Government Shutdown 2017: What it is, why it could still happen and how it would affect you

Government Shutdown 2017: What it is, why it could still happen and how it would affect you
The cost of a government shutdown can be huge, whether you’re relying on using any public services are not. Here’s what you need to know. Claudio Divizia/Shutterstock
The cost of a government shutdown can be huge, whether you’re relying on using any public services are not. Here’s what you need to know. Claudio Divizia/Shutterstock

Congress passed a measure Thursday to fund the government for two more weeks, narrowly avoiding a shutdown that would have started at 12:01 a.m. Saturday. That gives them until Dec. 22 to ink a deal that will forestall potential widespread closures of key federal services — from courts to the IRS to clinical drug trials. Though a shutdown was averted this time, negotiations for a long-term deal to keep the government open have not gone well.

On Nov. 28, Democratic leaders Chuck Schumer and Nancy Pelosi cancelled a meeting about a compromise after President Donald Trump tweeted that they “want illegal immigrants flooding” into the country and to raise taxes substantially. At one point Democrats were seen to have the upper hand in negotiations, but the Washington Post reports that the GOP is also expected to fight for expanding the military and cuts to domestic spending.

So what would happen if party leaders can’t settle on a deal? As during the government shutdown in 2013, so-called “essential” services including the military, Social Security and Medicare payments would still be in place. But many discretionary services — a category that includes spending on national parks, the IRS and food stamps — would be closed until Congress passes a new bill to fund the government long term.

If the government does shut down, it could mean delayed or lost pay if you are a federal employee or member of the military, and could affect you in other ways if you rely on discretionary services, plan to travel soon, or are currently concerned about job opportunities or investments. Here are five big ways a shutdown could impact people in the United States.

During a government shutdown, discretionary spending freezes shut down national parks, dealing a blow to tourism.
During a government shutdown, discretionary spending freezes shut down national parks, dealing a blow to tourism. Susan Walsh/AP

1. The economy could lose billions — hurting workers, job seekers and investors

Government shutdowns are terrible for the economy, and that’s perhaps even more true if one happens around the holidays.

Indeed, a shutdown this time around — if it happens — could cost the U.S. economy about $6.5 billion for each week that the government is closed, according to a new report from S&P Global. The ratings house arrived at that figure by studying government shutdowns that happened in 1995-96 and 2013.

In general, the government coming to a standstill is harmful for anyone looking for work, as well as investors, because shutdowns tend to knock down the stock market and slow GDP growth — meaning lower returns and fewer job opportunities, as Money recently reported.

For federal government employees, a shutdown could mean furloughs — or temporary leave — and it’s possible you will not be paid during that time or that recovering pay for any work performed during the shutdown would be difficult.

2. People in need could go empty-handed

The people who are most affected by a government shutdown, as Money reported, are those who rely on discretionary spending to provide basic services, particularly programs like the Supplementary Nutrition Assistance Program and Head Start.

Social Security checks will continue to be disbursed, but during the 2013 government shutdown the administration delayed thousands of disability reviews and and supplementary income redeterminations.

During the last government shutdown, as many as 19,000 children from low-income families lost access to Head Start services in just 11 states, according to a New York Times report. Debit cards issued to SNAP recipients stopped working within a few days of the shutdown, even when people still had money left on their cards, according to a Department of Agriculture Q/A.

3. Travelers may have headaches

One big reason why a government shutdown is so harmful to the economy? It puts a damper on tourism and travel, said Beth Ann Bovino, S&P Global’s chief economist.

“Tourists won’t come, and it’s right at the holiday season,” Bovino said. “Also the psychological effect ... as many as 1 million people are not receiving paychecks because they’ll be furloughed. They’ve always gotten back pay, but you’re going right into the holiday season, and if you don’t have a paycheck, you’re going to hesitate.”

Among the biggest economic impacts, Bovino said, will be felt by business owners near Washington, D.C., or near other national parks who rely on them staying open for tourism.

While domestic and international travel shouldn’t be too disrupted — TSA employees and air traffic controllers stay on the job — you might face longer wait times at customs or while applying for a passport.

4. You could experience big service delays

At first glance, having IRS tax collectors be on furlough might not seem like something you need to be concerned about, but the Center of American Progress estimates that a two-week shutdown would result in nearly $8 billion in delayed tax refunds.

And, as Money reported, more red tape and delays could be in store for anyone who has a pending court case, who is trying to get a mortgage to buy a home, or who wants to enroll in a clinical drug trial through the Centers for Disease Control or the National Institutes of Health. Academics could see delays in research funding.

5. Military members and students could be affected

Most of the government’s 3.5 million person workforce stays on the job during a government shutdown, including military personnel and civilian employees at the Department of Defense. But in 2013, Stars and Stripes reports, many service members were unsure of when their paychecks would be received, and some experienced payment disruptions. The outlet also reports that death gratuity payments to 30 Gold Star families were disrupted as well.

Meanwhile, in the past, government shutdowns have meant many canceled classes at military service academies.

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