Will The Federal Government ‘Shut Down’ At Midnight? And If It Does, Will It Affect You?

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The answer to the first question is looking more and more like a “yes” with each hour that passes. President Barack Obama said nothing new (and took no questions) at a press conference today, reiterating the harm a shutdown would do to the U.S. economy and to “our neighbors” who work for the Federal government – the Nation’s largest employer – who’d be furloughed.

Obama also repeated his rhetorical device Monday of marginalizing recalcitrant House Republicans (despite their representative majority), claiming that “one faction of one part in one house of Congress in one branch of government doesn’t get to shut down the government just to re-fight results of the last election.”

The House GOP spent Monday criticizing the Senate for taking Sunday off in the face of a government shutdown, as well as to repurpose a continuing resolution to temporarily fund the government with a proviso that would require a one-year delay in Obamacare’s individual-coverage mandate. That bill also seeks to strip members of Congress, White House officials and political appointees of any Obamacare subsidies, effectively forcing lawmakers to live with the same legislation they’ve passed on to the public.

Democratic leaders from Obama to Senator Harry Reid (D-Nev.) to Senator Tom Harkin (D-Iowa) uniformly vowed any bill that attempts to attach Obamacare restrictions to the Federal budget would get no traction.

In short: last-minute deals can always happen, but there’s been nothing in the rhetoric to indicate either side of the argument is approaching a compromise that will avert a shutdown with only hours left on the deadline clock.

As for the second question? Well, if you aren’t a Federal employee in a “nonessential” role (more on that in a moment), history would indicate that a shutdown is more likely either to help you a little, or to have no effect on you at all, than to cause you financial harm – despite Obama’s dire talk of an imploding economy.

Russell Price of Ameriprise Financial wrote Monday:

The most notable government shutdown of recent memory was the closure of government offices during the budget battle of 1995. Similar to the current circumstances, then-President Clinton battled with the Republican-led House of Representatives over the fiscal 1996 federal budget.

… How did the economy and markets react? Quite well, actually. Stock prices moved steadily higher throughout the period, likely on the perceived prospect of deficit reduction. The S&P 500 was 5.4 percent higher on a price-only basis from the end of October through the end of January.

Meanwhile, consumer spending was also fairly unaffected through the period, although consumer confidence did drop significantly. Confidence levels had improved in early November with the Conference Board’s index rising to 101.6 from 96.3 in October. But by the time of the January reading, the index had dropped more than 13 points to 88.4.

Ultimately, the U.S. economy surged in 1996 with Real GDP growing by 3.7% versus 2.5% in 1995.

In addition, Democrats’ claims that a shutdown will harm soldiers, mailmen, people on Social Security, unemployment and people who eat meat that someone from the FDA hasn’t inspected – to name only a few nightmare scenarios – are either exaggerated or completely false. National Review sets the record straight here.

A separate NR article also points out what many small-government conservatives have maintained all along: that a “shutdown” as defined by Congress isn’t really a shutdown at all. Rather, it’s a paring back of government bloat that leaves intact, in some form, those functions of Federal government that crucially serve the interests of all Americans, as opposed to specialized entitlements and regulations that benefit (or harm) only the few.

NR’s Hans A. von Spakovsky, a senior legal fellow at the Heritage Foundation, writes:

The truth from the experience of prior shutdowns, applicable federal laws, Justice Department legal opinions, and Office of Management and Budget (OMB) directives, is that crucial government services and benefits would continue without interruption even if Congress fails to agree on a continuing resolution (CR) or President Obama vetoes it. That includes all services essential for national security and public safety — such as the military and law enforcement — as well as mandatory government payments such as Social Security and veterans’ benefits.

In fact, as the Justice Department said in a legal opinion in 1995, “the federal government will not be truly ‘shut down’ . . . because Congress has itself provided that some activities of Government should continue.” Any claim that not passing a CR would result in a “shutting down” of the government “is an entirely inaccurate description,” according to the Justice Department.

Such a lapse in funding would be neither catastrophic nor unprecedented. There have been 17 funding gaps just since 1977, ranging in duration from one to 21 days. Under applicable federal law, operations and services would continue for those essential for “the safety of human life or the protection of property” as well as those programs funded through multiyear or permanent appropriations such as Social Security.

