Starting up the US federal government will be harder than it was to shut it.
The legislation passed on Wednesday night by Congress to raise the debt ceiling and fund the government into next year will bring hundreds of thousands of federal workers back to their jobs and reopen national parks and museums. Yet it may be weeks or months before the government resumes issuing loans, payments and contracts at a normal pace.
“This has been very disruptive,” said Larry Allen, the president of contract consulting firm Allen Federal Business Partners. “The shock wave will last for months.”
The partial halt in government operations was shorter than the budget shutdowns in 1995 and 1996 that lasted a total of 26 days. But this year’s disruption had been far broader in scope, said Barry Anderson, who was the assistant director of the White House office of management and budget during the fiscal 1996 shutdown.
In the previous stoppage Congress had completed seven of its 13 annual appropriations bills funding agencies, leaving vast parts of the government still working. This time not a single agency that is funded at Congress’s discretion had final budget approval.
“Things are very different now,” Anderson said.
Office of management and budget director Sylvia Burwell issued a memo that cleared furloughed employees to return to work and instructed federal agencies to begin opening offices yesterday in a “prompt and orderly manner”.
“We will work closely with departments and agencies to make the transition back to full operating status as smooth as possible,” Burwell said in the memo released yesterday after President Barack Obama signed the bill ending the shutdown.
The 16-day halt in operations at many federal agencies shaved at least 0.6 percentage point from fourth-quarter gross domestic product growth, or took $24 billion (R238.3bn) out of the US economy, Standard & Poor’s said on Wednesday.
The cost of restarting the government is hard to tabulate. A study conducted by the budget office after the fiscal 1996 shutdown pegged the cost of closing at $1.4bn, or about $2bn in today’s money. That figure did not include costs incurred when workers returned, although those expenses were termed “significant” by John Koskinen, the deputy director of management at the budget office during the previous shutdown.
“Significant additional costs, that cannot be determined at this time, include interest payments to third parties” when the government did not pay its bills on time, he told a House subcommittee hearing in 1996. “There will be additional personnel costs necessary to deal with the backlog of work resulting from the shutdown.”
Those expenditures might be billions of dollars, said Charles Tiefer, a law professor at the University of Baltimore who has studied shutdowns.
Tiefer said the biggest line items in restarting government probably included the inability of agencies to carefully audit the huge backlog of payments. Others came from the difficulty of health and safety regulators such as the Environmental Protection Agency to pick up unresolved investigations.
“When they resume work, the trail will be cold, and the work lost. That is by far the most costly.” – Bloomberg