Local Federal Employees Would Still Get Paychecks During Shutdown
While it's still not clear if the federal government will shut down at the end of this week, one local expert says the practical affect to the thousands of federal employees in central Ohio would be little to nothing. After the government shutdown of the mid 1990s, several protections for federal employees were put into place. That includes a policy where banks will accept basically-worthless paychecks with the promise of getting paid by the federal government once the funds become available. Jason Seligman is a professor of public policy at Ohio State University. "A bank like Chase in this particular region has to make a policy of accepting an I.O.U. in full faith and credit as being worth 100 percent of what the future of the U.S. dollar is worth," Seligman says. Seligman says he's more concerned about how the federal government's lack of liquidity could drive up interest rates, which could slow the country's economic recovery. "Private hiring is up, personal consumption is up, and also business investment is up. All of these things depend in some way or another on the low-interest environment we're currently in," Seligman says. Seligman, though, says he expects that low-interest environment to continue he expects lawmakers to come to a last-minute resolution to prevent a shutdown.