Government shutdowns are always an inconvenience but seldom rise to the level of an “emergency.” But amid increased airport wait times, food stamp funding on the verge of expiring, and hundreds of thousands of federal employees left uncertain about their next paycheck, the effects of the shutdown are being felt by more and more Americans each day. That may make it a “crisis,” a word that President Donald Trump is also using, for a different reason.
On Tuesday, Trump gave a prime-time address from the Oval Office, saying the situation at the Mexican border is a “crisis.” Since December, Trump has been demanding that Congress provide more than $5 billion to fund a wall on the Mexican border, and that’s what led to the ongoing shutdown; although the House did pass a bill including that language in late December, the Senate didn’t have the votes to approve it.
Neither side is showing any willingness to give. “We are not doing a wall. Does anybody have any doubt? We are not doing a wall,” newly elected House Speaker Nancy Pelosi said. For his part, Trump also remains adamant. He said the shutdown could last months or years, and that he plans to visit the border on Thursday.
Meanwhile, it’s far from a complete shutdown, with about 800,000 of the roughly 2 million total federal employees affected. Most federal workers are still on the job including everyone at the Department of Defense. That’s because in late September the Republican Congress passed, and the president signed, a measure to fund about three-quarters of the federal government for the entire Fiscal Year. So the military and the departments of Labor, Education and Health and Human Services are fully funded through September (the fiscal year begins October 1) and are running normally.
This was progress, of a sort. After all, Congress has only managed to pass a complete budget on schedule four times in 40 years. Recall that lawmakers didn’t complete the FY 2018 spending bill until March, following two shutdowns.
But the Republican House and Senate left Washington in September without passing spending bills to fund the remaining 25 percent of the government. Instead, they opted for a Continuing Resolution to keep those departments operating at current funding levels into December and then hit the campaign trail.
The elections didn’t go the way the GOP hoped.
Democrats took control of the House of Representatives for the first time since 2010, and lawmakers returned for a lame duck session to try to wrap up their spending bills and fix some mistakes they’d made in the 2017 tax reform bill. It didn’t go well. They couldn’t pass a technical corrections bill that would have fixed the treatment of Qualified Improvement Property, a priority for NAIOP and the commercial real estate industry. Then, Trump announced he wouldn’t sign a temporary spending bill that would have kept the entire federal government operating into February.
After Democrats took over the House on January 3, they passed a pair of bills aimed at reopening the government but Republican Senate Majority Leader Mitch McConnell opted to shelve those bills rather than have them vetoed by the president.
Because the federal government missed the January 8 deadline to process payroll, some 800,000 federal workers aren’t expected to get paid until late January at the earliest. Some may file for unemployment. Those aren’t the only economic effects of the partial shutdown. The White House estimates the shutdown could trim America’s economic output by about 0.1 percent every two weeks. It could also inflate the unemployment numbers for January because any federal employees who aren’t actively working on January 10 would be counted as unemployed. For the CRE industry, the shutdown could make it more difficult for tenants who are government contractors or loan recipients to pay rent on their offices.
Also, while the administration now says the IRS will be able to send tax refunds this year, the checks could be slowed down because the Treasury is one of the departments that isn’t funded. “Some in the Treasury Department don’t believe it has the legal authority to summon furloughed workers back to the office and begin distributing payments,” Politico reported.
Unless Congress and Trump can reach a spending agreement by Saturday, the ongoing partial government shutdown will become the longest on record. At this point, that seems likely to happen.
Rich Tucker is Director for Public Policy Communications at NAIOP, where he develops and executes communication strategies to raise the visibility of NAIOP’s advocacy work on behalf of the industry