Monday, September 30, 2013

Preparing for the Partial Shutdown

by Bill McBride on 9/30/2013 05:20:00 PM

From the WSJ: Agencies Prepare to Send Workers Home as Shutdown Looms

With the clock ticking and no budget deal in sight, federal agencies prepared to send more than 800,000 workers home without pay, and large swaths of the government were set to temporarily close.
Absent an agreement, workers who are furloughed will have to report to their agencies Tuesday morning for a half-day of preparations for the shutdown. Most will have up to four hours to wrap things up, and then be sent home until further notice.

Those who are deemed essential, or—in the language of government, "excepted"—will be guaranteed back pay after the fact. In past shutdowns, Congress has agreed to pay those furloughed as well, but given the cost-cutting zeitgeist of 2013, that was hardly guaranteed this time.
A Wall Street Journal review of agencies' shutdown plans found that more than 800,000 workers would be furloughed. In all, the federal government employs just under 2.9 million civilian employees.
Bad policy, but the impact on the economy will be minimal if the shutdown is short.

As we've discussed for some time, the deficit is declining rapidly (more short term cuts are bad policy right now) and public employment has fallen sharply over the last 4+ years (a significant drag).   This is not helpful.