Friday, April 8, 2011

Potential Government Shutdown

Will the critical infrastructure and economy of the United States be impacted by a potential government shut-down?  

If the Federal Government were to shut down on April 8th, 2011, we can look to the last prolonged shutdown (from Dec. 16, 1995, to Jan. 6, 1996) and a report by the Congressional Research Service for potential impacts:

  • Health - New patients were not accepted into clinical research at the National Institutes of Health (NIH) clinical center; the Centers for Disease Control and Prevention ceased disease surveillance.
  • Law Enforcement and Public Safety - Delays in alcohol, tobacco, firearms, and explosives applications and cancellation of federal law enforcement hiring.
  • Parks, Museums, and Monuments - Closure of National Park Service sites and significant impact to tourism.
  • Visas and Passports -  Applications by foreigners for visas and U.S. applications for passports went unprocessed; and U.S. tourist industries and airlines reportedly sustained millions of dollars in losses.
  • American Veterans - Multiple services were curtailed, ranging from health and welfare to finance and travel.

Beyond these clear impacts, there will be many ripple effects throughout the country:

  • Planning - Lost productivity for planning for a possible shut-down
  • Vulnerable Impact - There will be a variety of impacts on federal employees who will get furloughed and businesses who work with the federal government.  Those with the least resilience will be impacted the soonest.
  • Trickle-down Effects - Further impact to the economy will be determined by the length of the shut-down and the interdependencies with impacted businesses and individuals.  

Now a bit of perspective; as I write this, the US Federal Government is threatening a shutdown as a result of disagreement over the 2011 budget. The reported dispute is 6 billion dollars. That is a lot of money until you put it in the perspective of a 3 trillion dollar budget. The disputed amount is 2 tenths of one percent.  

What will be the ultimate cost of a shutdown?  How will the economic ripples effect a US economy struggling to recover from a devastating recession?  

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