Category Archives: Budgets

26 random things that could cease to function during a government shutdown

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Most people pay no attention to how many areas of everyday life our federal government is involved in. Many people believe a government shutdown will not affect them even as they depend on federal services almost every day of their lives. Granted, many of these things may not happen right away, as many federal agencies maintain capital reserves by federal law, but those reserves can be measured in days. I suspect a shutdown of more than 3 days could result in severe and, in some cases, permanent disruptions to federal functions.
  • A- Archives: the National Archives, Library of Congress, and the US Copyright Office would be forced to close.
  • B- Banks: all of the banks still dependent on TARP funds will lose their lifelines and FDIC insurance guarantees will become null because no one can disburse the money.
  • C- the Capitol: operation of the US capitol would cease and the capitol area would be forced to close down.
  • D- The Drug Enforcement Agency: the DEA will no longer be interdicting supplies of illegal drugs entering the United States.
  • E- Education: student loan disbursements and student loan rate guarantees will no longer function.
  • F- The Federal Bureau of Investigations: the FBI will no longer be available to assist in investigations of bank robberies and kidnappings. Domestic intelligence operations may cease or be cut severely back.
  • G- Governments: State and local government programs dependent on Federal money will be forced to reduce activities or shut down altogether.
  • H- Hospitals: medical programs dependent on federal grant money will cease to function.
  • I- IRS: the IRS will not be able to collect taxes, disburse refunds, or process returns.
  • J- Judges: the federal court system, including the Supreme Court, will be forced to shut down.
  • K- Khalid Sheikh Mohammed: KSM and the the other detainees at Guantanamo Bay will suddenly be guarded and cared for by people who are not being paid.
  • L- Land: farmers utilizing government land, especially for grazing, may discover that land is no longer accessible.
  • M- Medical: Medicare and Medicaid disbursements will cease, even for individuals undergoing treatment.
  • N- The National Aeronautics and Space Administration: NASA will not be able to fund its ongoing missions, including the International Space Station.
  • O- Open Skies: US enforcement of the Open Skies treaty would cease.
  • P- the President: While Barack Obama will still be our duly elected president, he will cease to have quite a bit of executive power because that power is derived from the authorization of Congress as part of the budget process.
  • Q- A government shutdown Q&A. And another.
  • R- Research: federal research grant money will cease.
  • S- Social Security: eligible recipients be able to apply for benefits and, if a shutdown goes on long enough, checks may not be issued.
  • T- Taxes: the federal government will not be able to collect taxes while it is shut down.
  • U- Unemployment: Federal unemployment benefits will cease.
  • V- The Veteran’s Administration: VA hospitals may not be able to see new patients and may have to discharge patients.
  • W- War: we have combat troops in harms way, but those troops will not be paid and they will have to depend on supplies already available because resupply will stop because those moving the supplies can no longer be paid.
  • X- X-rays: the TSA will no longer function.
  • Y- Yemen: the US embassy in Yemen, and all other US embassies, will have to cease providing services.
  • Z- Zoos: national parks will shut down, such as the National Zoo in Washington D.C.
This is hardly an exhaustive list, and the devil is always in the details. Some of these events could unfold differently than I describe here or not at all. But isn’t that part of the point: no one really knows what will happen, yet we will all be affected by whatever does happen.
DLH