Even furloughed employees are likely to receive their back pay, and some are already using the union apparatus to clamor for it. That kind of collateral expense points out the self-perpetuating fallacy of big government. Democrats’ urgent criticisms that a shutdown will ultimately be costly to the government are true – from Democrats’ point of view. That’s because Obama and his followers invoke the lost opportunity cost of unpaid wages and unspent Federal funds as a harbinger of economic loss for average Americans.

But that’s a very progressive way to approach the “problem” of paring back Federal spending. As Reason’s Scott Shackford writes:

To my perpetual annoyance, the president – like any government official defending employee spending – invoked the concept of economic multipliers, the notion that wages generate and grow a local economy as the money is spent in the community, thereby creating wealth. It’s frustrating when government officials invoke economic multipliers because the money they spend is forcibly taken from the community in the first place. These are not voluntary exchanges where the consumer receives something of value in exchange for the producer receiving more than the cost to create that thing (in fact, ithe exact opposite often happens given the lack of incentives for efficiency). When a government official invokes economic multipliers, he or she inevitably doesn’t consider what might have been done with that money if the government never collected it in the first place.

So here’s an idea: stop calling it a “shutdown” and make it permanent. Let dollars stay in the hands of people who earn them instead of being handed over to the Federal government to propagate a never-ending bait-and-switch game of “taxpayer-funded” entitlements that are actually funded on wave after wave of limitless, currency-debasing money printing.

Of course that won’t happen anytime soon. But if the government does “shut down” after midnight, it will be interesting to see whether the private sector responds as it did during the Clinton years.

Personal Liberty

Ben Bullard

Reconciling the concept of individual sovereignty with conscientious participation in the modern American political process is a continuing preoccupation for staff writer Ben Bullard. A former community newspaper writer, Bullard has closely observed the manner in which well-meaning small-town politicians and policy makers often accept, unthinkingly, their increasingly marginal role in shaping the quality of their own lives, as well as those of the people whom they serve. He argues that American public policy is plagued by inscrutable and corrupt motives on a national scale, a fundamental problem which individuals, families and communities must strive to solve. This, he argues, can be achieved only as Americans rediscover the principal role each citizen plays in enriching the welfare of our Republic.

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  • michaelt47

    We need to drastically reduce the Federal employees anyway. Get rid of about half and tell the other half they better stay real busy.Walk fast, look worried and be carrying something all the time.

    • Debbie Hogan Tate

      Those that are left with a job in government should have their salaries cut in half! That alone would get rid of half the riff raff.

    • Deerinwater

      LOL! funny ! I think everyone would agree with most of what you say.

      Let’s start with Fish & Game Wardens

  • Carl Mason

    Goverment the largest employer that’s the problem . approve the keystone xl pipeline for more private jobs. build more coal fired electric plants = more private jobs, not higher electric bills. Deport the illegal Aliens and their Families to put our Citizens back to work, they will do those jobs. I’m from New Jersey , our state is 4th highest with illegal aliens, Arizona is fifth, Nevada is in first place. I have a friend who just got layed off, the person with the visa is still working,go figure. no one in state goverment will sponsor a bill for e verify

    • rbrooks

      the person with the visa is still working. the problem is all of the immigrants. not just the illegals.

      • Deerinwater

        The problem is disparity! ~~ in opportunity’s and in earnings.

        We are experiencing great imbalance in both.

        • rbrooks

          the imbalance has been manufactured, manipulated, by the continues immigration that has been in affect ever since reagan threw the doors open.

          this will only get worse.

          • Deerinwater

            That and the disparity between the labor earned dollar and the investment earned dollar. ~ Taxed at a lower rate , the invested dollar is a bigger dollar.

            I didn’t fair well under Reagan , while many did as he shifted the tax burden and poured Federal money into a War Machine.

            This might have been good medicine for the “times” ~ but continued for 33 years ~ it’s now killing us. as now the top 10% earners own 60% of the nation wealth ~ and are so far out ahead, they don’t need to spend, don’t need to live in America while we are left to look for places to use this Fine “War Machine” we have bought and justify the investment. ~ Bring on the Boogieman!

          • rbrooks

            the really sad part is how many have bought into reagan’s and the current gop policy’s.

