The Real Impact of the Government Shutdown

Written by John Peterson
Posted January 25, 2019

This feels unprecedented. We’re currently in the midst of the longest government shutdown in American history.

Shutdowns aren’t rare. This country has weathered countless government shutdowns since the Carter administration. But until our current stalemate, the longest shutdown was the 1995–1996 conflict between President Bill Clinton and the Republican Congress over funding for Medicare, the environment, and public education.

That shutdown was from December 16, 1995, to January 6, 1996. 21 days. This current shutdown has well surpassed Clinton’s record. As of today, January 25th, we’re now entering the 35th day of the shutdown, and it’s taking its toll.

It’s not just D.C.-area employees that are being affected. An estimated 800,000 federal workers have essentially gone a month without pay.

The crux of the shutdown is that President Trump is asking for $5.7 billion to construct the U.S.–Mexico border wall that he’s been proposing since the 2016 campaign trail. House Speaker Nancy Pelosi and the congressional Democrats are refusing to funnel any additional funds toward the border wall.

The resulting shutdown has become somewhat of a personal duel between Trump and Pelosi. Nancy Pelosi suggested that Trump shouldn’t deliver the State of the Union address from the Capitol during the shutdown. Seemingly in retaliation, Trump cut the funding for Nancy Pelosi’s public relations trip to Brussels, Egypt, and Afghanistan.

Trump’s email to Pelosi was released by the White House and posted on his personal Instagram account. Within, he not so subtly urges Pelosi to visit him at the White House to discuss the budget for the border wall.

Dear Madame Speaker,

Due to the Shutdown, I am sorry to inform you that your trip to Brussels, Egypt, and Afghanistan has been postponed. We will reschedule this seven-day excursion when the Shutdown is over. In light of the 800,000 great American workers not receiving pay, I am sure you would agree that postponing this public relations event is totally appropriate. I also feel that, during this period, it would be better if you were in Washington negotiating with me and joining the Strong Border Security movement to end the Shutdown. Obviously, if you would like to make your journey by flying commercial, that would certainly be your prerogative.

I look forward to seeing you soon and even more forward to watching our open and dangerous Southern Border finally receive the attention, funding, and security it so desperately deserves!


Donald Trump

Pelosi was outraged that Trump, even generally, would reveal the locations of a diplomatic mission before it takes place — particularly in Afghanistan and Egypt, where foreign knowledge of Pelosi and her delegates’ whereabouts could potentially be dangerous.

“I was dressed and ready to go, ready to walk out the door with my suitcase,” Pelosi stated. “The removal of the use of transportation was the first step. The second was the disclosure of travel by commercial air. All protocols for safety, security were broken in the fact that all that information was made public.”

But beyond this clash of personalities and power, this shutdown, like the ’96 Clinton administration shutdown, is ultimately about funding. The real irony is that this stalemate about the allocation of government funds is actually costing an insane amount of money.

There are 350,000 federal employees in D.C. But the federal government’s workforce is comprised of 2 million civilian federal employees. Only 40% of those 2 million workers were affected by the shutdown — that’s where we’re getting that 800,000 number. But that’s not taking into account the additional 4 million contractors employed by the federal government.

The loss of productivity from these furloughed workers is taking a serious toll on our economy. We’re operating at a loss of about $1.2 billion each week. As of January 11th, the shutdown had cost around $3.6 billion. By next week or the week after, we should hit, or even surpass, Trump’s initial ask of $5.7 billion for border security.

Now, what does all of this mean for you?

It means national parks are closed and getting filthy. It means you may have an extremely difficult time getting your passport renewed. It means air travel has reached a new level of congestion.

Just last weekend, my local airport, Baltimore/Washington International Thurgood Marshall Airport, made national news as it was forced to close its primary TSA checkpoint due to an overflow of workers calling out sick. It’s been widely circulated that these callouts are actually part of a coordinated TSA strike. The results were chaotic, but the workers’ impulses were understandable. No one wants to put in a 12-hour shift when they haven’t been paid in weeks.

But beyond inconvenience, how is this shutdown going to affect your personal finances?

This shutdown could mean that your tax refund will be delayed. Standard tax returns should expect the normal period of around two to three weeks, but more complicated returns will have a week delay at the least.

Those furloughed workers directly affected by the shutdown should contact their creditors and service providers and request a grace period. If that fails, these workers may need to dip into their savings or create a plan to leverage their debt strategically.

But regardless of occupation or federal sector, we’re all just waiting for this shutdown to be over. It could be days, weeks, or even another month, but this country needs to get rolling again.

That’s all for now.

Until next time,

John Peterson
Pro Trader Today

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