NC Budget and Tax Center

The creeping damage of Trump’s shutdown

President Trump looked America in the eye last night and made it clear that he was the person who decided to shut the government down, that a wall along the southern border matters more to him than whether hundreds of thousands of federal employees can make ends meet. More important than families’ ability to put food on the table. More important than whether farmers get reimbursed for crop losses. More important than keeping federal parks safe. More important than a host of other vital government services.

This isn’t how our system of government was designed to function. Funding the government is always about compromises and trade-offs made throughout a process that should be oriented toward the good of our country as a whole, but a responsible President would never shut the entire government down over one line item in a $3.8 trillion dollar budget. That’s why the Senate unanimously passed a measure in December that would have avoided the shutdown, and why a similar extension of funding quickly passed when Democrats took control of the House last week.

Let’s look at a partial list of what the President is willing to sacrifice, and the people he’s willing to harm, in his quest to build a symbol along the southern border.

Part or all of the following departments are currently shut down:

  • Homeland Security
  • Justice
  • Agriculture
  • Treasury
  • State
  • Interior
  • Transportation
  • Housing and Urban Development

As a result, the following government functions have either stopped already, or will grind to a halt as the shutdown persists.

(We will continue to provide updates as additional impacts become clear.)

Impacts Already

  • Federal workers not getting paid: Federal employees in unfunded agencies are not getting paid, both those who are furloughed and employees like airport security officers who are still required to report for work. In North Carolina, roughly 7,800 Federal employees are missing paychecks, a count that does not include contract workers and state employees whose salaries are paid with Federal funds. The agencies with the most employees going without pay in North Carolina are the Department of Agriculture (1,900 employees), Environmental Protection Agency (1,200 employees), and Homeland Security (1,100 employees).
  • Federal contractors: In addition to official federal employees, many North Carolinians who work for companies on federal contract may be laid off or forced to take time off without pay. While there are no reliable estimates of the number of businesses or workers who are losing pay in North Carolina because of the shutdown, the harm is substantial and will only grow with time.
  • Farming Relief Funds. With the USDA unfunded, funds are not being distributed that are meant to reimburse farmers for income lost to last year’s hurricane and the ongoing trade dispute with China. With an estimated $1 billion in lost crops due to storms alone, and with farmers trying to plan for the upcoming growing season, any gap in processing relief claims will severely impact one of North Carolina’s most important industries. David Smith with the State Department of Agriculture and Consumer Services said, “We’re already hearing from farmers who are pretty desperate for relief money.
  • Native American health and social services. Many Native American tribes have seen funds for healthcare and other vital services dry up. The Federal Government is legally obligated to support services like medical clinics, food pantries, and educational programs, but the shutdown has stopped many of these payments. This has forced some services to be reduced or eliminated altogether.
  • Small Business Loans: Loans provided by the Small Business Administration (SBA) are not being processed, cutting off Mom and Pop enterprises from a vital source of capital. SBA loans are often used to get businesses off the ground, purchase new equipment, make building upgrades, or buy the raw materials needed to fill orders. Because banks are often hesitant to make loans to small businesses, closing the SBA means that some companies may be unable to expand, or may close entirely because they cannot access this essential source of business capital.
  • Home loans. Several federal agencies that help people purchase homes are shuttered, preventing some applications from being processed and therefore preventing potential buyers from being able to close on the houses they hope to call home. The Federal Housing Authority has said that it will not make new multi-family commitments during the shutdown, the Department of Agriculture has similarly communicated that new rural housing direct loans will not be issued, and the Federal Housing Authority gave notice that it will not make insurance endorsements under the Home Equity Conversion Mortgage program, which is designed to help senior citizens to convert some of the equity in their homes into cash.
  • Development permitting. EPA will have little to no capacity to process environmental approvals for real estate projects. In a prolonged shutdown, the inability of EPA to process applications could become a profound drag on the economy, preventing new developments from coming into being.
  • Federal parks unprotected. While most Federal Parks remain technically open, park staff have been sent home and most visitor centers are shuttered. In spite of valiant efforts by volunteer groups and communities, trash is building up and many park advocates worry about mounting damage to natural and cultural treasures because the parks are not being patrolled as usual.
  • Portions of the Blue Ridge Parkway are closed. Federal Parks are technically open, but portions of the Blue Ridge Parkway have been closed. With maintenance workers furloughed, no one is available to clear trees brought down by recent winter storms, rendering large portions of the iconic route impassible.
  • Testing for GenX. The State Department of Environmental Quality (DEQ) continues to sample wells for GenX, but the Federal laboratory that would normally run the tests is closed, so samples are piling up in DEQ’s Fayetteville office.
  • Immigration Legal Proceedings: Immigration courts have suspended hearings on immigration cases where the people involved are currently not in detention. This will result in unknown and potentially lengthy delays in resolving cases. Given the backlog of immigration cases, canceling hearings could leave applicants in legal limbo for months, and possibly even years.
  • Beer, Wine, and Spirits: The Alcohol and Tobacco Tax and Trade Bureau, which processes applications for new labeling is closed, preventing producers from getting new products approved. While by no means the most important impact, it’s an example of the many Federal services that often go unnoticed until they are no longer being performed.

Looming Impacts

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