          • Deerinwater

            Certainly So! ~ Reagan’s taxing legislation ushered in a new generation of Millionaires and Billionaires all paid for by the working poor. ~ That the working (not yet) poor as a whole, supported this process is the secret sauce in the GOP recipe to success! ( for a few anyway, )

            But it really quit simple, ~ We were sold train tickets to one destination while the train took us to another. ~Once the ticket bought and train boarded and underway, ~ any protest or resistance has been futile. Welcome aboard a 33 years train ride that promised to get the Federal Government off the peoples back!

            http://unvarnishedtruth.wordpress.com/tag/reagan/

    • KLAUS11

      IN ONE RECENT YEAR OUR GOVERNMENT SPENT CLOSE TO HALF A TRILLION DOLLARS ON FEDERAL EMPLOYEE’S SALARIES.
      THIS IS REAL MONEY. BUT NOT TO WORRY THE FED IS PRINTING 85 BILLION A MONTH AND NOBODY IN HIS RIGHT MIND IS BUYING OUR WORTHLESS DOLLAR ANY LONGER SO THE FED HAS TO BUY IT THEMSELVES. THEY ARE HOLDING A 150 % OF WHAT WE OWN THE CHINESE.
      ALSO KEEP IN MIND THESE EMPLOYEES DO NOT CONTRIBUTE TO THE GDP, THEY ARE LEECHING OFF THE TAX PAYERS HARD EARNED MONEY.
      LET’S SHUT THE GOVERNMENT DOWN FOR 1 YEAR AND WE COULD ALMOST PAY OFF 3 % OF OUR DEBT. BUT IN THIS FASHION WE WOULD HAVE TO SHUT IT DOWN FOR 35 YEARS TO PAY IT OFF COMPLETELY. REALIZE THE HOLE WE ARE IN?

  • Oliver_K_Manuel

    This is one of many UNINTENDED CONSEQUENCES

    The combined research careers of my mentor – the late Professor Paul Kazuo Kuroda – and me showed the real dangers of government-funded consensus models after the tragic events of August 1945:

    FEAR separated humans from the reality of mankind’s connection with his Creator via invisible force fields emanating from the Sun’s pulsar core.

    See middle paragraph of this one page synopsis:

    http://dl.dropboxusercontent.com/u/10640850/Synopsis.pdf

    It is now abundantly clear:

    1. Humans did not cause global warming. and

    2. AGW policies increased our vulnerability to natural, solar-induced global cooling.

    With kind regards,
    Oliver K. Manuel
    Former NASA Principal
    Investigator for Apollo

  • Robert Wood

    GET RID OBOZO —AND THIS SH$$T WILL ALL GO AWAY

    • Deerinwater

      no it won’t ~ it will be replaced with someone and something else.

    • KLAUS11

      NO, YOU HAVE TO GET RID OF THE FEDERAL RESERVE, THE MOST INFLUENTIAL EVIL IN ALL OF OUR WOES. AFTER 100 YEARS EVERYONE SHOULD KNOW BY NOW THAT IT IS A PRIVATE BANK CONTROLLED BY ZIONIST INTERESTS.
      MOST OF YOU PEOPLE DON ‘T UNDERSTAND THAT THIS UNAFFORDABLE HEALTH CARE ACT IS JUST A CAMOUFLAGE FOR
      ABSOLUTE PEOPLE CONTROL. IT IS TIME TO WAKE UP FROM YOUR TV INDUCED SLUMBER AND GET A REALITY CHECK.

  • Mole Johnson

    ITS THE END O THE WHIRL! THE END O THE WHIRL I TELL YA! giggle giggle

  • Warrior

    “Consumer Confidence Dropped?” There is currently only one direction consumer confidence can go under this regime. It’s already in the “crapper” so shut it down and let the “busy people” enjoy this “economy built to last” with the rest of us! The up arrow isn’t lighting up until these “progressives” are sent packing.

  • Bill

    Shut it down!!. The only way to stimulate the economy is to get the government out of it

  • Debbie Hogan Tate

    There have been 17 government shutdowns and funding gaps since 1976. Did anyone notice? They are spewing their doom and gloom but it is all lies!! Name one thing that the previous shut downs caused that was doom and gloom? SHUT IT DOWN! Let them know we mean business and are not going to fall for their lies!

