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Potential government shutdown would affect construction industry

Republicans and Democrats continue to fight over cuts to 2011 federal budget
 Republican John Boehner

The budget battle in Washington continues to rage between Republicans and Democrats in Congress. Republican House Speak John Boehner (OH) and Democratic Senate Majority Leader Harry Reid (NV) have been holding private meetings for weeks trying to reach an agreement that both sides find acceptable.

At stake are billions of dollars in government spending and an estimated 800,000 federal employees nationwide that would be sent home with no pay during a government shutdown. Boehner and the Republicans are seeking as much as $40 billion in cuts to the 2011 federal budget, while Democrats have agreed to meet them halfway at about $23 billion in cuts.

With each passing day the government heads one step closer to a complete government shutdown of all “nonessential” services, meaning federal construction projects all over the country would be put on ice. The deadline for the federal budget to pass through Congress is Friday at midnight.

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The impact of a federal government shutdown would be felt across the entire economy, and could hit the construction industry especially hard right as things have been picking up.

The Environmental Protection Agency would stop performing environmental impact assessments, delaying large-scale construction projects that need government approval before they can break ground. Further damage would be done to construction companies and other small businesses because the Small Business Administration would stop handing out loans that are meant to help small businesses get through the economic recovery.

The real estate market could take a hit too, which would decrease the demand for construction of new homes. The Federal Housing Administration would be unable to provide guarantees on new home loans, forcing first-time home buyers to postpone closing dates.

However the Federal Highway Administration and other fee-based government agencies that operate on multi-year budgets would remain open, so highway construction and road repaving projects would remain on schedule.

President Obama had largely stayed out of the dispute, but called both Boehner and Reid in to the White House for a late night meeting last night.

“Companies don’t like uncertainty, and if they start seeing that suddenly we may have a shutdown of our government, that could halt momentum right when we need to build it up — all because of politics,” President Obama said in a speech on Wednesday.

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