Federal government to “Shut Down” today, how will it affect you?

Federal government agencies were instructed to close last night, as Congress failed to approve the funds to keep them open. Image from the Associated Press.


It’s official: the federal government “shutdown” is here. After Congress failed to pass a budget late last night, the Office of Management and Budget ordered federal agencies to prepare to close for the first time in 17 years. Federal employees will be told to stay home without pay, automatically costing the U.S. economy $1 billion of lost potential spending as these workers are forced to save their money and brace for what could be a long wait. The last time a shutdown occurred, it lasted 21 days before Congress reached a compromise. Economic experts predict that if this new shutdown lasts that long, the ripple effects on the economy could lose the United States as much as $55 billion. Already the value of the U.S. dollar has fallen on the news.

How did this happen?

The federal government needs money to operate, and that money comes in two forms. The first is mandatory spending, those programs the government has decided by law to automatically pay for no matter what, such as Social Security, Medicare, student loans, interest payments on the national debt, food stamps, and the salaries of members of Congress and the President. The second is discretionary spending, the money that Congress allocates to the rest of the federal government according to current political needs, and thus can vary from year to year. This category includes national defense, most federal government agencies, spending on education and health matters, the salaries of federal workers, and veterans’ benefits. Discretionary spending must be specifically approved by Congress, or else the government can’t spend any money in these areas, period.

By long-standing tradition, Congress’s budgets cover the period from October 1 through the following year’s September 30th, a period known as a “fiscal year”. This means that Congress has to have a budget in place by October 1 of every year – if there is no budget, the government shuts down. Last night, Congress failed to pass a budget.

President Obama and Democratic members of Congress issued statements blaming Republicans in the House of Representatives for making unreasonable demands, while Congressional Republicans, in turn, blamed the Democrats for refusing to negotiate. Here are the facts:

  1. Back in August, while Congress was in recess, Rep. Mark Meadows (R-N.C.) suggested to his fellow Congressional Republicans that they refuse to pass a budget unless it included provisions to block the Affordable Care Act, better known as “Obamacare”, from taking effect on October 1.
  2. On September 20, the Republican-controlled House of Representatives adopted a budget bill that would have taken away federal funding for Obamacare programs. Democrats, who control the Senate, immediately pledged to block any attempt to alter Obamacare in any way, and President Obama said he would veto the Republicans’ budget.
  3. Democrats see Obamacare as one of the key achievements of President Obama’s administration, and argue that it will bring benefits to millions of uninsured Americans. Republicans argue that the law oversteps the federal government’s authority and that the side-effects of its adoption will hurt the economy.
  4. As the deadline for a new budget grew nearer, the House adopted budget bills that wouldn’t take away Obamacare’s funding, but instead would either repeal portions of the law or delay its implementation for a year. The Senate rejected each of these budget bills, proposing its own budget bill that wouldn’t touch Obamacare at all.
  5. Late last night, House Republicans passed yet another anti-Obamacare budget bill, but this time proposed a conference between Senators and Representatives to put together a compromise. This morning, Senate Majority Leader Harry Reid (D-Nev.) rejected the offer, comparing the Republicans’ insistence on forcing the health care issue to “extortion”.
  6. In spite of the wrangling, both the House and Senate did manage to unanimously pass a bill that will allow U.S. military personnel to continue to receive pay for their service during the shutdown. President Obama signed the bill last night.

Ironically, the government shutdown will not affect the implementation of Obamacare, which takes affect today. Parts of the bill have already been in effect for years, but the core of the program – requiring businesses with more than 50 full-time employees to cover their health insurance needs and creating government-subsidized, low-cost health insurance markets for the remaining uninsured Americans – are to be implemented today as open enrollment for the new health plans begins.

In fact, many other federal government operations will continue in spite of the shutdown. It won’t affect current military operations, training exercises, and other important areas of national defense. It won’t affect personnel deemed “essential” for the public safety, such as police, airport security and air traffic controllers, the Coast Guard, nuclear safety inspectors, and food safety inspectors. It won’t affect government agencies that are self-funded and don’t need Congress to operate, such as the U.S. Postal Service and the Patent and Trademark Office.

So, what will be affected by the shutdown?

  • About 800,000 federal employees will be told that they have been furloughed, and will be forced to clean their desks and return home. They will not be paid during the shutdown, and may or may not be given any compensation once the government re-opens.
  • Federal Courts have some reserve funding to stay open for two weeks, but after that they may need to close.
  • The Centers for Disease Control and Prevention will not be able to provide its annual flu shot program.
  • HUD payments for federal housing projects will be suspended.
  • Small businesses won’t be able to get loans from the Small Business Administration or other federal agencies.
  • National Parks, Smithsonian Museums, and other government-run tourist destinations will be closed.
  • Veterans’ benefits will be affected, as the VA will be unable to process any new applications and its capabilities to handle existing claims will be limited. VA medical care, however, will be unaffected.
  • Most of the IRS staff will be furloughed, so it won’t be able to process returns or conduct audits.
  • Getting a passport or visa will be more difficult, may take longer, and many applications may simply not be processed at all.
  • A wildfire in Yosemite National Park that has been contained by firefighters will still be put out, but cleanup won’t begin until the government re-opens.
  • The Women, Infants, and Children (WIC) program that helps young mothers buy healthy food and get adequate health care for themselves or their children will likely not be able to function for more than a week on reserve money.
  • NASA will be all but shut down, and government agencies that collect statistics such as the U.S. Census Bureau will be closed.
  • Residents of the District of Columbia may find that their garbage isn’t picked up and the streets aren’t swept. Many other city services might also be suspended. However, Mayor Vincent Gray has sworn to keep city services running at normal capacity for as long as possible.
  • Even college football will be affectedthe annual Air Force/Navy game may be postponed as the Department of Defense plans to suspend athletics at its military academies.

NBC’s Today Show asked viewers to respond to the news on Twitter, using the hash-tag #DearCongress. The responses showed overwhelming disapproval for Congress’s actions. One federal worker lamented, “I took a vow to serve the public and I’m sitting at home without a job today. Who are you getting paid to serve?” At press time, World War II veterans are protesting the shutdown by holding a sit-in at the World War II Memorial in Washington, D.C.

Even if Congress manages to pass a budget and re-open the federal government, another fiscal fight looms in just a few weeks. On October 17, the federal government will reach its debt ceiling, meaning that the U.S. Treasury will no longer be able to borrow any more money to pay the bills the federal government has incurred. This would mean that those people to whom the U.S. government owes money would not get paid, defaulting on our national debt. This has never happened before in U.S. history, so it isn’t entirely clear how this scenario would play out, but almost all economists agree its impact would be big, and would be negative.

Even so, a few voices are actually saying the shutdown is a good thing, and that members of Congress should “stand their ground”. As of press time, there appeared to be no obvious resolution in sight.


4 Responses to Federal government to “Shut Down” today, how will it affect you?

  1. AuntLeesie says:

    Given the wrangling that’s expected regarding the October 17th “debt ceiling” deadline, we can expect the government shut down to continue for a few weeks; neither party wants to blink (so to speak). The last shut down was during the Clinton administration, but today’s politics are even more partisan than they were 17 years ago. It wouldn’t surprise me at all if even that deadline is missed, causing default on our loans. Let’s hope not.

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