The odds of the government shutdown lasting until at least mid-October seem to be rising. That's not good news for the droves of small businesses already struggling after just a few days.
Business owners who rely on the federal government’s full operations—from businesses that serve tourists around national parks to federal contractors—typically have at least a small financial cushion to weather a short-term closure. But if the shutdown continues until the national debt-ceiling controversy strikes up later this month, many small businesses will likely have to lay off workers or, worse, close down for good.
President Obama, speaking at a small Maryland construction company Thursday morning, said an extended government shutdown and an "economic shutdown" caused by Congress's reluctance to raise the federal debt ceiling could seriously hurt small businesses that already suffered through the recession in recent years. “Remember, it was just five years ago that our economy was in a freefall,” he said while speaking outside M. Luis, an asphalt manufacturer in Rockville, Maryland. "We can’t afford to threaten that progress right now."
Many businesses are already worried about taking a major hit to their revenue, even though the shutdown has only been going on for three days.
Ohwnn, owner of Tour in the Glades, which hosts tours of the Florida Everglades, says a one-week shutdown of the national park could cost her business upwards of $20,000. If it stays closed for many weeks? “It’s bankruptcy,” she told NBCNews.com.
Unistar-Sparco Computers, a 40-employee technology firm in Millinton, Tennessee, has already had several packages returned from federal government clients, costing the company $25,000. The company is awaiting $8 million in payments from its government clients. If the shutdown drags on, “layoffs will have to happen,” co-founder Soo-Tsong Lim told The Wall Street Journal.
So, how long will the shutdown last? Given both President Obama and the Republican House leaders’ unwillingness to negotiate on a national budget, many political experts predict it could last more than a week and even merge with the debt-ceiling debate in Congress, which is expected to start around October 17. Some Republican House members have agreed to pass a "clean spending bill" that funds the government for two more months, but it's unclear whether the bill has enough support to be brought to a vote by House Speaker John Boehner, according to The Washington Post.
Economists are warning that an extended shutdown could have severe consequences on the economy and financial markets. Mark Zandi of Moody’s Analytics predicts that a three- to four-week shutdown would cut U.S. growth by 1.4 percentage points.
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