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Possible government shutdown threatens Tax Day, foreign aid

U.S. President Barack Obama addresses the media. Earlier in the day President Obama met with Congressional leaders in hopes of coming to a agreement on funding the government to avoid a shut down.

UPDATED REPORT

STEVE CHIOTAKIS: Budget negotiations between the White House and House Republicans seem to be at an impasse. And a government shutdown looms here in the U.S. In addition to domestic programs, foreign aid, the passport and visa process, all that could come to a halt.

Marketplace's Gergory Warner is with us live with details. Hi Gregory.

GREGORY WARNER: Hi.

CHIOTAKIS: What kind of foreign aid are we talking about here?

WARNER: Well, I mean -- anything. Anything from building schools for girls in Afghanistan to training police officers in Iraq to combating HIV/AIDS in Rwanda. All of it could be affected by a shutdown. The larger question is though, what is going to happen to foreign aid in these budget negotiations because according to a Gallup poll, foreign aid is the only piece of the budget that a majority of Americans agree should be cut.So shutdown or no -- the fate of a lot of foreign aid is uncertain.

CHIOTAKIS: All right, so how else would a shutdown have a global impact, Gregory?

WARNER: Well, as you said all kinds of document processing the government does on a daily basis -- I mean visas, passports, licenses for import/export businesses.

I called I called Stephen Davies. He's an economic historian at the Institute for Economic Affairs in London. And he remembers what this meant in the 1990s.

STEPHEN DAVIES: The last time that there was a shutdown it led to a significant delay in any sort of procedure documentation that required applying to an agency. The federal government would basically just not happen while the shutdown is in place.

So overseas businesses especially ones that depends on quick government approvals for the flow of goods, they're going to be watching the Hill very closely.

CHIOTAKIS: As we all will. All right, Marketplace's Gregory Warner. Gregory thanks.

WARNER: Thanks Steve.


ORIGINAL REPORT

JEREMY HOBSON: Time is running out on negotiations to avoid a government shutdown. But at last check the prospects for a deal don't look good. Now, there are many parts of the government that would be affected by a shutdown, but we're going to focus on a couple that are particularly timely with Marketplace's Gregory Warner, who joins us live. Good morning.

GREGORY WARNER: Good morning Jeremy.

HOBSON: So first of all, Gregory, we are less than two weeks from tax day. What would happen if the IRS has to close its doors?

WARNER: Well, they'd never close their doors completely. The tax collection has been deemed one of those essential services like air traffic control that keep going no matter what. But, the IRS could trim staff, and so what does that mean? Does it mean delayed refunds? What happens to electronic filing and online help? Software companies like TubroTax at least as of yesterday haven't been told what to do in the case of a shut down, and the treasury department is not talking.

HOBSON: All right, well the IRS is one thing, the other thing is foreign aid. We've got a lot going on in places like Egypt and Libya. What would a shut down do to foreign aid?

WARNER: So the war in Libya would likely not stop. That will probably be deemed essential. But humanitarian aid efforts or development projects -- anything from a women's shelter in Afghanistan to helping Pakistani farmers get new seeds in the ground after the floods -- those could be disrupted.

I called Stephen Davies. He's an economic historian at the Institute for Economic Affairs in London.

STEPHEN DAVIES: Quite certainly I'm sure that the heads of agencies like USAID will have contingency plans that are drawn up right now as to which staff they would keep on and who they would lay off.

But Jeremy of course these are all just contingency plans in case of a shut down, nothing certain at this point.

HOBSON: Marketplace's Gregory Warner. Thanks Greg.

WARNER: Thanks.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.
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