TL/DR –
Negotiations between Republicans and Democrats over federal funding are at a standstill, risking a partial government shutdown on October 1. If a shutdown occurs, essential federal agencies will continue to operate but many others will halt, resulting in furloughs for hundreds of thousands of employees and possible interruptions to services such as food and environmental safety inspections, national parks, and welfare benefits. Despite already being passed by the House, a Continuing Resolution to maintain government funding till November has been blocked in the Senate by Democrats who are demanding partisan funding concessions that Republicans are refusing to grant.
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Federal Government Shutdown Looms as Political Standoff Continues
With the Democrats and Republicans unable to reach a consensus in their negotiations, a potential partial shutdown of the federal government is on the horizon. If it materializes on October 1, it would mean the furlough of hundreds of thousands of federal employees and a halt to dozens of services. This situation arises when the federal agencies are devoid of funds needed to execute their operations. As stated by the Antideficiency Act, the government must cease operations until Congress appropriates new finances if it runs out of funding.
Current Funding Scenario
Normally, Congress should renew discretionary spending levels for agencies annually, by passing 12 appropriations bills. However, they often resort to a funding stopgap due to time constraints. In a recent development, the House has passed a Continuing Resolution to maintain the current government funding until November. However, it was blocked by the Democratic senators in the upper chamber, who do not intend to back down unless Republicans agree to certain partisan funding concessions.
Political betting markets suggest a high probability, above 80%, of a partial government shutdown. The impacts of this shutdown will be varied and are likely to affect Americans differently based on their occupation, region, and socioeconomic status.
Effects on Federal Agencies and Operations
In the event of a shutdown, essential federal agencies and operations such as national security, law enforcement, Border Patrol, outbreak monitoring, and emergency response will continue to function. Services like Amtrak, airports, passport and visa processing by the State department, and student aid administration by the Department of Education will also remain operational, although they may experience delays.
Moreover, Americans will continue to receive mail, Social Security benefits, Medicare, Medicaid, and veterans’ benefits as the U.S. Postal Service primarily funds itself and the entitlement programs are maintained by mandatory spending, which renews automatically without the need for congressional approval.
Adverse Impacts of a Shutdown
On the negative side, a shutdown would severely affect the routine food facility safety inspections carried out by the Food and Drug Administration and the Environmental Protection Agency’s inspections of water systems, chemical facilities, and hazardous waste sites. Cleanup of hazardous waste would also come to a halt. All national parks and museums would close, clinical trials at the National Institutes of Health would encounter interruptions, and applications for federal housing or small business loans would be stalled. The WIC supplemental nutrition program would run out of money swiftly, and food stamp benefits could be delayed if the shutdown prolongs.
Despite the Inflation Reduction Act of 2022 providing funds for the Internal Revenue Service to remain operational during a shutdown, it’s not guaranteed. Former shutdowns have seen the IRS furlough 90% of its staff, bringing operations to a standstill.
Federal employees labeled as “essential” would continue to work without pay until the end of the shutdown. On the other hand, “nonessential” government workers would remain furloughed and unpaid until the shutdown ends. After that, both groups would receive back pay. The only federal employees that would receive pay during the shutdown are those in agencies not funded by Congress, such as USPS workers.
Political Consequences of a Shutdown
A government shutdown, which has not occurred in the last seven years, benefits neither political party. The longest shutdown in U.S. history lasted from December 22, 2018, to January 25, 2019. Republicans, being the minority party in Senate at that time, faced much of the blame for the shutdown. Considering that the Democrats currently occupy that role, a similar shutdown now would likely harm their party the most.
The potential shutdown this time carries higher risks as the Trump administration plans to make some of the furloughs permanent if the government shuts down. A memo from the Office of Management and Budget has urged agencies to use this potential shutdown as an opportunity to cut down on unnecessary positions.
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