What does a US government shutdown actually mean?

President Donald Trump has only been in office since January, but a lot has changed in those eight months. One thing that hasn't changed though is the possibility of government shutdowns.

This time US lawmakers have until midnight on Tuesday to come up with an alternative plan that will pass muster with both Republicans and Democrats. That means Congress must approve a temporary stop-gap federal funding bill to keep the government running.

On Monday, Trump met with Congressional leaders from both parties at the White House, but no deal was reached as Democrats pushed to restore some health care funding and reverse other Medicaid cuts. After the meeting, Vice President JD Vance said, "I think we're headed to a shutdown."

If both sides cannot agree, a government shutdown will begin at 12:01 a.m. on Wednesday. A government shutdown is as disruptive as it sounds.

What is a US government shutdown?

A government shutdown occurs when the government has not agreed on its annual budget, in whole or in part. It impacts discretionary spending, which must be appropriated each year.

Such a shutdown basically means that the federal government stops paying federal employees and contractors who work for the government. It is a situation that impacts each part of the government differently.

In the past, there have been partial shutdowns when some of the budget had been approved, leaving some agencies fully funded and able to work as usual. There have also been wider shutdowns when none of the budget had been signed into law.

During a full shutdown all non-essential US government agencies and programs close since they depend on annual government funding.

Despite a government shutdown, essential services and mandatory spending programs do not stop. In past shutdowns, active-duty military personnel and most border protection agents, federal law enforcement agents and air traffic controllers have stayed on the job.

Whereas discretionary spending is up for discussion each year, mandatory spending is approved for longer periods or is permanent. So, things like Social Security, Medicare and Medicaid payments will continue to be made as will military veterans' health benefits. Mail delivery and the Federal Reserve are not affected because they are funded in a different way.

Who is affected by a government shutdown?

Federal employees are the first to feel the impact of a government shutdown.

Each shutdown is different and it is hard to know exactly what will happen ahead of time. Some agencies have clear contingency plans in place and set clear priorities, others do not. Still, some things will be immediately stopped. Other programs could slow down or stop later depending on how long a shutdown lasts.

Shutdowns in 2013 and early 2018 meant that around 850,000 out of 2.1 million non-postal federal employees were temporarily furloughed, according to the Committee for a Responsible Federal Budget, a Washington, D.C.-based nonpartisan group that focuses on fiscal policy.

Furloughed employees are not allowed to work and do not receive their paychecks during this time. But they are guaranteed retroactive back pay when the government is back up and running.

Employees working in essential services must keep working but are likewise not paid during a shutdown.

Federal officials who have been confirmed by the Senate cannot be furloughed. The president and members of Congress continue to work and be paid.

In the past, some agencies like the Department of Defense, State Department or IRS have asked furloughed workers to continue working and keep things running smoothly — again without being paid until a spending bill is finally passed.

What happens during a government shutdown?

The Environmental Protection Agency, Food and Drug Administration, Federal Trade Commission and the Securities and Exchange Commission are among the departments most likely to close their doors during a government shutdown.

Depending on how long things stay closed, huge backlogs of work can pile up while millions of dollars are lost in revenue like ticket sales. It also means routine health and safety inspections are not done. Monthly reports on employment and inflation are not published on time.

Other agencies or programs like NASA or the Library of Congress are also considered nonessential and stop operation either in part or full during a government shutdown.

National parks, national monuments and museums like the Smithsonian could also close, but the Trump administration could force them to stay open with a skeleton staff. But the longer a shutdown goes on, the more likely it is that they could close, too.

For federal employees who live paycheck to paycheck, a government shutdown can mean a temporary financial pinch and resentment.

To add to the general uncertainty, the administration has hinted it could use this shutdown as an excuse for more mass firings. The White House Office of Management and Budget sent a letter to federal agencies suggesting they could "use this opportunity to consider reduction in force."

How long do government shutdowns last?

This is not the first government shutdown. Presidents Clinton, Obama and Trump have all experienced them. The longest shutdown was under Trump in 2018-2019 and lasted for 35 days.

The Committee for a Responsible Federal Budget tallies up four shutdowns that led to government operations being affected for more than one business day.

"A shutdown of a few days is a hassle — and undermines public confidence in the capacity of US politicians to do the people's business — but is unlikely to have a significant impact on the economy," wrote David Wessel from the nonprofit Brookings Institution last year. "A prolonged shutdown, however, can cause bigger problems, albeit most temporary."

The Congressional Budget Office agrees that most of the economic impacts of government shutdowns are temporary. But it calculated that the 2018-2019 shutdown led to a $3 billion (€2.55 billion) reduction in GDP that would never be made up.

Edited by: Ashutosh Pandey

- DW

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