Will Canada be affected by shutdown?
Oct 1, 2013 / 7:32 am
An estimated 800,000 U.S. government workers are off the job, after Congress failed to pass a key funding bill, triggering a partial government shutdown.
The last time this happened – during the winter of 1995-96 -- the U.S. government shut down for three full weeks. This time, with the tensions higher and the issues more divisive, many expect this shutdown could last even longer.
And as it drags on, the more likely it is that Canadians instead will be directly affected.
Some inconveniences will be immediate for Canadians – such as the need to cancel travel plans to U.S. national parks and monuments. But Ian Lee, an associate professor in strategic management at Carleton University, says he has larger concerns.
"My biggest fear is the economy," Lee told CTV's Canada AM Tuesday from Ottawa.
Lee says he finds it "very instructive" that more than 240 American business associations wrote letters last week to the Democratic and Republican Party leadership, imploring them to avert the shutdown.
"In other words, the entire business community in the U.S. is completely opposed to this shutdown because they're worried what impact this is going to have on business confidence and consumer confidence. And that's my concern too," Lee said.
There are estimates that if the shutdown drags on for a few weeks -- as many expect it will -- it could knock between 0.5 and 1.0 per cent off GDP growth. While those numbers sound small, to Lee, they will translate into a significant loss of jobs.
"And that will feed back into us because of course we export about two-thirds to them. So this is not trivial; this is a very serious issue," he said.
A temporary government shutdown sparked by political haggling over the health care law is one thing. But Lee says what concerns him more is that later this month, the country's two major parties will have to spar again over the much thornier issue of raising the debt ceiling.
"The even worse news about all this is that this is just the warm-up to Oct. 17, when they really go at it over the debt ceiling," Lee said.
"Right now, they're voting over the supply of funds for the current fiscal year; in three weeks, they'll be voting on whether Congress is going to authorize the government to borrow any more money at all."
The U.S. currently owes about $17 trillion and has never defaulted on its debt. A tumble into default would be unprecedented and would likely set off an even bigger economic crisis -- both there and in Canada.
If Congress doesn't authorize the federal government to borrow more money to roll over the debt, "it's going to make the current shutdown look like a Sunday school picnic," says Lee.
On Monday, Finance Minister Jim Flaherty expressed his hope that the White House and Congress would come to a resolution quickly on the current spending and debt limit impasse.
“This is a reminder that while Canada’s economy remains strong, we are still vulnerable to uncertainties outside of our borders, especially in the U.S. and Europe," he said in a statement.
In more practical terms, here's how the shutdown will immediately affect Canadians:
Travellers to the U.S.
- All U.S. national parks will be closed, as well as several sites popular among Canadian tourists including: the Statue of Liberty and Ellis Island in New York; the Smithsonian museums, the Washington Monument and the National Zoo in Washington; Independence Hall in Philadelphia and Alcatraz Island near San Francisco.
- Those already on backcountry hiking or camping trips in parks such as Grand Canyon National Park will be able to complete their trips, but no new travellers will allowed to enter the gates.
- Federal air traffic controllers will remain on the job. So will screeners at airport security checkpoints.
- Border officers are also still on the job as are members of the Coast Guard and the Transportation Security Administration.
- Amtrak says it will continue normal operations for now. But because it relies on federal dollars to subsidize its revenue from ticket sales, that may change.
- The National Weather Service will continue its weather forecasts, and the National Hurricane Center will continue to track storms.
- The work of the U.S. Geological Survey, which tracks earthquakes among other activities, has mostly halted.
Do business in the U.S.?
- Canadians who earn income in the U.S. will still have to file U.S. tax returns, but the Internal Revenue Service says it will suspend all audits for now. As well, IRS taxpayer services and toll-free help lines are shut down.
- The Bureau of Labor Statistics has ceased almost all operations, leaving the stock market without some of the benchmark economic indicators that drive the market. The September jobs report, due Friday, could still be released on time. The Treasury
- Department's daily report on government finances will be released normally.
- Mail delivery should continue as usual, because the U.S. Postal Service receives no federal aid for its daily operations.
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