White House rejects GOP's one-week stopgap funding measure

Is Obama finally starting to grow a backbone?

The White House rejected a one-week stopgap spending measure that would have included an additional $12 billion in cuts, bringing the total amount of cuts up to $22 billion if passed.

The president has thrown down the gauntlet it appears. Now the likelihood of a government shutdown is very high.

What gets affected in the case of a government shutdown? All non-essential services are cut. In addition, government workers not deemed “essential” are furloughed while essential employees (members of Congress, uniformed military personnel and federal employees working in areas of national security and law enforcement are deemed essential) continue to work in a non-pay status. National parks and museums close, visa and passport applications are halted, veterans’ benefits cease and so do payments to federal contractors.

There have been shutdowns in the past. Most recently we saw shutdowns in 1995 and 1996. These did not cause major disruptions, but the situation was decidedly different back then as Congress had already appropriated funds to meet spending needs prior to those shutdowns. In the current case, there are no appropriations after April 8.

In addition, the unemployment rate was 5.5 percent in 1996 compared to today’s 8.8 percent level. The economy’s ability to weather a hit to demand is much more questionable now than it was then. Many business leaders agree. Verizon CEO Ivan Seidenberg, who is also the Chairman of the Business Roundtable, said that a government shutdown would do “serious damage” to the economy.

Stay tuned.