Government Shutdown is All Systems Go

Update October 1, 12:01 a.m. - As of midnight the deadline for a government shutdown has passed. Late Monday night the House of Representatives passed its third funding resolution to keep the government open. Like both previous, Monday night's resolution came with language targeting the Affordable Care Act, in this case delaying enforcement of the individual mandate by one year. The Senate rejected this bill and reiterated that it would reject any funding resolution that defunds or delays the ACA. Without last minute action by Congress, the shutdown will begin at 8:00 a.m. today.

NEW YORK (MainStreet) — The government will probably shut down at 8 a.m. Tuesday.

That's the situation as of Sunday morning, when House Republicans passed a bill to fund the federal government through December that also requires a one year delay of the Affordable Care Act. Senate Democrats and President Obama have consistently refused to negotiate over the ACA in exchange for keeping the government open, and House Republicans insist they won't pass funding legislation without doing so.

The result is an impasse that is unlikely to break before Tuesday, when the new fiscal year begins and the Treasury Department runs out of authority to spend more money.

CSPAN aside, how will this effect you? Here are some of the most common services consumers use every day and their plans for a shutdown. These are only plans however, and could change if days turn into weeks.

But First, What's Going On?

The federal government runs on budgets and appropriations bills, which authorize its agencies to spend money. This authority covers basic operational costs such as salaries, electricity and rent. Even booting up a computer or having someone show up for work costs money, since you owe someone for every step of the way.

On October 1 the new fiscal year begins, and the current appropriations bill will run out. Past that point, new legislation is required. Without authority to spend, the government will have to shut down.

Under ordinary circumstances when the parties can't agree on a budget, they pass a continuing resolution, a bill to sustain government funding at existing levels. This time, however, Congressional Republicans have seized the opportunity as part of their three year war against Obamacare. Conservative leaders have announced that they won't pass any bill that doesn't delay or defund the program, while Democrats refuse to negotiate over President Obama's signature achievement in exchange for keeping the government open, leading to the current impasse.

The Post Office

Active.

The Post Office is mostly self-funded and a government shutdown only impacts agencies that rely on money from the United States Treasury. Even though this is a federal agency, the mail will still go out largely as normal. Some behind the scenes services will be effected, such as the Postal Regulatory Commission and the Office of the Inspector General, but few consumers will see a difference.

National Security

Active.

During a shutdown the government gets divided into mandatory and discretionary services. Functions "that protect life and property," such as national security, generally remain open and operational. Active service personnel such as uniformed soldiers and border guards will remain on duty, although no one will get paid until the shutdown has ended.

Civilian employees, except for those necessary to support uniformed troops, will largely go home.

Hiring and recruitment will be suspended as well, although the full extent of this impact will remain to be seen.

 

Specific consumer services to shut down will include:

  • The E-Verify system, used to determine job applicants' eligibility to work in the United States.
  • FEMA Risk Mapping, used by public planers and insurance companies.
  • U.S. Coast Guard services to commercial and recreational boaters.

Tourism and Travel Services

Shut down.

Most tourism related services are considered non-essential and will shut down. These include:

  • Federal museums
  • Federal monuments
  • All 386 national park sites.

Consular services such as visa and passport applications will remain open as long as each office raises enough money from fees to cover its operations. That will change as those fees run out or for offices in a federal building that closes.

During the last government shutdown, in 1995-96, the U.S. tourism and travel industry reported several million dollars in losses due to these factors.

The Affordable Care Act

Active.

In a downright Shakespearean bit of irony, the focus of this whole battle will remain unaffected by it. The Affordable Care Act is funded through mandatory spending like Medicare and Medicaid, not as part of the annual budgeting process. It will retain the authority to spend regardless of what happens with appropriations.

Even if the government shuts down on Tuesday, the ACA's insurance exchanges will open for business as usual.

Law Enforcement

Active.

Like national security, law enforcement is considered essential for health and safety and will stay open for those purposes. FBI agents, U.S. Marshalls, federal prosecutors and all other employees necessary for public safety will stay on the job.

Employees will be furloughed "to the extent this can be done without compromising to a significant degree the safety of human life or the protection of property."

Major consumer services facing suspension include:

  • Applications to the bureau of Alcohol, Tobacco and Firearms, including those for a gun license.
  • Non-essential law enforcement activities.
  • Federal attorneys and employees working on non-exempted civil, not criminal, matters.

