We talk a lot about personal finance topics here at ReadyForZero and lately we’re challenging ourselves to expand beyond budgeting tips and debt payoff advice to also reporting on trending topics in the news that could impact your financial life. Financial literacy isn’t just knowing how to balance a checkbook. Financial literacy means knowing the economic events of the world and how they impact your life. Today we’re talking about how a potential government shutdown can impact you.
If you’ve read the news in the past few days then you may have noticed talk of Obamacare everywhere you look – what it costs, whether or not it should exist, and its impact on the economy. Now recent reports are showing that Congressional debate over Obamacare (formally known as The Affordable Care Act) could lead to a partial government shutdown. The question is, why should you care?
There have been reports of potential government shutdowns multiple times over the past few years thanks to debt ceilings, budget disputes, and now arguments over whether or not to defund Obamacare in continuing resolutions that must be passed by September 30 to avoid a shutdown. Many could feel helpless to take action over this political fighting, but given the cost – some estimates put the cost of shutdown at $150 million per day – and the potential to affect your daily life, it makes sense to get informed about what’s happening.
Here’s a breakdown of the services you could lose in a partial government shutdown:
National Parks and Monuments Close Down
Effect on Economy – Shutting down national parks and monuments mean a decline in local and international tourism to the US. That’s less money coming into the US economy.
Effect on You – Planning a vacation to Yellowstone Park? You’ll want to cancel your trip and you could pay a hefty fee for doing so.
Passports and Visas Won’t Be Issued
Effect on Economy – If people can’t obtain their passports or visas then that severely limits inbound and outbound travel. This could be a major hit to both tourism and business travel – costing individuals and corporations money as well as hotels and airlines.
Effect on You – Again, if you’ve been planning on a trip and need to obtain your passport, you’ll want to do so before October 1st or run the risk of paying fees on last-minute trip cancellations.
Furlough of Non-Essentials Government Employees
Effect on Economy – Government employees don’t just work on Capitol Hill. They run government agencies such as The Social Security Administration, The National Institutes of Health, and much more. Any non-essential staff of these agencies face furloughs and potential loss of pay in a shutdown.
Effect on You – If you’re not a government employee then this might not hit close to home. But if you’re counting on a quick processing turnaround for a social security claim then that won’t happen in a shutdown. All government agencies have to operate on skeleton staff in a shutdown and that leads to major slowdowns and backups on the processes you rely on.
Federal Contractors and Employees Can’t Work
Effect on Economy – The government doesn’t just run off their own agencies – they also employ massive amounts of federal contractors. These contractors may not be able to work during a shutdown either and that could lead to delayed projects that are important to the US.
Effect on You – If you or a member of your family is a federal contractor then you’re likely to face delayed pay and you could miss deadlines on your projects.
The direct cost to you isn’t the only thing that hurts if there’s a government shutdown. These cuts and their ripple effects can impact the economy in a way that lasts much longer than the shutdown would. And if the shutdown goes on for a month or longer it could even lead to another recession. Ironically, Obamacare, which doesn’t take its funding from annual appropriations, wouldn’t be affected by a shutdown. That means, if nothing else, there’s a hint of irony in all of this. As you continue to read the headlines over the next week, keep your focus on how this potential shutdown may affect you. That way, if it does come to pass, you’ll be prepared.
Image Credit: Nick Papakyriazis