US Government Shutdown Could Have Far-Reaching Impact

by Kane Farabaugh on April 8, 2011

A shutdown of the Federal government could leave hundreds of thousands of government employees without a paycheck.  That shutdown could also have a ripple effect, impacting local communities throughout the United States and beyond.  The shutdown could even impact one important Midwest waterway.

The Illinois River, which winds through the heart of the Midwest state of Illinois, is an important waterway for agriculture.

Kevin Eubank is a Park Ranger for the Army Corps of Engineers Illinois Waterway project.  The Army Corps of Engineers has oversight for the lock and dam system along the Illinois River.

"The Illinois is a commercial navigation River," said Eubank.  "Its main purpose is to allow towboats, cargo carrying things to go up and down to deliver the corn, coal, soybeans, and other raw materials that industry needs to keep operating."

It is not uncommon to see traffic disruptions on the river.  Forces of nature, such as flooding and drought, have closed the lock and dam system before.  But seldom has the closure resulted from a political dispute, and Eubank is unsure what a government shutdown would mean for the Army Corps of Engineers and the Illinois River.

"We have not seen the official recommendation yet on how the navigation part of the Corps is going to deal with a potential shutdown," said Eubank.  "So we really don't know."

Eubank says any decision to close the lock and dam system would have far reaching effects beyond Illinois.

"If the decision comes down that the locks should be shut down, then of course no boats will go through," noted Eubank.  "Then the industries that depend on the river for their materials would be faced with having to find another way to get it there.  Having to move cargo by truck usually costs close to three times as much as moving it by barge, so there could be a drastic impact on prices people pay as well."

GrainAnalyst.com's Matthew Pierce is watching those prices closely, at a time when food supplies around the globe are low, and prices for commodities that travel the river, such as corn and soybeans, are high.

"Third world countries are going to be affected most of all [by higher prices], with India and China the biggest problems on hand right now," explained Pierce.  "In the last two weeks, we've seen China buy over 2.5 million tons of corn, and this is the largest import program they've had in over seven years.  So the countries themselves are making moves to curb food inflation that they have domestically, but the situation I believe is that right now consumption worldwide outpaces production."

Pierce says in addition to supply and demand concerns for commodities, the biofuels industry would take the biggest hit by a government shutdown.

"The biggest impact is going to be on the ethanol industry," Pierce added.  "The subsidies that come from the U.S. government float the ethanol industry right now, and without that they are going to be running negative margins which could impact corn demand."

Back at the Illinois Waterway Visitor Center, Carol and Robert Walker watch the wildlife, as a commercial barge makes its way through the Starved Rock Lock and Dam.  

If a shutdown occurs, the visitors center would close, preventing people like the Walker family and thousands more from visiting the site.

"I think it's too bad," said Carol Walker.  "I think it's very, very sad that places like this and historic sites and parks are going to have to close down for a while.   It seems likes families would be big losers closing down sites like this and parks and historic sites.  Who's going to operate the dam and the locks?"

The biggest impact of a government shutdown hits close to home with people like Ranger Kevin Eubank.  As an employee of the Army Corps of Engineers, he is a federal employee, and his future is uncertain.

"Our staff of three permanent park rangers here and one in Peoria would be left at home," said Eubank.  "We're told that we have to post closure notices on the visitors center here."

Eubank says during the last government shutdown in 1995 and 1996, there was little impact to the daily operations along the river, and everyone got paid.  But the lack of a current agreement on a budget between lawmakers has created uncertainty, about how the latest shutdown will impact commerce along the Illinois River, and the rest of the country.

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