- The federal government will be shut down starting October 1 unless Congress passes a spending bill.
- If the government shuts down, non-essential functions will also cease.
- Federal employees may not receive paychecks, households may not receive some federal benefits, and student loan borrowers may not receive customer service and others may be delayed.
- The longer the closure lasts, the greater the potential impact.
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During a shutdown, the federal government shuts down operations that are deemed nonessential.
Each year, Congress must pass legislation to provide funding for the federal government for the next fiscal year. A shutdown would occur if legislators fail to finish this appropriations process on time.
The government’s 2024 fiscal year begins October 1. If Congress fails to pass necessary spending bills or a continuing resolution offering temporary funding, the shutdown will begin Sunday morning.
House Speaker Kevin McCarthy, R-Calif.
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It is expected to happen this year as far-right conservatives in the Republican-controlled House of Representatives use a potential shutdown as leverage to impose deep cuts in federal spending.
There have been 14 closures since 1980. according to this To the Bipartisan Policy Center. The most recent was the partial closure in 2018-19; also the longest lasted 34 days, according to this To the Congressional Research Service.
The shutdown affects “discretionary” spending. “Essential” spending, such as Social Security and Medicare, are set aside because they do not require annual congressional approval.
Discretionary spending made up about 27 percent of the $6 trillion federal budget in fiscal 2022. Congressional Budget Office.
Sprick said each closure is “unique,” making it difficult to measure the exact impact.
Here’s how the game plays out.
Among the fastest and most direct results: more than 2 million Civilian federal employees will either be furloughed or continue to work without pay until the shutdown is resolved.
“Loss of income over one, two or three payment periods can make the difference between rent or mortgage payment,” Sprick said. “This can lead to really significant home problems.”
While non-essential workers will be put on unpaid leave, essential workers will continue to work. Mark Zandi, chief economist at Moody’s Analytics, said there will likely be a 50-50 split of employees.
Also active duty military personnel – approx. 1.3 million people – would to stay This is without charge. Contractors hired by the federal government also face the risk of not getting paid for services, and those businesses may begin laying off or furloughing workers, Zandi said.
Millions of people could also lose some federal aid, and that threat will grow as the shutdown lengthens, experts said.
For example, around 7 million people will likely see aid delayed. Special Supplementary Nutrition Program for Women, Infants and Children program, according to this To the White House. The program, known as WIC, provides federal funding to low-income women, infants and children up to age 5 who are considered at nutritional risk.
food aid through Supplemental Nutrition AssistanceSprick said the SNAP program is in “better shape” than WICs, which will likely be impacted within days of the shutdown. But if the shutdown lasts several weeks, SNAP benefits would also be at risk, he said.
Section 8 housing vouchersSprick said devices used by low-income families, seniors and people with disabilities would also be at risk.
Some veterans’ benefits, such as disability compensation and transitional assistance, may be delayed. certain loans for farmers.
Loans available through the Small Business Administration may be deferred to business owners, Zandi said. Closing a house in need federal flood insurance He also said that it would probably be postponed.
Experts said customer service in all government departments will be negatively affected due to the reduction in staff numbers.
If past experience is any guide, absenteeism could also become an issue among essential workers as they may not receive pay if the shutdown continues, they said.
Significantly, 90% of U.S. Department of Education staff may be furloughed as federal student loan payments prepare to resume on October 1. Borrowers who call the Department of Education with questions about their bills “are going to have a really hard time getting those answers,” Sprick said.
How long this lasts has a real impact on American households; to a greater extent than whether it happens or not.
senior economic analyst at the Bipartisan Policy Center
Service issues will vary by agency depending on the agency involved. emergency plans. For example, taxpayers may face delayed service with the IRS, as may individuals trying to obtain certain assistance from the IRS. Social Security Administration.
Travelers may also find that plans are disrupted. Staff such as air traffic controllers and Transportation Security Administration workers are often considered essential but may not show up for work after a few weeks, when going through airport security lines becomes painful, Zandi said. This occurred during the last shutdown in 2018-19.
National parks and some museums Closed or limited servicesadded Zandi.
These disruptions could have major impacts on the U.S. economy over time.
For example, if the United States stopped buying typical goods and services, such as computer equipment, paperclips, office furniture, less money would be pumped into the economy. Federal employees who forgo pay may also cut back on their spending. Consumers may become more broadly concerned and cut back if they lose confidence; Investors may become nervous and volatility in the stock market may increase.
All of this could coincide with other economic headwinds, such as the end of the student loan pause, the United Auto Workers strike and higher oil and gasoline prices, Zandi said.
“I think if it’s a two-, three-week shutdown, while that may be a nuisance for some, it’s not a major issue for most,” he said. “If it continues for a month or more, this could be a headwind blowing hard enough to strain the economy.”
And he said everyone is affected by the recession.
Additionally, federal agencies that publish economic data on inflation and the labor market, for example, will not do so during the shutdown. Zandi said the Fed relies on such data when weighing how to continue interest rate policy, and that this increases the likelihood of the Fed making mistakes.