- Just ahead on "Black Issues Forum", the implications of government shutdowns or nationwide lockdowns can be far reaching, and affect various aspects of government services, the economy, and individuals lives, especially in Black communities.

We learn about preventative measures, and exactly what impact these decisions have, just ahead on "Black Issues Forum", stay with us.

- [Announcer] "Black Issues Forum" is a production of PBS North Carolina with support from the Z. Smith Reynolds Foundation.

Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.

[uptempo music] ♪ - Welcome to "Black Issues Forum", I'm Kenia Thompson.

It came as a surprise to many, but Congress was able to avoid a government shutdown earlier this week by passing a stopgap spending bill that funds agencies at last year's levels for 45 days.

This news has some buzzing about what this means, and questioning if we're in the clear.

Later in the show, we'll also discuss the financial impact.

To talk about this, we welcome to the show guest, La'Meshia Whittington, North Carolina State University professor and executive director of The Green Majority.

Welcome to the show, La'Meshia.

- Thanks Kenia for having me back.

- Of course.

Let's just go ahead and get into it.

Explain to us what's happened in this decision is to not have a shutdown, and then what is a stopgap?

- Absolutely, so let's get into it.

So first, I like to, you know, break down for folks exactly what is the shutdown, and then the stopgap will make a bit more sense.

So every single year, our federal government, you know, our, when we talk about our congressional members, congresswomen and men, they have to pass a budget.

Just like any business that we can think across the country, every year you pass a budget to determine what you can and cannot spend for the year to make sure you have enough, right, in the bank.

And so each year, that's the process and it has to be done, a decision has to be made by both the House, and the Senate, and confirmed and then signed by the president by October 1st, that's our deadline every single year.

And so our government has to go through this process of passing 12 budgets because there's 12 federal departments.

So we can think about transportation, Department of Defense, our Environmental Protection Agency, education, we can begin to think very broadly, right?

Even when we're talking about health and human services, okay?

And many of us that receive or benefit from programs from these departments, their budgets come from this appropriation, and that's what they call it, 12 appropriations, that's another name for the budgets.

But unlike any government in the world, the US is the only government that can actually shut down if it doesn't come to a decision.

No other country does this.

This is unprecedented how we move forward.

You know, usually governments, if they can't come to a consensus, an agreement, what they'll do is they'll just allow the agencies that they have to operate on last year's budget so they can keep their people paid, and so that we can keep those programs expending the needed resources to maintain our country.

But our government, when they can't come to an agreement, and that's the, you know, elected officials on the federal level, they can shut down the government if it doesn't happen by October 1st.

And so what we're seeing is more frequently in our recent history, we see a threat of a shutdown every single year.

And that's because our politics have become so polarized that there becomes a difficulty landing on a compromise, right?

And what for the American people needs to be a priority, make sure people are paid, that oftentimes it gets left behind in the conflict of partisan politics, and that's what we're seeing.

And in 2019, we had the longest, I believe it was over 30 days, 30 something days, that we had the longest government shutdown in history.

And so the stopgap to your question though, stopgap is as the word says, it's to stop the impact of that shutdown.

It is to give an extension to Congress to give them a little bit more time to come to an agreement.

It is trying to place a bandaid on a rather large crack in the seam, but it's temporary, that's the whole point.

So it's a very temporary measure, and that's what a stopgap is, is to give an extension, and to give more time for Congress to actually pass a budget for those 12 departments, 12 appropriations.

- Okay, and so thank you for that clarification.

And so they said that there, for the next 45 days, we're gonna continue at spending level of last year.

So after those 45 days, what does that mean?

So is that, is that the length of that stopgap?

And then does that mean we could be having this conversation again by the end of the year or next year?

What does, what does that look like?

- So that's exactly right, Kenia.

So at the end of that 45 days, this is a 45 day extension for them to pass what should be our current up-to-date new budget for this year.

And so yes, we do have 45 days, but in 45 days we will be back at the same conversation if a budget hasn't come to a consensus and it isn't passed.

Now, sometimes some agencies can be approved to move forward and continue to operate, and where there may be budgets that are approved for certain agencies, that they don't have to be delayed.

So we can see that all 12 may not be operable, but maybe six agencies are still okay with moving, and they have a budget where Congress has had an ability to agree on the transportation budget or agree on the Department of Health and Human Services budget.

