Obamacare, Government Shutdowns, and Why You Should Care

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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.

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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

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  • http://bandlightingreview.com/ JP LeClair

    Oh no! Not that?! Sheesh… the gov’t shuts down every frekin’ weekend. No one freeks out. Time for gov’t to live with in its means – just like us – that’s what you promote here right? Time the gov’t gets some “tough love”. Maybe they can sign up for ReadyForZero.com. It’s only 16+trillion with another 90+trillion in unfunded liabilities. No biggie.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Thanks for the comment, JP! It’s fun to imagine ReadyForZero being used to conquer a debt as large as $16 trillion – that would be quite something. But at the same time, we’re not coming down on either side of the political debate; we just want to make sure our readers are prepared for what might transpire.

  • Meghan

    If I wasn’t a government employee, perhaps I’d stick my chest out and claim that no one needs the government and it might as well shut down. But, seeing as I track the production of my agency and have hard numbers that quantify our impact, I’ll say that it is shameful that Congress is so inept that it can’t keep lights on. People rightly want agencies and local governments to be as efficient as private industry but it CAN’T happen because Congress once again probably won’t tell us what our budget is until 6 months in to the year. Can you imagine having millions depend on you, directly or indirectly, and not have a clue as to how much you can do until the year is halfway over? Then the agencies have to roll funding out. Most activity occurs in four or five months. No business would survive that way, and we wouldn’t do a good job with a household budget this way, but everyone faults the agencies. I wish the public would finally insist that Congress get its stuff together, and by stuff, I don’t mean improving it’s blackmailing capabilities.

    On a personal note, I already lost 10% of my pay for most of the summer so I really can’t absorb shut down days. I would make more in the private escort but I’ve stayed, partially because of the PSLF program. I’m seriously finally at the point where it’s not worth it. I am looking for something more stable, with better morale. My agency is a sad place.

  • Meghan

    Had a typo with an it’s there (yay auto correct) but my phone won’t let me edit. I know grammar, promise.

    • Shannon_ReadyForZero

      Haha we believe you ;). I can’t even begin to imagine the pressure you must feel when impending shutdowns threaten – both professionally and financially. Let’s hope that things get worked out by Monday and you won’t have to worry about this, but if you do move into the private sector then good luck in your search and please keep us posted on how things go for you!

  • J

    We are a military family & the threat we face with the shutdown is a possible delay in our paycheck. Really throws a wrench in our budget & could cause problems with auto-payments and simply buying groceries. Financial stress in military families is a little salt on a wound after dealing with multiple deployments & those kinds of stresses.

    • Shannon_ReadyForZero

      I can only imagine how stressful that must be for your family on top of everything else. Hopefully the threat of a shutdown will be just that and everything can go on as usual!

  • Danielle

    My husband is in the military and I work for a government agency, so this shutdown hits us at our core. We live in the WDC area so we have seen many families affected by it. I know that it’s hard to see in other parts of the country, but it really stinks to be an employee (where morale is already low due to sequester) and forced out of work because there’s no CR.