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More on the Federal Government Shutdown

Posted by Mike Anderson on Fri, Oct 04, 2013 @ 04:59 PM

Since this is a topic very near and dear to all of us Government Contractors, I think we should continue to explore implications and ramifications of the Federal Government Shutdown.  I have read several places that the shutdown may last for at least a couple of weeks.  There is another "elephant in the room" with the approach of the limit on the debt ceiling.  The debt ceiling is the limit in the amount of funds the US may borrow.  In 2011 Congress raised the debt ceiling to $16.7 Trillion.  In May of this year we exceeded that but the treasury department has used some "tricks" to stay under the limit since then (see a New York Times article on this).  As of October 17th, it will no longer be possible to stay under this debt ceiling without an act of congress to raise the limit.  The long and short of that is that the United States could go in default on payment of some of it's obligations as a result.  This would have serious consequences.  That would also most certainly affect the 2014 budget, further causing problems for an already strained system.  If you think we had problems with the flow of money from the Federal Government during Sequestration, guess what a default would do?  This could have a ripple effect into the economy in general.  Not a good situation.  Many have suggested that the budget (even if by continuing resolution) must be solved prior to the debt limit being considered.  Last week my brother wrote a letter to both President Obama and to House Speaker Boehner asking both of them to lead a resolution to this crisis.  Essentially he is asking them to do what they were elected to do in the first place.  I think he has a good idea.  We should all write to our elected officials right now to tell them this message.  In addition I think we should tell them that they are hurting small business and this is the true backbone of the American economy.  If they truly want to see a strong America, they should want to support the small businesses around the country for not only job growth but also for economic growth. 

The other article I saw this week dealt with the ramifications of furloughs.  Many government contractors are faced with just that problem.  I talked to a small business last week that had both of their government contracts issue them stop orders for the shutdown.  That basically meant they were forced to furlough their employees unless they have excessive cash reserves.  Since most small businesses don't have excessive cash reserves, they have no choice in the matter.  There are legal considerations for furloughing employees and this message from a prominent law firm gives you a good guideline to steer from.

I hope this shutdown will be ended soon.  I encourage all of us to write to our elected officials, just like my brother did, to help put pressure on our politicians to do the right thing.  Doing nothing or business like we have done it the last 6 years will no longer work and no longer be accepted.  Both sides have to start acting responsibly and do what is right for America. 

Topics: Federal Government, Shut down