The Biden govt could shut down on October 1: Here's all you need to know

A US government shutdown appears to be all but inevitable as House Speaker Kevin McCarthy dug in Thursday, vowing he will not take up legislation by the US Senate to keep the federal government fully running despite House Republicans' struggle to unite around an alternative.

The US Congress is at a crossroads days before a disruptive federal shutdown that would halt paychecks for many of the federal government's roughly 2 million employees and 2 million active-duty military troops and reservists, furlough many of those workers and curtail government services.

But the House and Senate are pursuing different paths to avert those consequences even though time is running out before government funding expires after midnight on Saturday.

 

The US Senate is working toward passage of a bipartisan measure that would fund the government until November 17 as longer-term negotiations continue while also providing $6 billion for Ukraine and $6 billion for US disaster relief.

The House, meanwhile, has teed up votes on four of the dozen annual spending bills that fund various agencies in hopes that would cajole enough Republicans to support a House-crafted continuing resolution that temporarily funds the government and boosts security at the US border with Mexico. It's a long shot, but McCarthy predicted a deal.

What is a government shutdown?

A shutdown happens when the US Congress fails to pass some type of funding legislation that is signed into law by the president. The lawmakers are supposed to pass 12 different spending bills to fund agencies across the government, but the process is time-consuming.

They often resort to passing a temporary extension, called a continuing resolution, to allow the government to keep operating. When no funding legislation is enacted, federal agencies have to stop all non-essential work and will not send paychecks as long as the shutdown lasts.

Although employees deemed essential, such as air traffic controllers and law enforcement officers, still have to report to work, other federal employees are furloughed. Under a 2019 law, those same workers are slated to receive back pay once the funding impasse is resolved.

When would a shutdown begin?

The funding of the US government expires October 1, the start of the federal fiscal year. A shutdown will effectively begin at 12:01 am if Congress is not able to pass a funding plan that US President Joe Biden signs into law.

How long will the shutdown last?

It is impossible to predict how long a shutdown would last. With US Congress divided between a Democratic-controlled Senate and Republican-led House, and Speaker Kevin McCarthy's hard-right conservatives looking to use the shutdown as leverage for spending cuts, many are bracing for a stoppage that could last weeks.

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What happens during a shutdown?

Millions of US federal workers are expected to face delayed paychecks when the government shuts down, including many of the roughly 2 million military personnel and more than 2 million civilian workers across the nation.

Nearly 60 per cent of federal workers are stationed in the Defense, Veterans Affairs and Homeland Security departments.

Federal workers are stationed in all 50 states and directly interact with taxpayers -- from Transportation Security Administration agents who operate security at airports to Postal Service workers who deliver mail.

Some federal offices will also have to close or face shortened hours during a shutdown.

Beyond federal workers, a shutdown could have far-reaching effects on government services. People applying for government services like clinical trials, firearm permits and passports could see delays.

Businesses closely connected to the federal government, such as federal contractors or tourist services around national parks, could see disruptions and downturns. According to the US Travel Industry Association, the travel sector could lose $140 million daily in a shutdown.

Lawmakers also warn that a shutdown could rattle financial markets. Goldman Sachs has estimated that a shutdown would reduce economic growth by 0.2 per cent every week it lasted, but growth would then bounce back after the government reopens.

Others say the disruption in government services has far-reaching impacts because it shakes confidence in the government to fulfil its basic duties.

The US Chamber of Commerce warned a well-functioning economy requires a functioning government.

Will it impact court cases, congress work and presidential pay?

The president and members of Congress will continue to work and get paid. However, any members of their staff who are not deemed essential will be furloughed. The judiciary will be able to continue to operate for a limited time using funds derived from court filings, other fees, and other approved funding.

Notably, funding for the three special counsels appointed by Attorney General Merrick Garland would not be affected by a government shutdown because they are paid for through a permanent, indefinite appropriation, an area that's been exempted from shutdowns in the past.

That means the two federal cases against Donald Trump, the former president, as well as the case against Hunter Biden, the son of President Joe Biden, would not be interrupted. Trump has demanded that Republicans defund the prosecutions against him as a condition of funding the government, declaring it their last chance to act.

Has a shutdown happened before in the US?

Before the 1980s, lapses in government funding did not result in government operations significantly shuttering. But then-US Attorney General Benjamin Civiletti, in a series of legal opinions in 1980 and 1981, argued that government agencies cannot legally operate during a funding gap.

Federal officials have since operated under an understanding they can make exemptions for functions that are essential for public safety and constitutional duties.

Since 1976, there have been 22 funding gaps, with 10 of them leading to workers being furloughed.

But most of the significant shutdowns have taken place since Bill Clinton's presidency when then-Speaker Newt Gingrich and his conservative House majority demanded budget cuts.

The longest government shutdown happened between 2018 and 2019 when then-President Trump and congressional Democrats entered a standoff over his demand for funding for a border wall. The disruption lasted 35 days, through the holiday season, but was also only a partial government shutdown because Congress had passed some appropriations bills to fund parts of the government.

How will a shutdown end?

It's the responsibility of Congress to fund the government. The House and Senate have to agree to fund the government in some way, and the president has to sign the legislation into law.

Congress often relies on a so-called continuing resolution, or CR, to provide money to open government offices at current levels as budget talks are underway. Money for pressing national priorities, such as emergency assistance for victims of natural disasters, is often attached to a short-term bill.

But Republicans say any temporary bill is a non-starter for them. They are pushing to keep the government shutdown until Congress negotiates all 12 bills that fund the government, which is historically a laborious undertaking that isn't resolved until December, at the earliest.

Trump, who is Biden's top rival heading into the 2024 election, is urging on the Republican hardliners. If they are successful, the shutdown could last weeks, perhaps even longer.

(With inputs from Associated Press)