Daily Ticker

5 Ways a Government Shutdown Would Affect You

Daily Ticker

The countdown clocks are ticking (just look at any cable news outlet today to see the tick-tock).

Maya MacGuineas has been fighting for less debt and more fiscal responsibility in Washington for more than 10 years. So when MacGuineas, president of the Committee for a Responsible Federal Budget, says, "There's a very significant risk" that the government will shut down, there is a very good chance it will. "There is no plan for keeping [the government] funded," she tells The Daily Ticker. "'It's very likely that [Congress] falls into a shutdown even if they don't mean to..."

Related: The Upside to a Closed Government

The Senate is expected to reject the latest House bill that would defund Obamacare as a condition for keeping the government open for business. Unless the House backs down, various parts of the U.S. government will shut down at midnight. Former Republican Senator Alan Simpson told The Wall Street Journal this raises the risks around the debt ceiling fight too:

“It’s going to be chaos, absolute chaos,” Mr. Simpson said.

Related: Defunding Obamacare: GOP is "Playing with Fire"

The Daily Ticker asked Maya MacGuineas, about the potential impact of a shutdown for the average American.

Here are her thoughts:

  1. A Big Bill for Taxpayers. A government shutdown won't save taxpayers money but will actually end up costing them more. The last shutdown in late 1995 and early 1996 cost $1.4 billion, which is more than $2 billion in today's dollars, according to MacGuineas. She explains: The government has to develop contingency plans, which costs money and furlough workers, who will likely receive back pay. And then there's the spillover effect of a slowing economy due to less government spending, which ultimately will reduce tax revenues.
  2. Slower & Fewer Mortgage Approvals. The Federal Housing Administration (FHA), which accounts for about a quarter of first-time mortgages, would either not make loans or make a lot less loans if the government shuts down."Part of the economic recovery is the housing industry," says MacGuineas, "It's sort of dangerous to think about slowing down housing [by way of ] a self-inflicted wound at the very time when we want to make sure that [the housing] market...is continuing to move along and help the economy to grow."
  3. Delays in Passport & Visa Processing. A government shutdown would make it harder for people to leave and to visit the U.S. "The tourism industry can be hit quite hard as can the airline and travel sector," says MacGuineas. In the 1995 shutdown, more than 200,000 passports went unprocessed.
  4. Closure of All National Parks. MacGuineas says she still hears stories of disappointment from people who weren't able to visit national parks on their vacations during the last government shutdown. "This is not a critical function" of government, says MacGuineas. "The bigger point is we don't have to do this. Let's not close down the government because we can't come up with any agreement."
  5. Slowdown in Social Security Enrollments. Social Security checks will not be delayed if there's a government shutdown but enrollments will be, at least temporarily, if Social Security workers are furloughed. And that could affect thousands or more since 10,000 baby boomers turn 66 every day and are eligible for full Social Security benefits. (That's not a typo: the retirement age for full benefits is now 66, not 65.). The Office of Management and Budget will decide which workers will be furloughed and for how long, says MacGuineas.

If you're concerned about a government shutdown and its impact, watch the video above to find out more.

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