WASHINGTON: The United States is facing yet another government shutdown — this time right before Christmas. What happens and who is impacted when the government stops paying?
President-elect Donald Trump is not yet in office, but he is already having an impact in Congress and causing chaos right before the c Earlier this week, he put pressure on Republican lawmakers to support a federal spending bill he endorsed, which was rejected.
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Now US lawmakers have until Friday evening to come up with an alternative plan that will pass muster with both Republicans and Democrats.
If they cannot agree, a government shutdown will begin at 12:01 am local time on Saturday. Since it is the weekend, its wider impact would start to hit on Monday. A government shutdown is as disruptive as it sounds.
What is a US government shutdown?
A government shutdown occurs when the government has not agreed on its annual budget, in whole or in part. It impacts discretionary spending, which must be appropriated each year.
Such a shutdown basically means that the federal government stops paying federal employees and contractors who work for the government. It is a situation that impacts each part of the government differently.
In the past, there have been partial shutdowns when some of the budget had been approved, leaving some agencies fully funded and able to work as usual. There have also been wider shutdowns when none of the budget had been signed into law.
During a full shutdown all non-essential US government agencies and programs close since they depend on annual government funding.
Despite a government shutdown, essential services and mandatory spending programs do not stop. In past shutdowns, active-duty military personnel and most border protection agents, federal law enforcement agents and air traffic controllers have stayed on the job.
Whereas discretionary spending is up for discussion each year, mandatory spending is approved for longer periods or is permanent. So things like Social Security, Medicare and Medicaid payments will continue to be made as will military veterans’ health benefits. Mail delivery and the Federal Reserve are not affected because they are funded in a different way.
Who is affected by a government shutdown?
Federal employees are the first to feel the impact of a government shutdown.
Full shutdowns in 2013 and early 2018 meant that around 850,000 out of 2.1 million non-postal federal employees were temporarily furloughed, according to the Committee for a Responsible Federal Budget, a Washington, DC-based nonpartisan group that focuses on fiscal policy.
Furloughed employees are not allowed to work and do not receive their paychecks during this time. But they are guaranteed retroactive back pay when the government is funded, back up and running.
In the past, some agencies like the Department of Defense, State Department or IRS have asked workers to come to work to keep things running smoothly — still without pay.
Many employees working in essential services must keep working but are not paid during a shutdown.
Federal officials who have been confirmed by the Senate cannot be furloughed. The president and members of Congress continue to work and be paid.
What happens during a government shutdown?
A number of agencies or programs are not considered essential and stop operation either in part or full during a government shutdown. These include national parks, national monuments, the Library of Congress and museums like the Smithsonian.
The Environmental Protection Agency, Food and Drug Administration, Federal Trade Commission and the Securities and Exchange Commission are among the departments affected.
Depending on how long things stay closed, huge backlogs of work can pile up while millions of dollars are lost in revenue like ticket sales. It also means routine health and safety inspections are not done. Monthly reports on employment and inflation are not published on time. On top of that agencies have to spend time and money creating complex contingency plans.
For federal employees who live paycheck to paycheck, it can mean a temporary financial pinch and resentment.
How long do government shutdowns last?
This is not the first government shutdown. Presidents Clinton, Obama and Trump have all experienced them. The longest one was under Trump in 2018-2019 and lasted for 35 days.
The Committee for a Responsible Federal Budget tallies up four shutdowns that led to government operations being affected for more than one business day.
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“A shutdown of a few days is a hassle — and undermines public confidence in the capacity of US politicians to do the people’s business — but is unlikely to have a significant impact on the economy,” wrote David Wessel from the nonprofit Brookings Institution earlier this year. “A prolonged shutdown, however, can cause bigger problems, albeit most temporary.”
The Congressional Budget Office agrees that most of the economic impacts of government shutdowns are temporary. But it calculated that the 2018-2019 shutdown led to a $3 billion (€2.89 billion) reduction in GDP that would never be made up.