The federal shutdown, the impending debt ceiling crisis and the worsening financial markets are beginning to worry Lansing residents.
Though the Great Recession ended in 2009, the American economy is still not booming.
“We’re not dealing with a robust economy that is creating middle class jobs,” Ingham County Treasurer Eric Schertzing said. “Middle class jobs have been under attack for decades. There has been this erosion, a shift in the economy as we get caught up in the world. “
Josie Gibbens, intern for Rep. Mike Rogers said furloughed employees will be able to backdate their pay, but there is no estimation of when they will receive their paychecks. It could be next week, the week after; there is no telling.
“A man who called from the Federal Aviation Administration is considered a non-essential employee, even though that is an essential agency,” said Gibbens. “Since he’s furloughed he’ll get paid eventually but he is tight on money so it’s a tough situation for him.”
“We’d be looking at chaos,” said Schertzing about what would happen if the United States fails to increase the debt ceiling by Oct. 17, which has been identified by Treasury Secretary Jack Lew as the day the government will reach its borrowing limit.
“It’s almost like you’ll have to pick your poisons,” said Gibbens. “Either you raise the debt ceiling, which would include cutting programs or you default and you cut programs.”
Schertzing said that there is no way to cut back on program cost fast enough to accomplish what needs to be done in October without raising the debt ceiling.
Since federal funding isn’t drawn down daily or even weekly, no changes in program funding have been seen yet, said Schertzing.
Schertzing said that people who call the federal government with questions risk finding no one at the other end of the phone.
“That certainly has an impact on the ability to deliver the services even if there is funding for them in the pipeline still,” he said.
Gibbens said she’s also received calls from Roger’s constituents regarding food stamps. “A lot of people in the Lansing area have had their food stamps cut in half,” she said. “We keep fixing them but every time we slap a mole it seems another one pops up.”
Martha Bashore, associate broker at Coldwell Banker-Hubbell Briarwood, said that many people in the Lansing area who are using the USDA’s Rural Development Mortgage plan are unable to get their loans approved because USDA is closed.
Once the federal government reopens, loan approval will be backlogged. She expects the lag time will be two days for every day that the government stays shut. This will create problems for people who gave 30 days’ notice at one residence, expecting to have their loan approved within that period to move into a different residence.
Gibbens said she has also been receiving calls from Lansing citizens regarding the plummeting stock market.
“One man who has large investments in the stock market called in saying how upset he is because over the past week he has watched his investments rapidly decrease,” she said.
Schertzing said his job as treasurer keeps him vigilant about monitoring the stock markets, bond markets and financial institutions so he understands that this situation causes markets to become more skittish.
“It’s a tremendous gamble that folks in Washington D.C. are taking, with the instability of the American economy,” said Schertzing. “We’ve already seen that consumers and businesses are more nervous. They just don’t feel good about what is going on and that is going to cause consumers to continue to spend less money and consumers make up a huge part of our economy.”
Schertzing said he hopes things will be resolved by Oct. 17 so the market doesn’t become even more upset.
“The impact of federal employees not getting paychecks is going to be huge on businesses,” said Schertzing. “You can’t necessarily see it now but it’s going to be worse tomorrow, much worse next week, and if it continues on, you won’t know what all of the impacts over the long term will be.”