Month: December 2018

News

Shutdown Winners and Losers

by Jeff Neal1 Comment on Shutdown Winners and Losers

With the partial government shutdown now in its 5th day, it is a good time to look at who wins and who loses in a shutdown.

Winners

The media. With shutdown clocks in the chyron and constant coverage of the shutdown, the shutdown feeds the 24-hour news channels. Since the beginning of all-news channels (that have devolved into some news and mostly opinion), cable news channels have craved content. A government shutdown, even if it is not the entire government, is great content.

Opponents of government. Anyone who does not like government in general can get satisfaction out of seeing a portion of the government shut down without immediate consequences. The fact that shutdowns are really faux shutdowns that make certain people doing jobs that affect national security and public safety are on the job makes it likely that the negative consequences take time to be seen.

Some politicians. Believe it or not, some politicians are going to benefit from a demonstration of our government’s inability to function effectively. It may be the President, if he gets what he wants, or it may be once and future Speaker Pelosi, or it may be someone who comes up with a face-saving way out of this mess.

Losers

The people. We elected members of Congress and a President to do the jobs the Constitution assigns to them. So far we are not getting what we paid for.

The media. Yes, the same ones who are winners. We may watch the coverage, and they may collect the ad revenue, but we eventually get sick of non-stop coverage and tune out.

Opponents of big government. Another winner that eventually loses. Reducing the size of government might be a good idea, but mindlessly shutting it down, then spending a fortune to undo the damage is certainly not the way to do it. The last long-term full shutdown had a $25 billion price tag. Taxpayers are not happy about seeing their money going down the toilet.

Supporters of big government. Anything that sends a message, even a false message, that large parts of the government can stop functioning without an immediate negative impact encourages people to view federal workers as inconsequential bureaucrats. It is not true, but it still does damage.

Contractors. When we see stories about shutdowns, the focus is typically on federal workers. Those federal workers who are not working are almost certainly going to get back pay. Many contractors (particularly in small businesses) who are not working now are not getting paid. They are not going to get back pay and this shutdown is taking money out of their pockets. The companies that employ them are also not being paid, so their bottom line will suffer.

Businesses patronized by federal workers and contractors. These folks drive a lot of economic activity. Some of it is as simple as eating lunch. Restaurants that have a large federal worker/contractor customer base are hurting. They lose revenue and no one makes them whole. Other businesses suffer the same fate. Businesses buy goods and services from other businesses. Workers do not spend money when they are not being paid. For many companies, a shutdown could make the difference in profit and loss for the entire year. Who writes the check to make them whole? Nobody.

All of us. The truth is that shutdowns are bad, no one wins, and everyone loses. The sooner it is over the better off we will all be.

News

A Christmas Shutdown?

by Jeff Neal


The news out of Washington today that there is still no agreement on a deal to keep the government open until February 8, 2019 is making a lot of federal workers nervous. What happens if there is no deal before tomorrow night? Is there anything to worry about? And how long could this standoff last?

What happens is clear. If there is no deal, current spending authority for many agencies, including NASA, Housing and Urban Development, Commerce, EEOC, Treasury, Transportation, Justice, the General Services Administration, Environmental Protection Agency, the Office of Personnel Management, Agriculture and the Department of Homeland Security, will expire. Most programs that operate with appropriated funds will have to shut down, unless they are excepted due to public safety or other considerations.

That means a lot of employees will not be allowed to work. Pay for days through December 22 would go on, but no more pay would be authorized after that until Congress and the President reach an agreement. That assumes back pay will be authorized for those days off. While it is not guaranteed, it is about as close to a sure thing as you can get in this town.

So — is there anything to worry about? After all, a lot of people are off work next week, back pay is practically guaranteed, and it does not even cover the entire government. As I see it, there are two things that should concern us. First, there are many employees who live paycheck-to-paycheck. That is not because they are wasteful, it is because they do not make a lot of money and the cost of living is high. For those folks, any disruption in pay could present some big problems. Someone who is on the financial edge could be pushed over by a pay disruption. If those employees have security clearances, financial problems caused by a shutdown could put a clearance at risk.

The second worry is that we already have a trillion dollar budget deficit and shutdowns cost money. If we see a shutdown, we should also expect to see a price tag in the billions. Most of us do not mind seeing our tax dollars go to good use, but we are not so happy to see them poured down the drain.

The good news is that the shutdown, if it happens at all, is unlikely to last long. The republican majority in the House of Representatives goes away on January 3, 2019. That means there is tremendous pressure on the current Congress to get the problem resolved. I would be stunned to see a shutdown last longer than a week. That would mean there should be no pay disruption, federal workers should be made whole, and everyone should go on with their holiday plans. A shutdown is not good and it certainly does not reflect well on any of our elected officials, but the likelihood of it causing real harm to federal workers, including those who are on the lower end of the income scale, is remote.