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In Northern Kentucky, Government Shutdown Meets Economic Reality

The partial shutdown of the Federal government is still in effect, putting a damper on scientific research, national park maintenance and other aspects of the broader American landscape. It also is having an impact on local economies outside the Beltway, including in Northern Kentucky. We spoke with Steve Stevens, President and CEO of the Northern Kentucky Chamber of Commerce, to hear about what a distant government shutdown means to his communities along along the Ohio River.

I do wanna say that this is a very fragile economy locally, as well as nationally as we view it. We’ve been very encouraged. We’ve seen manufacturing coming back. Therefore, you know, larger companies like that drive small business growth, to an extent. And so, small businesses are still cautious, you know. They’re trying to grow, we want them to grow. We want them to invest in people, and in their capital, et cetera . Let me tell you a real localized way this really hurt us. We also have an IRS facility here that has 4,000 employees in Covington, Kentucky and that’s right on river across from Cincinnati. Yesterday, 3,000 of them did not go to work. And when they did not go to work, that meant that restaurants, retail establishments, etc. that were all in that general vicinity didn’t have that very many people in them when it was time for lunch or at other times of the day. So there is a very big ripple effect that occurs, by virtue of that type of a shutdown.

The U.S. Representative for northern Kentucky, Thomas Massie (R-KY), was elected to the House in 2012. He, like many of the members of his district, is a staunch conservative. (He was one of three House Republicans to vote against Speaker of the House John Boehner in Jan. 2013). But Stevens thinks some of those conservative principles might run up against the economic hardships of the current situation.

I think they have become very conservative and they are very principled,  and they feel strong about their principles. But I think after a while, that kind of can wear thin. Especially when people aren’t working and their jobs are kind of going away. You look at the economy and say small business represent about 60 to 80 percent of net new jobs annually, and we’re sort of sitting at a very stalled period right now. After a while, I think people will grumble loudly.

Stevens says beyond the 3,000 furloughed employees at his local IRS office, the Federal government shutdown is affecting other areas of the local economy.

Well, it’s definitely looking like a bit of a a showdown. That does worry me. We’ve seen folks do a bit of staring each other down and then eventually somebody blinks and we move forward and that’s where I think we all hope it ends up going sooner than later. But you know, a protracted stalemate here I think is really gonna affect our entities here. Cause we need folks investing .The fact that we won’t be able to process any SBA [Small Business Administration] loans you know, going forward. People need to invest in capital so they can put on workers. Our unemployment rate is falling. Finally, we seen a recovery in our home-building industry here. We just saw a report recently that we’re up 20 percent on home sales in the region, which is fantastic. And so often, they have helped lead us out of some of our recessionary periods. Well all of a sudden, there’s no access to FHA loans, which then has a very big impact on that economy and that represents a large number of employees across this region.

Stevens doesn’t offer any easy solutions for the Congressional debate over funding the federal government. But he does think local business owners will eventually speak up for fast action forward.

Well I think you have to put faces of real people, real businesses in front of those who are in a position to make change, and to affect a change, and to really kind of paint the picture for them on the local level. You know that old adage that all politics are local really does play out here. You know, real business people have to sit down and talk about it. We want, in this region, a new bridge across the Ohio River between Kentucky and Ohio. It’s gonna cost us $2.8 billion to do that. We realized a while ago that the only way we could do that is to come together as two states, two business communities, two sets of government officials and figure this out. And we’ve been moving forward, and albeit it’s a slow process but it’s going somewhere and that’s what Congress has to do.

I hope that smart heads will prevail here. I don’t think you can watch businesses sort of whither away and die. Those folks are your constituents and they’re gonna tell you about it.

What’s the economic effect of the government shutdown in your local community? Are things different than they were last week? Were you delayed in applying for a FHA or SBA loan, or maybe furloughed from your locally-based Federal job? Let us know in the comments, or on Facebook or @OnPointRadio.

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