The Impact of a Government Shutdown on Hawaii

by Staff on April 7, 2011

Although the federal budget stalemate is taking place 6,000 miles away, the effects of it will be felt across the nation and throughout Hawaii.  With the clock ticking and Congress still bickering over the budget, a federal government shutdown is looking more and more likely.  What will this mean to the nation and our islands’ already fragile economy?

If no resolution is reached by Friday’s deadline and a government shutdown is declared, all federal employees in positions not deemed “essential” (such as law enforcement, public health, and transportation) would be furloughed until Congress reaches a resolution.

But it is not only the estimated 800,000 federal employees and their families who will be affected by the absence of a paycheck for an undetermined amount of time.

Businesses that cater to federal employees will also feel the effects, as their contracts are suspended and they are forced to hang on to inventory intended for federal use.  Lower income families may see their housing loan applications denied or delayed with the suspension of the Federal Housing Administration’s guarantee.  Foreign investors may shy way from American markets and invest their money elsewhere due to the uncertainty of the government shutdown.  And those in need of passport services or a promised federal tax return may also have to wait until a resolution is reached.

In a statement given by President Obama today, following his meeting with the heads of Congress, he emphasized the far-reaching and harmful impacts of Congress’s failure to come to an agreement.  “A shutdown could have real effects on everyday Americans,” he stated.  “That means that small business owners who are counting on that loan to open their business, to make payroll, to expand, suddenly they can’t do it.  It means folks who are potentially processing a mortgage, they may not be able to get it.  It means that hundreds of thousands of workers across the country suddenly are without a paycheck. Their families are counting on them being able to go to work and do a good job.” (Source)

National parks and business – such as hotels and tour operators – related to this type of tourism will also be hard hit if a shutdown is declared.  Unfortunately, our top visitor attraction here in Hawaii falls into this category.  The USS Arizona Memorial National Park, hosting approximately 5,000 visitors per day, will host not a single visitor should Congress refuse to come to an agreement on the federal budget.  Other local sites that will be affected by a government shutdown include Ala Kahakai National Historic Trail, Hawaii Volcanoes National Park, Pu’uhonua O Honaunau National Historic Park, and Puukohala Heiau National Historic Site on the Big Island; Kalaupapa National Historical Park on Molokai; and Haleakala National Park on Maui.  The National Memorial Cemetery of the Pacific at Punchbowl may also be forced to furlough employees and reduce hours, as it did during the 1995 government shutdown.

Will Hawaii and the country as a whole face yet another obstacle on the road to our economic recovery?  We can only hope that Congress recognizes the destructive impacts of their delay and comes to an agreement before it’s too late.

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