Reality Check

Reality Check

Vets the truthfulness of claims and measures the efficacy of public policy

Reality Check: Gov’t Shutdown Necessary Medicine?

By Sam Brock
|  Tuesday, Oct 1, 2013  |  Updated 10:21 AM PDT
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In this edition of Reality Check, Sam Brock takes a look at the impacts of a possible government shutdown.

In this edition of Reality Check, Sam Brock takes a look at the impacts of a possible government shutdown.

All parties involved in the vitriolic debate over funding the Affordable Care Act, commonly known as ‘Obamacare,’ will tell you the same thing: No one wants to see a government shutdown.

“The idea of putting the American people’s hard-earned progress at risk is the height of irresponsibility,” said President Obama, speaking at a White House briefing hours before the shutdown was to take effect. “And it doesn’t have to happen.”

Both parties have a pretty good idea of how it could happen, however.

Republicans say that they’ve softened their demand to defund the still controversial ACA, instead calling for a one-year delay of implementation. They say it’s the same kind of delay the president has already granted the business community without seeking Congressional approval.

Democrats, meanwhile, view the current House GOP strategy as a desperate attempt to quash a law that they couldn’t kill through all reasonable avenues, such as national elections, the legislative process or even the court system.

In the end, the chasm has led to the first government shutdown in nearly 20 years.

The question is what will it achieve?

Noted area economist Alex Field, chair of Santa Clara University’s Economics Department, tells NBC Bay Area that a relatively short government shutdown wouldn’t totally unhinge the economy but could force Congress to reverse course, depending on public reaction.

““If it’s just for two or three days, I don’t think it’s going to have a major impact,” Field said. “The national parks will be closed. Every department in Washington has to make a distinction between essential and nonessential workers. So some people will come to work and in many cases they’ll be working without pay, but they will ultimately get their backpay [once a deal is struck].”

An extended shutdown, however, or even worse- a disagreement over funding Obamacare that leads to the first ever U.S. default- could have disastrous results, he said.

“U.S. currency is the *standard for liquidity in all sorts of financial markets, domestic and internationally,” Field said. “And if THAT’s threatened, in pursuit of a wish list of certain domestic policy goals, I think it’s going to be potentially catastrophic. I would qualify that by saying, no one really knows how it will play out.”

Lawmakers have not tipped their hand on whether this dispute will carry over all the way to the debt ceiling debate.

The U.S. is expected to reach its debt ceiling within the next three weeks and would default if Congress doesn’t raise the limit.

Congressman Eric Swalwell, D-15th, a first-term representative from the East Bay, tells NBC Bay Area that a shutdown would devastate many families but would still not match the severity of a U.S. default.

“When it comes to the debt ceiling, the government can shut down and hopefully folks go back to work [once there’s a deal],” Swalwell said. “Once you default on the debt of the United States, there’s no going back. The credit rating will be reduced, every American will pay more when it comes to their home mortgage, their auto loans, their student loans, their credit card interest rates- you just can’t go back on that.”

Swalwell has instructed the House Chief Administrative Officer to withold his pay until there is a deal struck in Congress.

Meanwhile, Modesto Congressman Jeff Denham, R-10th, said there’s not much difference whether Congress battles over the budget, the debt ceiling or both.

“Both of them are critical time periods where we’ve got to have funding to keep the government going,” he said.

The current situation, Denham says, is unacceptable.

“We need to do everything we can, Republicans and Democrats, House and Senate, to avert a shutdown. We need to keep the government funded.”

The government shutdown officially goes into effect at 12 a.m. EST Tuesday morning.

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