Shutdown seen as lesser threat to U.S. economy
A default on the
national debt could be catastrophic, but the government shutdown is
unlikely to do lasting damage, economists say.
Government shutdown unlikely to damage economy, but debt limit could be catastrophe
Economists warned that some effects will linger, with consumers feeling spooked and pockets of the economy afflicted by closed national parks or a slowdown in government-related business.
Graphic
Wonkblog’s Daily Default Dashboard: Is it time to panic yet?
More business news
Economic damage from shutdown could be minimized
Defense employees are back, and a bill for furlough backpay is pending. But the debt limit is another story.
In blow to Boeing, Japan Airlines makes deal with Airbus
The agreement snaps the near-monopoly that Boeing has enjoyed in Japan for more than a half-century.
What shutdown means to cancer patient denied NIH trial
Michelle Langbehn talks about her diagnosis, why she applied for the trial and what the shutdown means.
The government could run out of money to pay its bills as soon as the middle of this month if Congress fails to raise the borrowing limit. That would undermine global confidence in the United States as the world’s financial safe haven and could permanently increase the nation’s borrowing costs.
“This becomes a bigger problem than the one we had this time last week, when it was just the shutdown,” said Stephen Fuller, director of George Mason University’s Center for Regional Analysis.
Fuller had estimated that the Washington region would lose more than $200 million a day during the shutdown, largely in lost income for federal workers. But over the weekend, the House passed a bill that would pay employees for their time at home. The Senate is planning to move forward on the measure this week. Fuller said the bill would turn the furloughs into paid vacations, diminishing the economic impact of the shutdown.
Meanwhile, the Pentagon called back almost all of its employees, saying they provided direct support for the active-duty military. That helped defuse a potential cascade of furloughs in the Washington region’s $70 billion government contracting industry.
Bethesda-based Lockheed Martin had said Friday that it would furlough 3,000 of its roughly 120,000 employees but trimmed that figure to 2,400 on Monday, after the Pentagon’s announcement. The company said the majority of those employees — 2,100 working on civilian-agency programs and 300 on Pentagon programs — are based in the Washington area. They will be paid for vacation time during the furlough, and the company will advance up to 40 hours to workers who have not accrued enough time.
Hartford, Conn.-based United Technologies canceled its plans to furlough nearly 2,000 workers this week. McLean-based Science Applications International Corp. said it has sent hundreds of employees home but continues to provide them pay and benefits, while Falls Church-based General Dynamics said it has not furloughed any employees.
Other types of businesses that rely on federal workers, such as food trucks and restaurants, may not be able to recoup lost revenue. Tourism may also be hit as national museums and parks remain closed.
“This all comes down to a confidence issue,” said Lindsey Piegza, chief economist for Sterne Agee. “The consumer is just very, very sensitive to the shenanigans in Washington.”
A survey by Gallup showed that Americans’ confidence in the U.S. economy plunged as the government shutdown became reality and that it continued to slide through the end of last week. The Gallup index now stands at its lowest level since December 2011.
Investors are also getting worried. A poll by TD Ameritrade over the weekend found that nearly three-quarters of investors said they were beginning to lose confidence in the recovery. Though the bulk of them have not made changes to their portfolios, about 10 percent said they have moved some of their money into cash.
Doug Handler, chief U.S. economist at IHS Global Insight, estimated that the shutdown would shave about six-tenths of a percentage point from the nation’s gross domestic product during the fourth quarter. His calculations assumed federal workers would be paid eventually, but he said the benefit of an early return by Pentagon employees was almost too small to measure.
Not raising the nation’s debt ceiling, however, could be catastrophic. A recent report by Goldman Sachs projected that halting Treasury payments would slash the growth of gross domestic product by 4.2 percentage points over a year. Although economists think the likelihood of default remains small, even flirting with not raising the debt limit could roil world markets.
“There’s a modest amount of uncertainty and inconvenience associated with the shutdown,” Handler said. “But that will get magnified once the debt-ceiling debates get very intense.”
Some firms have gone to great lengths to soften the blows from Washington. At Falls Church-based technology contractor IntelliDyne, just over a dozen of the company’s nearly 300 employees have been furloughed. Company executives, concerned about how they would pay the workers, pooled their own vacation time to create a bank of hours the furloughed can draw from.
“I have a bunch of vacation saved up that I know I’m not going to take,” said Tony Crescenzo, IntelliDyne’s chief executive. He kept about four days for himself for Thanksgiving and Christmas.
After collecting about 500 hours from executives, they allowed employees to donate. The bank is up to more than 1,000 hours, which will ensure the furloughed workers can still be paid for weeks, Crescenzo said.
“It’s unfortunate that private companies can find a way to do this kind of thing and Congress can’t do it,” Crescenzo said.
Shutdown exposes depth of rift between GOP lawmakers
THE TAKE | Should it be the party of “no” or one that creates a positive vision for conservative governance?Shutdown shines spotlight on rift in Republican Party
Video:
The Post's Capitol Hill reporter Ed O'Keefe discusses the week to come
on Capitol Hill as the shutdown continues, and the debt ceiling deadline
nears.
