How a Government Shutdown Could Affect Your Finances
If Congress doesn't
get it together in the next two weeks,
millions of Americans could feel the affects of a government shutdown directly in their pocketbooks.
House and Senate members passed a brief funding extension last week that will keep the government open until Dec. 22, and the GOP is expected to introduce another bandaid bill that will keep the gov open into January. By that time, Democrats, Republicans, and the White House will have to make some concessions : the GOP wants increased defense spending, Dems want to fund the Children's Health Insurance Program, and President Trump wants his wall.
The last government shutdown, in 2013, cost taxpayers $2 billion in retroactive payments to furloughed employees according to the Office of Management and Budget (the report is currently not available on the White House's website, though many outlets wrote about it). Here's what to know this time around.
Most government employees will be furloughed during a shutdown, which is another way of saying 'not working.' In 2013, that totaled around 800,000 people temporarily out of work, and who received delayed pay.
Those in "critical services," which include air traffic controllers, law enforcement, prison operations, border control agents, TSA, hazardous waste handlers and food inspectors, would keep working. The U.S. Postal Service will also continue operation if a shutdown happens.
Employees, even those who were furloughed, receive backpay after the shutdown is over.
In the event of a shutdown, national parks, zoos, and museums will all be closed, affecting over 700,000 visitors per day. If you're waiting on a passport for international travel, you'll likely be waiting a bit longer, so here's hoping you sent in your application with ample time before your trip.
Airports will remain open, though some "non-essential" employees (see below) will be furloughed.
Social Security checks will still arrive, but new signees will need to wait to sign up for their benefits until employees are no longer furloughed.
Medicare will also continue operating, as will Medicaid. However, new applicants will see delays because there won't be enough workers to process their paperwork.
The Supplemental Nutrition Assistance Program (SNAP) is not dependent on annual spending bills, according to USA Today , so you will still receive those benefits if you're already enrolled. However, new applicants will likely see delays in receiving them.
It is unclear whether or not free school lunches may be impacted, though some schools may have enough
Unemployment insurance benefits could be delayed or reduced because while they are funded by the states, they rely on administrative help from the federal government. States are required to keep paying them, technically, but they could run out of funds depending on how long the shutdown lasts , according to Thomas & Company, a national wage verification firm. If that were to happen, they could then obtain Title XII advances from the federal government to continue paying them.
In 2013, about 1.2 million people applying for mortgages faced a delay because the IRS, the Social Security Administration, and the Federal Housing Authority could not process their paperwork, the Washington Post reported. Lenders need the IRS to confirm the buyer's income, while the SSA confirms their identity. Around 17% of closings were delayed during the last shutdown, according to a survey by the National Association of Realtors, while some realtors reported they lost bids or received weaker offers. Mainly, however, homebuyers are looking at bigger headaches.
Small business loan approvals will also be halted or slowed during a shutdown as both the IRS and Small Business Administration would close down (or be severely understaffed) and not able to process the requests .
Military personnel are not subject to furlough in the same manner as other government employees, though other Department of Defense employees may be affected. The Department of Veteran Affairs would not be directly impacted by the shutdown because it receives appropriations a year in advance .
However, while critical medical services would still be fulfilled for active service members, elective procedures might not be. So while service members are less affected than other groups, they still could face some inconveniences and delays.
If the government temporarily shuts down, so will the Commerce and Labor Departments, meaning that investors waiting on their economic reports are out of luck. The stock market also gets a bit spooked when these things happen, losing 0.6% of its value , on average, in the past 18 federal shutdowns. These aren't irreversible consequences, but they could derail the "economic momentum" that the president loves to brag about, as a recent report from credit rating agency S&P Global details.