Government Shutdown Becomes Longest in History

Entering its twenty-second day, the federal government shutdown has become the longest such shutdown in American history. The shutdown, which began shortly before Christmas, is the result of a political impasse between President Donald Trump and Congress over funding for a proposed U.S.-Mexico border wall. Backing away from the threat to use presidential emergency powers to unilaterally appropriate funds for a wall, Trump has signalled that there is no path forward without concessions from Congressional Democrats led by House Speaker Nancy Pelosi (D-CA12) and Senate Minority Leader Chuck Schumer (D-NY).

The shutdown has already impacted hundreds of thousands of government workers, who missed their first paycheck on January 11. The New York Times reports that the shutdown has closed parts of nine federal agencies, including the Internal Revenue Service, the Department of Transportation, and the Department of Justice, and forced 800,000 federal employees to be furloughed or work without pay.

“Excepted” employees who must continue working without pay include those “performing emergency work involving the safety of human life or the protection of property or performing certain other types of excepted work.” These “excepted” or “essential” employees encompass government officials working in law enforcement, public safety, and airport personnel.

But the broader effects of the agency closures have reached all corners of society. Hundreds of national parks and museums released closure alerts in the last few weeks, and photos of overflowing trash cans have gone viral. The Food and Drug Administration has been forced to halt routine health inspections at domestic food processing facilities. And the Environmental Protection Agency has furloughed hundreds of its employees, many of whom are charged with monitoring pollution and domestic compliance with environmental laws.

The 38 million people who rely on food stamps have struggled with shutdown-induced instability, first fearing that payments would dry up by February and now dealing with the logistical challenges of a massive billion-dollar payout that has come early. Significant delays in loan processing for homes, farms, and businesses will only expand as funds for the federal court system run out.

Citing historical data on government shutdowns, Federal Reserve Board Chairman Jerome Powell told the Economic Club of Washington on January 10 that past shutdowns have had little effect on growth metrics, but cautioned, “If we have an extended shutdown, I do think that would show up in the data pretty clear."

The economic impact of the shutdown is far-reaching. Government agencies may not be able to publish essential data used by Federal Reserve economists to direct American monetary policy. Kevin Hassett, chairman of the White House Council of Economic Advisors, predicts that the government shutdown reduces GDP by a tenth of a percentage point every two weeks. This comes out to about $10 billion of lost output a week.

In the face of the extended shutdown’s snowballing effects, many have explored the legal requirements and limits for public employment and crucial public services. Individual federal agencies have quite a bit of leeway in deciding what is “essential,” and who must show up to work. The Trump administration itself can make decisions about what constitutes emergencies in public health and safety, and reopen more of the government while the shutdown continues.

However, as Russell Berman explains in the Atlantic, efforts to mitigate a shutdown tend to prolong it. The more bandaids placed on impacted services and agencies, the less painful the shutdown becomes, and the less political pressure there is to reach compromise.

In July 2018, the president announced plans to provide $12 billion in emergency aid to farmers whose export businesses were damaged by retaliatory tariffs from the trade war with China. While providing temporary relief, these funds disincentivized farmers and their political representatives from pushing for an end to the trade war. This same paradoxical strategy is at work today, as softening the effects of the shutdown may backfire by sapping the political will to address the problem’s structural cause.

However, politicians on either side of the impasse must be wary of exploiting—or aggravating—the shutdown’s harmful effects. A FiveThirtyEight summary of polls shows that between 43 and 47 percent of Americans blame Trump for the shutdown compared to just a third who blame Congressional Democrats. The mere perception that either party is using the shutdown to score political victories could prove counterproductive.

Vice President Pence addressed this on Monday, telling reporters that the administration is “trying to mitigate the impact of the shutdown on everyday Americans instead of the opposite.” But while the Trump administration has demonstrated its efforts to soften the shutdown’s worst effects—finding funds to keep food stamps available till the end of February and certain National Parks open—there is no end to the shutdown in sight.

Neither Trump nor Congress has shown any signs of backing down. White House strategists fear that weakness on Trump’s part would diminish the president’s leverage, while the newly Democratic Congress is unlikely to budge on an issue so central to Trump’s 2016 electoral victory. Trump’s statement on January 4 that the shutdown could last “months, maybe even years” confirms that, for the foreseeable future, this administration is not likely to seek compromise.