By The Economic Collapse Blog
“Is it actually going to happen? Are we actually going to see "Government Shutdown 2011"? Will the streets of Washington D.C. soon be eerily quiet as hundreds of thousands of federal workers are temporarily sent home? Right now Barack Obama, Harry Reid and John Boehner all say that they want to reach a deal and avoid a government shutdown, but the deadline is coming up fast. The current spending bill that the government is operating under expires at the end of Friday. If the Republicans and the Democrats do not come to an agreement before then, the U.S. government will "shut down" at 12:01 AM Saturday morning. The Republicans have proposed a plan to extend government funding for one more week so that negotiations may continue, but the Democrats have rejected it. Obama has summoned Reid and Boehner to the White House tonight in an attempt to hash out a deal, but most observers are not particularly optimistic. Sadly, government debt is going to expand at a mind blowing pace this year no matter who wins this battle.
Both sides are attempting to play political hardball. During the 2010 campaign, the Republicans promised to cut $100 billion from the budget for 2011 and they know that Tea Party activists are going to hold them accountable. The Democrats control the Senate and the presidency and they probably figure that when push comes to shove that many of the new, inexperienced Republicans in the House can be intimidated into giving in. But in the end it really doesn't matter that much who wins this battle. The Republicans are proposing $61 billion in budget cuts which would cut the budget deficit for 2011 by only 3.8 percent. The Democrats are proposing $33 billion in budget cuts which would cut the budget deficit for 2011 by just 2.1 percent.
Is that extra 1.7 percent really going to make a massive difference over the long run? Of course not. But right now Republicans and Democrats are both in the mood for a fight, so we really might actually see a government shutdown. If the government does shut down, it probably won't be for too long. The longest government shutdown of all time ended in early January 1996 and it lasted just 21 days. So exactly what would happen if there is a government shutdown in 2011? If it does actually happen, the following are 16 things you will need to know...
#1 Hundreds of thousands of "non-essential" federal workers will be told to stay home during a government shutdown.
#2 Those in the military will not receive paychecks during a government shutdown but they will be required to keep performing their duties.
#3 The Obama administration is anticipating "significantly lower staffing levels" at the White House if a shutdown happens.
#4 Barack Obama will continue to be paid during a government shutdown.
#5 Congress will also be paid and will continue to operate at close to normal levels during a government shutdown.
#6 The Federal Reserve will continue to operate normally during a government shutdown. The Federal Reserve is not part of the U.S. government.
#7 In all probability, all government employees will eventually receive any pay that is missed during a government shutdown. During the 5 day U.S. government shutdown back in 1995, approximately 800,000 "non-essential" government employees were told not to come in to work. But eventually they all got paid retroactively anyway.
#8 During a government shutdown, the Department of Homeland Security will suspend operation of its e-Verify system. Employers will be unable to verify the immigration status of job applicants and that could have a substantial negative impact on hiring.
#9 The processing of small business loans and FHA mortgages will be delayed during a government shutdown.
#10 The U.S. Postal Service will not be affected by a government shutdown. You will continue to get your mail.
#11 According to the Social Security Administration, everyone that is currently receiving Social Security benefits will continue to receive those benefits during a shutdown. New applications will be delayed however.
#12 Medicare payments will continue during a government shutdown, but there will be a delay in processing new applications.
#13 During a government shutdown, the processing of paper tax returns by the IRS would be delayed.
#14 If there is a government shutdown, the processing of passport and visa applications could be seriously delayed. This could have a negative impact on the tourism industry.
#15 National parks, museums and tourist attractions will be shut down. According to the Washington Post, "about 500,000 visitors could be turned away this weekend alone from the National Zoo and the major Smithsonian museums on the Mall".
#16 The annual Cherry Blossom Festival parade in Washington D.C. that is scheduled for this weekend would be cancelled.
So why don't the two sides just compromise on a figure and get it over with? Well, it is just not that simple. Barack Obama is pledging that he will not sign any budget bill that cuts funding for Planned Parenthood and the Environmental Protection Agency. But to Republicans those are very important things. Many Republicans are sick and tired of large amounts of money going to the Planned Parenthood abortion mills and many Republicans are determined to take away the EPA’s authority to regulate the "greenhouse gases" that many Democrats believe are causing "global warming". If the Republicans back down they risk alienating their Tea Party supporters. And we have already seen what happens to Republican politicians that cross the Tea Party. The truth is that many Tea Party activists are already upset with the compromises that Republican leaders have been making.
Originally, Republicans had pledged to slash $100 billion from the budget for this year. Then, they said that $61 billion was good enough because a large portion of the fiscal year was already gone. Now that there are rumors that Boehner may be willing to reduce that figure even further, some Tea Party activists are becoming extremely upset.
Tea Party Nation founder Judson Phillips posted the following message on his organization's website about a month ago... "The Tea Party movement should find a candidate to run against John Boehner in 2012 and should set as a goal, to defeat in a primary, the sitting Speaker of the House of Representatives." The truth is that this entire controversy shows how divided America is right now. The Democrat base is simply not going to accept cuts to Planned Parenthood or the EPA. The Tea Party base is simply not going to accept the small budget cuts that the Democrats are offering.
So who is going to give in? Whichever party does give in is going to have a lot of explaining to do to their base. But if neither side gives in we could be in for an extended government shutdown. It is certainly a fascinating game of "chicken" we have got going on. It is going to be extremely interesting to see who blinks first. Personally I think it is going to be Boehner that is going to cave. If he can get the Democrats to agree to a budget cut figure in the neighborhood of 40 to 50 billion dollars I think he is going to grab it and try to "spin" it as a great victory for fiscal conservatives.
Unfortunately, the truth is that no matter who "wins" this current battle government debt is going to continue to soar. The Obama administration is projecting that the deficit for this year will be 1.6 trillion dollars. Even if we were to cut $100 billion from that number it would barely make a dent. The U.S. financial system is dying, and nothing that the Republicans or the Democrats are doing right now is going to change that."