federal government

As of midnight Saturday, the federal government is partially shut down, with all non-essential government functions suspended pending a deal from Congress.

The shutdown occurred because funding the president’s border wall was effectively a non-starter in the Senate, and will only grow less likely when the new Congress is sworn in in January. Friday evening, Office of Management and Budget director Mick Mulvaney sent out a letter to all federal agency heads instructing them to prepare for an “orderly shutdown” of the federal government after midnight, as Congress had not yet passed a funding bill. Representative-elect Ilhan Omar (D-Minnesota) quantified what a federal government shutdown would mean for federal workers.

This shutdown is more limited than the one in January, as some elements of government have already been funded. But 420,000 federal employees will still be working without pay through the holidays and 380,000 will be furloughed, many of whom will struggle to make ends meet until the shutdown ends.

Nine federal departments will also be closed, those being Treasury, Agriculture, Homeland Security, Justice, Interior, State, Housing and Urban Development, Commerce and Transportation.

National parks will likely close, as even when following an agency directive to remain open in January a third of parks shut down. The Smithsonian will remain open using prior-year funds into the new year.

The Securities and Exchange Commission will be open for a “limited number of days,” and the U.S. Trade Representative will be impacted but will keep essential personnel to ensure it continues to function into the new year.

Important for holidays; the U.S. Postal Service, Amtrak and air traffic controllers will still be on the job.

President Trump has promised this shutdown will be “long,” so it isn’t clear when government will reopen. Trump is a fan of government shutdowns and has advocated for them as a common political tool.

Shutdowns tend to have ripple effects in the broader economy. Apprehension about the shutdown has impacted stock markets already, but more practically the work of government that fuels economic growth, like small business loans, will be interrupted.

Consumer spending makes up 70 percent of the American economy. This means that withholding pay from more than half a million federal government employees has impacts beyond just those employees. In a time of year where consumer spending already sees a precipitous drop, the added strain of a shutdown could put a lot of businesses in a tight spot.

And if the shutdown is long, as President Trump suggested, it will have a longer impact. A typical shutdown is a speed bump, explained Northwestern University finance professor Scott Baker. But as a shutdown lingers, government employees deplete savings, max out credit cards, and take out loans. So, too, might those working at private sector businesses feeling ripple effects of a shutdown. This extends the strain placed on consumer spending as families need to dig their way out of the debt the shutdown created.

In the sea of bad news, at least there is one bright spot this holiday: Shutdown cocktails at D.C.’s Capitol Lounge.

 

Katelyn Kivel is a contributing editor and senior legal reporter for Grit Post in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.

 

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