Boehner Paid as Soldiers

Boehner Paid as Soldiers Wait If Government Shuts Down

By Julianna Goldman

Elected officials, like Speaker of the House John Boehner, would be paid as usual during a shutdown. About 800,000 "non-essential" federal workers would not. Photographer: Alex Wong/Getty Images

House Speaker John Boehner. Photographer: Olivier Douliery/Pool via Bloomberg

As tomorrow night’s deadline for avoiding a government shutdown nears, about 800,000 “non- essential” federal workers face the prospect of getting no pay at all for time lost to the political impasse.

Elected officials, including Republican House Speaker John Boehner, Democratic Senate Majority Leader Harry Reid and President Barack Obama, all would be paid as usual during a shutdown, unless Congress changes the law. Soldiers, law enforcement officers and other government employees whose jobs are deemed essential would continue to work yet wouldn’t get paychecks until the budget standoff is resolved.

Workers furloughed as non-essential, however, aren’t guaranteed that they’ll be paid at all for time off when the government closes for business. While they’ve ultimately received back pay after previous shutdowns, it’s up to Congress to “determine whether ‘non-excepted’ employees receive pay for the furlough period,” according to a U.S. Office of Personnel Management website providing guidance and information on furloughs.

“It is unknown whether legislation will ultimately be passed” to make up lost pay, says a sample letter to non- essential employees prepared by the Committee on House Administration. “We wish that we could provide you with more guidance on this issue but, due to the fluid nature of the situation, we cannot.”

Obama said a White House meeting last night with congressional leaders served to “narrow” differences over spending cuts. The government’s current spending authority is set to expire at midnight tomorrow.

‘Everyday Americans’

“A shutdown could have real effects on everyday Americans,” Obama said late last night at the White House after a meeting where Boehner and Reid failed to reach an agreement.

“It means that hundreds of thousands of workers across the country suddenly are without a paycheck. Their families are counting on them being able to go to work and do a good job.”

The Senate has passed a measure to dock the pay of lawmakers for the duration of a shutdown. A House measure, part of the largely symbolic Prevention of Government Shutdown Act approved last week, would dock the pay of the president in addition to members of Congress. Neither proposal has taken effect.

Members of Congress “shouldn’t be getting paid, just like federal employees shouldn’t be getting paid” during a shutdown, Boehner said today on ABC’s “Good Morning America.”

Freshman Democratic Senator Joe Manchin, of West Virginia, said in a statement on his website that he would forgo his salary during a government shutdown and challenged colleagues to do the same thing.

Bottom Line

“The bottom line is this: I can’t imagine that the president, vice president or any member of Congress --Republican or Democrat -- thinks they should get paid when the government has shut down,” Manchin said.

Yields on two-year Treasury securities fell 2 basis points to 0.81 percent at 10:39 a.m. in New York, below the average yield of 2.59 percent in the last decade, according to Bloomberg Bond Trader prices. Bond prices reflect expectations that lawmakers will resolve differences over the budget and avoid a crisis of confidence in U.S. assets, said John Lonski, chief economist at Moody’s Capital Markets Group.

“I just don’t see where that is exerting much influence over the pricing of financial assets,” Lonski said in a telephone interview from his New York office. Investors foresee that “when you come to the edge of the precipice, a more rational approach should prevail,” he said.

Investor Perception

Contracts that show investor perception of U.S. credit risk rose today, reversing a five-day decline to the lowest since Oct. 19.

Credit-default swaps on U.S. government debt, which investors use to hedge against losses or to speculate on creditworthiness, jumped 4.1 basis points to 40.9 basis points as of 10:53 a.m. in New York, according to data provider CMA. The swaps are down from as high as 51.5 basis points on Jan. 27

Consumer confidence in the U.S. rose for a second consecutive week as an improving job market helped ease the burden of higher fuel costs. The Bloomberg Consumer Comfort Index climbed to minus 44.5 in the period ended April 3 from minus 46.9 the previous week.

In Washington, the shutdown has specific costs. The cost of back pay for furloughed government workers would be $174 million for each day the government is closed, according to data compiled by Bloomberg Government analyst Scott Anchin.

Wait for Paychecks

Unlike the president and legislators, military personnel and essential federal employees who stay on the job would have to wait until government spending authority is restored to get salaries and wages.

“Agencies will incur obligations to pay for services performed by excepted employees during a lapse in appropriations,” according to the website.

There is no guarantee that Congress would make furloughed workers whole. It is possible they will be eligible for unemployment compensation, though it depends on state requirements, the website says. “Some states require a 1-week waiting period before an individual qualifies for payments,” it says.