But if that consensus isn't made for all, right, we're still in the same decision point of, again, what is our budget for this year?

How much money are we spending?

And with all the climate disasters that are happening and the fires, we saw that President Biden was asking for additional emergency relief aid, and when we're talking about Maui and the support there in Florida.

And so with this 45 day stopgap, there was also a concession to include $16 billion to give to emergency management resources to be able to assist with these climate and storm events.

So that's a very big deal, it's very positive, it means that folks are not actually left out of the the rescue efforts, right?

That's what's happening.

But yes, in 45 days we're still going to be back at the same conversation of a shutdown if a decision isn't made.

- Yeah, and federal employees during this time are kind of left in this limbo, right?

And so what does that implication mean to their jobs, the security of their jobs?

- That's right, it's a major implication.

We saw strikes several years ago from the traffic air controllers, the folks that do a wonderful job just making sure that we can, airports can get in and out safely.

There was a bit of a protest from them several years ago that said, okay, you know if we can't get paid, we're not coming out to do this labor.

And so, and that's actually what helped to move the budget at that time because it was a response from the people.

So to your point, the implications are grave.

That means that all federal employees will be furloughed or they won't receive a paycheck.

And then if they are designated as essential employees, and that's why I mentioned the traffic air controllers, TSA, other folks, that means they have to show up to work without a paycheck and so, these are folks of some departments won't receive back pay, some will, like the military, but we're seeing our everyday folks that are serving really hard to protect this country, again, checks won't come through the mail.

When we're talking about Health and Human Services, checks won't come through the mail.

So that's a very a grave impact and we have nearly between four and nine million federal employees across the nation.

So we're not talking about Washington, DC, that that only makes up maybe 15%, if that.

of the total federal employees.

We're talking about a national impact of folks across all 50 states.

- Wow, big, big impact and more breaking news came through this week.

We had Speaker of the House, Kevin McCarthy, who was ousted from his seat and we know that he was largely against the shutdown and frankly, it didn't happen because of him.

So let's talk about his removal and was that connected to this decision somehow?

- Oh, it absolutely was.

So in January, I believe it was January 15th, now former Speaker of the House, McCarthy, went through a very trying time by his own party, actually becoming appointed as the Speaker of the House.

It took 15, 15 times and that's because there was already a break within the Republican party.

That's what we're looking at, there's a polarization that's happening, not just between both parties, but it's also happening within individual parties and in this case it's the Republican party.

There's factions that have stood up to say that they actually wanna lead in a different direction that may not be in alignment with the party values.

So that's what we're seeing.

The Freedom House Caucus is an example of that and because of that, in January, McCarthy agreed, in order to be placed in that position, he agreed to a deal that he would remove the formal process of how a speaker could be removed by his own party and actually he agreed that it would only take one person, one Republican to actually oust the Speaker of the House if they felt like it.

And so now that mechanism has been used to come back and actually remove him and so we saw what, only six Republicans out of the party actually vote against and to remove him out of that position and it was really that Freedom House Caucus and folks that were already standing up against the, again, the status quo of the Republican party and they stood with the Democrats to remove the Speaker of the House and their reason is because they didn't agree with his bipartisan effort to keep the shutdown from happening, keeping Americans actually paid and because he went into that bipartisan, what really should be the goal of American politics is democracy.

It's coming to a consensus and because he did that, that was unfortunate at this point and I say unfortunately because bipartisanship should be rewarded.

I'm not saying about party values, but at that point, yes, that's exactly what has been used publicly.

But what is very daunting, there's no recommendation for a replacement.

- That was gonna be my next question.

Before we move on to this financial portion of the conversation.

It's an open seat.

Who makes this decision?

How long is this decision gonna take to have a replacement?

And what does that mean if we don't have one soon enough?

- That's right.

So an outline of the process, next week, next Tuesday, by Wednesday, there will be a conversation brought to the floor around a vote because they will have to vote for the new Speaker of the House on, we're hearing the minority leader Congressman Hakeem Jeffries will be nominated from the Democrats.

And so there's some data, some statisticians that are saying that may not happen, that may not be probable for both sides to agree for Congressman Jeffries to be that replacement.

But then the Republican Party actually hasn't recommended a replacement.

