-Government Shutdown Doesn't Mean Worlds End-

Article: Shutdown Effects on Economy May be Slim

Author: Charles Wilbanks

Date of article: October 3, 2013

News Source: Money Watch (CBS)

                As everyone and their mother knows, the United States government shutdown early Tuesday morning, October 1, 2013, furloughing about 800,000 government employees deemed “unessential” to the system. I had a few questions before reading this article about this whole situation so I researched. First question: why October 1^st? Well the fiscal year is between October 1^st and September 30^th. Second, why the shutdown? The shutdown is basically a way of buying time because the two sides, democrats and republicans, cannot agree on a spending bill to fund the government for this fiscal year. Third, why is this any different from all the other years? Obamacare was to be added to this fiscal year’s bill, obviously making it costlier than previous years. Republicans demand that the new healthcare program be taken out of the bill while the democrats insist its stay.

                So how does all this pertain to and affect the economy? Everyone was dramatizing its effect the first few days, going on about the situation as if it were an apocalyptic event when in all reality, the economy might not be that harmed by this move. Although, it would obviously be better off if the government was fully functional as usual, but this has happened before. In 1995, the government shutdown for 21 days, three weeks later, the economy was back to its health so this shutdown should not be new to us or our economy.

The article put it bluntly “Research firm IHS Global Insight estimates that a one-week shutdown would shave off less than a tenth of a point from fourth-quarter GDP. Roughly 800,000 federal employees went on furlough on Tuesday after Congress failed to pass a bill to fund the government.” It goes on to further prove the point that "The spending habits of government employees probably would not change if the shutdown was short-lived, particularly if they believed that they would receive back," IHS added. "Meanwhile, incomes would be maintained for Social Security beneficiaries. Medicare payments would also continue, so spending on health care services would not be harmed and hospitals and doctors would receive payments."

                This articles argues that the shutdown “hurts consumer confidence, and it doesn't help with cash flow, but in terms of financial impact it's going to be made up when the government reopens.” Instead, the biggest downfall in this situation is not the economic loss, as small as they are, “the biggest problem is people can see what a dysfunctional government we have,” which is somewhat surprising but true. Now, after this hiccup, if the people were so blind to see the imperfections of our government before, now have a clear beautiful picture of the jumble of mess we call our government.