Orders of magnitude

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$40,000,000,000,000 -- the total government indebtedness as of 2011
$25,000,000,000,000 -- the total state and local debt as of 2011
$14,590,000,000,000 -- the US GDP
$14,184,254,500,000 -- the total national debt as of 5 March 2011
 $3,550,000,000,000 -- the federal budget in 2011
 $2,300,000,000,000 -- the total federal tax revenue collected in 2010
 $1,300,000,000,000 -- the national deficit for 2011
   $695,000,000,000 -- total Social Security spending in 2011
   $663,700,000,000 -- total defense spending in 2011
   $528,000,000,000 -- total Medicare spending in 2011
   $500,000,000,000 -- expiring all the Bush tax cuts for 2011
   $125,000,000,000 -- the projected state deficits for 2011
    $90,000,000,000 -- expiring the tax cuts on income over $250,000
    $63,200,000,000 -- total local budgets in Ohio in 2011
    $46,300,000,000 -- total local indebtedness in Ohio in 2011
    $68,961,315,845 -- Ohio's total outstanding debt in 2010
    $56,600,000,000 -- Ohio's budget for 2010-2011
     $8,000,000,000 -- the projected deficit in Ohio in 2011
     $1,000,000,000 -- savings from SB5 in Ohio in 2011
           $400,000 -- presidential salary in 2010
           $286,686 -- average CEO salary in 2010
           $174,000 -- Congressional pay
            $46,326 -- average household income in the US

It’s all about magnitude.

DLH

More on the cost of reality

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I love that the debate over stripping public unions of the collective bargaining rights has degenerated into an argument, essentially, about protecting union negotiated entitlements. In embracing this debate, both sides have distracted themselves from reality again–that is, the thing that is going to happen whether unions can bargain for entitlements or not.

I will focus on Ohio because I am far more familiar with its finances than I am with Wisconsin’s, but I believe the problems are similar in each state.

Various researchers, including the states own Office of Budget and Management, project that Ohio budgeted to spend somewhere between $5 and $10 billion more than it will collect in tax revenue in 2011. This reality is part of a general trend around the country that has states spending more than they tax even as they find their ability to borrow more and more limited by declining credit ratings due to the immense amount of money they have already borrowed.

This state of affairs threatens to become a crisis for Ohio because the state could have no capacity to fund the programs and services it has obligated itself to fund at the levels it promised to fund them as soon as this year. Nowhere is this potential crisis more evident than in public schools.

There is also a hard place for this state financial crisis to land: many school districts are already broke or are so close to being broke that the difference is irrelevant if funding gets cut by the state. According to the Ohio Auditor of State (.pdf), 15 districts are currently under fiscal watch or emergency, while 60 more just emerged from such a status on 1 January 2011. Around the state, districts are warning that, even if new levies pass this year, the districts will be forced to make cuts and lay off teachers.

So, while so many people seem to be focusing on the question of whether teachers–and other public workers–have the right to bargain contracts, most people seem to be ignoring the fact there may be nothing for them to bargain those contracts with.

This reality is because of the fact that Ohio is broke. It’s not just in 2011 either. Some budget estimates show Ohio running deficits of $5 to $8 billion for the next 10 years, deficits the state has no funds to cover and which it may not be able to borrow to make up for.

It is from these conditions that the anti-bargaining law originated. Republican lawmakers in Ohio–and Wisconsin, Indiana, and Tennessee–see public unions as a target of opportunity in what is going to prove to be a decade long budget battle to somehow preserve the financial sovereignty of their state. There are, in my opinion, all kinds of problems with the law and with the approach the Republicans have used, yet no one can deny that part of the problem faced by states, municipalities, and school districts right now is the cost of union negotiated compensation packages those entities simply do not have the capacity to pay.

If these entities do not have the capacity to pay, it does not matter if the unions have the right to collectively bargain or not. I suspect that, within the next few years, entire school districts and smaller municipalities are simply going to fold–disincorporate, which is essentially bankruptcy–because they no longer have the capacity to maintain even a fundamental level of the services they are supposed to provide. At that point, even if teachers, police, and firefighters have contracts, it will not matter because the entity they have a contract with has ceased to exist.

From my point of view, if legislators and unions alike want to prove they have their constituents best interests in mind, it is a resolution to this disastrous state of affairs that they would be debating instead of whether unions can collectively bargain contracts with failing entities. Yet, instead they debate about the fringes while the core is collapsing, and when it is done, all of their effort will have been expended for nothing.

DLH