    • Deerinwater

      Well, ~ that it might not have a rapid or direct affect on you personally does not mean it was not felt in a very big way by others Debbie.

      Much like the lacking of any apathy for border states and immigration issues by interior states. ~ just because it’s not your problem does not mean a problem does not exist.

      When we loss 5 billion dollars in as many days in GDP ~ Houston, we’ve got a problem that will eventually even darken your door given enough time.

  • William James Ward

    Our government shut downs are like the Arab Israeli conflict periods
    of peace, time to reload and come back out fighting but in this case
    the government will take time to line the tax payer up for another
    skinning. These great diversions are to take the attention away from
    the real plunder taking place in America, the treasury if empty, Fort
    Knox is empty and our love of corrupt government is on empty.
    No solutions can take place in a pauperized Nation where government
    is the problem and until put in prison we will go down in and ocean
    of debts created by our thieving employees in Washington D. C.
    district of criminals…………………..William

  • JimH

    The last time there was a government shutdown, they said they were shutting down all unessential services and offices.
    Why are we even supporting unessential services and personal?
    SHUT IT DOWN.

    • Deerinwater

      well, ~ parks are important as are Pages and Aids that help our elected officials read their mail and serve their constituents.

      While I do understand that you would ask “Why are we even supporting unessential services and personal?”

      I think that maybe shutting these efforts down is the best way to answer your question.

      • JimH

        National Parks charge to get in.
        If you camp, you pay a fee. If it were properly managed(big if) they would support themselves.
        What good is a letter to my Congressman if someone else reads it?
        You’re right, shutting some of these offices down would be very enlightening. Just not in the way some government workers would like.
        Remember. I said “nonessential”.

        • Deerinwater

          I understand you feelings about “Parks” overlord’ed by government. ~ and let me say ~ I’ve been more than just “pissed off” on a few occasions with the way they have been managed. ~ While people, as a whole are a disrespectful bunch of animals and tend to treat anything that is “Free” as worthless.

          Face the fact, ~ we have people out there that are wasting air ~ something else could be breathing and anything a precious as a natural reserve must be protected from those sort of people if it means restricted access, entry fees that offers some qualifier to those that might wish to enter and to be policed by armed law enforcement. ~ to do other wise we would be left to call it the “Bad Land of Oklahoma or Indian Nations” where the federal Government shall not enter, a sanctuary for the criminals among us to live and breed.

  • Thomas Faddis

    Please, Please, PLEASE : Shut down NON-essential services!…And DON’T start them p again!

  • rbrooks

    this will close the national parks and no more passports. about a million military personnel will be affected as well.

    perhaps we could shut down foreign aid, homeland security, the dea, ins, corporate and farm welfare along with all of the other non essential services?

    • vieteravet

      It will not affect the military, period! It won’t affect social security or military retirement pay! You may want to do some research about the 17 other gov’t shutdowns.

    • vieteravet

      It will not affect the military, period! It won’t affect social security or military retirement pay! You may want to do some research about the 17 other gov’t shutdowns.

      • rbrooks

        denial will not change the facts.

    • KLAUS11

      THE MILITARY WILL NOT BE AFFECTED.

    • Rev. Vernon York

      We don’t have National Parks any more they are now “international biosphere reserves”…

  • Deerinwater

    I’m already wounded, so i’m sorta use to pain. ~ For me, business is always off this time of year anyway. Summer winding down, the smell of season change in the air, ~ people getting back from summer vacations(broke), high summer electric and water bills, and the cost of getting children back to school puts a strain on many American budget.

    But make on bones about it ~this will touch just about everyone if it goes on long as rising water floats all boats.

    The GOP is riding for a fall, i figure. ~before the dust settles, they will be using the Tea Party for a piñata with the democrats standing next in line, impatiently waiting to take their swing at them with a long stick.

    The misery factor will be offset by the amusement and entertainment factor for folks like myself. ~ While I feel for those that will be hurt the most by it.

  • rbrooks

    we should shut government down. all of it. it would be a good education for the general public who believes that the govt. does nothing for them.

