International Economic Development Council Federal Alert
posted on Thursday, October 3, 2013 in Blog
We are now in day 3 of a partial government shutdown, our first in 17 years. Both chambers of Congress appear unwilling to compromise, which means economic developers should take stock of how their community may be impacted.
What we know so far:
• All non-essential employees are furloughed until further notice.
• It is illegal for furloughed federal employees to work. That means no checking email, reaching out to grant applicants, or processing payments; the government is shutdown in all but a few instances, typically related to national security and the protection of life and property.
• Following the orderly shutdown that took place in morning hours of October 1, many government websites have either come down completely or posted notices citing their dormant state pending appropriations for fiscal 2014.
• Between furloughed staff not answering phone calls, returning emails and websites coming down or going dormant, communication with federal agencies has gone silent.
• The federal government is effectively closed for business.
Here are just a few impacts specific to economic development:
• The Economic Development Administration is offline, which means all of EDA’s vital grant work and work in disaster recovery has come to a stop.
• The SelectUSA Investment Summit is still on and two staffers remain working on it as of this morning, but the rest of the SelectUSA team have been furloughed; the SelectUSA team in London for an investment conference had to drop-out at the last minute because of the shutdown.
• The Small Business Administration’s loan programs, 504’s and 7a’s, are no longer being processed or funds distributed, effectively locking-up vitally important small business capital.
• The Nation’s parks and federal attractions are closed; this might not seem like a big deal, but consider that in 2010 tourism had an economic impact of $1.8 trillion.
• Federal Housing Administration mortgage loans, which impact 30% of home sales, are going unprocessed during the shutdown, having an adverse effect on the still-recovering housing industry.
• The Department of Transportation’s Federal Transportation Administration may soon run out of money to service billions in debt associated with municipal bonds issued to fund transportation projects throughout the country; Grant Anticipation Revenue Vehicles (Garvees) will need further appropriations in as little as a few weeks before defaulting and wreaking havoc on credit ratings at the local, state, and federal level.
There are many less tangible impacts on the economy that will only become clearer over time, but we can be certain that with each passing day the full manifestation of the impact will become worse and worse. The federal government is an economic force that contributes trillions of dollars to the national (and international) economy. The government must reopen soon in order to avoid a greater shock to the economy that could potentially drive it back into recession.