Government Shutdown Consequences Go Beyond The Capitol Building

By Patrick Temple-West and Gabriel Debenedetti

WASHINGTON, Sept 29 (Reuters) - The most iconic image from the last big shutdown of the federal government in 1995 was also its most misleading.

It was a sign on the door of the Air and Space Museum in Washington saying "Due to the Federal Government shutdown, the Smithsonian Institution must be closed. We regret the inconvenience."

But that shutdown, which lasted from Dec. 16, 1995 to Jan. 6, 1996 as Democratic President Bill Clinton battled a Republican-controlled U.S. House of Representatives, was a lot more than an inconvenience.

And it offers lessons about what Americans might expect, both in costs and reduced services, if a stalemate between Republicans in Congress and Democratic President Barack Obama leads to a shutdown on Tuesday.

The shutdown of 1995-96 held up passports for more than 200,000 people who wanted to travel. It stopped stock offerings from coming to market. It blocked new admissions to the National Institutes of Health, the government's illustrious medical research facility.

And yes, national parks across the country and museums in Washington did close.

The paralysis produced millions of dollars in losses for tourist-dependent businesses.

And costs to the federal government alone, according to an analysis by the Office of Management and Budget, was $1.4 billion, most of it in back pay to furloughed workers who collected later for the inconvenience of staying home.

Elaine Kamarck, who worked in the White House during the 1995-96 shutdown and now directs the Brookings Institution's Center for Effective Public Management, said she remembers only about 30 essential staffers manning the Executive Office of the President instead of the hundreds who normally worked there.

IMPACT WILL BUILD

Kamarck said citizens in the rest of the nation - including ones who rail about Washington - may think their state and local services are intact until the trickle-down effects of a shutdown become obvious.

"It will take a couple days, and things that people do not think are part of the federal government will start shutting down," Kamarck said, because money from Washington is what keeps many of those services alive.

If the Tuesday shutdown materializes, it will be because of a similar standoff - a political struggle in a divided government over fiscal differences.

But the added complication is that Republicans want to delay implementation of the Affordable Care Act, the president's healthcare law and his signature legislative accomplishment.

The White House has said that item is non-negotiable, which means that a deal to end a shutdown soon could be difficult to achieve.

Ironically, a shutdown would not halt or even delay the launch of federal and state health insurance exchanges set for Oct. 1 as part of the law, commonly known as Obamacare.

Its impact would depend entirely on how long a shutdown lasts - hours, weeks or even months.

While most agencies are waiting for certainty before unveiling specific shutdown plans, they have issued guidance that makes the potential clear.

Workers will be on the job if they are responsible for public safety, whether it's Coast Guard patrols or meat inspections, or for fighting wars or guarding federal prisons.

Americans who depend on Social Security retirement payments or health insurance from the Medicare program will not be affected.

But more than a million federal employees will be off the job for as long as the shutdown continues.

Figures provided by agencies underscore the challenges.

Securities and Exchange Commission guidance, for example. says that the number of employees expected to be "on-board" before implementation of the furlough plan is 4,149.

After implementation, the number retained because they are involved in agency law enforcement activities or building security is 252.

At the Internal Revenue Service, the total number of employees prior to shutdown is 94,516. The total number "excepted" from furlough is 8,752, leaving all but 9.3 percent of workers at home.

Marvin Friedlander, a former IRS official who lived through the mid-1990s shutdown, said many workers were tempted to sneak home some business during their furlough, skirting rules that said they were not allowed to work at all without congressional authorization.

But now that's harder to get away with.

IRS employees, for example, have special home computer software installed to prevent leaks of taxpayer information.

The software tracks when an employee logs into IRS systems, said Friedlander.

Now, he said, the agency tells employees, "If we find out you worked at home, you're going to get fired."