As traditional as Thanksgiving, the annual government shutdown debate is proceeding. And although Congress has kicked the can down the road with a stopgap measure, the U.S. government is still in jeopardy of shutting down within the next 45 days.
If a shutdown occurs, what are the exact ramifications? Some government services will be disrupted. But what essential services will keep going? How does a shutdown affect you?
Parties Divided on Effect of Shutdown
The saying “it all depends on whose ox is getting gored” is apropos of discussing a government shutdown. For most Americans, the world will keep on spinning. But some will be hampered or even hurt by a government shutdown.Democrats and Republicans were split in a Partnership for Public Service survey. The survey found that 65 percent of Democrats said they would personally be affected by a shutdown, and 46 percent of Republicans said they would be affected.
But who is affected? Some federal agencies are or are not affected by a government shutdown.
Social Security, Medicare Payments
Those who receive Social Security benefits, including disability, will continue to do so during a shutdown. These are considered essential services. Medicare payments will also continue.But those individuals awaiting a decision about disability payments will have to wait until after the shutdown. That’s because state agencies decide, but it’s funded by the Social Security Administration (SSA).
The SSA will continue handling applications for retirement benefits, issuing new Social Security cards, and basic administrative requests like address changes and setting up direct deposit.
But the SSA will stop benefits verifications, cease issuing replacement Medicare cards, and cease overpayments processing and prisoner activities.
The SSA can increase the number of employees exempt from furlough to keep operations going. This was done in the 2013 shutdown.
Unemployment Insurance Payments
Unemployment payments will continue during the shutdown. Although the Department of Labor oversees the program, the state administers the compensation.Furloughed employees may be eligible for unemployment benefits in some states. But may be required to pay it back once they receive their back pay.
Is the US Postal Service Affected?
The U.S. Postal Service (USPS) would not be affected by a government shutdown. Its employees would still receive their paychecks.Although the federal government sometimes supplements it, the USPS does not receive its funding from tax dollars. Its revenue comes from shipping and stamps charges.
Does Government Shutdown Hamper Travel?
Air traffic controllers and Transportation Security Administration (TSA) personnel are considered essential services or employees. So they would continue on the job—but they would not be paid. Often, during a shutdown, calling in sick becomes a common practice. This could lead to some delays.The training for 1,000 new air traffic controllers will cease.
Passport processing may or may not stop during a shutdown. This also goes for visa processing and other consular operations at the State Department. These activities aren’t funded by taxpayers; fees fund them.
Amtrak is a federally chartered corporation but operates as a for-profit company. Amtrak does receive some federal grants. During the last shutdown, trail service was not interrupted.
Enforcement Agencies Affected by Shutdown
Drug Enforcement Administration (DEA), FBI, and other federal enforcement personnel will remain on the job. This includes prison staffers.But most of the Federal Trade Commission’s consumer-protection workers would be furloughed. And this would include half their antitrust personnel.
Internal Revenue Service (IRS) Impacted by Shutdown
Two-thirds, or about 60,000 people, would be furloughed during a government shutdown. Ongoing business would be nearly impossible.But there would be some funding remaining. Last year’s Inflation Reduction Act (IRA) provided some additional funding that would remain in place to keep some IRS employees working.
Because of this IRA’s funding, the remaining agents would keep preparing for the upcoming tax season, continue modernization efforts and provide income verification to mortgage lenders and banks.
Military Affected by Shutdown
Military personnel will remain at their posts, but not so for the Pentagon’s personnel. Half or 800,000 civilian employees of the Pentagon would be furloughed.Contracts awarded to defense contractors before the shutdown would still be continued. But no new ones or extensions would be given.
Payments to defense contractors could be delayed.
Veterans Affairs benefits will continue as usual under a shutdown. This includes pensions and disability checks. Veterans Hospitals and other health services would also continue to operate.
Would Shutdown Affect Financial Regulation?
The Securities and Exchange Commission (SEC) would be affected. Roughly 90 percent of its 4,600 employees would be furloughed.The Commodity Futures Trading Commission (CFTC) would furlough almost all its employees.
But the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency would remain as is.
The Treasury Department would continue to issue debt and manage the U.S. cash position.
Student and Small-Business Loans Affected
Students will still be expected to repay loans if there’s a shutdown. The repayment system is handled by third-party servicing companies, not the government.Financial aid shouldn’t be affected badly since most students received this at the beginning of the semester.
But, applying for future financial aid may be a problem. The Education Department plans to open its newly simplified Free Application for Federal Student Aid (FAFSA) in December. That is a delay from the original date of Oct. 1.
New Small Business Administration (SBA) loans would be delayed.
Many Furloughed, but Not Congress
Overall, 65 percent of the federal government’s civilian workforce will continue working with or without pay during a shutdown. The rest will be furloughed without pay.Many departments have contingency plans in effect if there is a shutdown. For example, The Smithsonian can exist for a week without federal funding.
But one group of people who aren’t affected by a shutdown is Congress. Although their staff members will be working without pay, Congress receives their paychecks with or without a working government.
The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
