Shutdown Creates Personal Budget Crises for Thousands of Government Employees

They made it through the holidays all right, annoyed that the second government shutdown in two months had put a dent in Christmas but hanging on to the near-certainty that all of this would end with the new year.

Then the new year came and it did not end. For hundreds of thousands of federal workers, Jan. 1 was not the usual joyful renaissance of resolutions and fresh starts. It was the first of the month like any other month, with mortgages due and car payments demanded and credit card bills landing with dreaded promptness in the morning mail.

“The credit card company wants all they have coming, plus late charges and all fees incurred. I’m still in shock. I know we’ll be playing catch-up all year,” Jess Moses, a corrections worker at the federal prison at Fort Dix, N.J., said Thursday.

With the longest government shutdown in its 20th day, desperation is setting in as about 700,000 federal employees--some furloughed and others working without pay--scramble to find ways to keep the children fed and the rent paid. They are breaking into retirement nest eggs, draining savings accounts, turning to charities and begging the bank to understand the cause of their delinquency--a White House and Congress with their horns inextricably locked and no resolution in view.

Moses usually spends New Year’s Day watching the Rose Bowl football game and picking on a honey-glazed ham. This year he spent it writing letters to his creditors, pleading for more time to make the monthly payment on his 1986 blue minivan, among other bills. He borrowed $50 from a buddy this week and left half of it with his wife and daughter and drove to Washington to lobby the freshmen House Republicans he believes are responsible for this mess. So far he has not been able to get past their receptionists, and the $20 bill in his pocket is all he has left.

All over the country, workers just like him are beginning to panic.

“Applications are pouring in by mail and by fax. We’ve had thousands and thousands of phone calls in an office that usually gets a couple of hundred a week,” said Beth Owens, spokeswoman at the Federal Employee Education and Assistance Fund in Littleton, Colo., a private nonprofit group founded a decade ago to help federal workers in crisis.

The group is more accustomed to helping workers hit by hurricanes and floods. But the unprecedented length of this budget battle has left many federal employees in unexpected straits. A single mother of three in Indiana, shut out of her $30,000-a-year job with the Social Security Administration, got $436 this week to pay the mortgage. A Veterans Affairs Department worker with two children in Dallas received $460 to pay the rent.

But the group has just $100,000 to disperse and enough requests to more than devour that sum, Owens said. “After that, we just have to say no.”

Some banks and credit unions are forgiving late payments and offering solutions to individual financial crises. The Federal National Mortgage Assn., the nation’s largest source of home mortgage funds, is assisting borrowers who may be forced to make delinquent payments because of the partial shutdown. Extensions are being granted on a case-by-case basis, after borrowers notify their lenders.

First Union Bank, among the largest in the Washington metropolitan area, is running a full-page ad in the Washington Post today informing government employees: “We’ll work with you.” The bank is offering delayed or reduced mortgage and auto loan payments without penalty.

“We are being extremely flexible. Senior executives have directed all branch managers to be very creative,” said David Scanzoni, spokesman at the bank’s corporate headquarters in Charlotte, N.C. “Government employees are excellent customers with excellent credit ratings who, through no fault of their own, find themselves in difficult circumstances.”

NationsBank Corp., also based in Charlotte, will not report past due status to credit bureaus and will waive all late payment loan fees. Emergency loans to customers who are government workers will be made available at below-market rates, the bank said.

“We share the frustration of the rest of the nation in the inability of our elected officials to resolve this impasse in the best interests of the nation,” corporate President Ken Lewis said.

But even a low-interest loan is more debt than federal workers care to incur. And while the government assures that their lost pay eventually will be made up, many government employees are asking who will shoulder the loan interest payments and late fees that are not forgiven.

“I heard about a federal credit union offering loans at 8%. But that’s charging me 8% to collect my paycheck,” Moses complained. “It is cutting right to the quick, and there is nothing we can do about it.”

Personal credit ratings were in jeopardy as the government stopped reimbursing for gasoline credit cards, leaving workers responsible for bills on government cars.

“It’s bad enough to ask federal employees to work without pay, but I am not going to ask them to pay their own gas bills,” Deputy Atty. Gen. Jamie S. Gorelick said Thursday as the Justice Department tried to get American Express Co. to agree to hold off on billings.

Some lawmakers are making individual gestures of sympathy. Rep. Andrea Seastrand (R-Santa Barbara) has put her paychecks aside and taken out a loan on her stock investments to make ends meet.

“In good conscience, I could not take my check until this thing is solved,” Seastrand said. “As a freshman, I think it’s important to walk the walk.”

Other Republicans have made donations to a nonprofit group that helps federal workers. But such gestures ring hollow with unions and idled workers.

“The contributions don’t change the political reality: Members of Congress have the power to end this crisis and eliminate the furlough-induced financial hardships,” said Robert M. Tobias, president of the National Treasury Employees Union.

“I don’t want anyone to be held hostage over this,” said Rep. David Dreier (R-San Dimas). “But we are committed to balancing the federal budget. In Republican meetings many, many members have said [that] if we are thrown out of office over this, so be it.”

Times staff writers Marlene Cimons and Ronald J. Ostrow contributed to this story.