When a major weather event approaches, the media highlights the prospective effects of the storm, state and local governments ready needed resources and practical citizens clamor for batteries, water, and pre-cooked canned goods at grocery stores. But what should you do if the federal government shuts down?
As you may know, a government shutdown, like the one experienced in 1995, is a very real possibility. Next Friday the government shuts down, unless Democrats and Republicans can reach agreement on issues which divide them sharply.
Congress has the so-called "power of the purse," controlling the government's metaphorical check book. When Congress fails to pass the legislation necessary to fund government agencies and services, or if the legislation is unacceptable to the president, the government stops, much like your spending would cease if your bank froze your checking and credit accounts.
The federal government will not completely abrogate its responsibilities if funding legislation fails. Each federal agency is required to have a contingency plan indicating which government personnel and programs are essential to protect life and property. A number of activities and staff meet that test, including those that relate to national security and border patrol, medical care, food safety, air traffic control, and the power distribution system.
However, in the event of a government shutdown, which could come any time after April 8, funding for a number of frequently used government services would stop.
The last government shutdown serves as a cautionary tale, illustrating services which would be adversely affected. According to the Congressional Research Service, health services, veterans' benefits, visa and passport issuances, some law enforcement activities, financial services functions, and access to national parks, museums and monuments, could suddenly halt.
This happened in 1995 when Congress, then led by Newt Gingrich, was uncompromising and overzealous in making draconian cuts to important services. At that time, 10,000 home purchase loans and refinancing applications, totaling $800 million worth of mortgage loans for moderate and low-income working families nationwide, were delayed.
Looking just at the Social Security Administration, we saw delays involving 10,000 new Medicare applications, 212,000 Social Security card requests, 360,000 individual office visits, and an estimated 800,000 toll-free calls for information and assistance. The Department of Justice suspended work on more than 3,500 bankruptcy cases. And, 368 National Park Service sites were closed at a loss of 7 million visitors.
Additionally, 200,000 U.S. applications for passports went unprocessed, which cost tourist industries and airlines millions of dollars, and American veterans endured cancelled vocational rehabilitation appointments and unprocessed compensation payments, pension and education claims. GI Bill education checks and insurance death claims were delayed, while counseling services for avoiding foreclosures were cancelled.
At a minimum, if you are purchasing a new home, travelling overseas, or filing for bankruptcy, you would be advised to consider how delays this spring might affect your plans or business transactions and expedite related paperwork.
Even rushed processing of passports can take two to three weeks, and costs $200.
Some passports may be processed on an emergency basis, such as overseas family deaths or business emergencies, but those situations are unrelated to a government shutdown and supporting documents must be provided to the Los Angeles regional passport office. (My office can help expedite passport applications for those who qualify.)
Many federal workers will be furloughed. Whether Congress will act to pay them for furlough days is uncertain. In the meantime, federal employees may obtain a reserve line of credit from some credit unions to cover expenses in the absence of a pay check. There is usually a three percent fee on the used portion of the line of credit, but not on any unused balance.
If your family is visiting a national park, you may want to make alternate or contingency plans, lest you find yourself with a cranky family in a long line of cars full of other disappointed tourists outside a national treasure that has been gated shut.
Coping with unprocessed applications for Social Security and Medicare will be difficult, particularly during this recession. Any lapse in veterans' benefits should be unacceptable given their valiant service to our country, but many would not receive health, compensation, pension and education payments they are due and deserve.
Some of the consequences of the last shutdown are less clear, providing no ready clues for avoiding inconveniences. For example, in 1995, the Centers for Disease Control ceased disease surveillance, so updated information about the spread of AIDS and the flu were unavailable. Toxic waste clean-up work at 609 sites stopped and 2,400 "Superfund" workers were sent home.
As a certified public accountant, I appreciate the need to balance the books. An honest debate about spending cuts is necessary, but it will require real compromise to achieve these reductions. I am ready to vote for reasonable compromise on the budget for 2011, just as I have voted for the short-term compromises that have prevented a government shut-down so far.
Hopefully, cooler heads will prevail and the threat of a government shutdown will pass. But, as your representative in Congress, I would be remiss if I did not urge you to plan for the possibility that we will repeat the experience of 1995.