8 Things You Need to Know About a Potential Government Shutdown

The fiscal year for the U.S. federal government ends annually on September 30th. There is currently a lot of conversation about what will happen not just on that day, but more importantly on October 1st this year, as Congress has yet to approve a budget. As we approach the end of this fiscal year, there will be even more conversation around the lack of a budget for FY 2014 and a potential government shutdown. Here are 8 basic things you need to know about this situation and how a government shutdown could affect you.

What is actually happening? Each year Congress is responsible for approving a budget that allows the government to operate. As per our Constitution, the country can’t spend money without Congress’ approval. The truth is, Congress hasn’t approved an actual budget since 2009 but has used legislative measures called continuing resolutions to allow monies to be spent in lieu of agreeing on a budget. Without an approved budget or the passage of a continuing resolution, the federal government does not have the authority to spend money to operate, which is why if no agreement is reached, a shutdown will occur.

What is the hold up? House Republicans are flexing their muscle against the Affordable Care Act (commonly referred to as “Obamacare”) and have refused to pass any budget which does not include an attached provision to defund the healthcare legislation, which is also scheduled to go into effect on October 1st. House Republicans have actually succeeded in passing legislation to keep the government operational through December 15th while simultaneously defunding the Affordable Care Act. However, that bill must still go to the Senate where it will likely be struck down by Senate Democrats who hold the majority and who will send it back to the House. This will create a high stakes game of chicken in the House of Representatives before the September 30th deadline.

Is there another way? There are several options that members have at their disposal to resolve this situation. Another continuing resolution could be passed which would allow for continued operation of the government beyond the end of the fiscal year. That likely hood is threatened because of the debate over the Affordable Care Act. Alternatively, House Democrats are not likely to agree to the Republican’s budget proposal because of their refusal to negotiate the debt ceiling.

About that "debt ceiling"...House Democrats are also concerned about the need to compromise on the country’s debt ceiling. Right now, Republicans are pushing on a debt limit with regard to how much the US can spend and borrow to meet its obligations globally. The big picture here is that the Republicans would like the country to spend less and this is their way of forcing that into fruition. The very serious threat is that a debt limit imposed could lead to the country defaulting on its financial obligations to other countries and send our nation’s economy into a tailspin even worse than the financial crisis of 2008.

What happens during a government shutdown? Hundreds of thousands of federal employees are sent home without pay and government agencies literally close and lock their doors from operation. This has nothing to do with state and local agencies...but anything related to federal services could either stop or may face delays. Social security benefits continued during the last shutdown, but it isn't guaranteed that they would be available during a lengthier one. The same goes for food stamp and WIC programs, as well as federal school lunch. 

What will that mean for me? Well, you might want to reschedule that trip to Yellowstone. Most federal government offices, programs, and museums would have to close their doors. Additionally, passport applications being processed could be significantly delayed (so that trip to Paris may also need to be rebooked). Federal contractors may experience problems because the agencies they work with won’t be able to get them the paperwork needed to move forward. But, on the bright side, the postal service will still operate which won’t interfere with us all finally sending off that long overdue letter to grandma. This is probably a good thing, because she’s likely to be a little crotchety after not getting her social security check.

What about the agencies that protect us? While most federal employees will not be able to report to work, critical services related to the protection of human life and property (national security, handling waste, food inspection, border protection, disaster assistance) would remain in limited capacity.

So, what next? It depends on what the members of the Senate do with the latest bill sent their way from the House. All signs point to the Democrats in the Senate rejecting the measure defunding Obamacare which would make the discussion a non-starter again once it is kicked back to the House and set up