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Part 2: The Basics of a Shutdown

Mar 1, 2011 • Government, Regulation • 185 Views    No Comments

On Friday, we might have a funding gap. With no up-to-date appropriations, agencies providing nonessential services from the federal government will have to stop. But what is “nonessential?”

A recent congressional research paper says we can look back to 1995 for an answer. In the health category, the National Institutes of Health did not accept new patients for clinical research. Many application reviews, ranging from firearm requests to passports and visas were postponed. National parks and monuments were closed. Federal contractors might be unpaid.

On the other hand, national security, benefits that are not annually funded, emergency medical care, disaster response, border protection…you see the basic idea…these continue.

Finally, who is explicitly “excepted?” The list includes the President and members of Congress.

And, we are prepared. Each year, federal agencies are asked to submit shutdown plans.

The Economic Lesson

The spending, taxing, and borrowing overseen by the President and the Congress is called fiscal policy.

While a funding gap might be the immediate fiscal controversy, within weeks, the Congress will also have to raise the debt ceiling.

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