11Feb

GOVERNMENT SHUTDOWN; WHAT WAS IT AND HOW MIGHT IT IMPACT THE ECONOMY?

The news hasn’t been able to say enough about the “government shutdown.” It has been the headline story in many papers and the lead story on many evening newscasts. To say that the government was shut down is something of a misnomer. It was actually a quarter of the government, consisting of about 800,000 employees.

The federal government, in large part, gets funded through appropriations determined by the Congress. Not all agencies of the government are funded for the current fiscal year; some are operating under temporary extensions. Those under temporary funding were impacted.

Those federal employees who were affected fell into two groups; those who continued to work with deferred pay and those who were actually furloughed. This includes approximately 380,000 federal workers who were placed on temporary leave without receiving pay. The remaining 420,000 workers are considered “essential” and were required to report to work, even if their paychecks were deferred. The shutdown affected nine of the 15 cabinet-level federal departments, including Homeland Security, Justice, Transportation, Interior, Agriculture and State.

What level of national security?

At the core of the stand-off, between the president some members of Congress, was contention over national security and a border wall. In 2016, more than 63,000 Americans died from opiate overdoses. More than 90 percent of cocaine and heroin comes into the U.S. across the U.S./Mexico border.

The deaths of many American citizens have been at the hands of illegal aliens. A recent example was the murder of Stanislaus County, California police officer Ronil Singh, who was gunned down by an illegal alien who had been using three different aliases. That man, Paulo Virgen Mendoza, was aided by seven other illegal aliens in an attempt to evade capture and return to Mexico. A president’s first duty is to protect the American people.

A wall is the only security measure that acts as an impediment and not just a source of notification that someone has crossed into the country. The president wants a wall and Congressional Democrats and some Republicans would prefer that funds are spent on sensors, cameras and high-tech alert systems, but not a wall. The president is asking for $5 billion to initiate the project and Democrats in the House are offering $1.5 billion that cannot be used for a wall.

For the time being, the “shutdown” is over. The president effectively ended it, giving Congress time to work out a deal that satisfies both him and the Democrats. As was the case with federal worker’s pay, the stand-off has been deferred for now; the can has effectively been kicked down the road.

The Congressional Budget Office (CBO) estimates that the shut-down will have a minor impact on the economy for 2019. According to the CBO’s estimate, “the partial shutdown delayed $18 billion in federal spending and suspended some federal services, thus lowering the projected level of real GDP in the first quarter of 2019 by $8 billion (in 2019 dollars), or 0.2 percent.”
The office further estimates that the shutdown impacted the fourth quarter GDP of 2018 by 0.1 percent. They report that the GDP for the full year 2019 is “expected to be 0.02 percent smaller than it would have been otherwise.”

The government shutdown was not the first and will most likely not be the last. It does point out the importance of maintaining an emergency fund and having a contingency plan in place for periods without income. Many federal workers were relying on social service organizations for help.


Share this story

Join the Conversation

Your email address will not be published. Required fields are marked *