Shutdown Showdown

As of Saturday, much of the federal government could cease to function, unless a budget stalemate can be resolved. So what does it all mean?  

WASHINGTON -- Ten days before tax deadline day, the IRS would stop processing paper tax returns.

Local offices of the Social Security Administration and other government agencies would shut down.

And just as the spring homebuying season is about to kick into gear, the financial backing for 30 percent of the nation's available mortgages -- and most of those in Buffalo -- would disappear.

That's just some of what would happen if a congressional budget stalemate results in a federal government shutdown, which appears increasingly likely to begin this weekend and continue for who knows how long.

As Democrats and Republicans continue to bicker over a way to fund the government through Sept. 30 before a temporary funding measure expires at the end of Friday, the prospect of a government shutdown began to take shape Wednesday in both Washington and Buffalo.

 The Obama administration outlined how it would manage a shutdown, and federal employees in Buffalo envisioned a short-term future of locked government offices and unwanted unpaid furloughs.

"I think the mood among the employees is a mixture of a lot of things -- uncertainty, fear, trepidation," said James R. Marsh, local representative for Chapter 3342 of the American Federation of Government Employees, or AFGE, at the Social Security office in Buffalo. "Most of all, there's the fear of the unknown."

Indeed, much remains unknown, starting with whether there will even be a shutdown.

Budget talks continued Wednesday on Capitol Hill even as President Obama traveled to a campaign-style event in Pennsylvania.

 Late-night budget talks with the leaders of Congress have helped narrow the issues, Obama said, but there is no deal yet to avert a shutdown.

Obama spoke after a hastily arranged Wednesday night meeting in the Oval Office with House Speaker John A. Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev. The three met for roughly an hour and 15 minutes.

"Progress is being made," said Sen. Charles E. Schumer, D-N.Y. "It looks a little better today than it did yesterday."

Still, the Obama administration -- which had kept its shutdown planning under wraps -- started taking the wrapping off Wednesday in a conference call with reporters, saying a shutdown could result in the layoff of upward of 800,000 federal employees.

Among the most important ramifications: If the government shuts down, effective Saturday, the manual processing of paper tax returns would stop as the April 18 filing deadline approaches, though the computerized processing of electronic returns would continue.

As a result, on a call with reporters in which Schumer reminded voters of uncollected tax refunds that they might be owed, the senator acknowledged that the payment of those refunds could be delayed because of a shutdown.

That's one of two ways in which a shutdown could directly affect many Americans.

Social Security and Medicare payments would continue, but federal officials believe that a shutdown would leave the Social Security Administration with just a bare-bones staff.

The agency would continue to pay benefits and process applications for new benefits, Social Security Commissioner Michael J. Astrue said. But that would be just about all the agency could do.

"If there would be an actual shutdown, most likely Social Security employees would not be declared essential," said Paul L. Demler, president of the AFGE local that represents the agency's employees in Western New York. "What we think that's going to mean is that appointments or interviews won't be able to take place."

Yet nothing is certain at Social Security or just about any other federal agency.

"I've canvassed some of the local agency heads, and they're still communicating with their headquarters to receive specific guidance on what the personnel impact will be here," said Paul M. Kendzierski, executive director of the Buffalo Federal Executive Board, which represents about 15,000 federal employees in New York's seven westernmost counties.

There's no doubt, though, that the impact of an extended shutdown would be vast.

The federal government is the largest employer in those seven western counties, and a shutdown would likely mean that thousands would be out of work for a while.

"My worry about a shutdown is not only about the impact on the government workers who would be laid off, but also on the economy," Schumer said.

The economic impact would extend beyond the federal work force to affect most homebuyers, as well.

That's because the Federal Housing Administration, which backs about 30 percent of the nation's mortgages, would be suddenly and temporarily out of business.

"I just think that would be a disaster," said E. Alice Miranda of M.J. Peterson Corp., president of the Buffalo Niagara Association of Realtors.

In the Buffalo area, the FHA backs most mortgages, Miranda said, so if there suddenly were no FHA mortgages during an extended government shutdown, there would be no financing for many deals at the peak of the spring homebuying season.

Similarly, the Small Business Administration -- which backed 314 loans worth a total of $58.7 million between last October and this January alone -- would be shut down, thereby depriving many small businesses of a credit lifeline.

Beyond that, national parks and federal historic sites, such as the Theodore Roosevelt Inaugural National Historic Site in Buffalo, would be closed, as would all nonessential offices.

Then again, much of the government is considered essential and would remain open.

The U.S. Postal Service, which is funded separately from the rest of the government, would keep delivering the mail. Also staying open would be the Buffalo VA Medical Center and other veterans health facilities, which have long-term funding sources in place.

Border security agents and air traffic controllers would remain on the job, and American troops would keep fighting -- although they would not get paid for their work during the shutdown until the budget showdown ends.

That's a sore point for Rep. Tom Reed, R-Corning, who said he hopes that even if there is a shutdown, Congress should pass legislation making sure the troops get paid on time. "I'm hoping for the best but preparing for the worst," said Reed, who termed a shutdown "a realistic possibility" that should only be seen as "a last resort."

The urgent argument in Congress is about a plan to fund the government through the fiscal 2011, which ends Sept. 30, not about a controversial plan put forth by Republicans this week that would alter Medicare and Medicaid in the budget for fiscal 2012, starting Oct. 1.

And while both Schumer and White House press secretary Jay Carney expressed optimism about coming to a 2011 budget agreement, the Senate's top leaders agreed on nothing but pessimism.

"Democrats' bottom line hasn't changed," Reid said. "Republicans' bottom line hasn't stayed still."

Reid said Boehner "has a choice to make and not much time to make it: He can do either what the tea party wants or what the country needs."

Boehner said the House would vote today on a one-week stopgap bill to keep the government open, cut $12 billion in spending and fund the Pentagon through fiscal 2011.

News wire services contributed to this report.

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The shutdown and you

What would stop:

* Processing of paper tax returns.

* Appointments at Social Security offices.

* Approval of government-backed mortgages.

* Federal small business lending.

* All work and pay for non-essential federal employees.

* Pay for military personnel, who would continue working.

* Operation of federal parks, museums and historic sites.

* Issuing of environmental permits.

* Tax audits.

* Updating of most government web sites.

What would continue:

* Processing of electronic tax returns.

* Payment of Social Security and Medicare benefits.

* Postal delivery.

* Operation of VA medical facilities.

* Military operations.

* Customs and immigration services at the border.

* Federal law enforcement.

* Air traffic control.

* Food safety inspections.

* Operation of federal prisons.