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Government Shutdown: What does this mean for Iowa?

BY GRETA MEYLE | OCTOBER 02, 2013 5:00 AM

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As the clock struck midnight on Monday, Congress was at a stalemate regarding an agreement on the spending bill, meaning the nation, and more importantly Iowa — will face the consequences of a government shutdown.

UI Associate Professor of political science Cary Covington said the shutdown affects food security, national parks, and access to passports — just to name a few items.

Economy

Many officials have expressed apprehension about the economic health of the country following the shutdown.

“You pay salaries to people, they pay their rent, they buy food, they go to movies, they put that money into the economy they invest, they buy stock,” Covington said. “When you stop giving them that money, then that demand disappears.”

While noting that Iowa does not have a large federal work force, UI Visiting Professor and former Congressman Jim Leach said certain sectors of the economy will be affected more than others, including workers in Iowa with federal contracts.

“You begin with federal employees and the federal contractors, then people who are tied to receiving federal funds,” he said.

For Quentin Marquez, the College Republican vice chairman, upcoming days will reveal government sincerity.

“I hope in the coming days they sit down and realize that the economic welfare of the American people is more important than an ideological political struggle, and hopefully, they come to their senses quickly,” he said. 

Farming

Along with the government shutdown, the current extension of the farm bill expired at midnight on Monday. This left Iowa farmers with the uncertainty of when and what they will plant for the upcoming year.

“Perhaps a bigger thing for the state of Iowa would be that the farm bill expired and hasn’t been renewed,” said John Solow, a UI professor of economics. “The rules about that are the law reverts to the law that was in place in 1948, and there’s been a lot of stuff that’s been added since then, and that goes away until they think about a new farm bill.”

State government

Many federal government institutions operating in the state have been closed due to the government shutdown including Iowa Department of Natural Resource sites such as the Coralville Rservoir day-use parks and the USDA National Resources Conservation Service.

In addition, the Herbert Hoover Presidential Library and Museum in West Branch is also shuttered, as all National Archives facilities are closed.

However, Social Security payments, the U.S. Postal Service, and the Department of Veteran’s Affairs hospital and clinics will all remain up and running. But Solow noted many ways in which the state might be affected.

“The Iowa National Guard is going to stop training and stop maintaining equipment,” he said. “Small-business loans, that’s going to probably shut down, and eventually that’ll start to hurt small businesses who borrow money so it’s things like that where in the short-term it’s not a big deal … but in the long-term, there could be a problem.”

Student impact

Cathy Wilcox, the senior associate director of office operations at the Office of Student Financial Aid, said officials hope there will be no delay in student aid; however, it is too soon to say.

“[The National Student Financial Aid Association] has given us the impression that business will run as usual and that we shouldn’t see any delay in getting the students’ funds,” she said. “We’ve had this happen before, and the effect has been very minimal. We’re still getting funds, and students are still getting money, so right now we’re not anticipating anything major.”

Wilcox said the UI will receive more information about the shutdown as the week continues.

Overall, the shutdown will cost $300 million per day, according to IHS Global Insight. According to the Office of Management and Budget, the shutdown in 1995 and 1996 cost taxpayers $1.4 billion.

“The longer the shutdown goes, the longer people will have to wait to get on the health-insurance exchange, the longer it goes that all those essential government services, even though they say they’re funded, will fall further behind,” said Rep. David Jacoby, D-Coralville. “It’s a critical domino effect.”

Metro reporter Emily Friese contributed to this story.


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