What Happens if the Government Shuts Down?
By Kathryn Buschman VaselFOXBusiness
Here we go again: A government shutdown looms if lawmakers can’t reach a compromise on a budget by Oct. 1, and the White House has already ordered federal agencies to prepare for a potential closure.
Republicans in the House of Representatives plan to pass a bill that would fund the government after Sept. 30, but there’s a catch: it also defunds the president’s signature health-care reform, so it doesn’t stand a chance of passing in the Democrat-controlled Senate.
On Thursday, the White House said the president would veto a budget bill that strips funding from the Affordable Care Act.
“The Administration strongly opposes House passage of H.J. Res. 59, making continuing appropriations for fiscal year 2014 and for other purposes, because it advances a narrow ideological agenda that threatens our economy and the interests of the middle class,” the administration said in a statement.
The country’s history is littered with government shutdowns, with six occurring between 1977 and 1980. The last shutdown lasted 21 days during the Clinton Administration and also centered around a health-care disagreement: Medicare funding.
“It’s not uncommon for an impasse to come up about potential cuts and spending, but what is unusual in this case, is that health reform is already law of the land so trying to defund is where the dysfunction comes in,” says Elaine Kamarck, director, Center for Effective Public Management at the Brookings Institution.
- Health-Care Reform
- Social Security
- Border and Coastal Protection
- Air Traffic Control
- National Security
- Essential Elements of Money and Banking System
- Care of Prisoners
- Emergency and Disaster Assistance
With less than two weeks until the deadline, government agencies are updating their contingency plans. According to the Congressional Research Service (CSR), “government shutdowns have necessitated furloughs of several hundred thousand federal employees, required cessation or reduction of many government programs, and affected numerous sectors of the economy.”
Here’s a look at what to expect if the government shuts down:
Who Still Gets Paid?
The Office of Management and Budget told federal agencies to start updating their plans for a potential shutdown and workers in all three government branches are at risk of being furloughed. The Constitution prohibits federal employees and contractors from being paid if appropriations haven’t been passed.
The CSR reports the executive branch is the largest in personnel and budget size, but furloughs cannot be applied to the president, presidential appointees, Congress members and federal employees deemed “excepted.”
For example, workers providing essential services in areas of national security, foreign affairs or public health and safety are exempt from the effects of a shutdown. Air traffic controllers would also stay in place along with border patrol agents.
The 1995 shutdown resulted in 800,000 federal workers initially furloughed. Kamarck, who worked in the White House during that shutdown, recalls a very empty White House.
“Non-essential workers are not allowed to work and you would be in violation of the law if you go to work. During the period of 1995-96 shutdown, there were 30 people in the White House complex as opposed to the couple hundred that are normally present.”
However, just because workers aren’t going to work doesn’t meant they won’t get paid. Furloughed workers could receive pay retroactively.
“They don’t have to get their pay, there is nothing in the law that requires pay for furloughed government workers, but in every past instance where the government did shutdown, furloughed workers were given retroactive pay, that is a policy choice of members of Congress,” says Hans von Spakovsky, senior legal fellow at The Heritage Foundation.
Federal contractors will stop being paid, and during the last shutdown, more than 20% of federal contracts worth $400 billion were involved, CSR reports.
The court system would continue to operate, with judges, key staff member—including probation officers—not facing a furlough.
Social Security and Medicare payments will still go out, but experts say a shutdown could bring delays.
Both programs are considered mandatory funding, which means they were written to be funded indefinitely and there’s no annual appropriation.
During the last shutdown, CSR reports, the Social Security Administration kept fewer than 50,000 workers to help provide existing benefits. “People who are fortunate enough to be turning 66 in the middle of a shutdown, might not be able to sign up for their benefits because there is no one to set them up,” says Kamarck.
Non-government workers might not even feel the effect of a closed government.
“The president will do what he can to make it seem like the public is going to be inconvenienced with a shutdown,” says von Spakovsky. “National parks will close and the places people like to visit in Washington, D.C., will be unavailable. But planes will still fly, Medicaid and Social Security checks will still go out…the average person might not even notice a shutdown.”
Veterans could face holdups with receiving services regarding health and welfare and finance. New passport applications could be delayed, and travelers could face longer lines at customs when re-entering the country.
Kamarck says shutdowns often show just how many agencies and state and local government rely on federal funding. “When the checks stop coming, people realize how much Washington supports, it’s stunning. During the 1996 shutdown, some Catholic charities had to shutdown without funding, and there are lots of non-profits and for-profits that are dependent on federal grants. When the money stops trickling down from the government, that has a ripple effect throughout communities.
The country’s 368 national parks will shutter, which could hurt tourism revenue since in 1996, an estimated two million visitors were missed during the shutdown.
The National Institution of Health will likely stop enrolling new patients as it did in 1996 into clinical trials and will have to close its hotlines.
Impact on Country’s Debt
Even if Congress comes to a compromise over the budget, another battle remains over the debt ceiling. However, even if a budget agreement isn’t reach, that doesn’t mean the government will default, that only happens if it can’t pay interest or principal on its bond obligations.
If anything, von Spakovsky says a shutdown could help with the country’s debt. “The government won’t be spending money on programs that are not considered emergency or essential and some of these are wasteful government programs, so that’s good news.”
On Thursday, Speaker of the House John Boehner said in his weekly press conference that Republicans weren’t interested in defaulting on the debt. “We just want to find a way to pay it off. That’s why the House will act on a plan that will reduce the deficit and include pro-growth economic reforms including a delay of the President’s health care law.”
While experts agree a shutdown creates unnecessary political drama, it can also be detrimental to lawmakers’ careers. “Clinton won his re-election probably in the six days of that shutdown,” says Kamarck. “It’s an extraordinarily high-risk gambit for the House of Representatives, Gingrich was finished with speaker after that battle.”
Follow Kathryn on Twitter @kathrynvasel