Government Shutdown

Americans, including hundreds of thousands of federal employees, could soon feel the impact of a U.S. government shutdown. If lawmakers don't reach an agreement by the end of Thursday — the last day of the fiscal year — the federal government will officially close as of 12:01 a.m. on Friday. 

Congress moved one step closer to a shutdown after Senate Republicans late Monday blocked a bill

 to fund the government at current levels and suspend the debt ceiling. But on Thursday it appeared that a shutdown would be averted, with the Senate poised to approve a short-term government funding bill that keeps federal agencies open through early December and staves off a partial government shutdown.

Most Americans would notice the disruption in one way or another. Many national parks would likely shut down, while mortgage and other loan applications could be delayed because the IRS could stop verifying income and Social Security numbers, according to the Committee for a Responsible Federal Budget (CRFB), a nonprofit group that focuses on fiscal issues. 

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Government services that are deemed essential — typically tasks important to safety and national security, such as border protection and air traffic control — would continue despite a shutdown. But the disruption would come at a sensitive time, with many Americans struggling to regain their footing amid the ongoing pandemic and the economy grappling with the effects of the COVID-19 Delta variant.

"Every shutdown is different — there is a lot of discretion in the agencies about what they can continue to do," said Marc Goldwein, senior policy director at the CRFB. "Everything that's not essential has to stop, but there are different definitions of essential work."

For instance, there are questions whether work on COVID-19 vaccines at the Food and Drug Administration and the Centers for Disease Control and Protection would be considered essential. Pfizer on Tuesday said it had sent data to the FDA on its clinical trials for the vaccine in children from 5 to 12 years old.

The biggest impact may be felt by the hundreds of thousands of federal workers who are likely to be furloughed if a shutdown occurs, experts say.

"You have 2 million civilian employees that are working hard across the country," Max Stier, president of the nonpartisan think tank Partnership for Public Service, told CBSN. "You have told all of them that there may be a shutdown — that means that they have to actually stop working on things like the [Montana] train crash or dealing with the economic calamity caused by the pandemic."

The showdown in Congress comes as lawmakers are also debating a hike in the nation's borrowing limit, or "debt ceiling," adding to the potential political twists and turns. Here's what you should know if the government shuts down this week.

What would be the financial impact? 

The last shutdown, from December 22, 2018, to January 25, 2019, was a partial closure since Congress had already enacted five of the 12 appropriations bills. But Congress hasn't yet passed any funding bills.

That means more federal agencies would likely be affected in a new shutdown. The partial shutdown in 2018-2019 was a record-setting 35 days, which reduced economic growth in the final three months of 2018 by $3 billion, the Congressional Budget Office estimated. It's unclear at this point how large the financial impact would be, since that partly depends on the length of a shutdown.

Which essential services would continue?

Each federal agency would have its own shutdown plan, which is coordinated by the Office of Management and Budget. Those efforts would determine which government activities would stop until the political impasse between Democrats and Republicans is resolves and funding is renewed. 

But all essential services would continue. Here are some of the services that have been maintained in prior shutdowns, according to the CRFB.

  • Border protection 
  • In-hospital medical care
  • Air traffic control
  • Law enforcement
  • Power grid maintenance 

How many federal employees would be furloughed?

A full government shutdown would likely impact more federal workers than the prior partial shutdown in 2018, the Committee for a Responsible Federal Budget said. 

It could be similar in scope to shutdowns in 2013 and in early 2018, when about 850,000 of 2.1 million non-postal federal employees were furloughed, the group estimated. In the 2018 episode, about 380,000 federal workers were furloughed, according to the Partnership for Public Service.

Furloughed federal workers aren't allowed to work during a shutdown and don't get paid while they're off, but would eventually receive back pay once the logjam is resolved. But that disruption could have a wider economic impact, according to American Federation of Government Employees public policy Director Jacqueline Simon.

"It's not only the federal employee who suffers when there's no paycheck on payday — their landlord doesn't get paid," she said. "The credit card company doesn't get paid, the utilities don't get paid. They don't go to the grocery store and buy groceries a lot."

