Government Shutdown Will Have Wide-Ranging Effects

February 22, 2011 3:05 pm0 commentsViews:

Image: nationalinterest.org

March 4 is looming. Whether it seems like a horseman of the apocalypse or barely a blip on the horizon, all can agree a government shutdown seems possible, and the impact has the potential to be far reaching.

In the spirit of cold-weather survival kits, various experts are advising on how local industry can survive a grinding halt to the metro’s economic lifeblood. While no one expects the lights to go off, electric bills will still come due regardless of whether the government is cutting checks.

The Greater Washington Board of Trade scheduled a meeting for local business leaders on Tuesday to discuss what the fallout of a government shutdown may entail. Jim Dinegar, CEO of the Greater Washington Board of Trade, suggested businesses brace themselves.

“Get prepared,” he said in a television interview. “Understand that this may mean that there will be fewer guests coming to visit your hotel, fewer people coming to spend money in your restaurants, fewer people that can get paid by the federal government.”

It’s the lack of paychecks that have federal employees and contractors nervously checking the news and Twitter feeds for the latest updates. If a shutdown occurs, pending contracts will go unawarded and proposals won’t be reviewed. Depending on the length of the shutdown, layoffs and furloughs are expected.

Coming hard on the heels of a shaky economy and a DoD warning to contractors regarding funding, the impending threat of a shutdown puts companies doing business with the government in an uncertain position.

“With the path changing for defense spending, a lot of the assumptions that contractors have made in their own five-year business plans are going to have to be re-examined,” said Stan Collender, a federal budget expert with Qorvis Communications. “There simply won’t be as much available for all the things that the DoD said it wanted to do and was planning on doing as early as three, four months ago.”

And if the government shuts down, there may be even less funding to play with than previously thought.

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