If The Government Shuts Down, You May Not Notice (At First)

Despite the doom and gloom, there would likely be limited economic impact from a government shutdown — at least initially. People who can't go to a national park just go to a movie instead. And in the last shutdown, in the 1990s, furloughed park rangers eventually collected retroactive pay.

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We're less than a week away from a possible shutdown of the federal government and there is still no clear path to a stopgap budget agreement in Congress. A bill to keep things running did inch forward in the Senate today. But getting a final deal between the Senate and the House is another question.

NPR's Scott Horsley reports on what a government shutdown would mean for people's pocketbooks.

SCOTT HORSLEY, BYLINE: The threatened government shutdown would come at a rotten time for the Tennessee tourism business, just as the autumn leaves are beginning to turn.

KELLY MOTT: Usually, the first or second week in October, the throngs of leaf-peepers descend on us - which we're always happy to have them.

(LAUGHTER)

HORSLEY: Kelly Mott heads the Chamber of Commerce in Pigeon Forge, Tennessee, one of the gateways to Great Smoky Mountains National Park. That's the most popular park in the whole country, drawing more than nine million visitors each year. Mott says it would be unfortunate if the park's campgrounds and visitor center are shut down during what should be one of their busiest times of the year.

MOTT: We're hopeful that a government shutdown doesn't happen. And right now, we're kind of in a holding pattern and hoping for the best.

HORSLEY: But Mott says even if the park were to close, there would be other ways for tourists to entertain themselves. They might spend more time shopping in the area's outlet malls, visiting Dollywood or catching a show at the Smoky Mountain Opry.

MOTT: I probably should not admit to this but sometimes we talk with people and I ask them, you know, well, what do you plan to do in the park while you're here? And they say, park? What national park?

HORSLEY: And that's the thing about a so-called government shutdown. A lot of people wouldn't even notice - at least not right away.

NARIMAN BEHRAVESH: It all depends on how long it lasts.

HORSLEY: Economist Nariman Behravesh of IHS Global Insight says the initial fallout would be limited because even though it's called a shutdown, essential government services would go on. Social Security checks would keep going out. And soldiers, meat inspectors, and air traffic controllers would keep showing up for work. The costs begin to add up, though, the longer the government stays shuttered. That's especially true for federal workers, who wouldn't be getting paid.

J. David Cox went through that the last time the government shut down, 18 years ago.

J. DAVID COX: I was a VA registered nurse. I had to go to work every day to take care of veterans. But on payday, I did not get paid.

HORSLEY: That shutdown lasted three weeks. Today, Cox heads a union representing hundreds of thousands of federal workers who could find themselves in the same situation.

COX: Let's get real. They're living payday to payday. They have very, very little money saved. They're not going to be able to immediately turn to a big bank account and last for a long period of time.

HORSLEY: Federal employees who end up working through a shutdown will eventually receive back pay. In the past, even workers who were sent home were paid retroactively, though Cox isn't sure that would happen this time.

COX: Knowing this Congress I would not count on anything.

HORSLEY: A shutdown could also take a psychological toll on the economy, if it rattled confidence and made consumers less willing to spend or businesses less willing to hire. Sadly, economist Behravesh says, much of that damage has already been done by the budget squabbles of the past few years.

BEHRAVESH: Unfortunately, we are getting altogether too used to and perhaps a little too comfortable with the dysfunctionality in Washington.

HORSLEY: Whatever the fallout from this week's budget impasse, a far bigger threat to the economy is the next showdown over the debt ceiling. Behravesh says unless lawmakers agree to raise the borrowing limit within the next few weeks, the federal government will default for the first time ever, sending shock waves throughout the global economy.

BEHRAVESH: It's a low probability event. But it could happen by accident or by somebody just sort of overplaying their hand, as it were. Then the effects could be much bigger than a temporary government shutdown, if it happens.

HORSLEY: Treasury Secretary Jack Lew sent a fresh warning to lawmakers today, saying their last chance to raise the debt limit is October 17th, just over three weeks away.

Scott Horsley, NPR News, the White House.

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