Federal agencies are once again finding themselves in the position of having to decide what to do if the federal government shuts down next Monday evening.
As published reports have maintained, much of the government will continue to function, including mail service and troops staying put. But the paychecks of more than 800,000 federal workers could be jeopardized if they’re told to stay home next week, according to The Washington Post.
Indeed, while more than 2 million other employees who are considered essential by the government—including the active military—would be entitled to their salaries, they may not get paid on time, the Post reported.
A glance at federal agencies’ contingency plans as of Tuesday on the Office of Management and Budget’s website shows a list of plans that haven’t been touched since the last shutdown loomed in 2011.
Indeed, John Nester, a spokesman for the Securities and Exchange Commission, told ThinkAdvisor Tuesday that the SEC is “currently reviewing” its plan and has “no update” to report at the present time.
As Time reported on Tuesday, it’s safe to “assume that most agency priorities have not significantly changed: in many cases the spending bill that is set to expire Monday is the same one that nearly expired two years ago.”
However, The Post notes that while no law exists requiring that nonessential employees be compensated if they are ordered off the job, Congress has in the past voted to reimburse their losses once shutdowns ended. “But this go-round could be different. The bitterly divided Congress includes many lawmakers who are unsympathetic to the plight of federal workers and could be loath to help them recoup their money,” says The Post.
The just–released First Command Financial Behaviors Index found that the majority of servicemembers and their families doubt that lawmakers will take appropriate actions to avoid a government shutdown in October or a second round of sequestration in the coming year.
The latest survey results reveal that 86% of middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) are not confident that Congress will pass a continuing resolution to fund the government by Sept. 30 and avoid a partial shutdown of federal operations. Also, 71% doubt that lawmakers will be able to take appropriate action to avoid another sequester in the new fiscal year, which begins Oct. 1.
But Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor Monday that two dozen Senate Republicans have spoken out against Tea Party Republicans’ “foolhardy plan to drive the economy off a cliff, Thelma and Louise style.”
The reviews are in: “The ransom demanded by House Republicans in exchange for keeping the government open is unworkable and unrealistic,” Reid stated in reference to the bill passed by the House Sept. 20, which funds the government until mid-December but seeks to defund the Affordable Care Act.
President Barack Obama “has been clear," Reid said. "I have been clear. Any bill that defunds Obamacare is dead on arrival in the Senate.”
Reid went on to state that this week the Senate “will act as quickly as Tea Party Republicans will allow. Once the Senate has acted, House Republicans will face a choice whether to pass a clean continuing resolution or shut down the federal government.”
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Check out Government Shutdown Wars Return: 5 Reasons This Time Is Worse on ThinkAdvisor.
Bill Pugliano/Getty Images WASHINGTON -- U.S. manufacturing activity held steady at firmer levels in June and automobile sales were on track to beat expectations, pointing to momentum in the economy after a rough winter. The Institute for Supply Management said Tuesday its index of national factory activity was at 55.3, little changed from May's 55.4 reading. A reading above 50 indicates expansion. The forward-looking new orders subindex hit a six-month high, but factory employment was unchanged. "Manufacturing has gathered some momentum in the second half of the year. That's an important pillar for the economy along with housing. The details are better with new orders rising," said Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania. Separately, early sales reports indicated the auto industry overall had a better-than-anticipated showing last month, even though there were two fewer selling days than a year ago. General Motors (GM) bucked Wall Street's low expectations and negative publicity over a flood of safety recalls, reporting a modest rise in U.S. sales in June. Chrysler Group and Nissan Motor also reported year-to-year increases Tuesday. They, along with Ford Motor (F), topped analyst expectations. The reports were the latest to suggest the economy rebounded in the second quarter after a weather-induced slump earlier in the year. However, another report showing construction spending barely rose in May indicated that second-quarter growth could fall short of expectations. Economic growth contracted at a 2.9 percent annual pace in the first quarter, also weighed down by a slow pace of inventory accumulation by businesses. Economists last week slashed their second-quarter growth estimates after weak consumer spending in May. Growth forecasts are now running as high as a 3.5 percent pace and as low as a 2.1 percent rate. Construction spending edged up 0.1 percent to an annual rate of $956.1 billion, the Commerce Department reported. However, April's data was revised up to show a 0.8 percent rise in construction spending, taking some of the sting out of the report. Economists had expected construction spending to advance 0.5 percent after a previously reported 0.2 percent gain. Construction spending in May was held back by a 0.3 percent decline in private construction projects, which offset a 1 percent rise in public construction outlays. Private construction accounts for the largest portion of construction spending. Private residential construction tumbled 1.5 percent, reflecting weak housing starts. A run-up in mortgage rates has stymied the housing market recovery. Investment in home building and nonresidential structures such as factories and gas pipelines contracted in the first three months of this year for a second straight quarter. Spending by the federal government dropped 8.9 percent, the largest fall since December 2010. State and local government projects increased a solid 2 percent. -.
