Kevin Conroy, the chief executive officer for Exact Sciences Corp., was asked the other day how the federal shutdown and the looming deadline for lifting the federal debt ceiling was affecting his publically traded biotechnology company.
Conroy dryly asked the questioner to search online for EXAS, the company's symbol on the NASDAQ exchange, and track the company's stock price since early October. Like the stock values of many other companies, Exact's price per share had fallen about 20 percent in a matter of days over investor worries about the federal shutdown.
"There was nothing about the performance of our company, before or since, that would have led to that kind of stock price decline," Conroy said.
Uncertainty in the markets is one of the most obvious indicators of the federal shutdown, but it's not confined to companies that are publically traded. Exact Sciences happens to be listed on the NASDAQ, but it's still a relatively young company that looks a lot like other promising firms in Wisconsin, especially those in industries touched by the federal regulatory system.
Exact Sciences is developing a non-invasive colorectal cancer screening test that detects both cancer and pre-cancer. That means intensive federal review, such as Food and Drug Administration clinical trials, which may be slowed or even interrupted if the shutdown continues. So far, those trials are positive.
The story is similar for other emerging companies in the life sciences, including medical devices, and extends to firms in other sectors that may be subject federal review or a grant approval process. The successful Small Business Innovation Research grant program, in place nationally since 1982, is one example of a grant program often used by young Wisconsin tech companies to grow and create jobs.
The size of the federal government's shopping list means many companies outside the tech sectors are feeling the pinch, as well. New applications for small business loans and loan guarantees have halted. Permits and reviews for planned energy and transportation projects have stalled. Many food-safety operations have been curtailed, which should make Wisconsin's agricultural industry more than a little nervous. Tourism is taking a hit because the National Park Service has closed hundreds of sites. Companies that serve as federal contractors will quickly feel the effects of delayed payments for their work.
All of this is in addition, of course, to the direct effects on federal benefit programs and federal worker salaries – dollars which eventually flow back into the larger economy.
Will everyone muddle through? Depending on how long the shutdown lasts, the answer is probably "yes." In fact, Wisconsin may be more prepared to cope than most states because it has historically done so poorly in getting back its fair share of federal tax dollars.
A report by WalletHub, a personal finance social media site, ranked Wisconsin as 47th among the 50 states and the District of Columbia in terms of its vulnerability to the shutdown. That was based on an analysis of seven areas in which the shutdown will touch each state – federal employees per capita, federal contracting dollars per capita, disruption of SBA loans, Social Security payments, student aid applications, veterans per capita, and a real-estate index tied to loan application delays.
Most likely to be affected, according to WalletHub, were Virginia, Alaska, Alabama, the District of Columbia, Maine, Maryland, New Mexico and Colorado. Joining Wisconsin on the "low-risk" list were Nebraska, Nevada, Minnesota, New York, Indiana and Iowa.
In Wisconsin's case, its historically abysmal record of attracting federal funding for just about anything, from highways to research laboratories, may pay off for a while. When the shutdown ends and life returns to normal, however, Wisconsin will go back to its status as a "donor state" when it comes to recouping its share of federal dollars.
No state is immune to the shutdown brought on by the inability of Congress and the president to come to grips with the government's budget and debt issues. Wisconsin's members of Congress should join in a more constructive debate about how to end the shutdown – and then focus on how its taxpayers get more bang for their federal bucks in the future.
-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.