The U.S. Capitol in Washington, DC.
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A looming government shutdown could leave hundreds of thousands of federal employees without pay and put key economic data — including the closely watched jobs report — on ice.
Congress has just four days left to agree on a stopgap bill that will keep the federal government fully funded past Tuesday. But as the clock runs out, party leaders are only growing more entrenched in their opposition.
Republicans, who hold narrow majorities in the House and Senate, want to pass a “clean” resolution to temporarily extend funding. Democrats want the stopgap to include health-care protections, including extensions of enhanced premium tax credits under the Affordable Care Act that are set to expire at the end of the year. The enhanced credits cap out-of-pocket health-care premiums for a wider swath of Obamacare enrollees.
A funding bill needs 60 votes to be adopted in the Senate, which means it cannot pass on a party-line vote.
President Donald Trump ratcheted up the political brinksmanship this week by canceling a scheduled meeting with the top House and Senate Democrats. And his Office of Management and Budget appeared to raise the stakes further on Wednesday, when it sent a memo warning federal agencies to prepare for mass firings in the event of a shutdown.
Each side is betting that Americans will blame the other for a shutdown. But regardless of the political dividends, a shutdown will have a major impact on a wide array of services and programs — and it could lead to unprecedented actions by the Trump administration, which has made shrinking the government a top priority.
Here’s what to know:
What is a government shutdown?
Congress has to pass a series of 12 appropriations bills by September 30 to finance government entities for the next fiscal year.
If it does not, or if it cannot pass a short-term funding measure known as a “continuing resolution,” the government shuts down. There have been 14 shutdowns since 1980, according to the Bipartisan Policy Center.
If Congress can only pass some, but not all, of the annual appropriations bills in time, the government will experience a partial shutdown. That happened in late 2018 during Trump’s first presidential term, when the government partially shut down for a record five weeks amid disputes about funding Trump’s U.S.-Mexico border wall.
The current Congress has not passed any of the 12 bills ahead of next week’s deadline.
How will federal employees be affected?
Non-essential government employees may be furloughed during a shutdown, meaning they are forced to take an unpaid leave of absence.
During the last full government shutdown in 2013, about 850,000 employees were furloughed, according to the Committee for a Responsible Federal Budget.
There are more than two million civilian federal workers in the U.S.
While furloughed employees are guaranteed back pay once they return to work, federal contractors have historically not received back pay, according to CRFB.
What services and agencies will be affected?
A shutdown will directly affect the non-essential government programs and services that rely on the spending that must be appropriated every year, which is known as discretionary spending.
In past shutdowns, that has led to the closures of hundreds of national parks and museums, the curtailment of veterans’ services, the suspension of health inspections, the postponement of immigration hearings and a slew of other impacts.
Discretionary spending accounts for 27% of the fiscal 2024 budget, according to the Peter G. Peterson Foundation.
Services and programs deemed essential would continue to operate, though they may be affected indirectly. And some federal employees are classified as “excepted,” meaning they are still required to work during a shutdown.
Examples of essential services include those that are related to national security, law enforcement, air traffic control and inmate control.
Programs funded through “mandatory” spending — which is authorized either permanently or for multiple years — broadly continue, though they can still feel the effects of a shutdown.
For example, in a 1996 shutdown, Social Security checks were still sent out, but staff who handled new enrollments to the program and other services were initially furloughed.
What about economic reports?
A shutdown could delay the release of key economic reports that are regularly published by the government.
If no deal is reached, the government will shut down just days before the Bureau of Labor Statistics is set to issue its monthly jobs report for September.
Wells Fargo economist Michael Pugliese noted this week that after the last full government shutdown in 2013, the monthly jobs and consumer price index reports “were delayed by about two weeks.”
“Collection, processing and publication delays stretched into the following month as well,” the economist noted.
The next BLS employment report is set to come out Oct. 3, while the CPI reading for September is due Oct. 15.
In the partial shutdown that began in late 2018, “The first look at GDP growth for Q4-2018 was delayed about a month, as was December 2018 data on retail sales and personal income & spending,” Pugliese wrote.
— CNBC’s Emily Wilkins contributed to this report.
