As Shutdown Looms, Painful Ripples Foreseen Across State

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Video report by Laurie Perez, Fox CT

Text by Daniela Altimari, The Hartford Courant

GLASTONBURY — The trains will run, the mail will be delivered and citizens will still be able to get a passport, despite a partial government shutdown that is expected to begin at midnight.

But a lengthy shutdown, coupled with a looming showdown over the federal debt, could have a devastating impact on the state’s economy, said Steven P. Lanza, who teaches economics at the University of Connecticut and edits the school’s economics journal.

“These protracted debates and squabbles over the budget and debt limits and fiscal cliffs and the like [have] raised the level of political uncertainty and that has … real economic consequences,” Lanza said. He spoke during a Monday morning press conference hosted by U.S. Sen. Richard Blumenthal at Habco, a Glastonbury manufacturing firm that relies on government contracts for about 50 percent of its sales.

Roughly 9,000 federal workers in Connecticut — and thousands more who contract with the federal government — were slated to be furloughed during the shutdown.

“We have tens of thousands of jobs that rely on defense contracts, and that work will not end, but it will slow down,” U.S. Sen. Chris Murphy said. Employees in Murphy’s Connecticut and Washington offices were among those who received furlough notices.

Murphy spoke to reporters from Washington Monday afternoon, about an hour before he, Blumenthal and other Senate Democrats voted down a House proposal that would have funded federal operations but derailed President Barack Obama‘s health care overhaul.

Democrats say conservative Republicans are using the threat of a shutdown to derail the health care law, which they were unable to do through the legislative process.

But Jerry Labriola, chairman of the Connecticut Republican Party, blamed Democrats for the impasse.

“Clearly the Democrats are incapable of compromising and refuse to debate tough issues, such as congressional health insurance privileges,” he said. “The U.S. Senate is controlled by radical fringe liberals who are always willing to sell out the next generation to win an election. … The Republicans have offered several good ideas, and a delay in the unpopular Obamacare mandates seems like a reasonable compromise to avoid a shutdown.”

Democrats say efforts to tinker with one of Obama’s signature legislative achievements is a non-starter.

“They seem so rabid in the House of Representatives about pursuing their ideological ends that they are going to use both the continuing resolution and the debt ceiling in order to get what they want,” Murphy said. “They won’t.”

During the press conference at Habco, Blumenthal and Lanza spoke of the enormous disruption even a brief shutdown could set off.

“The mildest case of just a couple of days, even that would be enough to trim 2/10th of a point off of annualized GDP in the fourth quarter,” Lanza said. “The consequences for Connecticut of just that … [could] be a loss of 300 jobs.”

A prolonged shutdown could cost 2,000 jobs statewide, Lanza said, adding that the figure includes both layoffs and jobs not created and filled.

At Habco, which employs 41 people, even the possibility of a government shutdown was enough to keep President Brian Montanari awake at night. “We’re a small company,” he said. “From an emotional perspective … the last thing I want to do is hire, then turn around and have to contract.”

For the average American who does not work for a federal agency or government contractor, the impact of a shutdown likely would be muted at first.

Many federal operations, including mail delivery and Amtrak, would maintain normal operations during a short-term shutdown. Also, Social Security checks and veterans benefits would continue to be issued, although new recipients might experience a delay, officials said.

The State Department would continue to issue passports and visas, a spokeswoman said, although some passport field offices located within federal buildings may be closed due to lack of support systems.

Most local Head Start providers would not feel any immediate repercussions of a shutdown, but the federally funded early childhood program could be affected if a shutdown lasted two weeks or longer.

“We’ll be OK for a little while, I just don’t know how long,” said Jerry Reisman, director of the Manchester Preschool Center, which serves 162 children. “It depends on how quickly Congress gets its act together.”

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