WASHINGTON--The federal budget stalemate that would shut down all but essential government services was right on track at press time Monday night, but the possibility was hardly generating immediate worries through the domestic apparel manufacturing or apparel importing industries.
The ramifications of a long-term shutdown, including a default by the U.S. on its bonds, are, of course, veering into unknown territory. As Maureen Allyn, chief economist for the investment firm Scudder, Stevens & Clark, comparing a default to a hurricane or nuclear war, said, "You don't exactly know what it's going to do, but you know it would inflict damage."
More likely than a default is a bad deal between Clinton and the Congress that the financial markets interpret as causing a larger deficit, she said. In such a case, confidence in the dollar would likely drop and its value would fall against other currencies, Allyn said. But this, because of low inflation, would hardly be catastrophic.
A partial suspension in federal spending would be noticed in areas with many federal employees but would not be big enough to harm the economy overall in the short-term, Allyn said. Some 800,000 workers would be furloughed, but will receive back pay once a budget agreement is reached.
Meanwhile, Laura Jones, executive vice president of the U.S. Association of Importers of Textiles and Apparel, said "Customs will be working normally, so generally, there should be no problems processing imports."
A spokeswoman for the American Apparel Manufacturers Association said its members are not concerned about a government shutdown "that lasts for a few days," including the shutdown of the Commerce Department's Office of Textiles and Apparel. Should this persist for perhaps a week or more, AAMA would be concerned, the spokeswoman said, explaining "OTEXA performs valuable services for companies looking for export markets."
At press time Monday night, the shutdown loomed as a distinct possibility, with President Clinton poised to veto a congressional spending bill that would push up Medicare premiums. The Office of Management and Budget was preparing for an orderly halt in all federal services, save for those considered essential. These include routine U.S. Customs inspections at ports, the delivery of mail, airport operations and military readiness.
However, in anticipation of the President's veto, the Senate moved to stay in session until midnight in the hopes of hammering out a compromise plan that Clinton would sign to keep the government operating.--Fairchild News Service

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