The shutdown is disruptive and uneven, causing some pain and wider unease if only because of its unpredictability. It also is less encompassing today than it was when it began. House GOP leaders have simultaneously attempted to maintain unity while trying to escape possible political blame for the consequences of what their strategy could lead to.
Sides harden their stances on debt ceiling
A defiant Speaker John Boehner says there are not enough votes in the house to pass a “clean” debt-limit bill.
Winners in the shutdown
Whom is the government shutdown helping? Believe it or not, there are some who are benefiting.
The shutdown’s losers and not-quite losers
No one looks good as the standoff enters its second week, but some are looking better than others.Sign up for ‘The Showdown’ newsletter
Get the latest news on the budget fight and a possible government shutdown in this daily newsletter.
A new Washington Post-ABC News poll shows that 70 percent of Americans disapprove of the way Republican lawmakers are dealing with the budget negotiations, seven points higher than a week ago. Only half of all Republicans approve of what their congressional wing is doing.
Democrats in Congress look worse in the latest survey as well, with 61 percent of Americans saying they disapprove of them, five points higher than last week. Obama’s rating rose slightly, with 51 percent disapproving and 45 percent approving.
The struggle has exposed a rift between the party’s confrontational, populist, tea party wing and its traditional business and establishment wing. These tensions reflect fundamental questions about the direction of a party whose rightward shift over the past decade has helped intensify the political conflict and changed the calculus of governance generally.
The conservative movement is not deeply divided over philosophy and policy. Obamacare is unpopular across the spectrum of conservatism, and the president is distrusted by many conservatives who do not consider themselves tea party followers. Overall, virtually all elements of the Republican coalition are more conservative and more hostile to the government than they were in the past.
But Republicans are divided about whether to be a party of “no” or a party that can fashion a more positive vision for conservative governance. The shutdown has brought these differences into even sharper focus. But if there is an obvious resolution, party leaders haven’t found it.
Tea party activists view compromise as capitulation to policies destroying the country and to a president they despise. Mainstream conservatives don’t particularly trust the president either, and oppose much of his agenda. But they question the tactics of the tea party wing, particularly in the shutdown battle. They recognize the inherent risks of being defined by their most hard-line faction. The unease of many Republican governors and other conservatives about the course the House pursued reflects this tension.
However, the perceived power of the tea party — and of those who help fund its members and threaten primary challenges to those who do not hew to the line — continues to make more traditional conservatives wary of staking out positions that are overtly critical of those forces.
Their first effort was to push legislation assuring that active-duty military members would continue to be paid through the shutdown. No one wanted to be on the wrong side of that vote. Obama and the Democrats quickly agreed to go along with that. Emboldened, Republicans decided to try to raise the pressure on the Democrats. Instead they dug themselves deeper.
Get the latest news on the budget fight and a possible government shutdown in this daily newsletter.
Meanwhile, Republicans expressed surprise and outrage that government monuments or park areas controlled by the National Park Service have been closed or restricted, claiming the president was being punitive and political. Some House Republicans went to the World War II Memorial and barked at Park Service employees to show their displeasure.
The shutdown is becoming a checkerboard of things functioning and things closed. Significant portions of the government were never to be shut down. Mandatory spending programs were exempt from the beginning. Social Security checks have continued to go out.
Over the weekend, Defense Secretary Chuck Hagel called back almost all civilian employees of his department. At the same time, the House passed another bill assuring that all furloughed federal workers will receive back pay when the shutdown ends. The vote was unanimous.
Even some House Republicans question the logic of continuing the shutdown under these circumstances, but logic has not been the prevailing motivator these past two weeks.
Given the mandatory carve-outs and the decision to guarantee back pay for all workers, the shutdown will not save money. But it continues to leave programs and people who depend on the government for help, but who have little clout or visibility, vulnerable until everything officially reopens.
On Sunday, House Speaker John A. Boehner (R-Ohio) remained defiant during an appearance on ABC’s “This Week.” He said there were not enough votes in the House to pass a “clean” bill to reopen the government, even on a short-term basis. Democrats and some Republicans dispute Boehner’s claim that a spending measure shorn of demands by his party to somehow change the health-care law could pass the House. On Monday, Obama dared him to put the legislation on the floor.
With hopes of blocking Obamacare in Congress nonexistent, Boehner appeared Sunday to shift his focus to the Oct. 17 deadline for raising the federal debt ceiling. He drew another bright line. “The votes are not in the House to pass a clean debt limit,” he said. Boehner demanded that Obama begin negotiating with Republicans. “He knows what my phone number is,” the speaker said of the president. “All he has to do is call.”
The dangers for Boehner and the Republicans are obvious. The longer this standoff continues, the more he and his leadership team will be defined by the most hard-line constituency in the GOP coalition. Obama has his own calculations to make as the debt-ceiling deadline nears and he weighs the consequences of default and whether there is any realistic prospect for a deal on entitlements, spending and taxes. But it is the Republicans who decided to risk pushing the country to the brink.
