U.S. budget gridlock may cause shutdown

While the United States government train continues to roll, it is still in danger of being derailed. Congress and President Clinton recently agreed to a continuing resolution that funds federal government programs until November 13. However, if Congress and Clinton do not reach an agreement on the budget by that date, the federal government will be caught in a "train wreck" and will be forced to shut down. A "train wreck" would cause the government to default on its financial obligations and would raise government borrowing costs for years to come, according to the University's Assistant Vice President for Policy Planning and Federal Relations David Morse. While public employees, welfare recipients, retired citizens and students relying on federal aid to pay their tuition will feel the brunt of such a wreck, the effect it may have on the University is yet to be determined. "The government is virtually being held hostage by the debt ceiling question," Morse said. "Annually, the debt ceiling must be increased so government can borrow money and pay interest on outstanding bonds. "What Congress could do is fund one big spending, tax and Medicare bill and attach it to the debt ceiling bill," Morse added. If this occurred, Clinton would have to sign the bill or veto it. A veto would ensure a "train wreck." Although Washington is gearing up for what could be a season of discontent, Student Financial Aid Director Bill Schilling said that University financial aid will not really be affected in the case of a short government stoppage. "A lot of the federal aid programs such as Pell Grants and Perkins Loans are forward-funded programs," he explained. A forward-funded program is one in which appropriations from one year are used to fund the program in the subsequent year. Thus, appropriations made in fiscal year 1996 would be used in the 1996-1997 school year. Schilling added that the impasse would have to last until the late winter to cause problems for forward-funded programs. On the other hand, the federally-aided Stafford Loan entitlements could be headed for trouble. "The entitlement must be paid by the government," said Morse. "However, if the federal government cannot borrow money, the whole issue of checks written by Congress is thrown into disarray." According to Morse, the government has never really been in serious trouble. "Except for a day or two of minor train wrecks, the government has never defaulted," he said.