Budget Expert: Prepare for a Shutdown

By Bill Matthews

With the March 4 expiration date looming for the continuing resolution that's funding the federal government, budget expert Stan Collender offers this advice: Prepare for a government shutdown.

It is more likely than not that Congress will fail to agree on a new budget for 2011 in time to prevent the federal government from running out of money and simply closing its doors, Collender said Feb. 10.

"My strong suspicion is that the Republicans need to shut down the government once to show the Tea Party folks that they are willing to do it," he said during a discussion of the 2012 budget that's scheduled to unveiled Feb. 14. "I think there's a better than 50-50 chance that we will have one or more shutdowns, and at least one will be longer than a couple of days."

Collender is a partner in the corporate communications firm, Qorvis, author of The Guide to the Federal Budget, and an expert on the federal budget congressional budget process -- and he's been through government shutdowns before.

In 1995 President Clinton, a Democrat, vetoed a spending bill passed by the Republican-controlled Congress that would have cut, among other things, Medicare, Medicaid, education and environmental controls.

Without a budget the government was operating on a continuing resolution -- just as it is today. And when the 1995 CR expired, non-essential services simply halted.

At first the effects seemed minor. Angry motorists lined up outside closed national parks and people were unable to get passports and visas. But soon companies that relied on government business discovered there was no one to pay their invoices, no one to open bids on new contracts, and no one to accept goods that were to be delivered.

"Contractors realized that they were in ground zero of the shutdown," Collender said.

After five days, a new CR was passed and the shutdown ended. But Clinton and Congress were still at loggerheads when that CR expired, and the government shut down again, this time from Dec. 15 to Jan. 6, 1996.

During the second shutdown, companies that depended on government business began to lay off workers, Collender said.

Layoffs are likely to happen earlier if there is a shutdown this year, he said. "I can tell you because I've talked to members of the contracting community and to [business] associations, and they've already started to prepare for this possibility."

And as in 1995, there could be more than one shutdown. "The common assumption in Washington is that the possibility of a shutdown will come to a head March 4 and they will work out a deal. I think it is more likely that we will get a short-term CR and go through it again," Collender said.

"I would not be surprised if there are layoffs, furloughs and project delays. The bottom line is I think it's coming," he said.