Veteran of 1995 shutdown says don't repeat

By Tim Reid

WASHINGTON (Reuters) - The official who carried out the last government shutdown has a warning for squabbling lawmakers -- another one now could be disastrous for the economy.

John Koskinen, who organized federal operations during two government shutdowns in 1995, said failure by Republican and Democratic lawmakers to reach a budget deal could plunge the United States back into recession.

"Things are very different today than they were in 1995," Koskinen, a former deputy director at the White House Office of Management and Budget, told Reuters.

"In 1995, we had a budget deficit of $200 billion, which these days looks like a rounding error. The world then was relatively peaceful -- today we are involved in three wars. The economy today is extremely fragile. We have just gone through the biggest economic challenge in 80 years. In 1995 the economy was beginning to stabilize.

"A government shutdown will take up to a million workers -- government workers and contractors -- out of the economy. Another recession is a real possibility,'" he said.

Investment firm Goldman Sachs estimated a government shutdown lasting more than a week could cost the economy $8 billion in missed federal spending, dragging down growth.

In 1995, the first shutdown lasted one week, around Thanksgiving. The other saw a three-week closure that finally ended when Congress reached a budget deal on the first Saturday in January 1996.

NO PLAN

Koskinen said there had never been a widespread government shutdown before 1995, and no government agency had a plan on how to manage one.

During the summer of 1995, with a shutdown looming, Koskinen asked each government agency to supply a shutdown blueprint, including a list of which workers were deemed essential and nonessential.

"It was my idea," Koskinen said, "but it was Justice Department language."

He said there were unforeseen consequences in 1995, and lessons learned.

For example, it is illegal for government workers to show up at work if they are not being paid. But many still showed up for duty.

"We had to bolt doors," Koskinen said.

If there is a shutdown this time, he said, "I think employees are much more aware now that they cannot work. But with the Internet and BlackBerry use today, I am sure some will try and work from home. That is why there is talk of people being forced to hand in their BlackBerrys."

Koskinen said the procedure to shut government agencies almost takes care of itself. While the federal government can borrow money and run up huge deficits to fund itself, it is a crime for a federal agency to spend one cent more than the money Congress has appropriated for it.

Each federal agency has a bank account to pay its staff and fund its duties. Once that bank account is empty, "in layman's terms, you cannot overdraw that account. It is a crime."

Koskinen said in 1995 the Internet was in its infancy. Today, most people rely on websites to get their information about the government.

"People will assume this information will be still be available if there is a shutdown this time round. It won't. These websites will close down."

(Editing by Vicki Allen)