My oldest son, a tenured State Department employee now living in Washington after several years in embassies and consulates abroad, is furloughed.
I hesitate to mention that because he, his wife and their three children are doing fine, unlike some of the federal workers you may have seen on the news lately. They have enough savings to last a while.
I hesitate to mention that because he, his wife and their three children are doing fine, unlike some of the federal workers you may have seen on the news lately. They have enough savings to last a while.
Working for the federal government, especially in a job that has required them on occasion to live in a communist country, has made them quite thrifty. Simply put, they never know what might happen, either with their own government or with the government of the country where they may be living. It pays to have a nest egg handy for unforeseen expenses.
Besides, they are fairly certain the nation’s political leaders will reimburse them with back pay when this is all over.
The state of Utah should be so lucky.
After past shutdowns, the federal government has been about as willing to reimburse states for their expenditures — keeping national parks open and some programs running — as teenagers compelled to clean their rooms.
As the Pew Charitable Trusts reported last year, Utah spent nearly $1.7 million to keep national parks open during the 2013 shutdown, which lasted a little more than two weeks. It got about $660,000 back, eventually.
It wasn’t the only state to get stiffed. Two years later, members of Congress from these states sponsored bills to get all their money back. The bills didn’t make it out of the committee stage.
I cite this not to raise any unnecessary fears. The 2013 figures were penny-ante stuff for states that have multi-billion dollar budgets. Utah is entering its 2019 legislative session with a surplus estimated at $1.3 billion.
During shutdowns, states such as Utah pay to keep parks open because they need the tourism dollars these provide — even though news reports of the shutdown are likely to keep many visitors away regardless of what the state does.
No, I raise it only because this shutdown shows no signs of ending soon. The president wants a wall. Democrats don’t want a wall. The president has said he is prepared to keep the shutdown going for months or even years.
“Years” seems unlikely, if only because the pressures of the 2020 election would inevitably push the fight in one direction or the other. But stretching it out over months would be bad enough.
What happens, for instance, if the economy goes south, either while the government is hobbling along or shortly after things are resolved?
The short answer is that a prolonged shutdown would make states more vulnerable. Earlier this week, Kristen Cox, executive director of the Governor’s Office of Management and Budget, said the state’s long-range plans — should the shutdown extend another six weeks or so — include possibly dipping into the $820 million Rainy Day Fund. That’s money set aside as a buffer against hard economic times — the state’s equivalent of a savings account.
Predicting a recession is much harder than predicting the weather. It doesn’t often begin raining while skies appear sunny, yet retail sales, industrial production and employment tend to be at their highest levels just before things collapse.
Writing for Forbes.com last month, Raul Elizalde said, “Studies show that forecasters are generally blindsided by recessions, precisely because they tend to be preceded by economic strength. There is little reason to believe that it is different this time.”
Some state leaders already are a little skittish about the inevitable end of a long and steady growth cycle. Meanwhile, some indicators show Utah may not be as ready as it could be for such a day.
Moody’s Analytics published a stress test of the states last year. Utah finished 29th in a list of preparedness for a moderate recession, and 30th for a severe one, with a 10.4 percent rainy day shortfall.
If the shutdown ends tomorrow, its effects on Utah may be minimal, especially if federal workers here are quickly given back pay. But if it lingers through February and into March, and if the state does begin to spend its Rainy Day Fund, its readiness for a bad economy would suffer.
Of course, if it lasts longer than that or if a recession begins in the middle of it, my son his family may find themselves in my basement, no matter how prepared they were at the start.
With the 2019 legislative session set to begin soon, talk of surpluses and tax cuts may quickly change unless Washington figures out how to get back in business.
Besides, they are fairly certain the nation’s political leaders will reimburse them with back pay when this is all over.
The state of Utah should be so lucky.
After past shutdowns, the federal government has been about as willing to reimburse states for their expenditures — keeping national parks open and some programs running — as teenagers compelled to clean their rooms.
As the Pew Charitable Trusts reported last year, Utah spent nearly $1.7 million to keep national parks open during the 2013 shutdown, which lasted a little more than two weeks. It got about $660,000 back, eventually.
It wasn’t the only state to get stiffed. Two years later, members of Congress from these states sponsored bills to get all their money back. The bills didn’t make it out of the committee stage.
I cite this not to raise any unnecessary fears. The 2013 figures were penny-ante stuff for states that have multi-billion dollar budgets. Utah is entering its 2019 legislative session with a surplus estimated at $1.3 billion.
During shutdowns, states such as Utah pay to keep parks open because they need the tourism dollars these provide — even though news reports of the shutdown are likely to keep many visitors away regardless of what the state does.
No, I raise it only because this shutdown shows no signs of ending soon. The president wants a wall. Democrats don’t want a wall. The president has said he is prepared to keep the shutdown going for months or even years.
“Years” seems unlikely, if only because the pressures of the 2020 election would inevitably push the fight in one direction or the other. But stretching it out over months would be bad enough.
What happens, for instance, if the economy goes south, either while the government is hobbling along or shortly after things are resolved?
The short answer is that a prolonged shutdown would make states more vulnerable. Earlier this week, Kristen Cox, executive director of the Governor’s Office of Management and Budget, said the state’s long-range plans — should the shutdown extend another six weeks or so — include possibly dipping into the $820 million Rainy Day Fund. That’s money set aside as a buffer against hard economic times — the state’s equivalent of a savings account.
Predicting a recession is much harder than predicting the weather. It doesn’t often begin raining while skies appear sunny, yet retail sales, industrial production and employment tend to be at their highest levels just before things collapse.
Writing for Forbes.com last month, Raul Elizalde said, “Studies show that forecasters are generally blindsided by recessions, precisely because they tend to be preceded by economic strength. There is little reason to believe that it is different this time.”
Some state leaders already are a little skittish about the inevitable end of a long and steady growth cycle. Meanwhile, some indicators show Utah may not be as ready as it could be for such a day.
Moody’s Analytics published a stress test of the states last year. Utah finished 29th in a list of preparedness for a moderate recession, and 30th for a severe one, with a 10.4 percent rainy day shortfall.
If the shutdown ends tomorrow, its effects on Utah may be minimal, especially if federal workers here are quickly given back pay. But if it lingers through February and into March, and if the state does begin to spend its Rainy Day Fund, its readiness for a bad economy would suffer.
Of course, if it lasts longer than that or if a recession begins in the middle of it, my son his family may find themselves in my basement, no matter how prepared they were at the start.
With the 2019 legislative session set to begin soon, talk of surpluses and tax cuts may quickly change unless Washington figures out how to get back in business.
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