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03.31.11

What Happens If Government Shuts Down?

The Daily Beast looks at why the parties can’t agree, what a shutdown could mean, and what it might cost taxpayers. UPDATE: With negotiations stalled and a shutdown looking more likely, this article reflects the latest news as of Wednesday.

The $61 Billion Problem: How deep will the first cuts be?

How did we get here? Democrats didn’t pass a 2011 budget last year— instead, they passed a placeholder resolution. Then Republicans shellacked Democrats in midterm elections, bringing in Tea Partiers fiercely dedicated to cutting the federal budget. Both sides want to reduce the $1.5 trillion federal deficit, but Democrats suggested $10 billion in cuts, while Republican leaders proposed $61 billion in reductions. Hardliners on the Republican Study Committee tugged at the GOP from the right, demanding $100 billion in cuts. Unable to resolve the impasse, Congress has passed three “continuing resolutions” that keep the money flowing while leaders negotiate. It briefly appeared that the two sides had agreed on a target of $33 billion in cuts, Republicans announced Tuesday afternoon that they wanted $40 billion instead. With an unofficial deadline of early Wednesday morning past, it now appears inevitable that the government will at least shut down briefly when funding runs out on Friday.

The Shutdown: Who will turn out the lights?

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Actually, no one. The Office of Management and Budget is responsible for making sure agencies have a plan in case of shutdown. During the two previous shutdowns, in 1995 and 1996, OMB Director Alice Rivlin and White House Chief of Staff Leon Panetta coordinated the closure, and the OMB has reviewed plans this spring. But while federal agencies are responsible for having contingency plans in place at all times, agencies that could be affected say they haven’t yet received any guidance on how to proceed if Congress can’t make the April 8 deadline.

Shutting down the government should at least save money, right? Not necessarily. In fact, they have serious economic ramifications. An OMB calculation in January 1996 estimated the cost of the 26 total days of shutdown at $1.4 billion in taxpayer money.

The Damages: How much will taxpayers and businesses lose?

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Shutting down the government should at least save money, right? Not necessarily. In fact, the 1995 shutdowns had serious economic ramifications. An OMB calculation in January 1996 estimated the cost of the 26 total days of shutdown at $1.4 billion in taxpayer money—although a good chunk of that came from back salaries paid to furloughed workers.

Daniel Stone: Who Gets Hurt in a Gov’t ShutdownBut the National Park Service forwent more than $14 million per day in revenue, businesses and local governments near parks missed out on an estimated $295 million due to closures, and U.S. tourist industries and airlines lost “millions of dollars,” according to estimates by the nonpartisan Congressional Research Service. Not that the shutdown is bad for everyone’s business: Back in 1995, local Washington, D.C. pizza magnate Frank Meeks sold a record number of pies as Congressional staffers worked over time.

Collateral Damage: How the 1995 shutdown changed history.

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Anonymous

You can’t measure the effect of a shutdown in just dollars, though. During the last showdown between a Democratic White House and Republican-controlled Congress, Speaker Newt Gingrich’s career was derailed by his handling of the budget crisis. ( What ever happened to that guy?) While President Bill Clinton emerged a winner, he wasn’t unscathed. During the five-day government shutdown in November 1995, an unpaid intern named Monica Lewinsky worked late at the White House because paid workers were furloughed. It was during that time that the first sexual encounters between the two, which would eventually lead to Clinton’s impeachment, occurred.

Mandatory Vacation: Only essential employees would report.

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Devon Stephens

The government says about 800,000 workers will be furloughed in the event of a shutdown, approximately the same number sent home in 1995. Nonetheless,  the term “shutdown” is a little misleading. “Essential” staff—such as FBI agents, air-traffic controllers, and Transportation Security Administration screeners—would still be on duty, and Veterans Affairs hospitals would still care for patients. Museums and national parks would be closed, but military bases would stay open. Visa and passport applications would grind to a halt. Like rain, snow, sleet, and gloom of night, a shutdown wouldn’t stop letter carriers, because the U.S. Postal Service doesn’t take federal money to deliver the mail. Also exempt from furloughs (and therefore still paid): the president, members of Congress, and presidential employees.

The Check’s In the Mail: Social Security, food stamp money would still flow.

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Shutdowns are politically perilous, and it’s not just because they make Congress look petty. Citizens who receive government assistance are liable to panic, fearing they won’t get their checks. The good news is that there’s nothing to worry about—probably. During the 1995-1996 shutdowns, Social Security checks and veterans’ benefits checks kept going out; funding for Medicare, Medicaid, and welfare didn’t stop, although new applications weren’t processed. But not everyone is safe: GI Bill payments, for example, were delayed. The administration says the IRS will quit processing returns, just in time for tax day. Members of the armed forces will stay on the job and continue to earn money, but they won’t be paid until budget problems are resolved. The administration has released a list of some of the changes to expect when the money stops flowing.

David Graham is a reporter for Newsweek covering politics, national affairs, and business. His writing has also appeared in The Wall Street Journal and The National in Abu Dhabi.