A government shutdown starting Tuesday, Oct. 1, is now upon us. The House and Senate couldn't agree on a bill to fund the government, and time has run out.

The photograph is cleverly shot to make it look like the gates of the federal government are literally closing. Neat, eh? (The Washington Post)

The
photograph is cleverly shot to make it look like the gates of the
federal government are literally closing. Neat, eh? (The Washington
Post)

So… it's shutdown time. Let's take a look at how this will work.

Not all government functions will simply evaporate come Oct. 1 —
Social Security checks will still get mailed, and veterans' hospitals
will stay open. But many federal agencies will shut their doors and send
their employees home, from the Environmental Protection Agency to
hundreds of national parks.

Here's a look at how a shutdown will work, which parts of the
government will close, and which parts of the economy might be affected.

Wait, what? Why is the federal government on the verge of shutting down?

The fiscal crises will continue until morale improves. House Speaker John Boehner (R-Ohio). (Scott Applewhite/AP)

Short answer: There are wide swaths of the federal government that need to be funded each year
in order to operate. If Congress can't agree on how to fund them, they
have to close down. And, right now, Congress can't agree on how to fund
them.

To get a bit more specific: Each year, the House and Senate are
supposed to agree on 12 appropriations bills to fund the federal
agencies and set spending priorities. Congress has become really bad at passing these bills,
so in recent years they've resorted to stopgap budgets to keep the
government funded (known as "continuing resolutions"). The last stopgap
passed on March 28, 2013, and ends on Sept. 30.

In theory, Congress could pass another stopgap before Tuesday. But
the Democratic-controlled Senate and Republican-controlled House are at odds
over what that stopgap should look like. The House passed a funding
bill over the weekend that delayed Obamacare for one year and repealed a
tax on medical devices. The Senate rejected that measure. They voted a
few more times and still no agreement. So… we're getting a shutdown.

Does a shutdown mean everyone who works for the federal government has to go home?

Not exactly. The laws and regulations
governing shutdowns separate federal workers into "essential" and
"non-essential." (Actually, the preferred term nowadays is "excepted"
and "non-excepted." This was tweaked in 1995 because "non-essential"
seemed a bit hurtful. But we'll keep things simple.)

The Office of Management and Budget recently ordered managers at all federal agencies to conduct reviews
to see which of their employees fall into each of these two
categories. If a shutdown hits, the essential workers stick around,
albeit without pay. The non-essential workers have to go home after a
half-day of preparing to close shop.

Which parts of government stay open?

Air traffic control stays open. (Jim Weber/AP)

Air traffic control stays open. (Jim Weber/AP)

There are a whole bunch of key government functions that carry on
during a shutdown, including anything related to national security,
public safety, or programs written into permanent law (like Social
Security). Here's a partial list:

— Any employee or office that "provides for the national security,
including the conduct of foreign relations essential to the national
security or the safety of life and property." That means the U.S.
military will keep operating, for one. So will embassies abroad.

— Any employee who conducts "essential activities to the extent that
they protect life and property." So, for example: Air traffic control
stays open. So does all emergency medical care, border patrol, federal
prisons, most law enforcement, emergency and disaster assistance,
overseeing the banking system, operating the power grid, and guarding
federal property.

– Agencies have to keep sending out benefits and operating programs
that are written into permanent law or get multi-year funding. That
means sending out Social Security checks and providing certain types of
veterans' benefits. Unemployment benefits and food stamps will also
continue for the time being, since their funding has been approved in
earlier bills.

— All agencies with independent sources of funding remain open, including the U.S. Postal Service and the Federal Reserve.

— Members of Congress can stick around, since their pay is written
into permanent law. Congressional staffers however, will also get
divided into essential and non-essential, with the latter getting
furloughed. Many White House employees could also get sent home.

Do these "essential" employees who keep working get paid?

Civilian employees will likely not get a paycheck during the
shutdown. They will, however, receive retroactive pay if and when
Congress decides to fund the government again.

The 1.4 million active-service military members, on the other hand,
will get paid during the shutdown. That's because the House and Senate
specifically passed a bill to make sure that their paychecks aren't delayed when the government is closed. Obama signed it into law Monday night.

So which parts of government actually shut down?

