Government shutdown to be felt first in Washington

As a government shutdown appears increasingly inevitable, those most likely to be hit by closures and furloughs are already bracing for hard times.

A shutdown would cut off contracts and thousands of federal employees around Washington, D.C., would face furloughs, with effects rippling through the rest of the local economy.

The region around the nation's capital survived the recession in 2008 relatively unscathed thanks to a local economy where federal accounts provide more than 350,000 jobs in the District of Columbia, Arlington County, Va., and Montgomery County, Md.

But growth stalled when $1 trillion in budget cuts went into effect on March 1, as federal contractors saw funding recede and the military faced big slashes to the bottom line.

"October 1 is our New Year’s,” said James C. Dinegar, the president of the Greater Washington Board of Trade. “It’s when contracts are supposed to be signed and money starts flowing for the new fiscal year.”

And it's not just federal employees that will feel the pain: With much of the District of Columbia's local government dependent on federal operation, libraries, motor vehicle officers, and even trash collection would stop.

D.C. tourism, which brings in billions in revenue and millions in tax dollars, and supports tens of thousands of jobs, will see a major decline as museums and monuments will be closed to the public.

"It’s an amalgamation of tourism, hospitality, restaurants and so on, said Dinegar. "If the government shuts down, a tourist isn’t going to visit the Smithsonian and then head to the Old Ebbitt for dinner."

Although while little pain would be felt in the immediate future outside the Washington area, stock markets are already reacting Monday in advance of the looming shutdown.

The Dow Jones Industrial Average dropped more than 130 points, or 0.9 percent on the open Monday morning, recovering slightly as the day went on. The S&P 500 Index was down 0.5 percent and NASDAQ down 0.38 percent heading into midday Monday.

The Senate is scheduled to meet at 2 p.m., where it is expected to reject a House of Representatives version of a continuing resolution that would fund the government through December 15 in exchange for delaying the implementation of the Affordable Care Act for a year and permanently repealing the law's medical device tax.