Government Shutdown
2:52 pm
Thu April 7, 2011

How a shutdown would affect Michigan

A shutdown of the federal government seems more likely as leaders in Congress don't seem to have a clear handle on where their disagreements lie.

The New York Times outlined the disagreement... over their disagreements...

  • Senate Majority Leader, Hary Reid (D-NV), said, "the numbers are basically there, but I am not nearly as optimistic, and that's an understatement, as I was 11 hours ago. The only thing holding up an agreement is ideology."
  • And House Speaker John Boehner (R-OH)  told reporters, "there is no agreement on a number. I think we were closer to a number last night than we are this morning. We're going to have real spending cuts. I don't know what some people don't understand about this."

So, a shutdown of the federal government is getting closer.

Here's how President Obama says a government shutdown would affect people:

Benefits and applications delayed

The Detroit News reports that people in Michigan would experience delays with passports, new Social Security, Medicare, Medicaid applications, and tax refunds.

From the News:

Aside from delayed entitlement program applications, businesses seeking to send their goods overseas could encounter delays if the Commerce Department decides to stop issuing export licenses, as happened in the '90s shutdown, delaying about $3 billion in outbound goods. Mortgage applications for Federal Housing Administration-backed loans could be sidelined if the agency adopts similar shutdown rules as it did before.

Six states ran out of money for unemployment insurance benefits during the government shutdown in the 1990s. The News said, "it was not clear Tuesday if such funding would be deemed "non-essential" and shut off during this year's impasse."

Parks would close

In Michigan, areas in the National Park system in the state would close, those include:

The Detroit Free Press wrote that "the Department of Interior confirmed today that all national parks, wildlife refuges and other public lands would be closed and locked in the event of a shutdown."

Governor's office waiting for more "essential" information

Sara Wurfel, Governor Snyder's Press Secretary sent this statement that summarizes the overall impact to the state:

We haven’t received any specific federal guidance to date, but are actively monitoring and seeking as much information as possible. Our initial examination and understanding shows that we should be able to continue most services with minimal to no disruption so long as the shutdown is not prolonged.

As you probably know, Michigan agencies certainly receive a variety of federal funding – from state workers paid with federal funds to federal grants or funds that help provide key services, everything from unemployment to Medicaid. Approximately 25% of our workforce, and 44% of our overall state budget, is supported in some way with federal funds.

Specific to the unemployment benefits, we’ve gotten initial assurances by the U.S. Department of Labor that they don’t anticipate any disruption in unemployment benefit payments should a federal shutdown occur. Our MI team is in constant contact with USDOL and will continue monitoring closely.  

It’s hard to quantify exact impact until any definition of what’s “essential” has been determined and of course how long the shutdown may last. From there, we will translate into Michigan’s specific situation and strive to ensure the least minimal impact possible.

Of course, our first hope is that all sides will come to a resolution. We’re trying hard to solve a significant state budget crisis already – a prolonged federal shutdown could serve to make Michigan’s comeback even more challenging.

If you want a good picture of what Congress is fighting over, you can look at this illustration from the Wall Street Journal.