Closed! Well, unless Arizona wants to pay to operate it. (Ron Watts / Corbios)

Closed! Well, unless Arizona wants to pay to operate it. (Ron Watts / Corbios)

Everything else, basically. It's a fairly long list, and you can
check out in detail which activities the agencies are planning to halt in these contingency plans posted by each agency. Here are a few select examples:

Health: The National Institutes of Health will stop
accepting new patients for clinical research and stop answering hotline
calls about medical questions. The Centers for Disease Control and
Prevention will stop its seasonal flu program and have a "significantly
reduced capacity to respond to outbreak investigations."

Housing: The Department of Housing and Urban Development will not be able to provide
local housing authorities with additional money for housing vouchers.
The nation's 3,300 public housing authorities will also stop receiving
payments, although most of these agencies have enough cash on hand to
provide rental assistance through the end of October.

Immigration: The Department of Homeland Security will no longer operate
its E-Verify program, which means that businesses will not be able to
check on the legal immigration status of prospective employees during
the shutdown.

Law enforcement: Although agencies like the FBI and the Drug Enforcement Agency will continue their operations, the Justice Department will suspend many civil cases for as long as the government is shut down.

Parks and museums: The National Park Service will close
more than 400 national parks and museums, including Yosemite National
Park in California, Alcatraz in San Francisco, and the Statue of Liberty
in New York. The last time this happened during the 1995-96 shutdown,
some 7 million visitors were turned away. (One big exception was the
south rim of the Grand Canyon, which stayed open only because Arizona
agreed to pick up the tab.)

Regulatory agencies: The Environmental Protection Agency will close down almost entirely during a shutdown, save for operations around Superfund sites. Many of the Labor Department's regulatory offices will close,
including the Wage and Hour Division and the Occupational Safety and
Health Administration. (The Mine Safety and Health Administration will,
however, stay open.)

Financial regulators. The Commodity Futures Trading Commission, which oversees the vast U.S. derivatives market, will largely shut down. A few financial regulators, however, such as the Securities and Exchange Commission, will remain open.

(Small parts of) Social Security: The Social Security Administration will retain enough staff to make sure the checks keep going out. But the agency won't have enough employees to do things like help recipients replace their benefit cards or schedule new hearings for disability cases.

Visas and passports: The State Department
says it will keep most passport agencies and consular operations open so
long as it has the funds to do so, although some activities might be interrupted.
(For instance, "if a passport agency is located in a government
building affected by a lapse in appropriations, the facility may become
unsupported.")

During the previous shutdown in 1995-1996, around 20,000 to 30,000
applications from foreigners for visas went unprocessed each day. This
time around, the State Department is planning to continue processing
visas through the shutdown, since those operations are largely funded by
fees collected.*

Veterans: Some key benefits will continue and the VA hospitals will remained open. But many services will be disrupted. The Veterans
Benefits Administration will be unable to process education and
rehabilitation benefits. The Board of Veterans' Appeals will be unable
to hold hearings.

What's more, if the shutdown lasts for more than two or three weeks, the Department of Veterans Affairs has said that it may not have enough money to pay disability claims and pension payments. That could affect some 3.6 million veterans.

Rep. Rush Holt (D-N.J.) has a list of
other possible effects of a shutdown. Funds to help states administer
unemployment benefits could get disrupted, IRS tax-refund processing for
certain returns would be suspended, farm loans and payments would stop,
and Small Business Administration approval of business loan guarantees
and direct loans would likely cease.

Would the city of Washington D.C. be affected?

D.C.'s garbage collection stops during a shutdown. (The Washington Post)

Only if the shutdown goes on longer than a few weeks. In theory, the
District of Columbia is supposed to shut down all but its most essential
services during a government shutdown. But Mayor Vincent Gray has said
that he will label all city services "essential" and use a cash reserve fund to keep everything going for as long as possible.

Some background: The District of Columbia is the only city barred
from spending funds during a federal government shutdown, save for a
few select services. During the 1995-'96 shutdown, the city was only
able to keep police, firefighters and EMS units on duty. Trash
collection and street sweeping came to a stop until Congress finally
intervened.

This time, however, the District is taking a more defiant stance. Gray has recently said that he will declare all city services "essential" and keep them running. And the city has $144 million in funds
to carry out services like trash collection and street sweeping for two
weeks. If the shutdown drags on longer, however, it's unclear what will
happen…

How many federal employees would be affected by a government shutdown?