Would benefits like Social Security and Medicare be impacted?

No, experts say. That's because Social Security, Medicare and Medicaid are mandatory spending programs, which means they aren't subject to annual appropriations. 

But while the government would continue to disburse payments for Social Security recipients and people covered by Medicare and Medicaid, other services could be disrupted.

For instance, benefit verification as well as card issuance would be halted during a shutdown, the group said. That could create problems for some, as benefit verification is sometimes required when people apply for loans, mortgages or other services that require proof of income. 

Would the post office continue delivering mail?

Yes, because the U.S. Postal Service doesn't rely on federal tax dollars for its operating budget. 

In an unrelated change, however, the postal service's delivery standards would slow for some patrons beginning on Friday, the USPS said Monday. That's due to an ongoing operational overhaul that Postmaster Louis DeJoy has said will stanch billions of dollars in losses and put the agency on the path to profitability. 

"Mail traveling the greatest distances will be most affected, with a day or two of transit time added for some first-class mail and periodicals," the agency. said.

Would national parks be shut?

It's possible. The National Park Service shut all of its parks to visitors during the 2013 shutdown. But in the 2018 shutdown, many parks remained open while park services like trash removal were halted. Without staff to maintain the parks, some of the nation's iconic parks suffered from overflowing garbage and damaging behavior such as illegal off-roading. 

Would the IRS continue to operate?

If a shutdown occurs, the tax agency might not be able to provide its normal service of verifying income and Social Security numbers. That would throw a wrench into applications for mortgages and other loan approvals as well as potentially delay loans from being processed, the CRFB said. 

In the 2018 shutdown, the White House promised that tax refunds would not be affected, reversing an IRS plan to halt the checks during the gap. Despite that pledge, refunds didn't go exactly as planned: "At least 26,000 furloughed IRS employees were recalled to work during the 2018-2019 shutdown in preparation for tax season, but 14,000 did not show up to work without pay," the CRFB said. 

Would food stamps get delayed?

Funding for the food stamp program — called the Supplemental Nutrition Assistance Program — is mandatory, but the government's ability to distribute the benefits to its 42 million recipients could be impacted, the CRFB said. 

That's because a stopgap funding bill would be needed to authorize the Department of Agriculture  to send out benefits for 30 days after the start of a shutdown. In the 2018 shutdown, the USDA avoided that issue by paying food stamp benefits early in January of 2019. If it hadn't done so before the 30-day window expired, the agency wouldn't have been able to pay the benefits in March, according to the CRFB. 

What else could be impacted?

Many more government agencies and programs would be halted, although it's unlikely that Americans would be aware of many of the disruptions. In the 2018 shutdown, agencies including the National Science Foundation, Fish and Wildlife Service, U.S. Geological Survey, Environmental Protection Agency, National Institute of Standards and Technology, and NOAA had to suspend their work

Yet while Americans might not notice the halt in agency programs in the event of a shutdown, such stoppages could have very real effects. For example, "In 2013, the Environmental Protection Agency halted site inspections for 1,200 different sites that included hazardous waste, drinking water, and chemical facilities," the CRFB said. 

What about a possible debt default?

That's a related issue that has experts concerned about its potential impact on the economy, jobs and the stock market. 

Democrats earlier this week attempted to pass a stopgap measure that would have funded the government through December 3 and suspended the debt limit through December 2022. But Republicans are refusing to raise or suspend the debt limit, and if that happens, the country could go into default for the first time in U.S. history.

The stopgap bill the Senate is preparing to take up on Wednesday would keep the government running through December 3, but it does not address the looming deadline to raise the debt ceiling to avoid default.

The Treasury Department on Tuesday estimated it would exhaust the measures allowing the U.S. government to pay its bills on October 18, if Congress does not act to raise or suspend the debt limit.

If the U.S. defaults, the nation could plunge into another recession this fall, according to an analysis by Moody's Analytics chief economist Mark Zandi. The fallout would wipe out as many as 6 million jobs and erase $15 trillion in household wealth, he estimated in a report.

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