The nine most painful impacts of a government shutdown

October 3, 2013

The federal government shut down on Tuesday and will stay closed until Congress can reach an agreement on how to fund day-to-day operations. So who gets hurt most by the shutdown?

Everyone's heard that the panda cam at the National Zoo has powered down, but that's hardly the most serious consequence of a shutdown. The biggest disruptions are less visible — the workers going without pay, the patients turned away from research clinics, and so on. Here's a rough list:

1) More than 2 million federal workers will see their paychecks delayed — and 800,000 of them might never get repaid.


Federal employees protest the sequester outside the Department of Labor on March 20. (Andrew Harrer/Bloomberg).

This is, by a fair margin, the biggest immediate consequence of a shutdown. So long as Congress keeps the government closed, many federal workers simply won't get paid during the shutdown (save for those in agencies with independent funding, like Postal Service employees).

There are two classes of federal workers to consider. First, there are the 1.3 million "essential" civilian employees who keep working during the shutdown. These workers may see their paychecks delayed, but they'll eventually get paid once the government reopens.

It's a different story for the 800,000 or so workers deemed "non-essential." These employees have to come in for a few hours on Tuesday, get their files in order, and then go home without compensation, indefinitely. And it's unclear if they'll ever receive back pay. That's completely up to Congress. Non-essential workers did get paid retroactively after the 21-day 1995-'96 shutdown. But this time around, some conservative are reportedly skeptical at the idea of paying federal employees for "work they didn't do."

This could be a fair-sized financial hit for many workers, depending on how long the government stays shut down. Note that many of these federal employees have already gone through a three-year wage freeze and months of furloughs imposed by the sequestration budget cuts.

The economic impacts could also be sizable. Economist Mark Zandi argues that the furloughs could shave 0.3 percentage points of fourth-quarter GDP growth (although some of that activity would come back if the workers get back pay). Maryland, where many federal workers live, could lose up to $5 million per day in income and sales tax revenue.

Note that this doesn't include federal contractors, who will also start furloughing employees as contracts dry up. (During the 1995-'96 shutdown, one-fifth of contracts were put on hold.) It's still unclear how many companies will be affected, but the numbers are large. Fairfax County, Va., alone has 4,100 contractors that bring in about $26 billion per year.

2) Millions of veterans may not receive benefits if the shutdown lasts more than two weeks.


(The Washington Post)

Officials at the Department of Veterans Affairs have quietly told Congress that they likely won't have enough money to pay disability claims or make pension payments for veterans if a government shutdown lasts for more than two or three weeks. That could affect some 3.6 million veterans who receive these benefits.

In a briefing with Congress, VA officials warned that many veterans depend almost entirely on these checks for their livelihood, and many have not been given enough time or information to prepare.

3) The CDC will halt its flu program just as flu season gets underway.


(Rogelio V. Solis, File/Associated Press)

Every fall, the Centers for Disease Control and Prevention monitors the spread of flu and figures out how best to direct vaccine programs around the country. During the shutdown, however, the agency will be "unable to support the annual seasonal influenza program," according to a memo from the Department of Health and Human Services.

And it's not just the flu. The CDC also has to stop providing "support to state and local partners for infectious disease surveillance." And the agency will have a "significantly reduced capacity to respond to outbreak investigations, processing of laboratory samples, and maintaining the agency’s 24/7 emergency operations center."

(The CDC will, however, continue its overseas malaria and AIDS programs, as those are funded independently.)

4) Some food-safety operations would cease.


Ken Trevarthan/AP - Water can cause harm by entering the egg through its porous shell, increasing the risk of contamination.

During the shutdown, the Food and Drug Administration will have to cease most of its food-safety operations. That includes "routine establishment inspections, some compliance and enforcement activities, monitoring of imports, notification programs (e.g., food contact substances, infant formula), and the majority of the laboratory research necessary to inform public health decision-making."

This past December, the FDA shut down a nut processor in New Mexico after records showed that the facility was shipping products infected with salmonella. That sort of monitoring and enforcement could become much harder.

Now, that doesn't mean all food-safety oversight stops. The U.S. Department of Agriculture will still maintain thousands of inspectors to check out meat and poultry facilities, and the Food Safety and Inspection Service is still allowed to recall workers in the event of an emergency. So there's still a fair bit of oversight capacity in place. But many routine FDA activities on this front will come to a halt.

It's not just food safety either. A wide swath of regulatory agencies will close during the shutdown. The Environmental Protection Agency will stop monitoring air pollution and pesticide use. The Labor Department won't be around to enforce wage and hour laws or occupational safety. The Commodity Futures Trading Commission, which oversees America's vast derivatives market, will close up.

It's very possible that nothing will go awry while these regulators are closed. But that's hard to say for sure.

5) Nutritional programs for women, infants and children could be disrupted after a week.

Some programs will continue to receive federal funds, but those for the Supplemental Nutrition Program for Women, Infants and Children would be cut off during a shutdown. (Tracy A. Woodward/The Washington Post.

