We’re into Day Three of the shutdown – OK, the partial shutdown – and civilization did not come to an end.
The new federal fiscal 2014 rang in at midnight Monday without a plan to fund the government.
For the record, this shutdown is the 18th since 1976, when Congress started using its current budget process.
But if this continues for long, there will be some negative consequences.
And if we blow the more important deadline in about two weeks to raise the debt ceiling, it could get really bad.
You have questions? We have answers.
What’s staying open?
Grandma will still get her Social Security check. Medicare and other programs and entitlements that do not require annual appropriations will not be interrupted. Unemployment benefits will continue. The U.S. Postal Service is still operating because it is not reliant on federal funding.
And yes, taxes still will be taken out of your paycheck. But if you have any tax questions for the Internal Revenue Service, its employees are unavailable to answer them. On a positive note, audits have ground to a halt for the duration of the shutdown.
Q: What else will continue to function?
A: Agencies that protect U.S. lives and security will remain open, such as the Armed Forces. The FBI and U.S. Marshals Service will still be arresting bad guys and the National Security Agency still will be collecting records on who we talk to on the phone. And while the National Oceanic and Atmospheric Administration has shut down, the National Weather Service is still forecasting weather and issuing watches and warnings.
Locally, agencies reliant to varying degrees on federal funding, such as the McHenry County Workforce Center and the McHenry VA clinic, are open.
Q: What’s closed?
A: Recreational venues such as our national parks and federally run museums are closed. So are a number of regulatory agency functions – the U.S. Centers for Disease Control and Prevention is no longer tracking flu outbreaks with the arrival of flu season. Offices in charge of overseas travel – renewing passports for U.S. citizens wanting to travel and processing visas for foreigners wanting to visit – are closed.
Although the federal food stamp program still has funding available, the administrative costs to maintain the WIC program have ceased. Nothing will change in the short term for McHenry County’s recipients of WIC, said Debra Quackenbush, spokeswoman for the McHenry County Department of Health.
Q: How did this happen?
A: The short version is that the Republican-led House passed a bill that would continue funding the government on the condition that the implementation of the Affordable Care Act requiring individuals to be insured be delayed a year. The original version of the bill made it contingent on defunding Obamacare altogether.
The Senate majority is held by Democrats, who have said such language is dead on arrival, and they have repeatedly made good on that promise.
Q: So it’s a political showdown?
A: The more important showdown here isn’t the one between House Republicans and Senate Democrats, but the showdown between the House GOP establishment and the tea party faction pushing for the anti-Obamacare language.
Q: What effect is the shutdown going to have on the economy?
A: Little if it is quickly resolved, but chances of a quick resolution are dwindling. An expert with Moody’s Analytics told the Senate Budget Committee before the shutdown that even a three- to four-day partial shutdown could cut the fourth-quarter growth rate by 0.2 points to 2.5 percent.
The longer the shutdown, the larger the drag. A three-week shutdown, like the last shutdown in 1995-96, could cut growth by more than half, or about 1.4 percent.
But the consequences of a protracted shutdown are nothing compared with the consequences should Congress not raise the debt ceiling in time.
Q: What’s the debt ceiling?
A: It’s a term for the limit set by law as to how much the federal government can borrow. Because the federal government spends far more than it collects in taxes and revenues, it won’t have the money to pay all of its bills if the ceiling, now at $16.7 trillion, is not raised.
Treasury Secretary Jack Lew told congressional leaders Tuesday that the Treasury Department will run out of ways to avoid the ceiling by Oct. 17. Should the ceiling not be raised, the nonpartisan Congressional Budget Office estimates that the Treasury by no later than month’s end will run short of the money needed to pay government’s bills.
Government then would have to decide who gets paid and who does not. Even though top priority would go to paying the interest on the debt to avoid a first-ever default, the nation’s credit rating – which two years ago was downgraded for the first time in history over a showdown on the debt ceiling – would surely take a big hit if the federal government started postponing bills.
Q: So what happens to me personally if the debt ceiling deadline is missed?
A: Good question – it’s never happened before. But the obvious consequences would be very bad.
Experts warn that it would not only put the brakes on the nation’s fragile economic recovery but also plunge us back into recession or worse.
Also, the credit downgrades that would almost certainly follow would mean that rates would increase on home, auto, business and student loans, credit cards and the like. This is because their interest rates are set against the benchmark of Treasury bonds.
Q: Could we still be in default if we make timely payments on the debt?
A: Yes. Rating agencies could find the U.S. in default because it is delaying other obligations to pay them.
Q: If government spending is out of control, wouldn’t holding the debt ceiling firm be a good way to stop it?
A: Raising the debt ceiling is not about enabling new spending, but paying for spending that has already been authorized by Congress. Trying to rein in government spending by not increasing the debt ceiling would be like balancing your home budget by not paying your bills.
Q: How did my local representatives vote on the government shutdown?
A: Both of McHenry County’s representatives in the House – Republicans Randy Hultgren and Peter Roskam – voted to tie funding the government to a one-year pause of Obamacare. Illinois’ two senators split along party lines – Democratic Sen. Dick Durbin voted to strip the Obamacare language from the House bill, while Republican Sen. Mark Kirk voted to keep it in.
You can find contact information for all four at shawurl.com/syl.