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Why you should care about latest govt budget fight

Thursday - 9/26/2013, 1:22pm  ET

Ron Kirby, a member of the Tea Party, holds a sign against Obamacare outside the Senate side of the Capitol in Washington, Wednesday, Sept. 25, 2013, in support of Sen. Ted Cruz, R-Texas, as the senator continues his lengthy speech in opposition to President Barack Obama's health care law. The Democratic-controlled Senate is on a path toward defeating tea party attempts to dismantle President Barack Obama's health care law, despite an overnight talkathon on the chamber's floor led by Texas Sen. Ted Cruz. (AP Photo/Jacquelyn Martin)

Who gets furloughs if government shuts down?

WTOP's Nick Iannelli reports.


Associated Press

WASHINGTON (AP) -- You've heard it all before.

The government is headed for a fiscal crisis caused by partisan gridlock. The stakes are high. U.S. credibility is on the line. The economic recovery could be derailed.

Is this a faux crisis that will quickly pass or the real deal?

Time to sort through the reality and the hype.


There are two dates to watch on the fall crisis calendar:

--Oct. 1: The coming Tuesday is the start of the government's next budget year. If Congress doesn't pass a new budget by then, or at least approve a temporary spending bill, parts of the government would be forced to shut down. (More on that later.) It's also when a big chunk of President Barack Obama's health care overhaul takes effect, unless Republicans manage to starve it of money. ("Defund it," in the awful parlance of Washington).

Oct. 1 also is when the next installment of across-the-board government spending cuts, known as the sequester (another awful word), kicks in if there's no deal to cut federal spending in a big way. No one's even attempting to do that right now. 

 _"X Date." Sometime around mid-October to early November, the government won't have enough cash to pay all of its bills on time if Congress doesn't raise the federal debt limit. Then the government would start to default on its obligations. That's a way bigger deal than a short-term government shutdown. It's never happened.



Yes, there's been similar hand-wringing before. Threats of a government shutdown and-or default have become increasingly common in recent years, particularly since the 2010 elections when voters elected to Congress a big tea party contingent made up of lawmakers intent on reining in the federal government and slashing spending.

The last time the government shut down -- a double whammy late in 1995 and early in 1996 -- politicians (especially Republicans) caught so much grief that they've generally avoided that tactic ever since. But the tea partyers didn't live through that shellacking, and many of them aren't afraid of bringing the entire government to a halt to extract concessions or at least get a little attention.

Even some tea party people are balking, though. Sen. Rand Paul, R-Ky., a favorite of that group, has called closing the government "a dumb idea."



In truth, a government shutdown probably wouldn't be that drastic. Think of it more as a government slowdown than an outright shutdown. It looks like the Obama administration will follow past rules regarding which federal employees work and which don't. If that's the case, less than half of federal workers would be forced off the job. (Sensitivity alert: There could be a lot of bruised egos among the 800,000 or so people whose jobs aren't considered essential enough to keep them working during a shutdown.)

A lot of programs would keep running -- air traffic control, food inspection and much more -- but there would be plenty of annoying disruptions. Closed museums and parks. Unanswered phones. No trash collection in the District of Columbia. Possible delays in nonurgent (except, perhaps, to you) services such as passport applications. As well, based on what happened in the last shutdown, the nonpartisan Committee for a Responsible Federal Budget says to expect delays in processing applications for Social Security and Medicare benefits, but no disruption in checks to existing beneficiaries. It also expects disruptions in some delinquent child support and bankruptcy cases, applications for federally guaranteed mortgages and some law-enforcement hiring.

Oh, and one potentially annoying nondisruption: Members of Congress don't get furloughed.



Government shutdowns tend to cost money, not save it, according to the committee. Already, there's a lot of time being spent simply preparing for a shutdown, regardless of whether it comes to pass. The 1996 shutdown cost taxpayers $1.4 billion, according to estimates from the Office of Management and Budget. That's a lot of money to make a point about the need to save money.



No hype, a government default could have ramifications that ripple through the whole economy. Even the threat of a default had big ramifications in the summer of 2011, when the stock market dropped, the U.S. credit rating was downgraded (making future borrowing potentially more expensive), consumer confidence slipped and businesses stopped hiring. But because default is unprecedented, no one's sure exactly what would happen.

While the Treasury Department probably would continue to make interest payments to bondholders, it wouldn't be able to make other payments on time, which could mean delays in Social Security benefits and in paychecks for federal workers and U.S. troops.

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