And so that's also what we're seeing is this decision point to remove the Speaker of the House but really have no one in the pipeline of recommendation.

But what that means, some folks are saying, "Oh, they're not planning, they don't know."

I caution us to be very careful about what we give as a benefit of the doubt.

I think it's very strategic, if I may add, is that that means that the House, the US House, is actually not operating currently.

Without a speaker, it's not moving forward and so where does that really place us in budget decisions and coming to a consensus in that 45 days?

Now we're under 45 days.

But what does that mean to come to a consensus when your House, no pun intended, is in disarray?

- Well, a lot to unpack there, but we wanna move on to the financial impact that a lot of these decisions are having on our community.

So let's bring in our next two guests to join LaMeisha, both financial advisors, Ruby Wesley with Northwestern Mutual Advisor and Thomas Wilson and Edward Jones Advisor.

Welcome both of you to the show.

- Thanks Kenya.

- Thanks Kenya for having us.

- Of course, it's certain that with conversations about the stability of our nation's economy like the one LA and I were just having, there are those out there that are asking, "What happens if?"

and for me, the first thought went to finances and I thought that this would be a good coupling with the government shutdown conversation.

We know that many of our Black communities are underserved and with news like this, it can cause panic to spread.

So let's talk about that financial impact and how to be prepared if and when conversations about shutdowns and lockdowns resurface, which it sounds like it might.

Ruby, I want to come to you first.

Emergency funds, not a lot of people have them.

We should all have them and usually that's the first thought, "How much do I need to have in savings?

"Is what I have enough?"

And how do we know how much is enough?

- Kenya, you're so right.

Emergency funds are extremely critical especially in situations like this, they're unforeseen.

But the important thing is to be prepared and so generally you wanna have around three to six months of your bills someplace liquid, in a bank account, high yield savings account, where you can access it pretty quickly in the event that there's an interruption to your income.

So that's a general rule of thumb.

For people that have an income cycle that may not be routine like every two weeks, once a month, maybe you're a real estate agent, you might wanna have a little bit more so you give yourself a little bit more runway because your income cycle's a little bit more spread out.

So you might extend that six months to nine months.

But the bottom line is you wanna just be prepared because sometimes we just don't know when these things will happen and so emergency fund is key to have at least you wanna be sure that you're able to pay your bills in a situation like this.

- Indeed, Thomas, I wanna bring you in, so three to six months, maybe more, depending on your type of employment, what types of actual accounts or saving accounts should we have?

Are there differences and are there ones that are more favorable than others?

- Yeah, that's a great question.

I kind of wanna piggyback off Ruby because, yeah, I totally agree, you need to have an emergency savings account.

And we hear about these things all the time, but let me just step back for a sec, say, you need have an emergency budgeting account.

And you have to understand how to trim down during time times of downmarket.

And I believe in a downmarket strategy.

Because you have to stay prepared for the unexpected, you never know when they're gonna happen.

So you want to make sure you separate your needs from your wants, from your desires.

Now, let's go back to the needs part.

Just diving down deeper into the needs is your must.

And that's where you get to your emergency budgeting.

What must I have?

From that must you start picking back to say, okay, now let me put these things in place.

Let me have my general account, which is the account that I use to take care of my my everyday expenses.

Then I'll pivot into my savings.

So now I have a savings account, and that's really gonna be directed towards goals.

What are the goals I'm trying to achieve?

Long term, short term, midterm.

And then I go into my emergency.

That savings account acts as the gap between your everyday spending, your goals, and now into your emergency fund.

Things going, things come about that you really need to be prepared for.

And you start looking at different various account, from your standard checking account to a high yield savings account, to a money market account, to a CD account.

Does it make sense for me to do a three month CD, a six month CD, or nine months, or a year.

You know, I put those in the cycles of when I may need that money and also my liquidity needs.

So that's really how you start bringing in accounts into the situation by establishing my needs, my wants, my desires, and then go back to my musts.

What are my must-have no matter what takes place?

- Nice.

And LA, you know, when we talk about unemployment benefits, last year, or during the pandemic, we saw that there were a lot of unemployment benefits being shared out, and then people were being asked to pay that back.

And so, and I think there might be a fear now that if another shutdown happens and it impacts your paycheck, that people are gonna start dipping into their savings, because they don't want to go to the government.

Do we see that being a problem?

