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Written by Isaac F. Davis
It may seem like they are playing games, but to many public workers, military, seniors, low-income children and veterans, a government shutdown will not be fun. House Speaker John Boehner wants at least $39 billion in cuts; the White House and the Democratic Majority Leader Harry Reid have agreed to $34.5 billion in cuts. Reid says the shutdown is no longer about money, but about a political agenda that Republicans have long favored. Although continuing resolutions typically extend the existing budget until a new budget is passed, the Republican-dominated Congress has used the resolutions to add hundreds of controversial riders that will cut programs they have long disliked including defunding the new Health Care Act, the new Consumer Protection Agency, Planned Parenthood, National Public Radio and the Environmental Protection Agency.
Not everyone thinks a shutdown is a bad idea. Conservative Tea Party lawmakers cheered Newt Gingrich when he came to their caucus to share the wisdom gleaned from the 1995 government shutdown; Tea Party activists at a recent Washington rally appeared eager for a shutdown. “I’m not the slightest bit worried about a government shutdown,” said Tea Party activist Robin Maas at a March 31 rally. “I think we [will] find out that there are many things government does that we really don’t need to keep this country going. And a government shutdown would actually save us some money.”
Most economists disagree. A shutdown would cause about 800,000 federal employees to stop work, but their lost pay would be reimbursed once the government revved up again. Those who depend upon non-essential government services would be impacted. Mortgage originations would stall, checks would be delayed, parks would be closed and tax refunds for those who mailed in their returns would slow down.
The Veterans Administration, however, would continue to provide all of its health-care services through the shutdown because it is funded in advance with a two-year budget cycle. Veterans would receive all of their benefits, but staffing for veterans services would be affected, so appointments and person-to-person help would be limited. Other programs, like the VA loan program may not be considered “essential” so veterans and military who hope to close on their new home would have to wait.
Burials at Arlington National Cemetery would also be affected. Active duty military at home and abroad, even those in the war zone would be paid, as scheduled, on April 15, but the check would only cover April 1-8; there would be no pay on April 29 if the shutdown lasted that long.
Rick Maze reported in an article published in the Military Times Network that an extended government shutdown would hurt many military families who are living paycheck to paycheck. “Families with a second income and with substantial savings might be able to manage with few problems. Others, particularly deployed personnel with young families and limited savings, might be affected very badly,” a report issued by the Congressional Research Service stated.
On Thursday, the House passed an amendment that would exempt military service members and contractors’ and civilian DoD employees from losing pay during a shutdown, extend the current budget by one week and fund the DoD until the end of the year, along with slashing $12 billion from the budget. If passed by the Senate and signed by the president — who threatened to Veto the bill — this will be the third continuing resolution passed five months into the current fiscal year.
Reid responded with his own ultimatum, “The president has told the Speaker and I have told the Speaker that it’s a non-starter over here. There will be no more short term [continuing resolutions] unless they’re clean, to give all us a few more days to work out funding the government.”
Dan Greenhaus, Chief Economic Strategist at Miller Tabak, told Fox News that a shutdown would hurt the economy. How much would depend upon how long the shutdown stretched out. The 1995 shutdown, he said, probably cost the economy a one percentage point drop, but because of the strength of that economy, the reduction in GDP was not a big deal. A hit like that today, however, would be much more challenging, he said, because the current economy is so vulnerable. Goldman Sachs estimated that a few days of government shutdown would shave .2 percent from the economy, threatening the fragile recovery.
Businesses are also getting fed up with the week-by-week budgeting process designed, some say, to make the funding of government into a daily crisis management proposition. Business Rountable (BRT) issued a statement on Thursday saying, “We urge the Administration and Congress to agree on a sensible budget solution in time to avoid a government shutdown. A shutdown would have negative and unforeseen consequences, including heightening uncertainty and disrupting basic business services to government agencies.” BRT is an association of leading U.S. companies that, combined, contribute almost $6 trillion in annual revenues to the economy and employ more than 13 million people.
Yet, even if the two parties can agree to this year’s budget, the big talks have yet to come. Congress has barely begun to discuss the hard issues — raising the debt ceiling and next year’s budget.