During the shutdown, the Department of Agriculture will stop supporting the Women, Infants and Children (WIC) program, which helps pregnant women and new moms buy healthy food and provides nutritional information and health care referrals to those who need it. The program aids some 9 million Americans.

That won't hit immediately. The USDA estimates that most states have funds and authority to continue their programs for "a week or so," but they'll "likely be unable to sustain operations for a longer period. "Contingency funds will be available to help States—but even this funding would not fully mitigate a shortfall for the entire month of October."

Update: On Tuesday the USDA released additional guidance allowing states to tap into additional funds that could allow many states to keep the WIC program running through October. But the memo warns that state agencies "may still face funding shortfalls associated with FY 2014 obligations during the shutdown."

The agency notes, meanwhile, that food stamp aid for 47 million low-income Americans would be unaffected through the month of October, since that program still gets stimulus funds that won't run out until next year.

6) Financing for small businesses could be hampered.


Durham Bulls Athletic Park in Durham, North Carolina. (Bill Russ / VisitNC.com)

The Small Business Administration has provided guarantees for some $106 billion in loans to more than 193,000 small businesses over the last four years. It also runs programs to help small firms win government contracts, help veteran-owned businesses, and boost international trade.

All that would cease in a shutdown. Although the SBA would continue to back existing loans in its portfolio, it wouldn't initiate any new loan guarantees. The one exception here is the Disaster Loan Program, which steps in during natural disasters and other emergencies — that would continue to operate.

For those reasons and others, a recent poll found that fully 41 percent of small-business employers with less than $5 million in annual revenue said that an extended shutdown (three months or more) would force them to pull back on their hiring plans. No one expects a shutdown that long, but even a shorter hiatus could disrupt some economic activity.

7) The tourist trade would take a hit.


Closed! Well, unless Arizona wants to pay to operate it. (Ron Watts / Corbios)

The National Park Service will close more than 400 national parks, museums and sites across the country, including Yosemite National Park in California, Grand Canyon park, Alcatraz in San Francisco, and the Statue of Liberty in New York. Day visitors will have to leave immediately. Campers will have two days to pack up and get out.

That sounds like a minor inconvenience, but it can have a major economic impact. During the last shutdown in 1995-1996, some 7 million visitors were turned away from national parks. Tourist industries and airlines lost millions of dollars per day, according to the Congressional Research Service.

This time around, the National Parks Conservation Association estimates that local communities could lose some $30 million in business for every day of the shutdown.

8) Head Start programs for hundreds of kids will slowly start closing.


(Carol Kaliff/AP )- Lead teacher Carmen Prybylski works with children Quinn Watson, left, 3, Sofia Coway, 2, and Kayla Lamour, 3, at Head Start's new building in Danbury, Conn. July 17, 2013.

There are some 1,600 Head Start programs around the country providing education, health, nutrition and other services to roughly 1 million low-income children and their families. Those will slowly begin closing during a shutdown.

Initially, only about 20 programs would be affected — the programs whose federal grants expire on Oct. 1 and don't get renewed. Over time, more programs would likely be affected. The effects really vary from community to community. In York County, S.C., for instance, pre-kindergarten classes for some 864 kids will be canceled this Friday. (These programs would likely be reinstated once the shutdown ended.)

Note that Head Start has already faced cutbacks due to sequestration budget cuts, having eliminated services for some 57,000 children this year.

9) Disability benefits could be interrupted.


(Source: Center for American Progress)

During the shutdown, the Social Security administration won't have enough staff to schedule new hearings for those applying for disability benefits. And the Veterans Appeal Board will be closed, which means veterans appealing a decision on disability benefits will have to wait until the shutdown ends.

Update: 10) Kids with cancer could get turned away from treatment.


Here's one last impact to add to the list. As long as the government is shut down, the National Institutes of Health says it will turn away roughly 200 patients each week from its clinical research center, including children with cancer.

“We’ve had to tell people, ‘I’m sorry, you can’t come here,’ ” NIH Director Francis Collins told the Wall Street Journal on Tuesday. See this post for more information and context.

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Note that these aren't the only consequences of the shutdown. There are plenty of others: Businesses won't be able to access E-Verify to check the immigration status of potential hires. The National Institutes of Health will stop accepting new patients for clinical trials. The Bureau of Land Management will stop issuing permits for oil and gas companies on public lands.

How painful the above impacts are depends on your perspective. Obviously the people affected will care a lot. But how big an outcry will there be from the broader public? Over at Business Insider, Joe Weisenthal suspects that "there's no obvious one thing [about a shutdown] that will be so annoying to the public that the two sides would quickly have to come to a deal." If that's true, a shutdown could last for quite some time.

It's also worth noting that we've already seen disruptive cuts this year after Congress allowed sequestration to hit — and lawmakers haven't exactly rushed to reverse those haphazard budget cuts. Indeed, much of Washington appears to have made peace with sequestration. That makes it hard to guess exactly how long a shutdown might last.

Related: Absolutely everything you need to know about how a government shutdown works.

 

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