Langbehn with her daughter Lula in May 2013. (Reuters)
This cancer patient’s treatment is
on hold because of the shutdown
WONKBLOG | Michelle Langbehn is among
the estimated 200 patients a week that are being turned away from
clinical trials at the NIH. “If I had a message, it would be that lives
are at stake.”
This cancer patient’s treatment is on hold because of the government shutdown
"People
don’t want to be enrolled because they're doing well," Langbehn says.
"They’re looking because of something that's wrong. For them to have
that taken away, it almost makes you want to lose hope in a way. "
(Photo by Natural Grace Photography)
Langbehn began filling out the paperwork to apply last month. Things were going well until late September, when she got a call from the NIH: If the government shut down, the trial would not accept new patients. Now, she is among an estimated 200 patients turned away each week from clinical trials there. Langbehn has started a petition asking the government to re-open the treatment option. We spoke over the phone on Friday about what the trial means for her -- and how it feels to end up in this situation.
Sarah Kliff: I really appreciate you taking the time to talk to me. Can you tell me a bit more about your condition, and when you were diagnosed?
Michelle Langbehn: My formal diagnosis is sarcoma. I was diagnosed in April 2012, shortly after I'd given birth to my daughter. Unfortunately that's not where it started. It started in 2011, when I was newly pregnant, they found a large tumor on my kidney. I went to the doctor thinking I had simple side pain. They thought it was benign, and I then went through the rest of my pregnancy. I started experiencing some neck pain, and it turned out the cancer had spread to multiple spots on my spine and skull. I was 29 at the time of diagnosis.
SK: Was this a shock to you, your diagnosis?
ML: It was extremely surprising. I'm otherwise healthy. I only get one cold a year or so. The kidney tumor alone was quite a shock. I was very happy and relieved when we thought it was benign, but we realized that was not the case. It was rather scary, when I was diagnosed stage 4 sarcoma. Doctors hadn't had experience with a lot of patients like me because it is such a rare cancer.
That news was extremely scary since I had a newborn daughter. A specialist told me people live up to a year when they are stage 4. The thought I might not be here for my daughter was really scary.
SK: And how did you move forward with treatment?
ML:There are a couple of approved treatments, two of which I have done, neither of which promise a cure. There isn’t a cure unless you catch it early enough. For mine to have spread like it did, the chemo was basically just going to be there to prolong my life. I did the two regimens. One was really difficult and [we] found out it wasn’t working. I did two cycles of this new chemo, and it has worked so much better. I just finished my ninth month.
SK: And how did you start looking at clinical trials?
ML: I was talking to my doctor, and we were starting to discuss that I needed to look at other options. After finishing my ninth cycle [of chemo] he informed me that you cannot stay on chemo for the long term sine it weakens the immune system. My body wasn't reacting to it like it used to. So I started looking at clinical trials, found one, immediately contacted them and got the process started.
ML: This one seemed perfect to me because it was what I needed. It was a treatment that targets the tumor from the inside, basically, and kills it from within. It's so different from any other treatment like chemo, which attacks all rapidly growing cells. There’s no guarantee that this might be the drug that helps but, at the same time this trial is as close to a magic bullet as we’ve found. Previous trials of this drug [Cabozantinib], there have been remarkable results.
SK: How did you go about signing up for the trial?
ML: I contacted one of the nurses who was working with the head doctor, and I contacted her and got her on the phone and asked a few questions. At that point she referred me to the clinical research coordinator, and he got the process started of getting all my records sent to NIH about previous surgeries.
This was about two or three weeks ago, when I initially made contact. They were very diligent about collecting all my records.
SK: When did you first get a sense that the shutdown could affect this?
ML: When I spoke with him on September 24, that’s when I
first became aware that the government might shut down. I wasn’t
following the news at that point and learned everything would come to a
halt. When I contacted him on September 30, he had told me all my
records had been sent in, and they had started evaluation, that they
needed to do their own re-diagnosis. They had started, and then on
Tuesday, everything came to a halt.
SK: How have you felt since then?
ML: I’m frustrated to say the least. This was not supposed
to happen. Nobody wanted the shutdown to happen. If I had a message, it
would be that lives are at stake. People don’t want to be enrolled
because they're doing well. They’re looking because of something that's
wrong. For them to have that taken away, it almost makes you want to
lose hope in a way.
SK: What would it mean to you to be able to enroll in the trial?
ML: It would give me a chance to think about the future.
Right now the future is unknown. Since stopping chemo in July, my
doctors have found one new spot. You never know how chemo is going to
react to your body and how quickly things are going to spread. That
makes it even more important that I’m on this trial. it would mean the
world for me to see my daughter grow up. I made a promise to her that I
refuse to let her grow up without a mom.
SK: What would your message be to Congress, if you were able to tell them directly how the shutdown has affected your life?
ML: I want to tell them that lives are at stake. This isn't
just a matter of inconvenience. This is a matter of life or death. I’m
not just doing this for myself. There are 200 people that are trying to
get into clinical trials each week. I want to speak for all of us.
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