US Federal Government Shutdown 2023: What could happen, Why the US Could Face a Government Shutdown

US Federal Government Shutdown 2023: A shutdown of the federal government of the United States occurs when Congress fails to adopt all 12 yearly appropriations bills by September 30. For the fourth time, this has happened because of President Trump’s demand for wall money.

Grants that help low-income Americans with food and housing costs, as well as large programs like Medicare and Social Security, would all be impacted by a shutdown. Agencies can avoid closure by using reserves or entrance fees to cover expenses they have not yet incurred. For instance, the National Gallery of Art has stated that it will remain open as long as these funds are available.

For example, the Social Security Administration kept sending out benefits checks during the 1996 and 2013 shutdowns while staff who handled new applications or address changes were sent home without pay.

In addition to threatening economic development, a prolonged shutdown might postpone the delivery of important economic statistics that policymakers and investors rely on, such as unemployment figures or gross domestic product projections. A protracted shutdown of government offices might also hinder their ability to ensure the public’s safety.

How the US Federal government shutdown may occur

For the next calendar year, Congress must approve a federal budget that allocates money for all government operations. Without a new budget in place by the end of October, government agencies must cut activity and halt non-essential activities.

Although certain federal agencies, such as those dealing with law enforcement, air traffic control, emergency medical treatment, and disaster relief, are exempt from appropriations processes, a shutdown would still affect most federal departments and services. Workers who are essential to these operations would stay on the payroll indefinitely if a funding lapse were to occur.

Payment of interest on government debt, Social Security payouts, and passport applications are also excluded. Congress has passed legislation establishing national priorities like disaster assistance and financing for medical research that might one day save lives.

Because furloughed workers reduce spending and disrupt revenue for businesses that serve federal offices, such as office supply stores, some agencies may reduce or close as soon as a shutdown begins, leaving citizens with delays in passport and loan applications, reduced food-safety inspections, closed museums and national parks, and other inconveniences.

What Could Happen During US Federal Government Shutdown 2023

Long-term government shutdowns won’t significantly affect the economy, but they can be uncomfortable for many Americans and damage faith in their representatives. However, a prolonged outage might cause short-term but significant delays in visa applications or food safety inspections, which could disrupt contractors and the millions of people who rely on them for income.

Everything save the most crucial operations ceases during a government shutdown. While mail and Social Security payments are still delivered, and air travel is managed, national parks may refuse visitors, and services at the Department of Labor, National Institutes of Health, and other agencies may be disrupted.

National parks may close or operate at reduced capacity; nevertheless, vital services like TSA-managed airport security, air travel, and Social Security checks continue, albeit with delays and inconveniences.

The Office of Management and Budget (OMB) compiles shutdown plans from the various agencies and makes them publicly available. The plans specify which workers would be furloughed or forced to work without pay and for how long key services will take to finish. Employees of the agency may choose to ignore the legality of the closure and continue working, but doing so is illegal and might have serious consequences.

The end of the fiscal year 2023 is on December 31; therefore, Congress will likely enact a CR this autumn to keep the government running past that date. These CRs have been effective in the past, but putting them into practice can be difficult because of the cyclical nature of available funds.

Why the US Could Face a Government Shutdown in 2023

However, if Congress fails to agree on full-year budgets for this year and beyond, the implications of a shutdown may be substantially more severe than in the past, when they normally lasted for only a few days. Even if essential data like the monthly jobs report from the BLS or quarterly profits reports from the SEC were missing during a protracted shutdown period, the repercussions on the economy would be noticeable and probably short-lived.

Top legislators from both parties are working to adopt a continuing resolution, a short-term budget extension, before the coming deadline. The purpose of these temporary solutions is to prevent a shutdown and give negotiators more time to work on a long-term financing agreement for the entire year.

A dispute over funding for Ukraine might potentially steal the spotlight, making it more difficult to enact a stopgap measure. While Democrats and Republicans in the Senate are in favor of delivering further help to Ukraine, many Republicans in the House are hesitant to keep giving aid and do not want to see it connected to a short-term funding package.

Yet, it is unclear whether there will be enough consensus to pass even a short-term funding bill out of both chambers before the end of the month, as House conservatives rail against the possibility of a stopgap bill and have threatened to vote against one while demanding major policy concessions that have no chance of passing the Senate.

Both parties and President Joe Biden would look bad if the government shut down. 

What have White House officials stated regarding a potential Federal government shutdown for 2023?

Most federal employees were ordered to stay home during the previous US government shutdown in December and January, although vital individuals were allowed to go to work. This week, the White House issued a stern warning that a shutdown may jeopardize essential federal programs.

“These consequences are real and avoidable – but only if House Republicans stop playing political games with peoples’ lives and catering to the ideological demands of their most extreme, far-right members,” “It’s time for House Republicans to abide by the bipartisan budget agreement that a majority of them voted for, keep the government open, and address other urgent needs for the American people.”

White House

The Office of Management and Budget (OMB) receives federal agency contingency plans that detail how they would function in the event of a budget shortfall, typically including a warning that non-essential work would be terminated while necessary staff continued without pay until funding concerns were resolved. In 2019, legislation sponsored by Sen. Ben Cardin ensured that workers who were furloughed would get their back pay.

National Academy of Sciences research programs show that a government shutdown would delay food safety inspections at the FDA and disrupt air traffic controllers and TSA officers; it would also undermine public trust in Washington politicians; however, Goldman Sachs claims that it shouldn’t have any major economic repercussions.

However, according to Goldman Sachs’ predictions of GDP decrease from protracted shutdowns (more than a week), a prolonged shutdown might have major ramifications for economic growth and exacerbate an earlier recession than originally expected. The White House has asked for temporary financing legislation to prevent a shutdown on October 1 while discussions take place over longer-term budget agreements.

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