Half of you go home. (Jeffrey MacMillan / For The Washington Post)

Half of you go home. (Jeffrey MacMillan/For The Washington Post)

The government estimates that more than 800,000 out of some 2.1
million federal workers (excluding the Postal Service and active-duty
military) will get sent home if the government shuts down.

Can you give me an agency-by-agency breakdown of the impacts?

Yes. We've been compiling a detailed list
here at the Post, but here's a brief overview, showing how many
employees are furloughed, and examples of who stays and who goes:

Department of Commerce: 87 percent of the
agency's 46,420 employees would be sent home. (The Weather Service would
keep running, for instance, but the Census Bureau would close down.)

Department of Defense: 50 percent of the
800,000 civilian employees would be sent home while all 1.4 million
active-duty military members would stay on. (Environmental engineers,
for instance, would get furloughed, and the agency could not sign any
new defense contracts.)

Department of Energy: 69 percent of the
agency's 13,814 employees would be sent home. (Those in charge of
nuclear materials and power grids stay. Those conducting energy research
go home.)

Environmental Protection Agency: 94 percent
of the 16,205 employees will be sent home. (Those protecting toxic
Superfund sites stay. Pollution and pesticide regulators get sent home.)

Federal Reserve: Everyone would stay, since the central bank has an independent source of funding.

Department of Health and Human Services: 52
percent of 78,198 employees would be sent home. (Those running the
Suicide Prevention Lifeline would stay, those in charge of investigating
Medicare fraud would go home.)

Department of Homeland Security: 14 percent
of the 231,117 employees would go home. (Border Patrol would stay.
Operations of E-Verify would cease. The department will also suspend
disaster-preparedness grants to states and localities.)

Department of Housing and Urban Development: 95
percent of the 8,709 employees would go home. (Those in charge of
guaranteeing mortgages at Ginnie Mae would stay, as would those in
charge of homelessness programs. Almost everything else would come to a
halt.)

Department of Labor: 82 percent of the
16,304 employees would be sent home. (Mine-safety inspectors will stay.
Wage and occupational safety regulators will go home. Employees
compiling economic data for the Bureau of Labor Statistics will also get
furloughed.)

NASA: 97 percent of the 18,134 employees
would be sent home. (Scientists working on the International Space
Station will stay. Many engineers will go home.)

Department of Interior: 81 percent of the
72,562 employees would be sent home. (Wildlife law enforcement officers
would stay, while the national parks would close.)

Department of Justice: 15 percent of the
114,486 employees would go home. (FBI agents, drug enforcement agents,
and federal prison employees would stay. Some attorneys would go home.)

U.S. Postal Service: Everyone would stay, since the Postal Service is self-funded.

Social Security Administration: 29 percent of the 62,343 employees would be sent home. (Claims representatives would stay; actuaries would go home.)

Department of Treasury: 80 percent of the
112,461 employees will be sent home. (Those sending out Social Security
checks would stay; IRS employees overseeing audits would go home.)

Department of Transportation: 33 percent of
the 55,468 employees will get sent home. (Air-traffic controllers will
stay on; most airport inspections will cease.)

Department of Veterans Affairs: 4 percent
of the 332,025 employees would go home. (Hospital workers will stay;
some workers in charge of processing benefits will go home.)

A much, much more detailed list can be found in the agency contingency plans prepared here.

Do "non-essential employees" who get sent home ever get paid?

The big question. (AP)

That's unclear, as my colleague Lisa Rein has reported.
On the first day of the shutdown, these employees do have to come to
their offices to secure their files, set up auto-reply messages, and
make preparations necessary to halt their programs.

The last time this happened, Congress later agreed to pay these
employees retroactively when the government reopened. But that's
completely up to Congress.

Is the government even prepared for a shutdown?

This is honestly the best stock art we've got to indicate the possibility of confusion and chaos. (Bigstock)

This is honestly the best stock art we've got to indicate the possibility of confusion and chaos. (Bigstock)

Maybe? As mentioned before, the Office of Management and Budget has asked federal agencies to develop contingency plans for
a shutdown. But chaos is always possible. Back during the 1995
shutdown, the Social Security Administration initially sent home far too
many workers and had to recall 50,000 of them after three days in order
to carry out its legal duties.

