Washington is in the first day of a federal government shutdown that no one quite knows how will be resolved.
At the center of the standoff is the Democratic party’s refusal to pass a reconciliation bill unless Republicans agree to restoring healthcare cuts that were enacted during the summer.
Now hundreds of thousands of federal employees will be furloughed, while millions more across the nation sit in anticipation waiting to hear if they need to work during the shutdown.
Everyday services for Americans, such as passport and federal loan offices as well as food inspections will come to a sudden halt. However, National Parks will still be open but expect to see no employees maintaining the areas.
These services are deemed non-essential whenever the government is shutdown over partisan bickering. Now, food inspectors and park rangers will be furloughed, while other bureaucrats are working from their office for only a few hours a day to ‘undertake orderly shutdown activities.’
There is no telling how long the shutdown could last. Donald Trump oversaw the longest government shutdown in US history at 35 days back in 2018.
What happens when funding lapses?
Now that a lapse in funding has occurred, the law requires agencies to furlough their ‘non-excepted’ employees. Excepted employees, which include those who work to protect life and property, stay on the job but don´t get paid until after the shutdown ends.
Hundreds of thousands of federal employees will be furloughed, while millions more across the nation wait in anticipation
At the center of the shutdown is Democrats pushing Republicans to restore healthcare benefits
The White House Office of Management and Budget begins the process with instructions to agencies that a lapse in appropriations has occurred and they should initiate orderly shutdown activities. That memo went out Tuesday evening.
The Congressional Budget Office estimates that roughly 750,000 federal employees could be furloughed each day of the shutdown, with the total daily cost of their compensation at roughly $400 million.
Do soldiers get paid?
When it comes to the military, over a million servicemembers are now working without pay because of the DC shutdown.
The Pentagon is unable to dish out new contracts or start new defense programs. Lawmakers could agree to pass legislation that would allow active-duty troops and Pentagon employees to be paid despite the shutdown.
If Congress does not resolve the issue by October 15th, then troops will not receive a paycheck.
Who keeps working?
FBI investigators, CIA officers, air traffic controllers and agents operating airport checkpoints keep working. So do members of the Armed Forces.
Those programs that rely on mandatory spending generally continue during a shutdown. Social Security payments still go out. Seniors relying on Medicare coverage can still see their doctors and health care providers can be reimbursed.
Veteran health care also continues during a shutdown. Veterans Affairs medical centers and outpatient clinics will be open, and VA benefits will continue to be processed and delivered. Burials will continue at VA national cemeteries.
Trump previously oversaw the longest government shutdown in history back in 2018 during his first term in office
Will workers get back pay?
Yes. In 2019, Congress passed a bill enshrining into law the requirement that furloughed employees get retroactive pay once operations resume.
While they´ll eventually get paid, the furloughed workers and those who remain on the job may have to go without one or more of their regular paychecks, depending upon how long the shutdown lasts, creating financial stress for many families.
Service members would also receive back pay for any missed paychecks once federal funding resumes.
Is the Postal Service affected?
Yes. The U.S. Postal Service is unaffected by a government shutdown. It´s an independent entity funded through the sale of its products and services, not by tax dollars.
How much discretion does the administration have?
All administrations get some leeway to choose which services to freeze and which to maintain in a shutdown.
The first Trump administration worked to blunt the impact of what became the country´s longest partial shutdown in 2018 and 2019. But on Tuesday, Trump threatened the possibility of increasing the pain that comes with a shutdown.
What are agencies planning?
Each federal agency develops its own shutdown plan. The plans outline which workers would stay on the job during a shutdown and which would be furloughed.
In a provocative move, the White House´s Office of Management and Budget has threatened the mass firing of federal workers in a shutdown. An OMB memo said those programs that didn´t get funding through Trump´s mega-bill this summer would bear the brunt of a shutdown.
Health and Human Services
Health and Human Services will furlough about 41 percent of its staff out of nearly 80,000 employees, according to a contingency plan posted on its website.
Meanwhile, research and patient care at the National Institutes of Health would be upended. Patients currently enrolled in studies at the research-only hospital nicknamed the ‘house of hope’ will continue to receive care. Additional sick patients hoping for access to experimental therapies can´t enroll except in special circumstances, and no new studies will begin.
At the Food and Drug Administration, its ‘ability to protect and promote public health and safety would be significantly impacted, with many activities delayed or paused.’ For example, the agency would not accept new drug applications or medical device submissions that require payment of a user fee.
National parks will be opened to the public but do not expect to see employees or park rangers maintain the areas.
National Park Service
As the shutdown neared, the National Park Service had not yet said whether it will close its more than 400 sites across the US to visitors. Park officials said Tuesday afternoon that contingency plans were still being updated and would be posted to the service´s website.
Many national parks including Yellowstone and Yosemite stayed open during a 35-day shutdown during Trump´s first term. Limited staffing led to vandalism, gates being pried open and other problems including an off-roader mowing down one of the namesake trees at Joshua Tree National Park in California.
Smithsonian Institution
In the event of a government shutdown, our museums, research centers, and the National Zoo will remain open through at least Monday, October 6.
What’s the economic impact?
Stock futures plunged and gold rocketed to fresh all-time highs on Wednesday after the government shutdown took hold at midnight.
Wall Street traders scrambled to hedge against wider fallout for an already fragile economy if the federal stoppage – the first since 2018 – drags on.
Dow futures slid 200 points, while S&P and Nasdaq contracts dropped about 0.5 percent.
Gold notched a record for the third straight session, climbing to $3,895 an ounce, while Bitcoin also advanced as investors sought safe-haven assets. Treasuries and the U.S. dollar were little changed.
Phillip Swagel, director of the Congressional Budget Office, said a short shutdown doesn´t have a huge impact on the economy, especially since federal workers, by law, are paid retroactively. But ‘if a shutdown continues, then that can give rise to uncertainties about what is the role of government in our society, and what´s the financial impact on all the programs that the government funds.’
‘The impact is not immediate, but over time, there is a negative impact of a shutdown on the economy,’ he added.
Markets haven´t reacted strongly to past shutdowns, according to Goldman Sachs Research. At the close of the three prolonged shutdowns since the early 1990s, equity markets finished flat or up even after dipping initially.
A governmentwide shutdown would directly reduce growth by around 0.15 percentage points for each week it lasted, or about 0.2 percentage points per week once private-sector effects were included, and growth would rise by the same cumulative amount in the quarter following reopening, writes Alec Phillips, chief U.S. political economist at Goldman Sachs.
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