’13 government shutdown

November 10, 2013

OSWEGO, N.Y. – The 2013 government shutdown is a topic that has the U.S. even more politically divided than usual, and many people still don’t know the effects of the shutdown and its aftermath.

Many of the known effects that were noted and previously predicted are either of social or economic nature, but the extent of even the known effects is still under scrutiny.

Elizabeth Schmitt is a professor of economics at SUNY Oswego. Schmitt knows about how the country as a whole was affected, but also how the shutdown affected the general Oswego area.

While Schmitt was able to observe the national effects of the shutdown, the local effects were more short-term and less obvious. The main impact that Schmitt observed on a local scale was that of the SUNY Oswego community.

“During the shutdown, many federal grant applications and disbursements were on hold and this would affect any of the programs on campus that depend on this activity,” Schmitt said. “Many government websites were down temporarily, and this affected students doing research for class assignments and college professors getting recent data for their classes or their own research.”

Schmitt concluded that in a way the shutdown is an example of how representative democracy leaves us with the government that we deserve.

“It is for voters to demand their representatives work together to solve our problems,” Schmitt said. “It is for students to take on the responsibility of citizenship and be part of this process.”

Ranjit Dighe is a professor and chair of the economics department. Dighe spoke about the shutdown and about how the Oswego community might still be affected, in a general sense.

Dighe said that a lasting decrease in confidence from businesses and consumers, what would likely happen is an economic recession, or at least a severe slowing of economic growth in an economy that is already growing slowly.

“Higher unemployment would result, and incomes would fall or grow more slowly,” Dighe said. “That would be bad for virtually all of the U.S., including Oswego and many people who attend and work at SUNY Oswego.”

Schmitt also spoke to the effects of the shutdown on the national spectrum, such as how certain benefits were expected to impact certain groups receiving benefits yet turned out to be preserved.

While many benefits that were expected to be were dismantled during the shutdown were not affected, not everything was unaffected.

“Parks closed, grants were on hold, and many other federal services were suspended–such as passport application processing, and work on the 2013 tax forms by the IRS,” Schmitt said. “Data releases (unemployment, inflation numbers) were delayed.”

According to Schmitt, the issue of most significance publicity-wise was the possibility of the government defaulting on its bonds, which did not end up happening. While this did not occur, it did still have an effect.

“… In the first two weeks in October, it was clear that financial markets were concerned about this, reflected in higher yields for short term Treasury Bills,” Schmitt said.

Schmitt provided a reason behind this specific effect.

“The importance of the ability of the United States to finance its debt cannot be overstated,” Schmitt said. “If global financial markets no longer view U.S. debt at attractive, U.S. taxpayers will pay out much more in interest costs and U.S. standards of living could fall.”

While the big impact might still occur through the credit markets and U.S. Treasury debt, one thing that is definite is that “consumer spending is impacted as people are nervous, and this could affect retail expenditures during the holiday shopping season,” Schmitt said.

As for the economic issues that the shutdown and its aftermath caused, Schmitt says that while there were economic ramifications, it is unclear whether the impact will be permanent or simply short-lived.

“While some operations have been delayed, they did resume,” Schmitt said.  “According to the Standard & Poor, the shutdown took $24 billion out of the economy, and fourth quarter gross domestic product growth projections have slowed from 3-2.4 percent.”

Some students have very vocal opinions about the shutdown and its aftermath, like Carson Metcalf. Metcalf is a meteorology major at SUNY Oswego, and the web director at the university’s newspaper. Metcalf is also a registered member of the Democratic Party.

Metcalf described the shutdown as unnecessary.

“The partisan bickering, the media taking sides, and everything that happened behind the scenes that led to the shutdown were all ridiculous,” Metcalf said. “It just goes to represent the declining quality and accountability of our government today.”

Metcalf said that in his opinion in the aftermath of the shutdown national morale and faith in government has reached a new low.

“I don’t think we can tell if the government shutdown was worth it at this point in time or not,” Metcalf said. “I think if we see this same situation play out in the future, then we clearly will not have learned from it, but if another massive shutdown can be avoided, then perhaps going through it this time around will have been good for something.”

Dighe spoke about a few things that the Oswego community should know about the shutdown and its aftermath.

“They should know that it hurts the economy,” Dighe said. “$24 billion is a lot of money, even in a $16 trillion economy.”

Dighe, like Metcalf, believes that the shutdown worsened morale and confidence around the country.

“… Government dysfunction like this tends to worsen consumer and investor confidence not only in the government but also in the economy,” Dighe said. “And that diminished confidence is bad for the economy and the labor market.”

2013 Government Shutdown Localization

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