12:01am

Mon February 28, 2011
Politics

Democrats, GOP Try To Be Pennywise And Political

Members of Congress come back to Washington this week, facing a tight deadline. They need to pass a stopgap spending bill by the weekend to prevent large parts of the federal government from shutting down.

Lawmakers seem close to a deal that would keep the government's doors open and the lights on for at least two more weeks while they try to agree on a budget for the rest of the fiscal year.

"All of us agree that a government shutdown would be bad for the economy," White House spokesman Jay Carney said. "It would create a great deal of uncertainty and potential instability, and might have a negative impact on the economy."

Economic Impact

A forecast by Goldman Sachs estimates that a one-week government shutdown would subtract $8 billion from the U.S. economy. While many essential government workers would stay on the job, hundreds of thousands would be temporarily idled.

"They don't get paid," said economist Nigel Gault of IHS Global Insight. "So that's a hit right there, if people are living from paycheck to paycheck."

Only some of those losses would be permanent. If foreign tourists can't get visas, for example, some might decide to skip their U.S. vacations, costing business for airlines and hotels. But most economic activity put on hold during a government shutdown would eventually be made up. If past experience is any guide, even those furloughed federal employees would likely get retroactive pay once the government reopens.

"Of course, at that point, they're getting paid for having done nothing," Gault said. "So you've lost the output these people would have produced had they been working. ... It's simply wasteful to have the federal government shut down."

Stopgap Measure

Lawmakers seem poised to OK a temporary spending bill that would head off a shutdown, at least for a couple of weeks.

The bill would reduce government spending by about $4 billion, but those would be relatively easy cuts, eliminating earmarks and programs that President Obama already targeted for phaseout next year.

The bigger question is what happens when the two weeks are up. Republicans insist on further spending cuts while Democrats argue that could derail the still fragile economic recovery.

The Goldman Sachs forecast warns that if the government were to cut spending as much as House Republicans voted for this month, the nation's economic growth rate could shrink by as much as 2 percentage points.

Working Toward A Compromise

"My sense is both sides think they have the upper hand, which is why they're in this stalemate pattern," said political analyst Sarah Binder of the Brookings Institution. "That's why I think it's really the White House who has to come in and force a solution here."

The Obama administration has been working with congressional leaders to broker a compromise, but the White House doesn't want to be seen as wading too deeply into the legislative swamp.

"I don't want to give you a play by play on our meetings," Carney said. "This is a process, obviously, that needs to take place on Capitol Hill. The focus here is on results."

The result, at least in the short run, appears to be that the government will stay open. While contingency plans have been drawn up for a shutdown, White House economic adviser Austan Goolsbee says he doesn't believe they will be needed.

"You've seen the top leadership in both houses of Congress, on both sides of the aisle, say they're going to do everything necessary to prevent a shutdown of the government," Goolsbee said. "My read is that there's not a lot of fear in the private sector because people think they're going to get a deal done."

The question mark for the economy is whether that newfound spirit of compromise on Capitol Hill lasts longer than two weeks. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.