Ripple effect of federal government shutdown makes local splash
The domino effect of the government shutdown, now in its second day, is expanding far beyond the 800,000 government workers who are now furloughed or working without pay.
The ripple effect, if the shutdown lingers, could affect thousands more.
Small business owner Heidi Story says she’s upset because she knows the shutdown will impact consumer confidence at her popular Carytown boutique.
“We elect these people and we want them to do their jobs,” Story says.
While lawmakers sat down with the president this evening to try to reach a compromise, both sides have refused over the past few weeks to budge on an appropriations bill to fund the government, including health care reform known as Obamacare.
“What they don’t realize, by doing this that everyone gets upset,” Story says. “They’re very concerned about their job so they’re not going to spend and it’s going to affect everybody-it’s a ripple effect.”
Economists believe a long-term shutdown will not only stunt the economy recovery, but it could freeze federal loan assistance such as small business and federal housing loans.
It could also impact a consumer’s ability to secure credit and short-term loans and could lead to higher rates on credit cards and loans.
A lingering government shutdown also means no tax returns. More than 12 million Americans requested a six-month extension to file their tax returns back in April. While those taxes are still due October 15th, the IRS won’t be doling out tax returns until government is back in business.
Jamie Cox, a financial expert with the Harris Financial Group, says while there can be wide-spread effects of a government shutdown, the prospect of the government breaching the debt ceiling will be far more devastating to the national and world economy.
A debt ceiling breach, which has never happened before, is characterized as a default on the national debt.
“The results of a debt default in the United States is so catastrophic, that I don’t think that any politician- the president- anybody really wants to see that,” says Cox.
The government has until October 17th to raise the debt ceiling.