Government Better Prepared for Potential Shutdown

By Cheryl Bolen

Sept. 18 — If there is any silver lining to a shutdown of the federal government, it is that next time, federal agencies, states and the public will be better prepared to handle it, governance experts told Bloomberg BNA.

Although it isn't clear whether funding will end and the government will close up shop Sept. 30, lawmakers already are thinking about that possibility and its consequences. Some Republicans have threatened to withhold their support for a short-term continuing resolution unless federal funds are eliminated for Planned Parenthood health clinics.

If a CR is not passed before fiscal year 2016 begins on Oct. 1, the government will close its doors.

The last government shutdown, which lasted 17 days in October 2013, occurred because Republicans wanted to eliminate funding to implement the Affordable Care Act. They ultimately lost that battle and out of it emerged a two-year spending agreement negotiated across chambers and political parties by Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.).

Agencies Updated Plans

An Office of Management and Budget official said that following the 2013 government shutdown, OMB issued guidance to agencies requesting they submit updated shutdown plans every two years at a minimum, starting Aug. 1. OMB is currently reviewing those agency plans.

According to the most recent OMB Circular No. A-11, issued in 2015, agency heads, in consultation with their general counsels, must develop and maintain plans for an orderly shutdown in the event of a lapse in appropriations. Up-to-date plans must be on file with OMB.

Given that the duration of a lapse in appropriations is inherently uncertain, OMB said agency plans should account for both a short lapse of one to five days as well as an extended period.

The circular also stated that OMB will monitor the status of congressional actions on appropriations bills and will notify agencies if shutdown plans are to be implemented.

One week prior to the expiration of appropriations bills, regardless of whether the enactment of appropriations appears imminent, OMB will convene a meeting or teleconference with senior agency officials to remind them of their responsibilities to review and update orderly shutdown plans, the circular said.

OMB will hold follow-up meetings or teleconferences on a periodic basis until appropriations are enacted or a lapse in appropriations has occurred, it said.

Use of Threat

Elaine Kamarck, founding director of the Center for Effective Public Management and senior fellow of governance studies at the Brookings Institution, said shutdowns are becoming a routine only for a faction of the Republican party. “They like to use the threat,” she said.

This is one place where there is an internal Republican party difference of opinion, Kamarck said. House Speaker John Boehner (R-Ohio) does not seem anxious to shut the government down, she said.

“I think that it's probably going to get to be an overused threat,” Kamarck said. “And they don't win these shutdowns—they didn't win the last time, they never win them,” she said.

It is unclear why these Republicans keep doing this, other than out of frustration that their minority is not the majority, Kamarck said. “And eventually it's going to be like the boy who cried wolf—eventually it won't work,” she said.

‘They Know the Drill.'

The career civil service is always preparing for a government shutdown, Kamarck said. “They know the drill now, they've been through it just recently,” she said. “Everybody's got their procedures for the shutdown.”

The real impact of the shutdown is in the short-term it's costly, and in the long-term it increases the inefficiencies in the government, because there is no planning, Kamarck said. Agencies can't plan, they don't know what their budgets are going to be, and they can't make investments in things that might save them money down the road, like a new computer system or new hires, she said.

“Any business man or woman ought to think about how they would manage to run a business if every nine, ten months somebody threatened to pull your funding,” Kamarck said. “Or pull their investments in you.”

Worse Over Time

Harry Stein, director of fiscal policy at the Center for American Progress, said an actual shutdown, compared to the threat of one, is what is really damaging for the country.

“To the extent that there was confusion or uncertainty about what was actually going to be the result of a shutdown, I just think there's going to be more clarity on that now because [agencies] can just dust off their plans from two years ago,” he said.

One lesson from the last shutdown is that they get “quite a bit worse” over time, Stein said. So on day one, the doors physically close on areas such as parks and monuments, he said.

But a lot of what the government does is provide grants or reimburse for other expenses, Stein said. What they found in the last shutdown, for example, is that school lunches were still being served, but the schools just weren't getting paid for them, he said.

More Examples

Another example is the bulk of the workforce at the Administration for Children and Families was furloughed, so their quarterly grants were discontinued, Stein said.

That didn't mean the service providers who received those grants had to shut their doors; rather, it meant they had to operate at a deficit or with increasing uncertainty about whether they were going to get reimbursed, Stein said.

“It gets worse and worse over time,” Stein said. “There's definitely an initial cliff, and then there's a compounding as more and more reimbursements and grants aren't going out the door.”

Small Business Administration loans are another example of that, Stein said. It is not as if all small businesses have to shut their doors when there is a government shutdown, but as it goes on for weeks, and businesses have to manage their cash flows, that becomes more and more problematic, he said.

“I think agencies tend to do the best they can with the really bad hand that they get dealt by Congress,” Stein said. “But it's still a bad outcome.”

Mitigating Impacts

House Minority Leader Nancy Pelosi (D-Calif.) spoke to reporters at the White House Sept. 17 about the last shutdown, saying the president was being responsible by mitigating a good deal of the damage that otherwise would have been done.

The last shutdown cost the U.S. economy $25 billion, 100,000 jobs were lost and it created so much uncertainty in the economy and in people’s lives, Pelosi said. “But, in fact, President Obama in his leadership and his approach … tried to mitigate for the harm and the impact it had on people’s individual lives.”

Pelosi said she hopes that most Republicans agree that a government shutdown is not good for the country.

“We’re talking about, again, the loss to the growth of our GDP, we’re talking about jobs, we’re talking about laying off a federal workforce, at least 30 percent of which are veterans,” Pelosi said.

Bipartisan Agreement Needed

White House press secretary Josh Earnest said Sept. 17 that this brinkmanship didn't happen last year, primarily because in the aftermath of the last government shutdown, Democrats and Republicans on Capitol Hill sat down and hammered out a two-year budget agreement.

“That ended up being good for our economy,” Earnest said. “And we encourage them to do that again.”

But two years after the last Republican-engineered government shutdown, the nation seems to be careening toward another one, Earnest said. “And certainly the last thing that the U.S. economy needs is the unnecessary injection of even more volatility,” he said.

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