The much-hyped sequester is now part of history, and the new budget battle is heading toward a possible government shutdown on March 27. But what does that mean and who is affected by it?
If you’re keeping score at home, $85 billion of federal spending cuts for the government’s current fiscal year will go into effect on March 2, as the sequester kicks in. But there is an even bigger budget battle brewing.
On March 27, the current continuing resolution that funds the government’s operations ends. Either a new resolution must be approved by the House and Senate, or a broader budget must be approved.
If Congress can’t reach a budget deal by March 27, all nonessential federal government operations stop. This happened in 1995 and 1996, and it wasn’t a pretty picture.
The current battle between Democrats and Republicans includes an insistence that no new taxes are levied (on the Republican side) and more taxes are needed to offset the sequester cuts (on the Democratic side).
The two parties have had a hard time agreeing on anything in Congress. The deal to avoid the fiscal cliff in January only came after the two sides missed a key deadline. It resulted in new tax revenues that GOP members insist must be matched by spending cuts like those in the sequester.
Given the inability of both parties to reach a consensus, the threat of a government shutdown is a possibility in late March, even though congressional leaders dread the thought of it.
Back in 1995 and 1996, Congress and the president were locked in a similar budget battle. The primary players were President Bill Clinton and House leader Newt Gingrich.
The first shutdown lasted from November 13 to 19, 1995. A temporary continuing resolution was agreed to in Congress to help budget talks along. The second shutdown was from December 16, 1995, to January 6, 1996.
About 15 years later, the Congressional Research Service analyzed the economic impact of the twin shutdowns.
Its 2011 report, the CRS says a shutdown, more precisely called a “funding gap,” is tied into the Constitution: Article I, Section 9, states that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”
If the budget appropriations process shuts down, then bills and people don’t get paid until the government is funded. Other laws define the shutdown process and allow spending for “emergencies involving the safety of human life or the protection of property.”
The CRS says one immediate effect is the “shutdown furlough” of many government employees. Members of Congress, the president, and other “excepted” workers aren’t furloughed.
In the 1995 shutdown, about 800,000 people were furloughed. The 1996 shutdown was partial, with 284,000 people furloughed, with others working on an unpaid basis.
Furlough-exempt programs include national security and homeland security; government-supplied medical services; food, drug, and environmental inspections; air traffic control; power grid activities; criminal investigations; and disaster assistance.
For the public, National Park Service sites will be closed, as well as national museums and monuments. Applications for passports and visas can’t be processed. Hotline calls to the National Institutes of Health will go unanswered.
And in 1995, some benefits were curtailed for veterans. Social Security checks will still go out, but new entitlement claims could be delayed, since employees to handle those claims may be affected. In the 1996 shutdown, the CRS says resources were diverted to help with Social Security issues.
The 1996 shutdown ended after 21 days, amid falling popularity numbers for both parties. President Clinton’s popularity numbers rose once the shutdown ended in an election year. The damage to the Republicans was more enduring.
In 1999, Senator John McCain spoke on the floor about how the shutdowns hurt his state.
“They told me that the shutdown cost them thousands of dollars because people could not go to the park. According to a CRS report, local communities near national parks alone lost an estimated $14.2 million per day in tourism revenues as a direct result of the government shutdown, for a total of nearly $400 million over the course of the shutdown. The cost of the last government shutdown cannot be measured in just dollars and cents,” he said.
The damage was so great from the 1995 and 1996 shutdowns that some observers believe congressional leaders Harry Reid and John Boehner will avoid that possibility at almost any cost.
At a Friday press conference about the sequester, President Obama told reporters that a shutdown needed to be averted.
"I think that's preventable," he said.
Boehner said at a press conference on Friday morning that he was "hopeful that we won't have to deal with the threat of a government shutdown while we're dealing with the sequester at the same time."
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