Question

Hi can You help me make a summary about this short article, and also tell me how it affects me economically as US citizen ?

As Government Shutdown Persists, Americans Feel the Bite

Members of the Secret Service on Monday outside the White House. Virtually every employee with the agency is required to work during the shutdown.CreditDoug Mills/The New York Times

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Members of the Secret Service on Monday outside the White House. Virtually every employee with the agency is required to work during the shutdown.CreditCreditDoug Mills/The New York Times

By Jim Tankersley, Matthew Goldstein and Glenn Thrush

• Jan. 7, 2019
• • 26

WASHINGTON — The impact of a partial government shutdown began to ripple across the economy as it stretched into Day 17, with mortgage applications delayed, public companies unable to get approval to raise capital and thousands of Secret Service agents expected to show up for work without pay.

President Trump and congressional Democrats have made little progress in negotiations to end a shutdown that has affected about 800,000 federal workers, many of whom will miss their first paycheck this week, and who owe a combined $249 million in monthly mortgage payments, according to the online real estate firm Zillow.

The shutdown shows no sign of ending soon, with Mr. Trump announcing Monday that he would address the nation on Tuesday evening from the Oval Office to discuss what he called the crisis at the southern border, and the White House saying that he would travel to the border this week as part of his effort to persuade Americans of the need for a wall — the sticking point in negotiations with Democrats.

The standoff is beginning to inflict pain on Americans, whose lives are affected, in one way or another, by the federal government. It is already the second-longest shutdown in history, behind the one that started in December 1995 and lasted 21 days.

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On Monday, the Trump administration moved to soften some of the blow — and prevent taxpayer outrage — by directing the Internal Revenue Service to issue tax refunds during the shutdown, reversing previous policy. While the decision will allow taxpayers to get their money, the I.R.S. workers being called back from furlough to process those refunds will not be paid until the shutdown ends.

The effects of a prolonged shutdown have some Wall Street economists predicting a hit to the United States economy. Bank of America Merrill Lynch economists said Monday that it had pushed them to downgrade their estimates for economic growth at the end of 2018 by a 10th of a percent.

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The ramifications of a prolonged shutdown are beginning to unnerve those both inside and outside the federal government. Some private companies and charities that serve public employees are searching for ways to cushion the impact.

The effects extend from the president’s inner circle, to Wall Street to farm country.

Virtually every employee with the Secret Service involved in investigations, security and the protective division, which protects Mr. Trump and dozens of other current and former government officials and their families, is required to work during the shutdown. And 6,000 of the organization’s roughly 7,000 employees will not be paid.

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The same is true at the Securities and Exchange Commission, which has come to a standstill with “only an extremely limited number of staff members available to respond to emergency situations,” according to a shutdown plan posted on the commission’s website.

The security line on Monday at La Guardia Airport in Queens. Transportation Security Administration agents have worked without pay since the first day of the government shutdown.CreditKarsten Moran for The New York Times

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The security line on Monday at La Guardia Airport in Queens. Transportation Security Administration agents have worked without pay since the first day of the government shutdown.CreditKarsten Moran for The New York Times

As the effect moves well beyond the nation’s capital, craft brewers cannot get approval from the Bureau of Alcohol, Tobacco, Firearms and Explosives for new beer labels. And the Commerce Department has stopped processing requests from auto suppliers and other manufacturing companies seeking an exemption from Mr. Trump’s metal tariffs, leaving them uncertain over the price they will need to pay for key materials this year.

Farmers who planned to apply for subsidies to help mitigate the effect of Mr. Trump’s trade war must wait to get paid until the Agriculture Department’s Farm Service Agency offices reopen. And in neighborhoods across the country, as many as 39,000 federally backed mortgage applications may have already been delayed because of reduced staffing in federal agencies, according to Zillow estimates.

The tax refund decision flies in the face of previous shutdown plans — and interpretations of federal law — when the I.R.S. was prohibited from dispensing tax refunds.

The earliest I.R.S. statistics from 2018 show that 18 million individual tax returns had been filed by Feb. 2. By that point, the I.R.S. had issued more than six million refunds, totaling $12.6 billion — an average refund of $2,035. The agency issued more than $324 billion in refunds for all of last year.

Several nonprofit organizations, including the Federal Law Enforcement Officers Association, are trying to aid Department of Homeland Security workers who need immediate help with a limited pool of cash and other resources, an officer with the group’s charitable foundation said. The Navy Federal Credit Union is offering no-interest loans to service members who face the prospect of missed paychecks. USAA, though, has drawn criticism from members of the Coast Guard for offering similar loans that charge interest.

Secret Service agents are growing increasingly anxious and angry about the shutdown, according to several current and former agents. The Secret Service protects 42 people associated with the Trump White House, 11 more than were given details during the Obama administration. In August 2017, the agency’s new director, Randolph D. Alles, told an interviewer that the sprawling Trump entourage was putting unprecedented strains on his agents, in terms of staffing and budgeting.

“They are asking you to put your life on the line and not paying you — it’s ridiculous,” said Donald Mihalek, 49, a 20-year Secret Service veteran whose own retirement paperwork has yet to be processed because of the shutdown.

