Correction: This post initially conflated the upcoming battle over raising the government's debt ceiling, with the dispute between the House and the White House over funding of Obamacare. The Oct. 1 deadline is for passing a budget or continuing resolution to keep the government functioning. The debt ceiling must be raised by Oct. 17.
If Congress doesn't pass new budget by Oct. 1 the government will shut down, which would add ruin to an already ruined economy. Republicans are holding the budget hostage to force a one-year delay in the implementation of Obamacare--which would serve their candidates well in the mid-term elections in which there are 33 U.S. Senate seats at stake.
Sen. Ted Cruz of Texas, one of the most conservative of the Tea Party-brand Republicans, attempted a filibuster this week to literally try to talk Congress into shutting down the federal government.
No one knows what exactly in government would get shut down in the event of it not passing a budget. Shutdowns happened 15 times between 1977 and 1996. They've ranged from as short as three days to 21 days. In these events, some so-called non-essential workers were furloughed or temporarily laid off, but when work resumed, they returned and received back pay.
The same would happen here. Someone in the federal government would have to determine which staff members it could afford to keep and which are temporarily disposable. Some have written that that would be left up to Obama's discretion. The Obama administration sent a memo to federal agencies telling them that "prudent management requires that agencies be prepared for the possibility of a lapse."
While it's not clear right now how each department and agency will respond to a lapse in funds, and what staff and services they will find non-essential. Here, a few things we can count on happening based on past experiences:
- Social Security: A shutdown doesn't affect social security payments, but it does impact the people who process, cut and deliver checks. So some payments could be delayed.
- Medicare/Veterans Affairs: Same situation here: The amount of Medicare and VA benefits wouldn't be affected. But new claims could take longer to be processed. The VA just recently began clearing a backlog of claims; a shutdown would jeopardize this progress.
- Federal Contractors: Given that the federal government is over-reliant on contractors due to past budget negotiations with Republicans that have frozen federal employee pay and refused new spending, many of these contractors should be worried. Contractors who provide administrative services deemed nonessential could be paid late, or at least not as scheduled, which could impact the quality of their services.
- Loans: This is one of the toughest areas because given the current economy, a lot of people are seeking federal loans to meet their debt obligations. If you're looking for a housing or a student loan during the shutdown, you might get a busy signal, or no one to pick up your call at all. The Small Business Administration (SBA), which provides small business loans, is one of the main agencies experts name when discussing which government entities will take a hit during a shutdown. Loans from SBA are important in post-disaster situations as communities try to recover, as seen in Colorado flood relief, and even in New York City as it rebuilds from Hurricane Sandy.
- Military Pay: The other agency often named when shutdowns are discussed is the military, where members will be expected to work but possibly with delayed paychecks. And hundreds of thousands of Defense Department civilians are actually vulnerable to unpaid furloughs.