Small Business as Usual? Effects of a Government Shutdown
by Jake Barnett
A looming federal government shutdown has been put off for at least two weeks because of a continuing resolution passed by Congress yesterday. However, the budget is only good until March 18th, at which point Congress and the president must agree on a budget for the rest of the year or the government will shut down. It is business as usual for entrepreneurs, but they continue to prepare for the possible impact of a shutdown.
If a budget is not passed, some federal agencies will continue to operate. According to a February CNN money article, government agencies are “allowed to perform any operations necessary for the safety of human life and protection of property.” This includes military operations, air traffic control and the guarding of federal inmates.
The closure of federal agencies not protected by this clause could have a substantial impact on many small businesses. Small businesses that count the federal government for contracts, or rely on federal government workers for business, would likely face immediate negative impacts from a government closure.
In the areas surrounding DC, many businesses rely heavily on the government for revenue. The Greater Washington Area Board of Trade ran workshops last Tuesday designed to teach small business owners how to effectively scale back operations and absorb the loss of revenue associated with the possible government closures.
Beyond the Washington area, small businesses reliant on tourism are bracing for a reduction in business. In the event of a government shutdown, all federal parks would temporarily close and passport and visa requests would be stalled, impeding the vacation plans of foreign tourists.
Broader effects on the economy and small businesses are harder to measure and depend on the length of the shutdown. A federal study cited by the New York Daily News estimates that a shutdown could cost the US economy $100 million dollars a day and that its effects would become increasingly noticeable as time went on.