By Oliver Tang
As of the time this article is written, it will have been slightly over a month since the United States federal government shutdown of 2013 ended. Lasting for a tenuous 16 days, this shutdown was rivaled in length only by one lasting 18 days during the Carter administration and another lasting 21 days during the Clinton administration (1). But, so what? As comedian Conan O’Brien remarked, “Our government may be shutting down in a few hours. So folks, get ready for absolutely no noticeable difference.” Was this shutdown just a tragically misunderstood period overplayed and overstated by the media? Or was it really the end-all be-all of American life and politics for two weeks? Let’s take a closer look.
Before delving into the details, it’s important to clarify what the government shutdown constituted as it can become all too easy for the effects of the shutdown to get overstated or understated if one is not truly aware of what happened in those fateful two weeks. Late-night host Jimmy Kimmel quipped, “I hope [this] means I don’t get any more parking tickets.” Unfortunately for Kimmel, there’s more to the shutdown than just that. It all starts at Congress. The House and Senate are required, every year, to agree on funding and spending priorities on several government agencies every year. Unfortunately, amid unprecedented levels of polarization between Democrats and Republicans creating Congressional gridlock, our Congressional representatives have become quite bad at this job. As a result, Congress has been traditionally resorting to temporary, stopgap bills in place of the required government funding plan. With the most recent stopgap expiring on September 30th, a new stopgap was needed. However, a new piece of legislation called Obamacare complicated the picture and exacerbated differences. Within a week, no agreement had been reached. The federal government shutdown of 2013 had begun.
But did this mean that all federal workers immediately lost their jobs? No. The federal government workforce is divided into two categories: essential and non-essential, with the non-essential numbering 43% of the workforce. The non-essential government workers were the ones that found themselves furloughed thanks to the shutdown. So although there were thousands left without jobs amid the shutdown (the nation puts the figure at around 800,000 workers), not everybody was out of work. 2.7 million civilian and active-service employees kept their jobs, albeit with delayed pays. The shutdown had varying consequences, depending on the government agency. Some were relatively unscathed: Only 50% of civilian employees in the Department of Defense were sent home, while nobody in active service was affected. Other agencies were completely devastated: CNN reports that 97% of NASA was laid off, leaving the agency unable to even update its Twitter feed. One humorous moment that emerged amid the confusion of the bright line between essential and non-essential was the all-too-justified outrage that the members-only Congressional gym had been deemed essential and was kept fully operational during the shutdown, funded by taxpayer dollars.
With so many federal workers getting laid off, a hit to the economy was inevitable. A preliminary analysis conducted by Standard & Poor found that the US government was left $24 billion poorer, meaning the shutdown cost the country $1500 million every day (7). Another report by Reuters calculated the economic loss at a less alarming $2 billion, but additionally found that domestic GDP had been depressed by at most 0.6% and job creation had decreased by 120,000 over the period. The brunt of this loss came from the loss of governmental services that could not be performed because hundreds of thousands of workers were laid off. For example, the National Park Service lost $76 million in revenue every day since popular tourist attractions like Yellowstone could not operate. While we as a country have had to bear these economic losses and have lost several billions of dollars we will never get back, are there permanent repercussions? Economic analysts disagree. Chief economist of High Frequency Economics, Jim O’Sullivan argued that, “It’s pretty clear that there’s going to be some major distortions because of the shutdown… There’s a real case for dismissing [long-term economic loss].” O’Sullivan projected the effects of the shutdown to vanish by November and job-creation normalizing by then. However, confidence has not been the same. Gallup’s Economic Confidence Index reveals that consumer confidence is at an all-time low, dropping 14 points within a month. Chief economist of Sterne Agee Lindsey Piegza argues, “This all comes down to a confidence issue. The consumer is just very, very sensitive to the shenanigans in Washington”. Consumer confidence is all too important because it is what directly impacts spending and investment, and a fall in confidence does not bode well for the economy. Domestic confidence isn’t the only factor changed; international confidence will not be the same. Although the government dodged the bullet of defaulting on its debts during the shutdown, the debt ceiling was lifted yet again in the resolution ending the shutdown. Now seen as a country that can’t maintain a stable government and has yet again pushed back the ticking time bomb that is the debt ceiling after disagreeing (yet again) on how to manage its fiscal policy, the US may no longer be seen as the economic safe haven it used to be and may see this lost confidence manifest itself through increased borrowing costs.
However, government confidence has equally important implications as economic confidence. CBS News finds disapproval ratings of both Democrats and Republicans skyrocketing to 61% and 78%, respectively. Although it seems that the Democrats have come out of the shutdown on the better end (Republicans Ted Cruz, Paul Ryan, and many others have come under fire from even their own party with leaders like Mitch McConnell and John McCain critical in their role of the shutdown), ultimately everybody in Congress emerges as a loser. The Pew Research Center finds 19% public agreement with the statement that Congress is doing “what is right for the country”, a figure that has recently been inching towards the single digits. Our commander-in-chief has been taking blame for the shutdown too and a recent Reuters poll finds that approval for Obama has dropped to an all-time-low of 38%, even amid successes like the Iranian nuclear deal. Government confidence, already low due to fluctuating unemployment and Congressional gridlock, holds many important implications. Will the public ever be as accepting of major government projects like Obamacare again? Will the public be as tolerant of the blunderings of Congress ever again? Will our politicians finally be incited to action and cooperation by public demand? Or will the elections of 2014 result in completely new faces populating Congress? Again, as with the economy, only time will tell.
The government shutdown was a long and bumpy 2 weeks. Although we fortunately emerged from it without any riots or complete collapse into anarchy, both the public and government have important lessons to take from this. Let’s just hope that we learn from them and find ourselves in a better position as a country in a few years’ time.