Understanding the impending US government shutdown: How will it affect Americans – Times of India

Just four months after narrowly averting a catastrophic default, the world’s largest economy is once again teetering on the brink of a significant fiscal crisis.
A bitter feud has erupted between President Joe Biden’s Democrats and their Republican counterparts in Congress over crucial spending bills. Failure to pass these bills into law in a timely manner could trigger a government shutdown.
The clock is ticking, with US lawmakers facing a looming deadline of midnight on September 30 to strike a consensus. Should they fail, government services could face a funding drought, leading to temporary closures in numerous sectors.
The impasse stems from a dispute between far-right Republicans and other lawmakers, potentially jeopardizing the financial stability of hundreds of thousands of workers employed in national parks, museums, and other federally funded entities. Moreover, the situation carries significant political risks for President Biden, who is eyeing re-election in 2024.
The White House has pointed out that House Republicans have not thrown their support behind the government spending levels previously agreed upon by Biden and Speaker Kevin McCarthy, the highest-ranking Republican in Congress.
Here are some key details about US government shutdowns:
Why do government shutdowns occur?
Every fiscal year, Congress must allocate funding to 438 government agencies, and this fiscal year ends on September 30. If lawmakers fail to pass these bills before the new fiscal year begins, these agencies will be unable to function as usual. There have been 14 shutdowns since 1981, with most lasting only a day or two. The most recent one, however, was the longest, spanning 34 days between December 2018 and January 2019 due to a dispute over border security. Typically, lawmakers extend agencies’ current funding levels temporarily to allow more time for negotiations.
Impact of a government shutdown
A government shutdown results in hundreds of thousands of federal workers being furloughed without pay, causing disruptions in various services, from financial oversight to trash pickup at national parks. “Essential” workers continue working but go unpaid. Services like mail delivery and tax collection persist. Shutdowns lasting only a few days have limited practical effects, especially if they occur over a weekend.
However, if federal employees miss paychecks after two weeks, the broader economy could suffer. Goldman Sachs estimates that each week of a shutdown directly reduces GDP growth by approximately 0.15 percentage points, with growth rebounding by the same amount after the shutdown ends. The 2018-2019 shutdown cost the economy about $3 billion, equivalent to 0.02% of GDP, according to the Congressional Budget Office.
‘Essential’ functions that won’t be impacted
Each government department and agency has a contingency plan that determines which employees must continue working without pay. In the 2018-2019 shutdown, around 800,000 of the federal government’s 2.2 million employees were furloughed.
The Department of Homeland Security’s 2022 plan called for keeping 227,000 of its 253,000 workers on the job, including border security agents and the Coast Guard. The Department of Justice stated that 85% of its 116,000 employees would be considered essential, including prison staff and prosecutors.
Air travel would remain relatively unaffected, but the Transportation Security Administration warned of potential increased sick calls among airport-security screeners during past shutdowns.
The Internal Revenue Service has furloughed up to 90% of its staff in previous shutdowns, but all employees are currently considered essential. While all military personnel would keep working, around 429,000 civilian Pentagon employees would be furloughed.
(With inputs from Reuters and AP)

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