What’s Closed And Open If The Federal Government Shuts Down

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House Speaker John Boehner’s announcement today that he will quit both his leadership post and Congress at the end of October, improves the odds the federal government will stay open on October 1 when the new fiscal year begins, since it frees him to seek Democratic support for a funding bill. But there’s a distinct possibility that if the Ohio Republican does push through a short term continuing resolution now, the government will shut down in December instead , when it expires, says budget guru Stan Collender, a Forbes contributor. (See his post on the Boehner resignation here.)

Whenever it might occur, the impact of a shutdown would be largely the same. Indeed, the 16-day 2013 budget shutdown, the third longest in U.S. history, provides a good road map of what will and won’t be operating. That’s because the Antideficiency Act, originally enacted in 1884 (and as interpreted by the Department of Justice and Office of Management Budget over the decades) largely determines what happens.

The bottom line on the act: government departments and agencies can’t legally commit any money that hasn’t yet been appropriated by Congress (meaning they can’t allow employees to work now and get paid later), except in certain circumstances. Those include when a statute or legal requirement otherwise authorizes such spending (so Social Security benefits will still be paid ); where a function is needed to continue an otherwise authorized program (federal workers needed to process Social Security payment will stay on the job); where the function is necessary to carry out the President’s constitutional duties (uniformed military and diplomats); or where spending is necessary to protect against an imminent threat to human life or property (yes, they’ll still fight wildfires).

So no, it’s not just political theatrics. President Barack Obama really can’t keep the Washington Monument, Statue of Liberty or National Zoo open if there’s a government shutdown. “Zookeepers can come in to keep the animals alive,’’ says John Cooney, a partner at Venable, LLP. That’s because it’s protection of property, he says.

Cooney, who helped write the shutdown rules as Deputy General Counsel at the Office of Management & Budget under President Ronald Reagan, notes the legal interpretations were skillfully drafted back then to give the President the upper hand. “We turned the shut down plan into a weapon the executive branch would be able to use against Congress.’’ he says.
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So the executive branch is able to keep enough of the government open that essential services work—the Social Security checks go out, the nation is protected and there’s no sense that the President is letting the government collapse. But there are enough popular services that must close down that the Administration has a good PR talking point against Congress each day. This has given the the President the upper hand during shutdowns during the Reagan, Clinton and Obama Administrations, he says. “The people (in Congress) who advocate a shutdown are preparing a frontal assault that has failed every other time,’’ he adds.

Not everything about a shutdown is set in stone, of course. Agencies have wiggle room to define what poses an imminent threat to health or property. In 2013, for example, the U.S. Department of Agriculture decided 8,005 of its 8,387 field employees involved in meat, poultry and egg inspections were needed to ensure the safety of human life, yet the Department of Health & Human Services determined the Food & Drug Administration would need to stop most of its routine food safety inspections and that the Center for Disease Control staffers monitoring that year’s flu season weren’t necessary to protect human life.

Moreover, Congress can step in to salvage some services. At the start of the 2013 shutdown, 850,000 civilian workers, including about half of the Department of Defense’s 750,000 civilians, were told to stay home. But Congress passed a special bill allowing military members and those who supported their readiness, well-being and morale to be paid and all but 5% of DOD civilians were called back after a week. That might well happen again.

All federal workers, including those who stayed home all 16 days, were ultimately granted back pay, as they have been after previous government shutdowns. That makes taxpayers one of the big losers in a shut-down. In an after-report on the impacts and costs of the shutdown, the Office of Management and Budget estimated that 6.6 million work days were lost, but later paid for, at a cost to taxpayers of $2 billion, or $2.5 billion when benefits costs for workers are counted in.

That report also estimated that the nation’s Gross Domestic Product was directly reduced by 0.2% to 0.6% by the shutdown. That small effect doesn’t, however, count the impact of a marked drop in consumer and business confidence that accompanied the shutdown. Direct impacts on the private sector included $500 million in lost tourism revenue when trips to National Parks were canceled and delayed import and export licenses. (More than two million liters of U.S. beer, wine and distilled spirits was left sitting at ports, unable to ship, according to OMB’s after the fact report.)

The impact on some individuals was even more dramatic. The already backlogged processing of veteran’s disability claims was halted and hundreds of patients were kept from enrolling in National Institutes of Health clinical trials.

The Internal Revenue Service was almost entirely shut down—almost all the human beings (including the staff of the National Taxpayer Advocate) were sent home—which created big problems for some taxpayers, including those who were subject to levies processed just before the shutdown. Mortgage and other loan applicants waiting for their income to be confirmed to lenders by the IRS were also inconvenienced.

Janet Novack

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