Is there gonna be potential lack of unemployment funds?

Are we gonna be asked to pay that back again?

What do you foresee there?

- Yes, so, you know, I just really wanna appreciate the comments from Ruby and Thomas.

The reality is our communities, when we're talking about the Black communities, we're already in a deficit.

And so as I'm giving a landscape of nationally what we're looking at, we have to give it a focus of, it's just that much harder for us, right?

And so that's the reality, and planning these contingency plans and being very proactive is key.

We are already in a trillion plus dollar deficit as a country, and that's growing.

We have debt.

And so that's something that isn't a part of the conversation today.

But if folks look deeper, we've had on Black Issues Forum, if folks look back other conversations around the debt ceiling.

And so it's very critical to understand that our country's in debt, our communities are in debt, our country's in debt.

And so we are having to be very strategic and preemptive.

And so when the shutdown does occur, I really wanna make it clear, Congress doesn't actually lose their paycheck during the shutdown.

- Right.

- Mm-hmm.

So Congress, President, and our Supreme Court justices, their paycheck continues to go, even though they're federal employees.

But if their staff, as an example, their staffers, they will lose their checks to come in, and they actually read, draft the bills, speak to constituents, right?

So we're thinking about the folks who are impacted are the people who are the frontline workers.

That's where I'm driving towards.

And so when we talk about the impact, it may not be, if you're not a federal employee, you may not see that direct impact to your check, but the fact is, nearly 7 million women and children benefit from WIC.

- Yeah.

- WIC is a federal program, and it would altogether almost completely stop shortly after a shutdown starts because it couldn't be sustained.

- Yeah.

- Thousands of children are actually benefactors of Head Start.

And that means that if Head Start stops, which is a federally funded program, children actually wouldn't have daycares to go to, because a lot of childcare organizations receive grants from Head Start to run the daycare.

No daycare, parents and guardians can't actually have supervision while they have to go make an earning.

So then we saw that impact in 2019, when our economy took a $11 billion hit.

- Wow.

Wow.

- Well, Ruby, I wanna bring you in.

You know, let's say we do find ourselves in this situation that La'Meshia is referring to.

We're unemployed, we don't have SNAP benefits, you know, we can't take our kids to daycare.

How do we manage our finances during that time?

That is, to me sounds extremely overwhelming.

Sometimes money's there, and sometimes it's tight, and sometimes it's just non-existent.

- You're 100% right.

And La'Meshia and both Thomas raised great points.

It's really about that preparation, doing the work upfront so that you don't find yourselves in these situations.

And sometimes we do.

And going back to the importance of emergency fund, that's why it's there, for times like this.

And Thomas mentioned, hey, we got it, there are gonna be times when we're gonna need to be a little bit more lean.

And so maybe that means we're not, you know, getting our nails done twice a month.

Maybe we're cutting that completely out and doing it yourselves.

It's really looking at like, what are my needs, and understanding what are your values.

Because sometimes we value things are material, and they're not necessarily tied to our needs, because we want a certain image.

- Let me, sorry, I don't mean to interrupt you.

Let me add a quick question there.

So if we are living paycheck to paycheck, we literally sometimes can't find 20 bucks, right?

How much contribution is impactful versus not?

Or is any contribution impactful?

- General rule of thumb is, you're saving about 20% of your income.

And you're tracking well for retirement and preparing for future needs and goals.

But that's not the reality for a lot of people.

So you have to start building that savings muscle.

We can find it.

The dollars are there.

I mean, money gets lost in coffee and dining out, in other luxury things.

So we really gotta be disciplined about where our money is going and where we're spending it.

And we will find those dollars.

And sometimes it might be a matter of like, "Hey, I've done everything, but now I need to really look at my income sources.

Potentially I may need to incorporate a side gig."

I need to do something to increase the income that's coming in, 'cause you're just at max.

And so it's having that hard conversation with yourself to take a course, to find a side gig, to do something to bring in additional income.

- Yeah.

That's a good point.

- So that you can save.

- Good points.

Thomas, you know, as we're saying, people live paycheck to paycheck, but they're also living on high debt balances, when we talk about credit.

And the Black communities are certainly not exempt from that.

Are there alternatives to utilizing our credit cards, and increasing our balances during economically tough times?

- When I sit down with clients, you know, I try to put us in that space automatically.

