Are You Worried About a U.S. Government Shutdown?

Washington for months has been tangled in a messy political debate over the federal budget. The newest deadline to reach a budget deal – April 8 – is just days away.

The phrase "government shutdown" is being used with increasing frequency.

Temporary funding measures have kept the government running this year as U.S. lawmakers repeatedly extended the final budget deadline. An end to negotiations is still nowhere in sight – stoking the shutdown discussions.

While the thought of a Capitol Hill ghost town has a certain allure, federal budget expert Stan Collender says most Americans would find little to joke about in the face of a real shutdown.

"Everybody may hate federal spending, but they like federal services," Collender told NPR. "And that's what happened back in '95 and '96 when we had the last two shutdowns. Within minutes…after everyone got over the initial kind of amusement of the situation, they realized suddenly that they couldn't apply for a passport, couldn't apply for a visa, and national parks were closed. Government contractors suddenly found out there was no one there to review their proposals or process their checks – and they were angry as hell about it."

A U.S. government shutdown means running essential operations only. National parks and museums close, cleanup at toxic waste sites stops, passport applications and Social Security claims go unprocessed, and hundreds of thousands of federal employees and government contractors go without pay.

When asked Tuesday to rank the odds of a U.S. government shutdown on a scale of one (shutdown) to 10 (no shutdown), House Minority Whip Rep. Steny Hoyer, D-MD, said, "I would've said ‘eight' two weeks ago. At this point in time, I'll tell you five to six."

Republicans and Democrats both have developed budget plans – with a $51 billion difference in the proposed spending cuts. Both parties are hesitant to compromise, but more than willing to point fingers at each other for delaying the process.

"One thing about a government shutdown, the government doesn't stop taking money out of your paycheck every Friday," Rep. Robert Andrews, D-NJ, told NPR. "People still pay taxes, but they get no services. How anybody could put the country at risk of that situation is beyond me."

While some anxiously await the deadline, others think the U.S. government will continue to delay a final decision until it runs into more problems – like next year's budget and the approaching debt limit.

"My guess is we end up with another short-term resolution taking it to, say, 4/29," said Money Morning Contributing Editor Martin Hutchinson. "After that, it's tied up with the 2012 budget and the debt ceiling, in both of which the GOP House has rather more leverage. My guess would be a fair number of threats and mock-crises in May, followed by an overall agreement on a giant package involving only modest cuts in early June, just before the government finally runs out of the ability to borrow."

This brings us to next week's Money Morning "Question of the Week": Do you think we are headed for a U.S. government shutdown? Do you think the parties will reach a budget agreement, or continue with temporary funding measures? How would you be affected by a government shutdown?

News and Related Story Links:

• Money Morning:
  Washington's Debt-Ceiling Debate – A Political Sham

• NPR:
  Analysts Say A Government Shutdown Is No Joke

• The Wall Street Journal:
  Government Shutdown Grows Likelier

• CNNMoney.com:
  Government shutdown: What's at stake

• Money Morning News Archive:
  Question of the Week Feature