This spring the federal government avoided a "shutdown" by passing a fiscal budget. As bad as a budget impasse might have been, the government's facing a bigger problem in the debt "ceiling". Congress and the Obama administration look headed for another showdown in August.
The debt ceiling caps the amount of money the federal government can borrow. Because the government's running a huge budget deficit, it needs to borrow a lot of new money. Borrowing's projected to reach the cap in August. At that point, unless a higher cap is set by Congress, the government won't be able to borrow any more money. That's when it won't be able to pay all its bills. That's when decisions would be made about which bills to pay, which to put off and which services or other outlays to cut. Stay tuned.
All of us depend on programs or services paid for and run by the federal government. Think about mail service and Social Security retirement and disability payments alone, and you'll get an idea of how much we depend on a smooth running government.
So, what happens when the government "shutsdown?" It's no picnic, but it's not all doom-and-gloom, either.
It's the Budget
The federal government, like you and your family, operates on a budget. In a nutshell, the President sends Congress (the Senate and House of Representatives) a budget request - essentially a wish list of how and how much the President wants to spend. Congress then has to authorize the expenditures and come up with a budget plan, which is often much different than what the President envisioned. The President then has to sign in onto law.
There's a time limit on all of this, too. In 2011, it all needs to be done by April 8. The deadline was extended two times because of debates and wrangling about cutting government spending and the federal deficit. If April 8 comes and goes without a budget, though, there's no money to pay for federal programs and services, so the government "shuts down."
What Does "Shutdown" Mean, Exactly
Rest assured that a government shutdown doesn't mean everyone in Washington and in federal offices across the US close up shop and go home. It doesn't mean the entire federal government comes to a grinding halt.
That being said, it does mean you can expect some programs and services to stop until Congress and the President can settle their differences and come up with a budget.
Programs & Services at Risk
What stops and what continues during a shutdown depends on how a program or service is classified by federal officials - and particularly the President. Essential programs and services keep running; non-essential ones stop. There's no cut-and-dry list of what's essential and what's not. The President (and Congress, to an extent) decides.
We get clues from current news reports and from the last government shutdown in 1995 of what's considered essential:
- National security and military operations
- Programs and services critical for the protection of life and property
In other words, you can expect:
- Mail service to continue
- Delivery of Social Security disability and retirement checks
- Hospitals to remain open, with continuation of most Medicaid and Medicare benefits
- Continued security and screenings at the nation's borders and airports
- Continued law enforcement and criminal investigations
- Emergency and disaster assistance
In all, you can expect 70-80 percent of the federal government to carry on business as usual.
We get clues about non-essential items, too. If the government shuts down, you can expect:
- Closure of national parks, museums and monuments
- Delays in processing and approving new applications for public benefits, such as Social Security, Medicare and Medicaid
- Delays in the IRS' processing of tax returns, and so delays in how fast you'll get your refund
- Delays or the complete stoppage of processing new passports and immigration visas
- A decrease in the number of reports from the National Weather Service
- Delays in federal court processes and actions, especially in civil (non-criminal areas), like bankruptcies
Unfortunately, these "non-essential" items may be very essential to you. A shutdown may mean some headaches and inconveniences for you and your family.
Prepare for a Shutdown
You can avoid some headaches and delays a shutdown may cause. First, contact your Senators and Representatives in Washington and urge them to get a budget plan together before April 8. Then:
- File your federal income tax as soon as possible. If possible, e-file - it's much faster than mailing a return and you could get your refund within days, even if there is a shutdown
- If you've put off applying for Social Security, Medicare or Medicaid, apply as soon as possible. You can apply online, too
- If you need a passport, look into the expedited service offered by the US State Department
- Check with your attorney about any delays you may have in a legal action pending in a federal court and how those delays might be avoided
A government shutdown isn't the end of the world, but it can make life hectic. Prepare for it now so you're not too inconvenienced by the stoppage of services and programs you and your family may use.
Questions for Your Attorney
- Will I be able to file for bankruptcy on April 8, as planned, if there's a government shutdown?
- Do I have to show up for jury duty in a federal case if there's a government shutdown?
- As a federal employee, will I get paid for the time I was off work or furloughed during a shutdown?