The US government is headed toward a shutdown ahead of the Christmas holidays, after President-elect Donald Trump and Elon Musk struck a cross-party deal to keep federal agencies running.
What happens if Congress fails to pass a spending bill to keep the lights on after the Friday night deadline?
– Who is affected –
The shutdown would potentially affect hundreds of thousands of federal employees.
Shai Acabas, executive director of the economic policy program at the Bipartisan Policy Center, said an estimated 875,000 workers could be furloughed, while 1.4 million would keep working because they would be deemed essential.
Typically, many employees, except those providing key services such as air traffic control and law enforcement, will be asked not to come to work. In the past, this has put pressure on air transportation and other sectors.
The American Federation of Government Employees (AFGE), a major federal employee union, said the shutdown means essential workers will work without pay through the holidays.
Employees receive their pay retroactively when the shutdown ends, and a prolonged closure could put a strain on their finances. But some contractors may not be guaranteed back pay.
AFGE national president Everett Kelly said a prolonged shutdown would be “nothing less than a Christmas gift to America’s adversaries and a lump of coal in the stock of the American people.”
– Services affected –
Social Security and Medicare beneficiaries would not be affected, because these programs are authorized by Congress through laws that do not require annual approval, the Brookings Institution has previously noted.
But services offered by Social Security benefits offices may be limited in the shutdown.
The National Park Service (NPS) will also be affected. During the 2013 government shutdown, NPS turned back millions of visitors to hundreds of parks, national monuments, and other sites across the United States.
The longer the standoff lasts, the greater its impact.
– Shutdown period –
It is unclear how long the shutdown will last.
Bernard Yaros, chief economist at Oxford Economics, told AFP it could last up to two weeks – a typical pay period in the United States.
“The pressure on the government to reopen will build rapidly as federal workers miss a pay check and worry about not getting another pay check,” he said.
There have been several shutdowns that have affected operations for more than one business day, including a shutdown that lasted 35 days around December 2018 and January 2019 during the previous Trump administration.
It was the most recent and longest shutdown in US history.
– Economic impact –
“The shutdown has had a wide-ranging impact on the U.S. economy,” said Thibault Denamiel, a fellow at the Center for Strategic and International Studies, which reduced growth by about 0.2 percentage points after including the private sector impact.
Markets are generally not much affected by shutdowns.
David Wessel of the Brookings Institution said observers may view Trump’s chaotic intervention as a preview of his second-term governing style.
DeNamil said markets experienced more concern if the Treasury had to impose special measures to avoid debt default, which would be “uncharted territory.”
Although this week’s debate did not include such concerns, “we could see the threat loom again during a second Trump administration,” he warned.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
