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Subscribe to RSSAs the standoff in Congress continues over where and what to cut from federal spending for the rest of this fiscal year, the prospects for a government shutdown loom larger.
But the haggling over the budget could have a very expensive consequence: A shutdown costs the government money.
A lot of it.
The Office of Management and Budget estimated early in 1996 that the first of two government shutdowns – for six days in November 1995 – cost taxpayers an estimated $100 million per day. The final price tag for that closing and the record three-week shutdown later that year - including back pay to workers who did not go to work over that time: Over $1.25 billion.
Other shutdowns have been costly too. According to the Government Accountability Office, a funding gap of just three days in 1991 rang up a $607 million bill, including $363 million in lost revenue and fees.
If Congress fails to reach an agreement on a stopgap spending measure before the current funding law expires on March 4, the federal government could be headed for the 16th closure since Jimmy Carter’s presidency.
The costs of shutdown
The executive branch of the federal government currently employs just over two million civilians – about the same number as it did in the mid-1990s – and requires hundreds of millions of dollars per day to function.
But why does it cost so much to keep the lights off?
First of all, pay.
The Office of Management and Budget requires federal agencies to maintain a contingency plan in case of a “funding hiatus” – including information about how many employee are essential for “military, law enforcement, or direct provision of health care activities” or otherwise “to protect life and property.” That would include air traffic controllers, national security professionals, key medical workers, and law enforcers, among others. But, in the event of a shutdown, “non-essential” employees would be forced to stay home until the impasse gets resolved.
In the 1990s, the 800,000 employees who were furloughed in November and the 260,000 who sat idle in December received a total of about $1 billion in back pay even though they could not report to work, according to a report by the Office of Management and Budget.
(That was a relief to many employees, who were uncertain for weeks about whether or not they would ultimately be paid. Robert Tobias, who served as the president of the National Treasury Employees Union during the shutdown and now teaches at American University, said that his organization and other federal employee groups dispersed tens of thousands of dollars in loans to workers who were unable to pay their bills without receiving their paychecks on time.)
There’s also the issue of uncollected fines, fees, and other revenues.
The Environmental Protection Agency, for example, failed to collect $63 million in fines because of cancelled facility inspections during the November shutdown in 1995. Uncollected airline taxes and fees by users of government facilities like national parks also added up.
There are also major potential trickle-down effects for the nation’s economy.
Shortly after the three-week shutdown in 1995, the Interior Department concluded that the shuttering of national parks had cost related businesses and nearby local governments almost $300 million. A study conducted by the by National Parks and Conservation Association found that – even a year after the budget standoff – small businesses were still suffering from a lingering decline in tourism, especially by foreign visitors.
Contractors also suffered during the mid-1990s shutdowns. According to a survey conducted at the time by Signet Banking Corp., a third of federal contractors furloughed some of their own employees in January 1996. Many of those workers never received checks from their private-sector employers to make up for time lost.
Looming threat
It remains unclear whether or not a shutdown will occur, and the Obama administration has been mostly muted in its warnings about the economic effects of a potential budget stalemate after March 4.
"We don't want to do things that would jeopardize confidence in the (economic) recovery,” said Treasury Secretary Timothy Geithner at a breakfast sponsored by Bloomberg News on Wednesday. But he declined to comment further on the possible impact of a shutdown, saying of the congressional negotiators working on a stopgap bill, “I don’t want to complicate their challenge.”
Still, the potential political and commercial costs of the 1995-96 standoff are on the minds of the shutdown’s veterans and its students.
“What Republicans discovered was that, while people don’t pay much attention to the federal government, they notice a great deal when the services they need are not available,” said Tobias. “That’s why there was a huge backlash.”
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This has to be the largest lesson this country will ever learn. The founders were totally adamant about a decentralized government with strong states and communities where the people ran the country on budgets of locally collected taxes. They knew the kiss of death was to connect the voters and corporations to the Treasury. The only way to do that is with a giant centralized "Federal" government. That is specifically why they left the federal level out of handling all the money projects and left them to defense only, which was watched like a hawk.
No federal level political party or politician has ever been able to resist using the Treasury to payoff voters and line the pockets of financial contributors. Never has a countries voters been able to resist voting themselves jobs and entitlements from the Treasury given the chance. That is why the founders were adamant about ZERO federal charity and money handling.
