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Yet another look at another government shutdown threat

September 13, 2013 by Scott Bomboy


If you’re following the latest drama in Washington over a possible government shutdown, there are 12 legislative days left until the federal government starts closing down its operations. So what happens after September 30, when the first deadline hits?

capitolIn a repeat of basically the same story from March 2013, the Democrats and Republicans are far apart on a deal to fund the federal government for a fiscal year starting in October.

Back in May, part of the drama was about the future of sequester cuts, the across -the-board spending decisions that resulted in scaled-back defense spending, and layoffs and furloughs for government-related workers.

Another part of the drama was congressional demands for an annual budget, instead of a six-month continuing resolution.

This time, the sequester and annual budget are important factors, but in a supporting role.

The big items of contention are some GOP demands that Congress defund, and essentially shutdown, programs related to the Affordable Health Care act, or Obamacare; and Democrat demands that Republicans agree to a new debt ceiling limit in mid-October, to avoid a potential United States default on its debt or other payments.

Currently, there seems to be little hope that a long-term budget deal will be completed by October 1st. One theory is that Congress would agree to fund the federal government until at least October 18th, which is the first  theoretical day that the U.S. would default on its debt.

The considerable roadblocks are the near-100 percent certainty that the Democrat-controlled Senate would never vote to shut down Obamacare and a vocal group of House Republicans who insist that Obamacare be delayed, and defunded, for at least a year, if not forever.

So what happens if talks breakdown so much in the next two weeks that not even a temporary funding deal is approved?

Quite simply, all nonessential federal government operations stop. This happened in 1995 and 1996, and it wasn’t a pretty picture.

Back then, 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 said 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 said 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 said resources were diverted to help with Social Security issues.

The 1996 shutdown ended after 21 days, amid falling popularity numbers for both parties.

In 2013, many observers believe the calculus of having the debt ceiling in the negotiations mix will make a potential shut down much trickier to avoid.

On Tuesday, the Bipartisan Policy Center said the debt ceiling will be hit sometime between October 18 and November 5.

What happens after the debt ceiling is hit could be a gigantic political headache. One scenario is that the federal government, short of cash, would make its interest payments first, and then use the remaining cash to meet some, but not all, of its other commitments.

Typical government payments include Social Security, Medicare and Medicaid, checks to defense contractors, unemployment compensation, educational loans, military pay, veterans’ benefits, and funding for the federal court system.

Scott Bomboy is the editor-in-chief of the National Constitution Center.

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