The IRS

Semi-active.

Sorry everyone.

The IRS will remain open to the extent necessary to protect and preserve government property. Unfortunately, since anything owed is considered government property, most enforcement actions will continue as will all automatic income tax withholding.

Administrative and support services, however, will largely shut down. Major suspended consumer functions will include:

  • Taxpayer services, including all telephone support and legal counsel.
  • All audit functions.
  • Return processing.
  • Non-automated collections.

Regulatory Agencies

Shut down.

This is an extremely broad category, so business owners out there should check on a case-by-case basis; however, as a general rule most regulatory functions will be suspended during a shut down. Agencies like the FDA, EPA and Department of Labor rarely provide services necessary for immediate health and safety, and mostly draw their budgets from the Treasury, so they will go on hiatus in the event of a shutdown.

Air Travel

Active.

The FAA and TSA are essential services for the protection of life and safety, and as such will remain open. Behind the scenes and administrative operations will shut down, so projects like aviation rulemaking, employee training and financial planning will get suspended. It's unlikely that most consumers will directly see these disruptions however.

Federal Courts

Active.

The federal courts will remain open for ten business days funded by administrative fees. The court system has not yet announced a plan for operations after that.

The last time the government shut down in 1996 most court services operated as normal except for civil matters that had to be directly processed by government employees, such as bankruptcy filings and child support.

State courts will operate as normal, although some disruptions are likely.

Washington D.C.

Semi-Active.

Washington D.C. is run by the federal government, and so is subject to the terms of a shut down.

shut down plan which identifies essential services. On September 25, however, city Mayor Vincent Gray wrote a letter to the Office of Management and Budget in which he declared that "all operations of the government of the District of Columbia are 'excepted' activities essential to the protection of public safety, health, and property."

 

At time of writing, it was unclear which of these documents will take precedence, although in either case most services for daily life should proceed uninterrupted.

Social Security, Medicare and Medicaid

Active.

Social security pays out of a trust fund separate from the appropriations process, and since the post office will stay open those checks will still go out. That said, administrative furloughs will still cause problems. During the 1996 shutdown social security checks became significantly delayed.

Medicare and Medicaid are considered essential services, so their funding is also untied from the annual appropriations process. As with social security, while payments will continue to be processed and mailed, administrative delays are likely.

Services not directly tied to payment face suspension, including applications for new benefits and any kind of consumer support.

Student Loans

Active.

"Program funds for Pell Grants and Direct Student Loans are provided through mandatory and carryover appropriations. Over 14 million students receive student aid, in the form of grants and loans, at over 6,600 schools through these programs. As a result of the permanent and multi-year appropriations, Pell Grants and student loans could continue as normal." From the Department of Education's contingency plan.

Expect disruptions and delays to all support-end services, however, so if you have any questions call and ask them by October 1.

Wages and Employment

Employees who work for agencies covered by mandatory or outside funding will receive their pay as normal. Those who remain at work, because their positions are considered "excepted," such as law enforcement and the military, will also get paid although it's uncertain when. In the event of brief shutdown the government will pay them once it reopens. During a long one, there's no clear answer.

Employees who are furloughed face a more uncertain future. The government is not required to pay them for time not worked; however, as the Congressional Research Service noted "in historical practice, federal employees who have been furloughed under a shutdown (i.e., those who were not excepted), generally have received their salaries retroactively as a result of legislation to that effect."

It is equally uncertain exactly how many people this will effect and the government has given no official estimate.

According to J. David Cox, President of the American Federation of Government Employees, between 800,000 and 1 million workers out of 2.1 total federal employees could get sent home.

This is consistent with a USA Today estimate of approximately 41% of all federal employees, as well as with the 800,000 workers sent home during the 1995-96 government shutdown.

How Much Will This Boondoggle Cost?

Government shut downs cost, rather than save, money given that it takes a considerable amount of time and effort to prepare for, execute and then return from a shutdown. Even now just the threat of one has forced every federal agency to conduct detailed reviews in order to prepare for the possible events of October 1.

Furloughed employees have also historically received back pay so as not to cause hardship, imposing further costs for which the government collects no benefit.

There's no way to know in advance how much this will cost. By way of guidance, the OMB estimates that the two government shutdowns in 1995-96 cost $1.4 billion, over $2 billion in today's terms.

 

 

 

--Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website www.wanderinglawyer.com.

 

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