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BBCWatcher 30th September 2013 01:41 PM

U.S. Government Shutdown Likely to Begin October 1, 2013: Anticipated/Actual Impacts
 
The U.S. Congress (House and Senate) have not agreed to any budgetary appropriations past September 30, 2013, as I write this -- much less any continuing resolution or other appropriations measure that the President can also agree to -- so it's highly likely that the U.S. federal government will partially shut down starting on October 1, 2013. There will be significant impacts on U.S. citizens living overseas and on other individuals interacting (or trying to interact) with the U.S. federal government. In no particular order, and assuming a relatively short term shutdown (a couple weeks or less), here are some examples:

1. If you're visiting the U.S. or planning to visit the U.S., unfortunately many of the most popular tourist and leisure destinations will be closed. That includes Smithsonian museums, the Statue of Liberty, all the national parks (e.g. Yellowstone), and many other places you might not even think of as "federal." Remaining destinations could be much more crowded. (The Disney theme parks will still be open, however.)

2. Air traffic control services will continue, so your airline flights will be able to land in and take off from the U.S.

3. U.S. Customs and Border Protection officers should remain on duty, so you can clear immigration and customs in the U.S. (and at CBP pre-departure checkpoints outside the U.S. such as in Canada). Transportation Security Administration (TSA) officers should still be on duty at airport security checkpoints. However, CBP and TSA are both somewhat short staffed (due to previous budget cuts), and the shutdown at least won't be helpful, so we might see some delays.

4. You should still receive U.S. government benefits such as Social Security.

5. Passport and visa applications (including passport renewals) will be delayed or halted. Various other consular services may be impacted such as obtaining a Consular Report of Birth Abroad (CRBA) for your new baby.

6. It'll get tougher or impossible during the shutdown to obtain records held by the federal government which you might need for legal and other purposes overseas. For example, the National Archives and Records Administration (NARA) will close.

7. About 40% of the U.S. federal government's workforce will be required to remain at home, off the job and unpaid. That's about 800,000 people who will cut back on their spending (especially in a long shutdown), reducing consumer demand and negatively impacting the macroeconomy (with some global impact). Moreover, those federal employees still on the job (the other 60%) aren't going to get paid either while there's no budget. Which gets very interesting indeed if the shutdown drags on. The estimates I've seen are that a one month shutdown could wipe out as much as 1.5 percentage points off U.S. GDP growth for 2013. That's significant. Among the employees who will be required to stay at home: most civilian defense contractors, including many stationed overseas.

8. You will not likely see any IRS tax refunds processed during the shutdown.

9. The Patient Protection and Affordable Care Act's ("Obamacare") implementation will continue, and the new health insurance exchanges will open. A partial government shutdown has no material impact on that.

10. There's another big problem right behind the partial shutdown. Back in May the U.S. Treasury Department had to start using "extraordinary measures" to prevent the federal government from reaching the current statutory debt ceiling. Treasury recently estimated that those measures would be exhausted on October 17. The shutdown may (paradoxically) extend that deadline slightly but only slightly. Though it has come somewhat close in the past, the U.S. has never fully exhausted its statutory debt limit, and there's really no precedent.

What won't happen is a default on U.S. government bonds and other debt instruments. (The Fourteenth Amendment to the U.S. Constitution guarantees that.) Your bond interest will be paid. However, what is fairly likely to happen is that the U.S. federal government will stop paying its bills. Treasury probably doesn't have the technical ability to pick and choose which bills to pay or not pay, so things could get very, very messy. Yes, that could mean Social Security payments don't go out.

There is some state-level precedent for a U.S. government entity not paying its bills in timely fashion or paying them in IOUs (e.g. California), but this is totally unchartered waters for the federal government if it should happen. Nobody really knows what the impacts would be, and it's very hard to predict.

The President has very few legal options -- maybe only one, actually -- when Congress has given him two perfectly contradictory instructions: spend and tax in specific ways, but do not borrow to cover what the government has spent (less taxes). Most likely if those contradictory instructions stand he'll be forced to act unilaterally to violate one of the two. (The legal option, minting a one trillion dollar platinum coin, is unorthodox to say the least.) I assume he'd choose to violate the statutory debt ceiling and instruct his Treasury Secretary to continue issuing non-Congressional debt (perhaps with the Federal Reserve as the sole buyer of that debt), but nobody really has any idea what this would mean. Let's hope it all remains hypothetical and not operative.

If you have any reports of U.S. federal government shutdown impacts in the coming days -- let's hope days or hours if at all -- please add to this thread. Actual impacts, please, not political commentary -- let's stick to the facts as best as we can determine them. Thanks in advance.

BBCWatcher 1st October 2013 06:37 AM

The U.S. federal government has begun its partial shutdown. Various departments and services are closed for business on Tuesday, October 1, and for as long as there is no continuing resolution or other budgetary agreement to fund federal government operations.

Congress and the President have appropriated continuing funds for the U.S. military's pay -- soldiers, sailors, airmen -- but otherwise there's no change to the information presented above.

The partial shutdown will have trivial impact on the remaining time the U.S. Treasury has before slamming into the statutory debt ceiling, when the "extraordinary measures" Treasury is using to stay within the debt ceiling are exhausted.

The most recent government shutdown lasted from December 15, 1995, until January 6, 1996 (22 days).

BBCWatcher 1st October 2013 07:57 AM

The Washington Post summarizes the shutdown impacts. It looks like U.S. citizen services at consulates and embassies will continue operating for some period of time, so that's a bit of good news. Also, the list is slightly out of date because U.S. servicemen and servicewomen will continue getting paid.

My paper tax return (and tax refund) isn't going to get processed at the IRS. :(

mtlve 4th October 2013 10:52 PM

This shut down is pathetic. We need legislation passed that if the government shuts down for like a week, that we instantly get a re-vote on all senate and representative spots. This is total bs. Pass a budget and then fight about that you passed years ago!

BBCWatcher 5th October 2013 04:12 AM

The federal government employees deemed "essential" are continuing to work, but they aren't getting paid with only a few exceptions (military servicemen/women, members of Congress, and a couple others). They are now volunteers. That cannot go on forever, and the employees cannot be forced to continue working without pay.

My advice is to be especially kind when interacting with any U.S. federal government worker.

Bevdeforges 5th October 2013 08:59 AM

Quote:

Originally Posted by mtlve (Post 1957537)
This shut down is pathetic. We need legislation passed that if the government shuts down for like a week, that we instantly get a re-vote on all senate and representative spots. This is total bs. Pass a budget and then fight about that you passed years ago!

It's a pity there isn't a mechanism in the US for dissolving Congress the way they dissolve parliament in most parliamentary systems. Let's put it to the People whether this shutdown is a good idea or not! Oh well.
Cheers,
Bev

BBCWatcher 5th October 2013 12:40 PM

About as close as the U.S. system gets to dissolving parliament and snap elections is mid-decade redistricting. Up until very recently that wasn't considered a politically acceptable maneuver, but it happened in Texas.

The next Congressional election is not until November, 2014, for seating the next Congress in January, 2015. That's the next opportunity U.S. voters have to speak, though they'll be able to send a signal or two (or not) in next month's local elections.


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