    • Deerinwater

      hmm? maybe every 17 years people need a reminder? , ~ shutting down the government would probably be one of the best ways to steal the wind out of the Tea Party sails.

      • rbrooks

        it would take the wind out of the gop and the libertarians at the same time.

        there is no argument that the govt has grown too large or that it spends with reckless abandonment. that has been a problem since the early 80’s.

        but these folks that continue to claim they can survive with out any govt should be allowed to experience that.

  • IsThisAmerica

    The lying demon craps said during the shutdown when Clinton was in power that S.S. checks would not go out. Really? People, this is what you get from the democratic party. Out and out lies. We should abolish that party, and the EPA, IRS, and the FEDERAL RESERVE. We don’t need Big Government being the major employer. We also need our own money backed by gold and silver, like it used to be. Congress should go back to being in charge, once we get rid of the low lifes in it. We have 3 branches of the government and obama is end running around all of them. It’s his way or the highway, umm, no, that’s not how it works in this country. If you want to be king go back to Africa. This is a republic. Like it or leave it, but follow the laws. Oh and obama, YOU DON’T MAKE LAWS!!

    • Deerinwater

      Right ~ he don’t make laws, ~ he only ask that they be made.

      • IsThisAmerica

        He does not ask, he does it without asking. His newest frankenstein, Obamacare.

        • Deerinwater

          You are referring to the “Affordable health Care Act?”

          No , Obama did not create that ~ some Republicans created the idea ~ congress and senate passed it and Obama asked for it to happen and seen it through.

          • IsThisAmerica

            Democrats and obama created that train wreck. Quit watching the propaganda alphabet soup news. The only republicans that agree with it are the democrat light. (Elites).

  • Don in Ohio

    “the Federal government – the Nation’s largest employer”
    This pretty much explains it all…
    Why do we have non-essential employees???????

    • IsThisAmerica

      Non-essential, kinda means to me not needed.

      • Deerinwater

        Would you like the mail read?

        • IsThisAmerica

          Do they know how to read?

  • terri

    No trust Obamacare!

  • Rev. Vernon York

    Washington DC-” District of Criminals” The reprobate center of the universe!!! Try them for treason and enforce the death penalty!!!
    While justice is a nice thought it is pure fantasy since the FBI, CIA, NSA, JSOC, Congress, DHS,Senate,Supreme Court, and the rest of the alphabet soup are ALL bought and paid for criminals. If this were not true we would see these parasites being arrested starting with the IMPOSTOR AND CHIEF. We would also enjoy DEBT FREE CURRENCY i.e. “UNITED STATES NOTES” instead of fraudulent “FEDERAL RESERVE NOTES” and a fraudulently bankrupt nation controlled by anti christ Banksters who keep us embroiled in dozens of illegal wars for their own personal gain and global agenda.
    “You bankers are more dangerous to the security of a free state than
    standing armies, and by the grace of God I will rout you vipers out!”
    ANDREW JACKSON

  • Jeff Noncent

    the government shut down let it be so because the Government is not the answer for the problem we are facing, today in our nation, because man and women are running this nation they don’t have no clue how to solve the problem we are facing, the Scorpion and his administration is what I called the fool themselves

    • Deerinwater

      maybe not ~ but the absence of any government isn’t either.

  • Deerinwater

    Okay, you have got your wish. ~ Now the dance beginning to avoid shooting off your toes as the music plays your tune selection.

    I am looking forward to this with great amusement.

  • Jim B

    Well it did, and no it won’t! The private sector will continue to go to work to earn the valueless fiat currency stock (best you invest that pay as quickly as possible to avoid further losses over the next several years). The public sector and those who live off the extortion of the private sector will experience the failures of their Serfdom President (BHO) and his minions to keep their meager existence going. Serf’s are always the first to revolt, they have the least, but the most to lose! But this is fun really, the ultimate being that a completely dysfunctional, out of control government, and over his head President, has shut themselves down. Proof once more that you can’t fix stupid!

    • Deerinwater

      And if you believe for one second the current US president had anything to do with setting up this cozy arrangement, ~ Jim~ have I got a deal for you, ~ that’s just too good to pass up! Could we setup an appointment to discuss it? Anytime after 9 AM works for me.

      • Jim B

        Please continue, I am also looking forward to this with great amusement!