WASHINGTON, DC-For those of you who don't have the stomach to follow the political minutia behind the recent news coming out of official Washington, this is your lucky day—we have been doing it for you. Today, the US government partially shut down. Most everybody knows why: Republicans in the House of Representatives are insisting on a measure that will delay or defund ObamaCare in exchange for funding government operations. How long this impasse will last is anyone's guess, but the ramifications could be significant. Following are some FAQs about the shutdown and how it may impact the commercial real estate industry.

How many government employees have been thrown out of work? Numbers vary from between 800,000 to one million.

Will they recoup their lost pay? They did in the last shutdown but there is no guarantee that will happen this time. Indeed, pundits have noted that many politicians now are far more hostile to government workers and unlikely to feel they should be paid for work they didn't do.

And that matters to the commercial real estate sector because…? Depending on how long the shutdown lasts, it will have some impact on local economies. Washington, DC, of course, will feel the strongest impact but there are some cities and states where the impact could be surprisingly severe as well. A protracted shut down would worry consumers, tank the markets and more than likely cause businesses to scale back capital equipment spending. It is also important to note that federal employees will not be available for important – but not critical – tasks. The CRE industry will notice that too.

Such as? Well, there is some doubt about whether the September job numbers will be released on time this Friday. Websites with important data, such as Census.gov, are going dark or the equivalent thereof. The Census site is currently showing a warning that "due to the lapse in government funding, census.gov sites, services, and all online survey collection requests will be unavailable until further notice."

Is that all? No, but the cynically-minded might not be so dismayed by other closings. The Internal Revenue Service will cease audits and examinations (filing deadlines remain in place). The Securities and Exchange Commission will not open new inquiries and will hold off on litigation as much as possible. (Filings, though, will continue as always).

What comes next? Who knows? This is a clash over policy and each side is equally determined it is correct.

You don't seem too worried about the shutdown. As a Washingtonian and U.S. citizen I am mortified by it and if this were the only item on the menu I would be worried to distraction over it: without a doubt, an extended shutdown has the potential to unwind our slow but still forward-moving recovery. But the coming clash over the debt ceiling is what really frightens me. On or about Oct. 17, the US will start to default on its debt unless Congress agrees to raise the debt ceiling.

How does the shutdown play into this? They are two separate issues, but there is a theory that the shutdown may diffuse passions in the House of Representatives and make them more amendable to a deal to raise the debt ceiling.

Or? Or it could harden their resolve, especially if the shutdown ends without many or any of Republicans demands met. In that case if neither side blinks there is a good chance the US could technically default.

And then what happens? Economists say a default will make the Lehman Bros. collapse look like a walk in the park.

I am a real estate guy not a constitutional attorney, so refresh my memory – what other options are out there? President Obama could invoke the 14th Amendment and raise the debt ceiling himself. That will surely be litigated all the way to the Supreme Court, but it is also questionable whether it will soothe US and world markets anyway. Investors will not likely want to buy any of that debt if there is a question mark attached to it.

Maybe Obama will blink over the debt ceiling instead? Maybe, but it is highly unlikely. It would be the end of his political career; also, it would make him look weak abroad as he deals with various crises and issues. He can't afford that.

Instant Insights /

An FAQ on the Government Shutdown

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