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“Morale is a serious issue,” said Mr. Mihalek, who served on the presidential detail during George W. Bush’s and Barack Obama’s administrations. “This is an incredibly stressful job that requires your full attention, and if you are standing there thinking about your mortgage, or your credit card bills, or the fact that you are burning through your savings, you are distracted, you not able to give 100 percent.”

Financial enforcement is also suffering. The S.E.C. has about 4,400 full-time employees and during the shutdown is operating with just a few hundred — most of those tasked “to protect life or property.”

The constrained operations means pending investigations in securities violations have ground to a halt, and there is no one reviewing applications for company stock offerings to raise cash or consider merger and acquisition filings.

Defense and corporate lawyers said meetings with potential witnesses in pending investigations have been canceled, and some companies seeking to raise cash through a stock offering are having to bide their time. Staff lawyers at the S.E.C. are largely prohibited from responding to emails seeking information or guidance.

Border wall prototypes in Southern California. President Trump has stood firm on his demand for billions of dollars to fund a wall along the border with Mexico.CreditGuillermo Arias/Agence France-Presse — Getty Images

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Border wall prototypes in Southern California. President Trump has stood firm on his demand for billions of dollars to fund a wall along the border with Mexico.CreditGuillermo Arias/Agence France-Presse — Getty Images

In the past, the S.E.C. had managed to keep operating during government shutdowns by shifting around money in its budget. But the commission, which has been operating under a hiring freeze for more than a year, is not able to do that this time.

“When I was there, we always had money to be able to operate for a certain period of time,” said Andrew M. Calamari, a lawyer with Finn Dixon & Herling in Connecticut, who stepped down as the director of the S.E.C.’s New York office in October 2017. “I was there for 17 years, and in my time, we had several shutdowns, and in each case, we continued to operate.”

The S.E.C. said in a statement that staff “continues to monitor the asset management space, track market activity and watch for systems issues or other events that could disrupt the fair and orderly operation of the securities markets.”

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The agency also said it had advised financial filers to request expedited action before the shutdown.

But corporate America will now have to wait for the government to reopen in order to move ahead with things like initial public offerings and pending corporate mergers that need approvals from regulators.

“I have a client in registration right now for an M.&A. deal, and nothing is going on,” said Marc Leaf, a partner at Drinker Biddle & Reath in New York who used to work for the S.E.C. as an adviser to a commissioner.

Mr. Leaf also said so-called secondary stock offerings — which companies often rely on to raise cash — are paused. A dearth of those deals could create financial hardships for midsize public companies that have fewer financial resources to draw upon.

“If this it is not solved and goes on for weeks, there will be companies who are really slowed down in the public offering process,” Mr. Leaf said. “There is a lot of basic blocking and tackling that can’t get done, and that will impact a number of issuers.”

Deutsche Bank economists warned on Monday that the shutdown could also affect the Federal Reserve’s interest rate decisions by delaying the release of key economic data, like new home sales and durable goods orders. That delay “would significantly impair” economic forecasters’ ability to gauge growth, the economists wrote, and cloud decision-making for Fed officials who have emphasized “data dependence” in their policy decisions.

The biggest and most far-reaching effect of the shutdown looms on Feb. 1. Trump administration officials say that funding for the Supplemental Nutrition Assistance Program, or SNAP, which provides food benefits for about 40 million people, will run out of cash by the end of the month. The Agriculture Department has not made it clear how long it will be able to fund the program, which costs about $4.7 billion a month, but estimates by anti-hunger groups put the department’s reserves at $3 billion to $5 billion, meaning funding is more likely to completely run out in February or March.

Other food assistance programs are facing a more immediate cash crunch. The Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, has already been cut off, with state funds filling the gap as the shutdown drags on. WIC provides aid to an additional seven million low-income Americans who are considered to be at “nutritional risk.”

Answer 1

Whereas a shutdown impacts an economy in several ways–from delaying corporate permits & visas to lessening service hours at numerous agencies–a fundamental channel thru which a shutdown impacts the economy is thru pending / foregone pay from federal staff members who do not obtain their pay checks.

As consumer spending makes up around 70 per cent of economic activity in the U.S, holding back pay from even some governmental employees could introduce a considerable economic speed bump in the short-term.

This behavioral pattern is what tends to spread the economic impacts of a shutdown which influences a slice of the populace to a broader group of corporates & persons . And in areas with considerable numbers of federal employees, these declines in expenditure can greatly damage the local economy’s health in the short term.

The longer the shutdown persists, the worse its effects. Households might exhaust their savings / reach their credit card maximums as the deadlock extends day after day, providing them added time to alter their spending in manners that they couldn’t do with only a few days’ notice. For example, in 2013, bills for tuition payments/ health insurance were hugely unimpacted. Had that shutdown continued, households may have begun to cut back here also.

So if Congress declines to offer furloughed employees back pay & the shutdown persists weeks instead of days, the economic effect could be grave.

But, if a shutdown is resolved in a comparatively short span of time, with employees being paid back their regular pay, the harm would probably be fairly contained.