The Low-Down on the Shutdown

On January 12, the government shutdown became the longest in our nation’s history — spanning more than 22 days.

So how did we get here?

 
Government Shutdown Blog

Since October, Congress has passed only five out of the 12 required appropriations bills needed to fund the federal government. With funding expiring on December 21, lawmakers missed the deadline to approve the remaining seven appropriations bills, thus causing a partial shutdown. Nearly 800,000 federal workers have been furloughed across the nation as a result. With a total of nine of the 15 federal departments impacted, many federal workers affected by the partial shutdown live in the Washington, DC area; however, its impact is felt way beyond the nation’s capital.

Both Democrats and Republicans have levied blame at each other for the overall root cause of the crisis, yet the main point of contention lies on the specific amount of money appropriated for border security. According to S&P Global Ratings, each week that the government is partially shutdown could trim more than $1 billion from the U.S. economy. If the shutdown continues through January 25, the projected cost of the partial shutdown would be $7.1 billion: $1.4 billion more than the funding requested for the border wall that prompted the shutdown in the first place.

Apart from the potential loss to the overall economy, many small businesses could be impacted as well: The Small Business Administration (SBA) announced that they will not be processing any new loans as of December 22, 2018. Even once funding is appropriated to the SBA, the backlog of applications and requests could delay future investments for months. Without this needed capital, many businesses must delay their plans for expansion or consider alternative — and at times more expensive — sources of cash.

Experts have estimated that almost $2,000,000,000 has been postponed in SBA loans due to the shutdown. Moreover, the IRS is currently operating with only 12% of its staff due to the shutdown. With a skeleton crew, individuals and business owners are expecting delays in the processing of refunds and silent support phone lines. This also marks the first year businesses must file their taxes under the revised tax code due to the Tax Cuts and Jobs Act, which may lead to some headaches for those who cannot have their questions readily answered.

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Although on a case-by-case basis, the shutdown could also delay federal contracts from reaching the hands of many small and midsized firms that regularly do business with the government. According to the Democratic members of the House Small Business Committee, “[o]n a daily basis, a shutdown could cause small firms to forgo approximately 6,875 contract actions worth $301,656,083. A shutdown will also cost federal taxpayers as stop-work orders must be issued, resulting in higher costs paid to contractors. For instance, the 2013 shutdown forced agencies to pay more to contractors on roughly 10,000 stop-work orders.'“

Previously, the government has shut down on 20 separate occasions since 1976 (interestingly, half of these shutdowns were over a weekend). This time, the end doesn’t seem to be right over the horizon with both sides digging in their heels. Amid the pageantry of delaying the State of Union and canceling opponents’ foreign travel, negotiations are underway to put this issue to rest. However, with thousands of small businesses on the line, both Republicans and Democrats cannot afford to remain partisan for much longer.