Government shutdown would ripple through Triangle's economy

dranii@newsobserver.comSeptember 30, 2013 

  • What’s open, what’s not

    Here’s a rundown of how a federal government shutdown will affect some federal agencies:

    • The federal courts have two weeks of operating reserves to continue operating as usual for the short-term, said Charles Hall, a spokesman for the Administrative Office of the U.S. Courts.

    If a shutdown lasts longer than that, operations will be curtailed but the courts will continue operating “to some degree,” Hall said. That includes the expectation that many criminal trials will continue and probation officers will remain on the job.

    “We’re simply not going to let people with criminal histories go unsupervised in the community,” Hall said.

    • The Environmental Protection Agency’s massive air pollution research and regulation facility in Research Triangle Park will close its doors. Most of the 2,000 employees and contractors would be furloughed, with the exceptions being those needed to protect federal property and maintain lab animals, plants and other organisms used in research.

    Overall, all but 907 of EPA’s 16,200 employees, or about 6 percent, would be furloughed.

    • The Internal Revenue Service will operate on a limited basis. Among other things, that means it would continue law enforcement and undercover operations and will make sure that it doesn’t lose data in its computers.

    But it will halt tax collection and processing activities that aren’t automated. It also will halt taxpayer services, including responding to taxpayer questions over the phone. And taxpayers with appointments related to an audit or appeal “should assume their meetings are canceled. IRS personnel would reschedule those meetings at a later date,” according to the agency.

    • The National Institute of Environmental Health Sciences in RTP, which studies how the environment affects human health, would close. All workers would be furloughed except those required to protect buildings and equipment and care for animals and cell lines used for research.

    •  The Nuclear Regulatory Commission will continue to inspect nuclear power plants. Its work is considered essential to public health and safety, spokesman Joey Ledford said in an email.

    •  The Small Business Administration will continue to offer disaster loans for businesses, but most other programs would be closed. That includes other loan programs, Small Business Innovation Research grants and Small Business Development Centers.

    • The Social Security Administration will continue to pay benefits, and local offices will remain open, but services at those offices will be pared back.

    Local offices will continue to handle applications for benefits and requests for appeals. But they won’t be providing new or replacement Social Security cards or providing replacement Medicare cards. Nor will they handle Freedom of Information Act requests.

    • At Raleigh-Durham International Airport, federal air traffic controllers will remain on the job. Airport screeners and federal inspectors will continue enforcing safety rules.

    • The Food and Drug Administration will handle high-risk recalls but suspend most routine safety inspections. Federal meat inspections are expected to proceed as usual.

    • School lunches and breakfasts will continue to be served, and food stamps, known as the Supplemental Nutrition Assistance Program, or SNAP, will be distributed. But several smaller feeding programs will not have the money to operate.

    • Federal occupational safety and health inspectors will stop workplace inspections except in cases of imminent danger.

    • Veterans will be able to get inpatient care, mental health counseling and prescriptions filled at VA hospitals because lawmakers approve the money for the Department of Veterans Affairs’ health programs a year in advance. Crisis hotlines will be staffed and claims workers will process payments to cover disability and pension benefits. But veterans appealing the denial of disability benefits to the Board of Veterans Appeals will have to wait longer for a decision because the board will not issue decisions during a shutdown.

    • All active-duty military will stay on duty, but their paychecks will be be delayed. About half of the Defense Department’s civilian employees will be furloughed.

    • Mail will be delivered as usual because the U.S. Postal Service receives no tax money for day-to-day operations.

    • The Federal Housing Administration, which guarantees about 30 percent of home mortgages, won’t underwrite or approve new loans during the shutdown. Action on government-backed loans to small businesses will be suspended.

    Staff and wire reports

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If you’ve got a meeting scheduled with an Internal Revenue Service auditor, assume it’s canceled.

If you’ve lost your Social Security card, your local Social Security Administration office won’t be able to provide you with a replacement.

And if you’re among the more than 2,000 employees or contractors working at the U.S. Environmental Protection Agency’s massive air pollution research and regulation facility in Research Triangle Park, you’re most likely furloughed. Ditto if you’re one of the 1,200 people who work at the National Institute of Environmental Health Sciences in RTP.

Many crucial government operations won’t be affected by the federal government shutdown that was slated to begin at midnight. Social Security and Medicare benefits will continue. The U.S. Postal Service will deliver the mail.

But it will trigger major disruptions and minor hassles.

Look for the furloughs of government employees and contractors to ripple throughout the local and national economy.

“Government employees spend money, too,” said James Kleckley, an economist at East Carolina University. “They go out to eat, they buy groceries, they get haircuts. So you’re going to hurt spending in the economy.”

The uncertainty caused by the shutdown is also a negative.

“If you’re somebody thinking of starting a business or expanding a business, what are you going to do?” Kleckley said. “You’re not going to do anything until those people (in the nation’s capital) work it out.”

Just how much impact a shutdown will have on the economy depends on how long it lasts.

“If we get by with a one- or two-day shutdown … I think it will have a very small impact,” said Mike Walden, an economist at N.C. State University.

Some economists are projecting that a more extended shutdown could shave the growth of the economy by a few tenths of a percentage point, “which maybe doesn’t sound like much but, if we’re growing at 2.5 percent and you shave two- or three-tenths of a percent off that, you have a real impact,” Walden said.

Walden added that the scenario was similar the last time the government temporarily shut down 17 years ago, but there’s one crucial difference: The current economy “is in a much weaker state.”

A brief shutdown is what the region’s major research universities – Duke, N.C. State and UNC-Chapel Hill – are hoping for because the federal government is a major source of research funding. N.C. State alone received $236 million in research grants from the federal government in the 2012-13 school year.

“We’re hearing … it won’t impact our research dollars immediately,” said Terri Lomax, vice chancellor for research, innovation and economic development at N.C. State.

“If it’s a short shutdown, we’ll still be allowed to work on grants,” she said. “In a long shutdown, we would definitely have to shut down research.”

In addition, she noted, no new federal grants will be awarded as long as the shutdown is in effect.

Although Republicans in Washington used the threat of a shutdown as leverage to try to stop the new health care law, that effort failed. Enrollment in health care plans under the law starts Tuesday as planned.

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