Tag Archives: 2013 Space

Updates on GOVERNMENT SHUTDOWN: U.S. BUDGET CRISIS LOOMS (AGAIN IN FY 2018)

Government-ShutdownApplied Technology Institute (ATICourses) provides a variety of technical training courses on Space, Satellite, Radar, Defense, Engineering, Systems Engineering, and Sonar.  Now is the time to plan your training!

This updates an 8/18/2017 post. Unfortunately, the shutdown risk has grown!

This is a good article about the economic cost of a federal shutdown. It provides many detailed examples of the costs of the shutdown caused by the failure of the federal government to act in a timely way due to the shutdown.
https://chiefhro.com/
Jeff Neal was the chief human capital officer at the Homeland Security Department and the chief human resources officer at the Defense Logistics Agency.

Planning training and travel for FY 2018 could be tricky if there is a government shutdown of unknown duration. Many of the people that ATI has talked to have “no remaining FY 2017 training funds and have no idea what training budget will be in the FY 2018”.

The last government shutdown occurred in 2013. The 16-day-long shutdown of October 2013 was the third-longest government shutdown in U.S. history, after the 18-day shutdown in 1978 and the 21-day 1995–96 shutdown. ATI was conducting training in 1995-1996. The 1995 shut-down was chaos.

The last time sequestration kicked in 2013, it forced many federal agencies to furlough employees, costing them up to 20 percent of their salary during the furlough period.  Fortunately, all the government employees were eventually paid their full salary. Paying employees to not work and then rush to catch-up is a wasteful government practice. Many had to struggle until the late salary pay was received.

Standard & Poor’s estimated that the 2013 shutdown took $24 billion out of the U.S. economy, and reduced projected fourth-quarter GDP growth from 3 percent to 2.4 percent.

Even after the shutdown was over there was confusion for several months as employees talked about the shutdown and tried to get all the affected programs back on track. Small businesses and tourist locations lost money that was never recovered. Training and travel funds were devastated for most of the year in 1995 and 2013.

 https://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013

Congress must pass a new government funding bill by Sept. 30 to prevent a shutdown on Oct. 1, which is when fiscal 2018 begins. In previous years, because of the limited amount of time on Capitol Hill in September, lawmakers have been forced to pass a continuing resolution (CR) to keep the government running for a few more months.

This year could be different. “Build that wall,” Mr. Trump said. “Now the obstructionist Democrats would like us not to do it. But believe me, if we have to close down our government, we’re building that wall.”

We’re months away from agreeing on the annual budget, and if Congress and President Trump fail to appropriate funds, government departments won’t be able to spend money. This means contractors won’t get paid.

“If the budget debate gets ugly, which is a clear possibility, we could see the stock shares weaken in September, and then potentially rebound fairly quickly with the conclusion of (or lack of) any shutdown, as was the case in 2013,” Wells Fargo analyst Ed Caso wrote in a Thursday note.

See this link for continuing news updates on the potential 2017 shutdown.

https://federalnewsradio.com/federal-report/2017/08/one-less-thing-to-worry-about-furloughs/

What Could Happen?

During the federal shutdown of 2013, contractor stocks fell as much as 6 percent, while annual revenue and earnings per share were estimated to average a 1- to 1.5-percent hit, according to Wells Fargo. IFCI also lowered guidance.

But this year’s shocks could be amplified.

“We should note that in 2013 the defense sector was at through EV/EBITDA (enterprise value to earnings before interest, taxes, depreciation, and amortization) multiples, while now they are in the upper quartile suggesting the potential for more volatility,” Caso wrote.

But How Worried Should We Be?

Given the current political climate, Caso considers a one-day shutdown possible and a multi-day shutdown modestly likely. Still, the caprice of the Trump administration merits preparation.

“The political calculus, in our view, is even more unstable than in 2013, so uncertainty going into GFY end (September) should only be higher even with the memory that no one gained politically from the 2013 shutdown,” he wrote.

Additionally, the drastic budget changes proposed could sustain debate more contentious than that driving the previous 16-day shutdown. Government agencies and employees do not know how to plan training and travel. Confusion will result for several months.