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Craig Warga/Bloomberg via Getty Images WASHINGTON -- Americans bought fewer existing homes in September than the previous month, held back by higher mortgage rates and rising prices. The National Association of Realtors said Monday that sales of resold homes fell 1.9 percent last month to a seasonally adjusted annual rate of 5.29 million. That's down from a pace of 5.39 million in August, which was revised lower. The sales pace in August equaled July's pace. Both were the highest in four years and are consistent with a healthy market. Mortgage rates rose sharply over the summer from their historic lows, threatening to slow a housing recovery that began last year and has helped drive modest economic growth. But many economists expect home sales will remain healthy, especially now that rates have stabilized and remain near historically low levels. Final sales in September reflected contracts signed in July and August, when rates were about a percentage point higher than in May. The average rate on a 30-year fixed mortgage was 4.28 percent last week, down from a two-year high of 4.58 percent in August. That's also far below the 30-year average of 7 percent, according to Bankrate.com. Sales of existing homes have risen at a healthy 10.7 percent in the past 12 months. Still, that's the slowest year-over-year increase in five months. And the median home price has risen 11.7 percent in the past year, the Realtors said. That's also the slowest annual gain in the past five months. Price increases may be slowing because more homes are finally coming on the market. The supply of available homes rose 1.8 percent from a year ago to 2.21 million, the first year-over-year increase in 2 ½ years. The limited number of homes for sale is a key reason prices have risen so fast in the last year. The economy is growing modestly and employers are adding jobs at a slow but steady pace. That's helped a growing number of Americans buy homes. Still, many first-time buyers have been unable to enter the market. They made up just 28 percent of purchases in September, down from 32 percent a year ago. In healthier housing markets, they typically make up at least 40 percent of buyers. First-time buyers are having trouble qualifying for loans because many banks have adopted tougher lending restrictions and higher down payment requirements since the housing bubble burst. In their place, investors and Americans willing to pay cash are playing an outsize role in sales. Cash purchases made up 33 percent of September's sales, up from 28 percent a year ago. Borrowing rates began to rise in May after Federal Reserve Chairman Ben Bernanke suggested that the Fed could start to slow its monthly bond purchases by the end of the year. The purchases are intended to keep interest rates low and stimulate the economy. But the Fed decided against slowing its purchases at its September meeting, citing weak economic data and looming budget battles in Washington. The budget fights led to a partial government shutdown Oct. 1. The nation's borrowing limit was increased but only at the last minute. Economists have cut their forecasts for growth in the October-December quarter by about a half-percentage point because of the shutdown and debt limit fight. As a result, many economists think the Fed won't slow its bond purchases until January or even later. That's likely to keep mortgage rates low well into the new year.
Mike McGregor/Bloomberg Markets Howard Chen, left, and Craig Siegenthaler correctly predicted that AllianceBernstein stock would rebound.