GOVERNMENT SHUTDOWN 2021

What consequences would the government shutdown have?

The US government could shut down in less than five days if Congress does not pass a spending bill, which could leave thousands of workers furloughed.

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What consequences would the government shutdown have?
Anna Moneymaker AFP

Since 1980, the US federal government has shut down ten times, with the longest taking place over the course of thirty-five days between December 2018 and January 2019.

The 2018-2019 shutdown occurred after Republicans, led by President Trump, withheld their votes on a spending bill in an attempt to gain funding for the border wall. Democrats who came to hold a majority in the House in early January 2019 did not budge, and in the end, Republicans surrendered.

With just five days left to avert a government shutdown, negotiations on Capitol Hill are not instilling confidence. The White House has directed the heads of federal agencies to put plans in place if Congress does not reach an agreement.

Consequences

Shutdowns, especially for a government as large as the US, are logistically difficult and costly.

The Congressional Budget Office estimated that the most recent shutdown cost about five billion dollars.

About $3 billion had to be spent to pay back furloughed federal workers. An additional $2 billion in losses were reported by the IRS, which could not carry out tax compliance activities to reduce evasion. A smaller amount in losses was also reported by other agencies for fees, including those associated with the closure of national parks and other services. 

Furloughed workers

In the 2018-2019 shutdown, more than 380,000 workers were furloughed, meaning they were sent home and not required to work. They were not paid. An additional 420,000 workers were required to work but did not get paid until after the spending showdown ended. Federal workers were compensated after the crisis ended. However, many federal contractors hired by a third party and paid by the government were not paid for the hours lost during the shutdown.

The fact that federal contractors, many of whom are security officers, custodians, cooks, landscapers, were not compensated was widley condemned by progressive Democrats and activists. Many of these people who lost thier incomes are low-wage workers who already find themselves in an economically precarious situation.

SNAP, Social Security, and other benefits

Thankfully, the funds allocated to send SNAP benefits or food stamps to millions of families were not scheduled to lapse until March 2019. With the shutdown-ending in late January, families did not see thier benefits cut.

However, these protections are not in place this time around. Senior fellow at the Center on Budget and Policy Priorities, Paul Van de Water told CNN, "Just about everyone is likely to be affected in some way or another

The White House has warned that more than $30 billion in funds for various food assistance programs, including WIC, school meals, and SNAP, could be at risk if the government shuts down. While the Department of Agriculture has a legal mandate to distribute food assistance benefits, it only includes the first thirty days after a shutdown. After that thirty-day period, it would take an act of Congress to allow for the distribution.

Additionally, the Committee for a Responsible Federal Budget, a non-partisan organization, has warned that during a shutdown, stores that take Electronic Benefits Transfer (EBT) cards may not be able to renew their license, meaning that those receiving SNAP benefits may have fewer options when shopping.

As for Social Security beneficiaries, the White House warns that there could be delays in making payments in October, valued at over $90 billion. In an option piece in The Wall Street Journal, Treasury Secretary Janet Yellen noted that if the shutdown happens, Social Security payments could be missed for the first time since the program was established in 1935.

 Parents who have just received thier third payment of the Child Tax Credit should also be aware that the October payment could be delayed if a shutdown is triggered. The IRS, who is tasked with distributing the credit, will be forced to reduce staff, and with limiting operating capacity, the agency is warning lawmakers that they may not be able to make the 15 October deadline.