November 11, 1995
Web posted at: 2:58 p.m. EST
WASHINGTON (CNN) -- If budget negotiators are unable to reach a compromise over the weekend, the so-called budgetary "train wreck" threatened by congressional leaders will occur.
But what are these barreling trains and just how messy will the wreck be?
If no compromise is reached, two things will occur next week. On Tuesday, the government will run out of money, or its authorization to spend money. On Wednesday a $25 billion interest payment on the national debt comes due, raising the specter of a first-ever U.S. default.
A temporary spending measure reached by Congress and the White House in September expires at 12:01 a.m. Tuesday. Congress is planning to send President Clinton a new stop-gap spending bill, or continuing resolution, before the old one expires, but the president has said he will not sign it because the spending levels are too low.
Congress has also passed measures to address the impending debt crisis. The bill would add $67 billion the nation's $4.9 trillion credit limit. This would permit the government to continue borrowing and paying interest on the national debt.
President Clinton said he will also veto this bill because it prevents Treasury Secretary Robert Rubin from using surplus federal funds to pay interest on the debt, something Rubin plans to do to cover the $25 billion interest payment due next week.
So, what real impact will all of this have on the average American? For starters, a vacation to Washington might be a bad idea. National monuments, museums and visitors centers at national parks will be closed.
It also wouldn't be a good time to apply for Social Security and veterans benefits or a passport. No new applications will be processed during a shutdown.
Economists and other number-crunchers will have to extrapolate. The Bureau of Labor Statistics will close and suspend its reports.
Although the shutdown will cause inconvenience for many, necessary government services will continue. Air traffic controllers will go to work. Mail will be delivered, money will be printed, weather will be forecast. Federal law enforcement and military personnel will stay on the job.
The impact will be greatest on "non-essential" federal workers. Approximately 800,000, or about 40 percent, of the federal work force, will stay home without pay.
It wouldn't be the first time federal workers have been sent home. In the past, they've been compensated for the time off, but there are no promises they will be repaid.
But even if the workers get their money back, the taxpayers won't. The General Accounting Office estimates a three-day government shutdown would cost taxpayers as much as $600 million.
Much will depend on the length of the shutdown, according to Budget Director Alice Rivlin.
"It depends on how long it goes on," she said Saturday. "More and more people would notice as it went on ... They would notice because they were personally affected or because their community was affected. If federal employees are not being paid in an area where there are a lot of them ... the grocery stores and the cleaners and the regular establishments are going to feel that problem." (205K AIFF sound or 205K WAV sound)
The cost to the average American if the federal government defaults on its debt is harder to quantify. Administration officials warn that a default may boost interest rates for years to come. By how much, they did not say.
Even if there is no train wreck, the budget impasse has already created bad news for consumers. The U.S. benchmark 30-year Treasury bond dipped three-quarters of a point Friday and the dollar was squeezed by uncertainty over the budget.
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