Well we did it so bad we emptied the Treasury decades ago and are now voting ourselves borrowed money every year. Once addicted to entitlements this country simply does not have the stomach to do what it takes to get rid of them. We have created a monster of epic proportion that may bring down the country, as we know it, to get rid of it. We view our federal government as a "too big to fail" corporation that must be supported with as much debt as it takes for as long as it takes.
Unfortunately, at some point soon our creditors will end this entitlement and war monger party and THEY will decide what stays and what goes.
Then you should visit your local SSA office Monday and do so.
Entitlements are a touchy subject. But --
They are a part of employment. The Vietnam veterans, for instance, have "entitlements" that are a part of compensation due as a result of a contract, and the government's desire to save money when they bought defoliant for use in Vietnam.
The other biggie issue was that some decades ago, the government decided to allow employers to underfund retirement plans. The government then went on to provide a minimalistic backup scheme that comes into play when companies such as Delta airlines goes bankrupt. This allowed large investors to buy cash rich corporations, gut them and place them into debt, then sell the ghost to recover the original investment, and profit by retaining the cash that was "skimmed off".
"JobSeeker
As a teabagger, I volunteer to give up my SS and Medicare. All that without burning down a single building like you worthless libs do whenever your entitlements are threatened."
I think that everyone should be paid equally an do away with government unions. Why would my education be any different from someone in the government.? Well it isn't. They need to trim back on paper, lights, gasoline, nuts and screws that cost $$$$, that is only worth at a hardware store 10 cents. They don't need name brand items to run the White House. Why isn't the mistress cooking all the meals, instead they have several chefs. That is a waste of money. They could close off 2/3 of the whole White House and that would save even more money. The real problem was that Obama had all these bright ideas, but can't implement them, because he don't know how. Now the problem is worse. Millions of people without jobs who want to pay taxes, can't find one. I hope that someone in Congress and the Senate is reading this. Let me fix the whole problem. Either let that gas go that is in the reserve and let people go back to work (high gas prices is what the problem is) at consumer affordable prices or force OPEC to lower the price of oil. It is cheaper to let the gas go that is sitting in storage tanks since 2008, then to buy more and save that. Gas goes bad after a year or two. Then you have to burn it. You can save the United States by distributing it at a low cut rate price and then rationing it like they did when Jimmy Cater was in office. Yes, I would force sanctions on oil companies to let their gas go for $1.50 or so cheaper than the price today. I can't go to work because I have to be able to get to the job first. If I can't afford my bills, how can I afford gasoline at over $3.00 a gallon (not a 55 gallon drum). For those who have not read my comments in the last several days, I have explained that oil was sold by those 55 gallon drums. The kind that some of you make barbecue pits out of or steel drums.
These continuing Democrat/Republican turf battles continue because WE the voters let it continue. Get off your lazy butts and write your Representatives and Senators and DEMAND they do the job for which WE elected them, or vote the ba@#&$%s out of office!!!!! Do it at least once a week!!
what I love about the republicans is that they really don't give a sh*t about any issues but their own !!! and, if their policies hurt average hard working Americans "so be it" !!! I hope that Americans take a good look at the fight in Wisconsin and realize that the republicans are showing the same intransigence in Washington over the budget issue !!! this unseemly and hypocritical behavior comes,of course, after they forced President Obama to blow a 400 billion dollar hole in the budget courtesy of a tax cut for the rich !!! I hope that Americans don't make the same mistake that is costing Wisconsinites so dearly at this very moment !!! VOTE DEMOCRATIC NOT REPUBLICAN IN 2012 to avoid ending up like the people in Wisconsin !!!
p.s.if the federal government should shut down let these republican bastards in Washington be their first to have their checks stopped and let them not be reimbursed for any money lost during the forced furlough !!! that will teach them !!!
Smith 1 - IF the federal Government shuts down Congress and the president still get paid... The only people who suffer are the workers - NORMAL people like you and me.
dear justin
you're absolutely correct and it's a shame !!!
I'm confused. If the furloughed employees are all going to get back pay when the budget does get passed, what's the point in sending them all home to begin with? Seems to me that they should all stay at work and continue to do what little they do to earn the pay they going to get when the budget is passed! Is our government broke, broken, and out of control or what?
(R) are sick phuqes
Please do not let these (R)'s (Steele) get away with their little sound bites like the "Government still owns GM" and that is not true. GM has paid in full with interest.