U.S. government shutdown: What to expect if it happens
Funding deal must be reached by Tuesday to avert halt of hundreds of thousands of federal paycheques
The U.S. government could close its doors Tuesday if Congress can’t reach a deal on a temporary spending budget bill, and that would jeopardize the paycheques of more than 800,000 Americans, as well as the country’s economic recovery.
It's political bickering between Democrats and Republicans in both the Senate and the House of Representatives, along with Republican in-fighting, that has brought the country to the brink of a shutdown yet again.
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Once more, the U.S. Congress is deadlocked on a temporary spending bill that needs to pass in order to keep funding the federal government's operations, its employees and the services they provide.
Congress hasn’t passed any of the annual bills that fund various government agencies, so it has had to rely on stopgap measures that are known as continuing resolutions. The government needs to pass another one as soon as possible to keep the cash flowing beyond Sept. 30.
A government shutdown won’t mean the entire country will grind to a halt, but it will have an impact on the daily lives of Americans.
The rules governing a shutdown say federal workers must be classified as essential or non-essential, so that key government functions can carry on in the event of a fiscal crisis.
Air traffic control, the military, prisons, border security, mail delivery, anything related to national security and public safety, social security cheques, emergency medical care, and food safety inspection are examples of things that would be unaffected.
So what would happen?
Passports, other services could be on hold
Some 800,000 government workers could be told to stay home and go without pay. However, they might get paid retroactively once the shutdown ends.
Those missing paycheques would have an impact on individual bank accounts, but depending on how long the shutdown lasts, the loss of income could also affect the broader economy. The affected public servants would essentially be unemployed, pumping less cash into an economy that very much needs it.
The economy would also take a hit because it costs money to prepare for a shutdown, to carry it out, and start the government back up again. The last two shutdowns, which took place weeks apart in late 1995 and early 1996, cost taxpayers $1.4 billion, according to estimates from the Office of Management and Budget.
The shutdown would also mean an interruption in services. Visa and passport applications, for example, wouldn’t be processed.
Parks and museums could be shuttered
And the tourism industry would take a hit. Anyone planning a weekend getaway to one of the country’s 400 national parks would have to come up with something else to do, for example, since those parks would be closed. Tourists in Washington, D.C., in particular would have fewer options because most of the city’s famous museums would be shuttered.
Closing tourist attractions would also mean less revenue for the government from things like national park user fees.
A shutdown would also mean that small business loans would not be processed, government-backed insurance for home loans would not move forward, and some tax refunds would pile up.
Residents of D.C. would likely feel the effects the most. The capital city’s local government depends on the federal government for permission to spend money. A shutdown could mean city services such as garbage collection, street cleaning, motor vehicle offices, and libraries would be on hold or closed.
The city's mayor, Vincent Gray, is trying to get around the problem by declaring all of the local government “essential.”
Debt-ceiling crisis also looming
The potential government shutdown isn’t the only fiscal crisis looming for the U.S. The other is the debt ceiling, which is far more concerning.
Under U.S. law, the government must stay below a certain debt limit and Congress must pass legislation to allow the government to exceed that limit. If it doesn’t, the government can’t pay its bills and would have to default on its legal obligations.
That would have "catastrophic" consequences on the economy, according the the U.S. Treasury, which expects the government to reach the debt ceiling — currently sitting at around $16 trillion — by mid-October.
The U.S. federal government has never defaulted before so no one knows exactly how severe its effects could be, but there’s little doubt it would cause severe economic damage.
Congress has until Oct. 17 to figure out a plan for the debt ceiling, and until midnight Monday to deal with the budget spending bill. The clocks in Washington are ticking loudly.