in losses per week.” The Post further detailed other potential effects of a shutdown for D.C. residents:
The shutdown will begin on Saturday morning if no budget agreement is reached.
The District would be hit hard.
The city, considered in a shutdown to be a federal agency, would face $1.5 million to $5.5 million in losses per week.
Along with trash collection, most parking enforcement would be suspended, and D.C. libraries and Department of Motor Vehicles offices would be closed.
Street sweeping would be suspended for the duration of a shutdown, city officials said. Trash pickup could resume, because federal shutdown laws permit government services that deal with property and public safety, they said. But that wouldn't happen for at least a week.
“That'll be a treat, won't it?” Mayor Vincent C. Gray (D) remarked sarcastically about possible piles of trash around the city.
He said he thinks the potential shutdown is more evidence of the unfair treatment of the District by Congress.
“This is a concrete example of what it means to be treated like a second-class citizen,” he said.
Public and charter schools would remain open, but the University of the District of Columbia would close.
Police, firefighters and emergency medical technicians would remain on duty. The Board of Elections and Ethics would maintain its staff to prepare for the April 26 special election. [The Washington Post, 4/7/11]
Greater Washington Board Of Trade Official: “This Is Coming At A Terrible Time, When The Economic Recovery Is Still Fragile.” From an April 6 Washington Post article:
About 11 percent of the Washington area workforce is employed by the U.S. government, according to the Greater Washington Board of Trade, and about a third of the region's economy is dependent on it.
In a survey of businesses by the Greater Washington Board of Trade, about 71 percent of respondents said they were concerned or very concerned about a federal government shutdown.
“This is coming at a terrible time, when the economic recovery is still fragile,” said Matt Erskine, senior vice president at the Greater Washington Board of Trade. [The Washington Post, 4/6/11]
1995-96 Shutdowns Affected Thousands Of Workers, Disrupted Numerous Services
Thousands Of Federal Workers Were Furloughed. Slate reported on February 22: “In the first shutdown, 800,000 workers stopped heading into the office. In the second, about 284,000 stayed at home, with an additional 475,000 working on 'non-pay status.'” U.S. News and World Report noted that while Congress later voted to “pay back federal employees for the time they were furloughed ... [i]t's not clear, in the current political environment, whether lawmakers would make the same decision.” [Slate, 2/22/11; U.S. News and World Report, 2/25/11]
Bloomberg: Shutdowns Caused “11 States And The District Of Columbia To Stop Providing Unemployment Benefits.” Noting the effects of the 1995-96 shutdowns, Bloomberg reported that "[a] shortage of federal funds eventually led 11 states and the District of Columbia to stop providing unemployment benefits when they couldn't or wouldn't fill the gap with their own funds." From Bloomberg Businessweek:
A shortage of federal funds eventually led 11 states and the District of Columbia to stop providing unemployment benefits when they couldn't or wouldn't fill the gap with their own funds. Other benefits were slowed or stopped entirely: Veterans stopped receiving some payments, including insurance death claims and checks for education provided by the GI Bill. Delays hit recipients of federal welfare programs and adoption-assistance services, along with children in foster care and in the Head Start early childhood program. The Bureau of Indian Affairs closed, cutting off assistance payments to 53,000 people, while about 25,000 American Indians also stopped receiving checks for oil and gas royalties. [Bloomberg Businessweek, 2/24/11]
OMB Outlines Effects Of 1995-96 Shutdown On Public Services. In a February 18 report, OMB detailed effects that the 1995-96 shutdowns had on the public, which included disruptions in health, recreations, and veterans services:
- Health. New patients were not accepted into clinical research at the National Institutes of Health (NIH) clinical center; the Centers for Disease Control and Prevention ceased disease surveillance; hotline calls to NIH concerning diseases were not answered; and toxic waste clean-up work at 609 sites reportedly stopped and resulted in 2,400 Superfund workers being sent home.
- Law Enforcement and Public Safety. Delays occurred in the processing of alcohol, tobacco, firearms, and explosives applications by the Bureau of Alcohol, Tobacco, and Firearms; work on more than 3,500 bankruptcy cases reportedly was suspended; cancellation of the recruitment and testing of federal law enforcement officials reportedly occurred, including the hiring of 400 border patrol agents; and delinquent child-support cases were delayed.
- Parks, Museums, and Monuments. Closure of 368 National Park Service sites (loss of 7 million visitors) reportedly occurred, with loss of tourism revenues to local communities; and closure of national museums and monuments (reportedly with an estimated loss of 2 million visitors) occurred.
- Visas and Passports. Approximately 20,000-30,000 applications by foreigners for visas reportedly went unprocessed each day; 200,000 U.S. applications for passports reportedly went unprocessed; and U.S. tourist industries and airlines reportedly sustained millions of dollars in losses
- American Veterans. Multiple services were curtailed, ranging from health and welfare to finance and travel.
- Federal Contractors. Of $18 billion in Washington, DC, area contracts, $3.7 billion (over 20%) reportedly were affected adversely by the funding lapse; the National Institute of Standards and Technology (NIST) was unable to issue a new standard for lights and lamps that was scheduled to be effective January 1, 1996, possibly resulting in delayed product delivery and lost sales; and employees of federal contractors reportedly were furloughed without pay. [OMB, 2/18/11]