Treasury Sales Would Continue in Shutdown With Data in Doubt
The U.S. Treasury will continue selling debt in the event of a government shutdown next week, while economic reports from the Commerce Department will be suspended and the Bureau of Labor Statistics will stop operations.
Contingency plans for the federal agencies were released yesterday in advance of a shutdown that will start Oct. 1 unless Congress acts.
The Senate voted to finance the government through Nov. 15 after removing language to choke off funding for President Barack Obama’s health care law, putting pressure on the House to avoid a shutdown.
The Treasury said yesterday in a blog post that it would keep paying interest on the government’s debt and maintain collections and daily cash management. It would also keep up disbursements of Social Security and other federal benefits, as well as “critical government-wide accounting activities.”
The Internal Revenue Service would stop responding to taxpayer questions by telephone in the case of a closure, the Treasury said. The IRS also would halt “non-automated collections and tax-processing activities but would continue activities necessary for the protection of government property,” according to the post.
Services and activities provided by the Bureau of Economic Analysis, the Economics and Statistics Administration and the Census Bureau are among those that would be suspended in a shutdown, according to the Commerce Department’s plan.
Data on construction spending, scheduled for release on Oct. 1, as well as factory orders, retail sales and gross domestic product are all reported by agencies within the Commerce Department.
The Labor Department’s Employment and Training Administration said it will continue to issue weekly jobless claims figures.
The Bureau of Labor Statistics will suspend all operations and staff, commissioner Erica Groshen said in a memo. The agency left open the possibility of publishing certain data, including the Oct. 4 employment report, should a release be deemed to be part of the “orderly cessation of activities.”
The agency cited the example of the 1995 federal government shutdown, which occurred after consumer price index figures had been prepared but not yet released to the public.
“The risk of disclosure of the CPI data during a shutdown was deemed to be unacceptable, and releasing the CPI report was deemed to be part of the orderly cessation of activities,” Groshen said in the memo. So the Office of Management and Budget authorized some Labor Department officials to release the inflation data.
The Republican-controlled House passed a measure that would deny funding for President Barack Obama’s Affordable Care Act as part of a bill to pay for government operations after the Sept. 30 end of the fiscal year. Senate Democrats, who passed a measure to keep the government open through Nov. 15, said they won’t accept conditions.
A shutdown of the federal government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists say.
Mark Zandi of Moody’s Analytics Inc. estimates a three-to-four week shutdown would cut growth by 1.4 points. Zandi projects a 2.5 percent annualized pace of fourth-quarter growth without a shutdown. A two-week shutdown could cut growth by 0.3 percentage point to a 2.3 percent rate, according to St. Louis-based Macroeconomic Advisers LLC.
Seventeen funding gaps happened between 1977 and 1996, based on a Congressional Research Service analysis. In 1995 and 1996, interruptions lasted from Nov. 14 to Nov. 19 and from Dec. 16 to Jan. 6, as Republicans led by then-House speaker Newt Gingrich clashed with President Bill Clinton’s administration.
Those back-to-back shutdowns cut gross domestic product by 0.25 percentage point in the fourth quarter of 1995, almost entirely because federal employees were furloughed, according to an analysis by Joel Prakken, senior managing director at Macroeconomic Advisers.
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