Government shutdown affects the Connecticut economy
Editor of ‘The Connecticut Economy’ believes 3+ days of the shutdown will reduce GDP
Published: Tuesday, October 1, 2013
Updated: Wednesday, October 2, 2013 10:10
After several days of back-and-forth politics in Washington, D.C. among United States senators and congressmen, the country’s federal government has resorted to going into a partial shutdown for the first time in 17 years. Along with the numerous departments and agencies forced to shut down, there are also some possible cutbacks anticipated for Connecticut though not much is directly affecting UConn yet.
Steven P. Lanza, executive editor of The Connecticut Economy, said Moody Analytics’ economy.com estimates a short shutdown of three or four days would reduce the United State’s gross domestic product (the market value of all final goods and services produced) growth in the fourth quarter by .2 percent point. This would result in GDP annually growing by 2.3 percent instead of 2.5 percent.
In a longer, month-long possibility, the reduction in GDP could be as high as 1.4 percent.
If Connecticut were to add 4,300 jobs, Lanza said, it would now be only 4,000 jobs with $13 million less in income to families.
“Another scenario which we are fearful of,” Lanza said, “is when we are going to bump up against the borrowing limit for the government. So if we don’t raise the debt limit then all heck is going to break loose at that point.”
Lanza also said this would cost Connecticut over 20,000 jobs.
At UConn, any new contract work set to begin this fiscal year for the federal government on Oct. 1, will not happen. This will effect state revenues, resulting in unanticipated shortfalls in revenues which will necessitate budget cuts across the board.
Lanza said there will be no noticeable change to staff at UConn as an immediate effect.
Gian-Carl Casa, undersecretary for legislative affairs in Connecticut’s Office of Policy and Management said “in the short term, (the state) wouldn’t expect much of an impact at all. Programs will continue to operate as they were.”
The real question, Casa said, is how long the shutdown will last. The ability for state agencies to continue working depends on duration of the government shutdown.
“We recognize that Connecticut residents should be concerned about these kind of political antics in D.C. but we want to reassure people that Connecticut’s state government is going to manage through any sort of federal shutdown,” Casa said.
On the federal level, numerous programs will continue to stay open, including individual congressional offices, mail service and USPS. Active duty military and defense operations will continue to operate, as will the Departments of State and Veterans Affairs. The United States courts will also remain open for the next ten days.
All federally funded attractions such as museums and national parks, however, are closed. The Departments of Agriculture, Education, Energy, Commerce, Health and Human Services, Homeland Security, Interior, Justice, Labor and Transportation are shut down. Other major agencies including the Environmental Protection Agency, National Aeronautics and Space Administration and the Internal Revenue Service are closed. The Executive Office of the president is shut down.
In terms of the direct impact on a state level in Connecticut and UConn, Casa said they do not know yet and are working department by department and agency by agency to see how each is able to handle this situation. But Casa said they will have a better idea later in the week.