Which parts of the economy would be most affected by a shutdown?

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A few points:

— The local economy around Washington, D.C. is expected to lose some $200 million in economic activity for each day that the government is shut down.

— Economist Mark Zandi has estimated
that a short government shutdown, which would send more than 800,000
federal workers home, could shave about 0.3 percentage points off
economic growth in the fourth quarter of 2013 (though the economy would
likely bounce back in the following quarter). A more extended shutdown
could do even more damage.

— Alternatively, we can look at what happened back in 1995 and 1996, the last two times
the federal government actually shut down for a few weeks. In a
research note earlier this month, Chris Krueger of Guggenheim Partners
passed along some thoughts about the possible economic impacts of a
shutdown in a few areas:

Tourism: U.S. tourist industries and
airlines reportedly sustained millions of dollars in losses during the
1995 and 1996 shutdowns, in part because visas were going unprocessed
and in part because so many parks were shutting down, turning away 7
million visitors.

Federal contractors: Of
the $18 billion in federal contracts in the D.C. area back in 1995-1996,
about one-fifth, or $3.7 billion, were put on hold during that era's
shutdown. Employees of contractors were reportedly furloughed without
pay.

The effects would be considerably larger today, given that the number
of private contractors has swelled over the past two decades. In
Fairfax County, Virginia, alone there are currently 4,100 contractors
that bring in about $26 billion per year. It's still unclear exactly how many of those contracts would be affected.

Energy: The Department of Interior would temporarily stop reviewing
permits for onshore oil and gas drilling as well as applications for
renewable energy projects on public land. The Department of Energy would
stop processing applications for liquefied natural gas exports.

Pharma and biotech: This one's harder to
game out. The Food and Drug Administration didn't have to shut down in
1995 and 1996 because it was already funded. This time around, however,
the FDA won't be spared, and the review process for new drugs is likely to get bogged down.
The shutdown could also put a cramp on the grant process from the
National Institutes of Health. "If prolonged," Krueger writes, "that
could negatively impact life sciences/diagnostics companies.

Would a government shutdown stop Obamacare from happening?

(Jessica Rinaldi/Reuters)

No. As Sarah Kliff has explained,
the key parts of Obamacare rely on mandatory spending that isn't
affected by a shutdown. "That includes the new online marketplaces,
known as exchanges, where uninsured people will be able to shop for
coverage. The Medicaid expansion is funded with mandatory funding, as
are the billions in federal tax credits to help with purchasing
coverage."

That means uninsured Americans will be able to start shopping for plans when the exchanges launch Oct. 1, although there are likely to be some glitches.

How do you end a government shutdown?

Congress needs to pass a bill (or bills) to fund the government, and
the White House has to sign them. They can do this at any time. Or they
can sit at home and keep the government closed. Nothing requires them to
do anything. It depends what sort of political pressure they're facing.

How often has the government shut down before?

Since 1976, there have been 17 different government shutdowns. The longest came in 1995-'96 and lasted 21 days, as Bill Clinton wrangled with congressional Republicans over budget matters.

But there were also six shutdowns in the 1970s, all lasting longer
than eight days, and there was even a one-day shutdown in 1982 when
Congress couldn't agree on funding for Nicaraguan Contras.

Is a government shutdown the same thing as breaching the debt ceiling?

Nope! Different type of crisis. In a government shutdown, the federal
government is not allowed to make any new spending commitments (save
for all the exceptions noted above).

By contrast, if we hit the debt-ceiling then the Treasury Department
won't be able to borrow money to pay for spending that Congress has
already approved. In that case, either Congress will have to lift the
debt ceiling or the federal government will have to default on some of its bills,
possibly including payments to bondholders or Social Security payouts.
That could trigger big disruptions in the financial markets — or a
long-term rise in borrowing costs.

The Bipartisan Policy Center estimates
that we're on pace to breach the debt ceiling sometime between Oct. 18
and Nov. 5. So if a government shutdown isn't thrilling enough for you,
good news: There's another fiscal crisis just around the corner.

Clarification: During the 1995-'96 shutdown, many visas and passports went unprocessed. This time around, however, the State Department has said it will keep as many consulates and embassies open as it can using existing funds.

Comments

  1. By all means, keep funding “garbage” pick-up in D.C. They should work overtime on that project at both the White House and Capitol.

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