And I start with an if-then statement.

If this happened, then what?

You know, because I think if you can answer those questions before it happen, you understand what the next steps are.

With that said, if I'm going to a situation where maybe my income is not sufficient, and I've got potentially where I'm headed towards high balances, can I transfer that balance to another card that has 0% interest where I can make a minimal payment on that card now with a 0% interest, and the excess of that can go towards something else that I really need?

And then you also take a look at their necessary expenses.

Do I have a cash reward credit card?

'Cause now I wanna play offense with that side, and I take that card specifically for bills that I know I pay off every month anyway.

And I charge all those purchases towards that card to get that cash reward later, and use that as an additional savings.

So there's different ways, we just have to be creative enough.

But it's better to be creative when you're in a peaceful calm state where you can have that conversation up front to understand your different options.

You know, a lot of times we make bad decisions because we have that anxiety attached to it, and that anxiety brings in that emotion.

So that's why you wanna sit down with a financial professional, financial advisor so we can have these detailed discussions about what to do in the case that this happened, and be prepared for those unexpected.

I mean, you never know when you lose a job, medical expense, or just things just go array, right?

And you want to say to yourself, "Okay, if this happened, then what?

Now, let's formulate the plan and the strategic steps to actually execute for this temporary moment in time before things shape back up.

- Yeah, yeah, good points.

- Kenya, if I could add to what Thomas just mentioned, it's so important to be proactive.

Too often we find ourselves in a situation where we're reacting, and it's harder to position and pivot when you have to react.

So it's so important to be proactive so that we can be prepared.

Because these are situations we're talking about now, they're out of our control.

But we can control being proactive, we can control taking steps towards building that financial fortress.

And these are components of that, that emergency fund, saving for your retirement.

There's so many, just putting in the defenses for your financials is just so key, but you have to be proactive.

And too often we're tempted to put off, "I'm not making enough, so I can't afford to save."

That means you probably need to save, if you're in that situation.

- Right, if you're the one that needs to be saving, yeah.

- Exactly.

- Indeed, let's talk a little bit about income tax season.

We love to hate on income tax season, but LA those refunds, we love those refunds, right?

If a shutdown or a pandemic-like situation happened, would we be receiving tax refund if owed, and how long would it take?

And then I'm also curious about social security and retirement benefits, are those impacted?

- Okay, that's a great question.

So, you know, I'll say it like this.

You know, the IRS is not shutting down y'all [laughs], that's one thing that's not shutting down.

And so Social Security Administration, the Internal Revenue Service, IRS, the services that, you know, Medicare, Medicaid, those services continue because they're on a completely separate budget that actually isn't reliant on this process that we discussed earlier around the shutdown.

So it has a separate budget that, you know, is permanent, and it's ongoing, right?

But even though the services are ongoing, the people that work and move those services are still federal employees, Which means that if their income is impacted, and they can't work.

Well, your time to receive those benefits, disability, again, Medicare, Medicaid, even IRS it may slow down the process by which you receive that support.

And that's why I'm so excited about just the way, Kenya you've designed to today's conversation.

Because it's always, you know, we give this really heavy, realistic information, but then the solution is here with experts like Ruby and Thomas.

Like I may be providing this information to say, "Hey y'all, it's coming, it's very real "that even though you can access these programs, "even passports, it can be delayed because the folks behind the counter, they're not there, right?

Or you can't turn in new applications to these programs, it's about who's already existing in those programs.

And so here's here's the spiel, the T, but here is the next steps for solution for listeners, is to contact Ruby and Thomas and black investment professionals such as them, so that we can pair these solutions to be proactive in our communities, but that is what's coming.

- Indeed, and we're so grateful for the education that you guys have provided for us here.

And hopefully this is a spark for folks so that they can start making some really important changes in their lifestyle.

So LaMeisha, Ruby, Thomas, thank you so much for being here.

- Than you.

- Thank you.

We invite you to engage with us on Instagram using the hashtag Black Issues Forum.

You can also find our full episodes on pbsnc.org/blackissuesforum and on the PBS video app.

Thanks for watching.

I'm Kenya Thompson, I'll see you next time.

[upbeat music] ♪ ♪ - [Announcer] "Black Issues Forum" is a production of PBS North Carolina with support from the Z.Smith Reynolds Foundation.

Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.